Document:

Exhibit 10.11

 

CASINO MANAGEMENT
AGREEMENT

 

THIS CASINO
MANAGEMENT AGREEMENT (this “Agreement”), is
made and entered into on this [      ] day of [                                          ],
200[  ], by and between Cannery Casino Resorts, LLC, a Nevada limited
liability company (“CCR”), Rampart Resort Management, LLC, a Nevada
limited liability company (“Rampart”), The Cannery Hotel and Casino,
LLC, a Nevada limited liability company (“Cannery”), Nevada, LLC, a
Nevada limited liability company (“Nevada Palace”), and Millennium
Management Group II, LLC, a Nevada limited liability company (together with its
permitted successors and assigns, “Manager,” and together with CCR,
Rampart, Cannery and Nevada Palace, each, a “Party,” and collectively,
the “Parties”).

 

W I T N E S S E T H

 

WHEREAS,
Rampart, a wholly owned subsidiary of CCR, subleases the casino facilities
located in the casino hotel known as the JW Marriott Resort, located at the
intersection of Rampart Boulevard and Canyon Run Drive in Las Vegas,
Nevada, pursuant to that certain Casino Sublease Agreement made and entered
into as of April 1, 2002, as amended, by and between Hotspur Casinos
Nevada, Inc., a Nevada corporation (“Landlord”), and Rampart (the
“Rampart Sublease”), in which Rampart operates a casino and
related business operation known as the “Rampart Casino” (the “Rampart Operation”);

 

WHEREAS, Manager
has been providing certain management services to Rampart with respect to
the Rampart Operation pursuant to that certain Rampart Casino Management
Agreement by and between Rampart and Manager and dated as of April 1,
2002 (the “Rampart Management Agreement”);

 

WHEREAS,
Cannery, a wholly owned subsidiary of CCR, owns the property and casino hotel
project located at the intersection of Craig Road and Lossee Road in Las
Vegas, Nevada upon which Cannery operates a casino and related business
operation known as “The Cannery Hotel and Casino” (the “Cannery Operation”);

 

WHEREAS,
Manager has been providing certain management services to Cannery with respect
to the Cannery Operation pursuant to that certain The Cannery Management
Agreement by and between Cannery and Manager and dated as of May [      ],
2002 (the “Cannery Management Agreement”);

 

WHEREAS, each
of Cannery and Rampart desire to continue their respective engagement of
Manager to provide, and Manager desires to continue to provide, certain management
services to Rampart with respect to the Rampart Operation and to Cannery
with respect to the Cannery Operation, pursuant to the terms and subject to the
conditions set forth in this Agreement, which shall, effective as of the
Effective Date (as defined in Section 2.1), replace in their entirety each
of the Rampart Management Agreement and the Cannery Management Agreement,
which as of the Effective Date shall terminate and be null and void and of no
further force or effect;

 

 

WHEREAS, Nevada
Palace, a wholly owned subsidiary of CCR, has acquired certain gaming assets and
has entered into a lease for certain property that Nevada Palace will use to operate
a casino and related business operation known as the “Nevada Palace Hotel and
Casino” (the “Nevada Palace Operation”);

 

WHEREAS, Nevada
Palace desires to engage Manager to provide, and Manager desires to provide, certain
management services to Nevada Palace with respect to the Nevada Palace
Operation, pursuant to the terms and subject to the conditions set forth in
this Agreement;

 

WHEREAS, if
gaming opportunities (other than the Rampart Operation, Cannery Operation
and Nevada Palace Operation) are accepted for exploitation by the Management
Committee of CCR in accordance with the procedures set forth in that certain
Amended and Restated Operating Agreement of Cannery Casino Resorts, LLC, dated
as of [                                        ],
200[  ] (the “Operating Agreement”) (each such gaming opportunity,
an “Eligible Operation,” and collectively with all such other gaming opportunities,
the “Eligible Operations,” and together with the Rampart Operation,
Cannery Operation and Nevada Palace Operation, each, a “Casino Operation,”
and collectively, the “Casino Operations”), it is contemplated that such
Eligible Operation would be pursued initially by CCR pursuant to a business
plan approved by the Management Committee of CCR and, thereafter, developed by
a newly formed Nevada limited liability company that would be owned, in whole
or in part, by CCR (each such limited liability company formed to own an Eligible
Operation, an “Eligible NewCo,” and together with Rampart, Cannery and Nevada
Palace and their respective permitted successors and assigns, each, an “Owner,”
and collectively, the “Owners”);

 

WHEREAS, CCR,
on behalf of each Eligible NewCo, desires to engage Manager to provide, and
Manager desires to provide, certain management services in respect of each
Eligible Operation and for each Eligible NewCo with respect to such Eligible
NewCo’s Eligible Operation, pursuant to the terms and subject to the conditions
set forth in this Agreement; and

 

WHEREAS, CCR
desires to engage Manager to provide, and Manager desires to provide, certain management
services to CCR with respect to CCR’s business operations and with respect to
certain Eligible Operations (prior to such time as an Eligible NewCo may engage
Manager to provide certain management services to such Eligible NewCo with
respect to such Eligible NewCo’s Eligible Operation), pursuant to the terms and
subject to the conditions set forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the representations, warranties, covenants,
agreements and conditions set forth herein, and intending to be legally bound
hereby, the Parties agree as follows:

 

1.                                       ENGAGEMENT

 

1.1                                 Rampart Operation

 

Rampart hereby engages and retains
Manager, and Manager hereby agrees to be so engaged and retained by Rampart, to
perform the general management services set forth on Exhibit A
(the “General Management Services”) with respect to the Rampart Operation.

 

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1.2                                 Cannery Operation

 

Cannery hereby engages and retains Manager, and
Manager hereby agrees to be so engaged and retained by Cannery, to perform the
General Management Services with respect to the Cannery Operation.

 

1.3                                 Nevada Palace Operation

 

Nevada Palace hereby engages and retains
Manager, and Manager hereby agrees to be so engaged and retained by Nevada
Palace, to perform the General Management Services with respect to the
Nevada Palace Operation.

 

1.4                                 Eligible Operations Prior to Formation
of Applicable Eligible NewCo

 

With respect
to any Eligible Operation prior to the date of formation of the applicable
Eligible NewCo, CCR shall, pursuant to a business plan for such Eligible
Operation approved by the Management Committee of CCR, engage and retain
Manager, and Manager hereby agrees to be so engaged and retained by CCR, to perform the
developmental, construction and pre-opening services set forth on Exhibit B
(the “Development Services”) with respect to such Eligible Operation.

 

1.5                                 Eligible
Operations Following Formation of Applicable Eligible NewCo

 

Upon its
formation, each Eligible NewCo shall engage and retain Manager, and Manager
hereby agrees to be so engaged and retained by such Eligible NewCo, to perform the
General Management Services with respect to the Eligible Operation conducted by
such Eligible NewCo. In addition, upon its formation, each Eligible NewCo shall,
pursuant to a business plan for such Eligible Operation approved by the
Management Committee of CCR, engage and retain Manager, and Manager hereby
agrees to be so engaged and retained by CCR, to continue the Development
Services with respect to such Eligible Operation commenced in accordance with Section 1.4.

 

Upon formation
of any Eligible NewCo, CCR shall cause such Eligible NewCo to execute a counterpart of
this Agreement acknowledging such Eligible NewCo’s engagement of Manager to perform the
General Management Services and Development Services set forth in this Section 1.5,
on the terms and subject to the conditions set forth in this Agreement.

 

1.6                                 CCR

 

CCR hereby
engages and retains Manager, and Manager hereby agrees to be so engaged and
retained by CCR, to perform the following services:

 

1.6.1                        CCR
Services

 

Manager shall,
at CCR’s expense, perform those General Management Services as may be
applicable to CCR or as may be necessary or appropriate to enable CCR to
effectively and efficiently conduct CCR’s business of being a holding company
with respect to the Casino Operations including, without limitation (the “CCR
General Management Services”):

 

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(i)                                     Manager shall
prepare an Annual Operating Budget and a Long-Term Budget (collectively, for
any and all Casino Operations, and together with any Pre-Opening Budget,
Construction Budget and Development Budget, the “Budgets”) in
consultation with, and subject to the approval of, the Managers (as defined in
the Operating Agreement) of the Management Committee of CCR designated by OCM
AcquisitionCo, LLC (the “Oaktree Managers”), and revise and update such Budgets
in consultation with, and subject to the approval of, the Oaktree Managers.

 

(ii)                                  Other than as such
action may involve a manager or equityholder of Manager or a direct family
member of a manager or equityholder of Manager (which, in each case, shall
require the prior written consent of the Oaktree Managers before Manager may proceed;
provided, that, those related party transactions set forth on Schedule 3.25
of the CUPA shall not require such prior written consent so long as the terms
of such related party transactions do not change in any material respect;
provided, further, that the promotion of a direct family member of a manager or
equityholder of Manager from a position set forth on Schedule 3.25 of the
CUPA to a position substantially identical in title and function to a
then-existing non-Senior Officer position of CCR or an Owner, at a salary
commensurate with what would be paid to such non-Senior Officer if not such a
direct family member, shall not require such prior written consent so long as
such promotion is justified based on past performance as reasonably determined
by Manager), Manager shall arrange for the employment, payment, supervision and
discharge of employees of CCR, subject to the Section 5.5 and 5.8 of the
Operating Agreement and in accordance with CCR-approved policies adopted,
revised and updated by the Management Committee of CCR from time to time.

 

(iii)                               Other
than as such action may involve payments to Manager or an Affiliate,
manager, officer or equityholder of Manager or an Affiliate or direct family
member of a manager, officer or equityholder of Manager (which, in each case,
shall require the prior written consent of the Oaktree Managers before Manager may proceed;
provided, that, those related party transactions set forth on Schedule 3.25
of the CUPA shall not require such prior written consent so long as the terms
of such related party transactions do not change in any material respect), Manager
shall (A) arrange as necessary for the purchase of all supplies, equipment
and merchandise necessary for the proper operation of CCR’s business, and (B) arrange
for the engagement of advisors, consultants, or other professionals from
time-to-time as reasonably necessary to promote the sound and efficient
operation of CCR, including accountants, financial advisors, real estate advisors,
computer consultants, attorneys, and such other professionals as appropriate or
necessary for the proper operation of CCR’s business.

 

(iv)                              Other than legal actions
in which a conflict of interest arises between CCR and/or an Owner, on the one
hand, and Manager and/or an Affiliate, manager, officer or equityholder of
Manager and/or an Affiliate or direct family member of a manager, officer or
equityholder of Manager, on the other (which, in each case, shall require the
prior written consent of the Oaktree Managers before Manager may proceed),
Manager shall (A) commence legal actions concerning CCR on behalf of CCR
as are necessary or reasonably required, in the good faith opinion of Manager,
to preserve and protect the business of CCR and to collect sums due to CCR or due
to the Casino Operations; (B) advise the Management Committee of CCR of
the commencement and status of material legal actions concerning CCR

 

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or the Casino Operations; and (C) retain counsel in connection
with any action or proceeding commenced by or against CCR or Manager (to the
extent such action or proceeding by or against Manager relates to the services
provided by Manager under this Agreement) or concerning CCR.

 

1.7                                 Owner
and Manager Responsibilities

 

The Parties covenant,
agree and acknowledge that, unless expressly stated herein to the contrary, each
Owner shall be responsible for all direct costs, fees or expenses reasonably incurred
by Manager on behalf of such Owner for the provision of General Management
Services and Development Services (collectively, “Management Services”)
with respect to such Owner’s Casino Operation as set forth in this Agreement
and consistent with the applicable Budgets or other funding approved by Manager
and the Oaktree Managers. Notwithstanding the foregoing, Manager shall be solely
responsible for and pay Manager’s own expenses of operations, rent, overhead,
employee expenses and general business expenses relating to Manager’s business
of casino management services. In the event that Manager dedicates one or more
of Manager’s employees (which may include William Wortman or William
Paulos only with the express written consent of the Oaktree Managers) on a
temporary basis to one or more Casino Operation in order to fulfill its
obligation to provide Management Services under this Agreement, the applicable Owner
shall reimburse Manager for the gross payroll of such person(s) for the
relevant time.

 

2.                                       TERM

 

The term of this Agreement shall commence separately
with respect to each Casino Operation in accordance with this Section 2. The
obligations of the applicable Parties set forth in this Agreement with respect
to each Casino Operation shall commence as of the beginning of the applicable term
for such Casino Operation; provided, however, that the obligations of any Party
set forth herein that are expressly made to survive the termination of this
Agreement shall survive for the period set forth herein; and further provided,
however, that, after the termination of this Agreement, each Owner shall be
obligated to remit to Manager any Management Fee earned or accrued prior to the
termination of this Agreement and Manager shall be obligated to remit to each
Owner any Management Fee Excess (as defined in Section 3.2(b) below)
outstanding prior to the termination of this Agreement.

 

2.1                                Rampart Operation, Cannery Operation
and Nevada Palace Operation

 

With respect to each of the Rampart Operation,
the Cannery Operation, and the Nevada Palace Operation, the term of this
Agreement shall commence as of the Second Closing Date (as defined in that
certain Contribution and Unit Purchase Agreement dated as of May 10, 2005,
by and among CCR and various other parties named therein (the “CUPA”))
(the “Effective Date”) and shall continue until this Agreement is
terminated in accordance with Section 4.3, Section 6, Section 7 or
Sections 9.3 or 9.4 of this Agreement.

 

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2.2                                Termination of Rampart and
Cannery Management Agreements

 

As of the Effective Date, the Rampart Management
Agreement and the Cannery Management Agreement are hereby terminated and shall be
null and void and of no further force or effect.

 

2.3                                Eligible Operations – General
Management Duties

 

With respect to any and each Eligible
Operation (including those Eligible Operations acquired by CCR), the term of
this Agreement with respect to Manager’s obligation to perform General
Management Services (with the term for Development Services being governed by Section 2.4
below) shall commence on the Opening Date (as hereinafter defined) of such Eligible
Operation and shall continue until this Agreement is terminated in accordance
with Section 4.3, Section 6, Section 7 or Sections 9.3 or 9.4 of
this Agreement. “Opening Date,” as such term is used herein, shall mean,
with respect to each Eligible Operation (including those Eligible Operations
acquired by CCR), the date agreed upon by Manager and the Oaktree Managers that
all of the following have occurred (with respect to each such Eligible
Operation):

 

(i)                                     Construction of the
structure and improvements in which the applicable Eligible Operation is to be
conducted have been substantially completed;

 

(ii)                                  All furnishings,
fixtures and equipment (including, without limitation, all gaming, security,
surveillance and related equipment and financial controls) required for the
operation of the applicable Casino Operation (with respect to each Casino
Operation, the “FF&E”) have been substantially installed;

 

(iii)                               All approvals, licenses
and permits, whether temporary or permanent, necessary or required to own, open
and operate the applicable Casino Operation (with respect to each such Casino
Operation, the “Licenses”) have been obtained;

 

(iv)                              Adequate working capital
and minimum required cash reserves, as provided in the Pre-Opening Budget (as
hereinafter defined) with respect the applicable Eligible Operation, have been
duly deposited or furnished as applicable; and

 

(v)                                 The applicable
Eligible Operation (A) if a new casino operation, is ready to render “first-class”
service to patrons on a fully-operational basis, or (B) if an acquired
casino operation, is ready to render the same service to patrons on a
fully-operation basis as rendered immediately prior to such acquisition.

 

2.4                                Eligible Operations –
Development Duties

 

With respect to any Eligible Operation that
is not open for business and fully operational at the time such Eligible
Operation is accepted by the Management Committee of CCR in accordance with the
procedures set forth in the Operating Agreement (a “Going Concern”), the
term with respect to Manager’s obligation to perform Development Services for
an Eligible NewCo shall commence upon formation of the applicable Eligible
NewCo (and, at such time, shall be transitioned from being performed for CCR
pursuant to Section 2.5(B) below to being performed for such Eligible
NewCo) and shall continue thereafter up to the earlier of the Opening Date with
respect to such Eligible Operation or the date this Agreement is terminated in

 

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accordance with Section 4.3, Section 6,
Section 7 or Sections 9.3 or 9.4 of this Agreement; provided, however, that
Manager and CCR, on behalf of each applicable Eligible NewCo, covenant and
acknowledge that the Development Services set forth in Exhibit B Part A
may be performed from time to time as reasonably determined by Manager;
and further provided, however, that the term with respect to Manager’s
obligation to perform the Development Services set forth in Exhibit B
Part B shall commence a reasonable time prior to the Opening Date with
respect to each such Eligible Operation, as reasonably determined by Manager. Notwithstanding
the foregoing, as part of Manager’s General Management Services with
respect to any such Eligible Operation, Manager shall continue to perform any
Development Services after the Opening Date that, in Manager’s reasonable discretion,
are required to be performed after such Opening Date.

 

2.5                                CCR Services

 

With respect to CCR, the term of this
Agreement: (A) with respect to the CCR General Management Services, shall
commence as of the Effective Date and shall continue until this Agreement is terminated
in accordance with Section 4.3, Section 6, Section 7 or Sections
9.3 or 9.4 of this Agreement; and (B) with respect to Development Services
for any Eligible Operation prior to the time it is pursued by an Eligible NewCo,
shall commence at such time as such Eligible Operation is accepted by the
Management Committee of CCR in accordance with the procedures set forth in the
Operating Agreement and shall continue until the earlier of the date of
formation of the applicable Eligible NewCo (and, at such time, shall be
transitioned from being performed for CCR to being performed for such Eligible
NewCo pursuant to Section 2.4 above) or the date this Agreement is terminated
in accordance with Section 4.3, Section 6, Section 7 or Sections
9.3 or 9.4 of this Agreement.

 

3.                                       MANAGER’S
FEES

 

Each Owner shall pay to Manager the following
fees as compensation for Manager’s performance of the Management Services with
respect to such Owner’s Casino Operation:

 

3.1                                 Management Fee

 

(a)                                  For Management Services rendered
with respect to any Casino Operation on and after the commencement of the applicable
term with respect to such Casino Operation (except with respect to commencement
of the term pursuant to Section 2.4 or 2.5, for which an Owner shall have
no obligation to pay a Management Fee with respect to Development Services or
CCR General Management Services performed pursuant to Section 1.4, 1.5, 1.6,
2.4 or 2.5), for each Fiscal Year (as defined in Section 3.5), or fraction
thereof, the Owner of such Casino Operation shall pay Manager, and Manager
shall accept from such Owner, the Management Fee with respect to each such
Casino Operation. The “Management Fee” with respect to each Casino
Operation shall be as follow:

 

(i)                                     with respect to the Cannery
Operation, an amount equal to One Million Dollars ($1,000,000) per annum;

 

(ii)                                  with respect to the Rampart Operation,
an amount equal to Two Million Dollars ($2,000,000) per annum;

 

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(iii)                               with respect to the Nevada
Palace Operation following its Opening Date, an amount equal to four percent
(4%) of EBITDA (as defined in Section 3.5) derived from the operation of
the Nevada Palace Operation, but in no event less than an amount equal to Seven
Hundred Fifty Thousand Dollars ($750,000) per annum; and

 

(iv)                              with respect to any and each
Eligible Operation following its Opening Date, an amount (computed separately
with respect to each Eligible Operation) equal to four percent (4%) of EBITDA
derived from the operation of the applicable Eligible Operation, but in no
event less than an amount equal to Seven Hundred Fifty Thousand Dollars
($750,000) per annum.

 

(b)                                 The Management Fee set forth in
Sections 3.1(a)(i) and (ii) shall increase annually, and the minimum
Management Fees set forth in Sections 3.1(a)(iii) and (iv) shall
increase annually, commencing at the beginning of the first full Fiscal Year
following commencement of the applicable term with respect to each Gaming
Operation, and adjusting as of the beginning of each Fiscal Year thereafter
(regardless of whether or not the Management Fee payable pursuant to Sections 3.1(a)(iii) and
(iv) is based on EBITDA or the minimum Management Fee as of the time of
adjustment), in an amount equal to the percentage increase in the CPI (as
defined below) from the first day of the applicable Fiscal Year over the CPI as
it existed on the later of the month of commencement of the applicable term and
January of the immediately preceding Fiscal Year (calculated on a
percentage basis); provided, however, the Management Fee shall not be subject
to decrease below the rate in effect for the immediately preceding Fiscal Year.
“CPI” shall mean the Consumer Price Index, Urban Wage Earners and Clerical
Workers for West Urban, all items (1982-1984=100), as published by the Bureau
of Labor Statistics of the United States Department of Labor. If the CPI is
calculated from a base different from the base period 1982-84 = 100, such CPI
shall be converted to a base period of 1982-84 = 100 by use of a conversion
factor supplied by said Bureau of Labor Statistics. If the CPI is discontinued
or replaced during the term, such other comparable governmental cost of living
index or computation which replaces the CPI shall be used in order to obtain
substantially the same result as would be obtained if the CPI had not been
discontinued or replaced.

 

(c)                                  CCR, the owner of all of the
issued and outstanding equity interests in Rampart, Cannery and Nevada Palace,
and to be an owner of equity interests in each Eligible NewCo, which shall
derive a benefit from the Management Services to be performed for each Casino
Operation, hereby absolutely, primarily, unconditionally and irrevocably
guarantees to Manager, its successors and assigns, the full, prompt, complete, timely,
and absolute payment of the Management Fees. Guarantor’s liability pursuant
to this Section 3.1(c) shall be primary, and with respect to any
right of action which shall accrue to Manager relating to any Management Fee,
Manager may at its sole option and without notice or demand, proceed
directly against CCR without having proceeded against the applicable Owner.

 

3.2                                 Time of Payment of Management
Fee

 

(a)                                  With respect to the Management
Fee payable pursuant to Sections 3.1(a)(i) and (ii), such Management Fee
shall be paid by each Owner to Manager on a monthly basis, on the first day of
each calendar month with respect to Management Services performed during the
preceding calendar month. The Management Fee shall be prorated with respect to
any

 

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partial period. Each Owner hereby authorizes
Manager to pay Manager the Management Fee, monthly, from the Account
established in accordance with this Agreement with respect to such Owner’s
applicable Casino Operation.

 

(b)                                 With respect to the Management
Fee payable pursuant to Sections 3.1(a)(iii) and (iv), such Management Fee
shall be paid by each Owner to Manager on a monthly basis based on the higher
of (x) four percent (4%) of EBITDA for the preceding calendar month derived
from the operation of such Owner’s applicable Casino Operation and (y) the pro
rata portion (based upon the number of calendar months in such Fiscal Year, or
portion thereof) of the minimum Management Fee with respect to such Casino
Operation, on the first day of each calendar month on which EBITDA numbers for
the preceding calendar month are available, with respect to Management Services
performed during the preceding calendar month. Not later than thirty (30) days
after the receipt of the Annual Statement prepared with respect to each Casino
Operation for the calendar year in which the Effective Date or Opening Date, as
applicable, occurs and for each succeeding Fiscal Year, Manager and the Oaktree
Managers shall calculate the actual EBITDA for such Casino Operation determined
from the financial statements of each such Owner for the period ending on December 31
of the immediately preceding year (“Actual EBITDA”). If the Management
Fee calculated by Manager and the Oaktree Managers and determined on the basis
of Actual EBITDA for such Casino Operation shall be less than the Management
Fees paid in such Fiscal Year (or portion thereof) with respect to such Casino
Operation (hereinafter, the “Management Fee Excess”), the applicable
Owner shall deduct the dollar amount equal to the Management Fee Excess ratably
over the remaining monthly payments of the Management Fee for such year. Each
Owner hereby authorizes Manager to pay Manager the Management Fee, monthly,
from the Account established in accordance with this Agreement with respect to
such Owner’s applicable Casino Operation.

 

3.3                                 Reimbursement for Costs and
Expenses

 

Subject to the applicable Budgets or other
funding approved by Manager and the Oaktree Managers, each Owner shall at all
times be responsible for providing and shall at all times make available sufficient
working capital to finance and support the uninterrupted and efficient
development, construction, pre-opening and operation of such Owner’s Casino
Operation as a first-class gaming property as required by any lease or
sublease under which such Casino Operation operates or, if there is no such
requirement, consistent with the market in which such Casino Operation competes
(including, without limitation, supplying those funds and expenses enumerated
in Exhibit A Part F, and as projected in the Budgets with respect to
each such Casino Operation). It is the intention of the Parties that (in
accordance with Section 1.7 above) each Owner shall be responsible for all
direct costs, fees or expenses reasonably incurred by Manager on behalf of such
Owner for the provision of Management Services with respect to such Owner’s
Casino Operation as set forth in this Agreement and consistent with the
applicable Budgets or other funding approved by Manager and the Oaktree
Managers, such that all such costs, fees and expenses shall be payable by
Manager directly from the operating account established in accordance with this
Agreement with respect to such Owner’s applicable Casino Operation. Notwithstanding
the foregoing, each Owner shall reimburse Manager for all out-of-pocket costs
and expenses reasonably paid by Manager on behalf of such Owner for the
provision of Management Services with respect to such Owner’s Casino Operation
as set forth in this Agreement and consistent with the applicable Budgets or
other funding approved by Manager

 

9

 

and the Oaktree Managers, and Manager may reimburse
Manager for such costs and expenses from the operating account established in
accordance with this Agreement with respect to such Owner’s Casino Operation.

 

3.4                                 Place of Payment

 

To the extent not paid from an operating
account established in accordance with this Agreement with respect to an Owner’s
Casino Operation, the Management Fee and reimbursement of out-of-pocket costs and
expenses shall be paid to Manager by the applicable Owner in U.S. Dollars at
Las Vegas, Nevada or such other convenient situs as may be reasonably
determined by Manager from time-to-time.

 

3.5                                 Definitions

 

In addition to the definitions provided
throughout this Agreement, the following definitions shall be applicable to
this Agreement.

 

3.5.1                        Affiliate

 

“Affiliate” means, as to any Person any
other Person that directly or indirectly through one or more intermediaries
controls, or is under common control with, or is controller by, such Person. As
used in this definition, “control” (and the correlative terms “controlled
by” and “under common control with”) shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies, whether though ownership of membership interests, by contract, or
otherwise. Notwithstanding the foregoing, Paulos, Wortman, Millennium Gaming
and Manager shall be deemed to be “Affiliates” of one another,

 

3.5.2                        EBITDA

 

“EBITDA” means the amount determined
by subtracting Operating Expenses from Gross Revenues for a Fiscal Year.

 

3.5.3                        Fiscal Year

 

“Fiscal Year” means and coincides with
and is identical to the calendar year for all purposes; provided, however, it
is understood that the first Fiscal Year under the Agreement may be a
partial calendar year.

 

3.5.4                        GAAP

 

“GAAP” means generally accepted
accounting principles applied on a consistent basis to the hotel and gaming
industry generally in accordance with the Uniform System of Accounts.

 

3.5.5                        Gross Revenues

 

“Gross Revenues”  means, for any Fiscal Year, all receipts,
revenues, income and proceeds of sale of every kind or nature derived directly
or indirectly from the operation of a Casino Operation, and services rendered
to, and rentals of all kinds received from tenants,

 

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subtenants, licensees and occupants of space
located in a Casino Operation, including, without limitation, all receipts,
revenues and income derived from: guest rooms, food and beverage operations,
bar and lounge operations; gross revenues from casino operations less sums paid
out as winnings (“Gaming Revenues”); meeting room facilities, space
rentals to stores and other tenants; proceeds from any “business interruption”
or “use and occupancy” policy of insurance; and any amount recovered in any
legal action or proceeding or settlement thereof which arose out of the
operation of a Casino Operation, which amount under GAAP, is properly included
as an income item. All of the foregoing shall be calculated on an accrual basis,
whether in cash or in credit. The following revenues are excluded from the
definition of Gross Revenues:

 

(i)                                     All taxes collected as direct
taxes from guests or patrons of a Casino Operation or in respect of any
business conducted in a Casino Operation to be paid to duly constituted taxing
authorities having jurisdiction, such as local gaming taxes, or withholding
taxes assessed against gaming patrons’ winnings, if applicable, sales taxes, or
“bed” taxes;

 

(ii)                                  Tips and service charges
collected for payment to employees; and

 

(iii)                               Proceeds of sales of property,
real and personal, other than sales in the ordinary course of a Casino
Operation’s business.

 

3.5.6                        Operating Expenses

 

“Operating Expenses” means all
operating expenses related to a Casino Operation for the applicable Fiscal Year
determined in accordance with GAAP, including, without limitation, Employment
Costs (as hereinafter defined), employer’s liability and similar operating
insurance premiums, License fees, professionals’ fees pertaining to operational
matters (excluding the Management Fee), and all real estate and personal
property taxes and assessments. The following shall be excluded from the
definition of Operating Expenses: debt service, if any; operating lease
payments or finance or carrying charges for FF&E; depreciation; and the
interest on monies borrowed by Owner.

 

3.5.7                        Person

 

“Person” means any natural person,
corporation, limited liability company, general partnership, limited
partnership, proprietorship, other business organization, trust, union or
association

 

4.                                       ASSIGNMENT,
TRANSFER, CHANGE OF CONTROL

 

4.1                                 By Manager

 

Manager shall have the right to assign this
Agreement to an Affiliate (as defined in Section 3.5.1) in which each of
William Paulos and William Wortman holds an equity ownership interest no less
than that held by him in Manager immediately prior to such assignment at any
time, provided such Affiliate assumes the obligations of Manager set forth
herein, but Manager shall have no other rights to assign this Agreement without
the prior written consent of the Oaktree Managers.

 

11

 

During the term of this Agreement, neither
William Paulos nor William Wortman may directly or indirectly transfer
(including by sale, pledge, hypothecation or other disposition) any equity in
Manager (or any permitted assignee of Manager) such that they in the aggregate would
no longer directly hold more than 50% of the total equity of, and more than 50%
of the total voting power in, Manager (or any permitted assignee of Manager).

 

4.2                                 By Owner or CCR

 

CCR and the Owners shall have no right to
assign this Agreement without the prior written consent of Manager.

 

4.3                                 Termination Upon a Change of
Control

 

Unless CCR and Manager agree otherwise in
writing, this Agreement shall terminate with respect to a Casino Operation in
the event of a Change of Control (as defined below) of the corresponding Owner,
or in the Agreement’s entirety in the event of a Change of Control of CCR.

 

A “Change of Control” means, with
respect to an Owner or CCR:

 

(a)                                  with respect to CCR only, either
OCM AcquisitionCo, LLC or Millennium Gaming, Inc. acquires 100% equity
ownership of CCR pursuant to Section 11.3 of the Operating Agreement, or
all or substantially all of the assets of CCR;

 

(b)                                 with respect to either such Owner
or CCR, a Person other than OCM AcquisitionCo, LLC or Millennium Gaming, Inc.
(together with any Affiliates of such Person or Persons otherwise associated
with such Person) or a “group” within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, including the rules and
regulations promulgated thereunder, becomes, after the Effective Date, the
beneficial owner (as defined under Rule 13d-3 of the Securities Exchange
Act), directly or indirectly, of equity of such Owner or CCR, as the case may be,
entitling such Person or group to exercise, directly or indirectly, more than 50%
or the total voting power of all classes of equity of such Owner or CCR, as the
case may be;

 

(c)                                  with respect to either such Owner
or CCR, the consummation of a reorganization, merger or consolidation of such Owner
or CCR, as the case may be, with one or more other Persons which results
in CCR or the members of CCR before such reorganization, merger or consolidation,
as the case may be, not having more than 50% of the total voting power of
all classes of equity of the surviving Person or Persons after such
reorganization, merger or consolidation;

 

(d)                                 with respect to either such Owner
or CCR, a sale, transfer or other disposition of all or substantially all of
the assets of such Owner or CCR, as the case may be; and

 

(e)                                  with respect to either such Owner
or CCR, a dissolution or liquidation of such Owner or CCR, as the case may be.

 

12

 

5.                                       AUDIT
RIGHTS

 

The Oaktree Managers, on behalf of CCR, may audit
the books of account and other records relating to or reflecting the results of
operations of any Casino Operation kept by Manager pursuant to Exhibit A Part I.
The Oaktree Managers may make such audit for the purpose of verifying the
accuracy of the financial statements provided by Manager pursuant to Exhibit A
Part G and the accuracy of costs, fees and expenses (including Management
Fees) incurred, and reimbursements paid to Manager, with respect to any Casino
Operation. The Oaktree Managers may exercise their right to audit such
books and records by notice to Manager no less than thirty (30) days prior to
the date the Oaktree Managers intend to commence their audit, and the Oaktree
Managers shall pay all fees, costs and expenses associated with such audit;
provided, however, that if such audit reveals that the actual costs, fees and
expenses (including Management Fees) for a Casino Operation for a reporting
period in any financial statement provided by Manager exceeds the costs, fees
and expenses (including Management Fees) reported in such financial statement
by more than 5%, then Manager shall pay all fees, costs and expenses associated
with such audit. Such audit shall be conducted by independent certified public
accountants selected by the Oaktree Managers, and in such a manner so as not to
disrupt unreasonably Manager’s duties to provide Management Services under this
Agreement. Any such audit shall be conducted only during normal business hours
and at the place where the books and records to be examined are normally kept.

 

6.                                       DAMAGE
AND DESTRUCTION

 

If one or more Casino Operation or any
portion thereof shall be damaged or destroyed at any time during the term with
respect to such Casino Operation by fire, casualty or other cause to such an
extent that it would be either impossible or impracticable, in the applicable Owner’s
sole discretion, to repair such Casino Operation or to continue to operate such
Casino Operation as a first-class gaming property as required by any lease
or sublease under which such Casino Operation operates or, if there is no such
requirement, consistent with the market in which such Casino Operation
competes, then the applicable Owner may terminate this Agreement by giving
written notice of termination to Manager, whereupon this Agreement as same
applies to the specified Casino Operation shall be terminated and of no further
force and effect with respect to the rights, duties and obligations with
respect to the specified Casino Operation, except with respect to the duties,
liabilities and obligations of the Parties which arose or accrued prior to
termination and continue to exist, or have cause to exist, post-termination. Otherwise,
this Agreement shall remain in full force and effect, and the applicable Owner
shall promptly rebuild such Casino Operation as a first-class gaming
property as required by any lease or sublease under which such Casino Operation
operates or, if there is no such requirement, consistent with the market in
which such Casino Operation competes at its sole cost and expense; provided,
that, no Management Fees relating to such Casino Operation (other than, if such
Casino Operation is the Cannery Operation or Rampart Operation, 50% of the
Management Fee set forth in Section 3.1(a)(i) or (ii), respectively,
so long as Manager is providing full and complete Development Services to such
Casino Operation) shall accrue or be payable by either CCR or the applicable
Owner from the time of such damage or destruction until the new Opening Date of
such Casino Operation. Notwithstanding anything to the contrary pursuant to
this Agreement, this Agreement shall continue in full force and effect with
respect to all Casino Operations not affected by such damage or destruction.

 

13

 

7.                                       CONDEMNATION

 

If the entirety of one or more of the Casino
Operations shall be taken in eminent domain or condemnation proceedings, or the
equivalent thereto, or if any portion of the Casino Operation shall be taken in
eminent domain or condemnation proceedings, or the equivalent thereto, to such
an extent that in the sole discretion of the applicable Owner, it is impossible
or impracticable to continue to operate the Casino Operation, then, in either
of such events, the applicable Owner shall have the right to terminate this
Agreement by giving written notice of such termination to Manager and upon the
giving of such notice, this Agreement shall be terminated and of no further
force and effect with respect to the rights, duties and obligations with
respect to the specified Casino Operation, except with respect to the duties,
liabilities and obligations of the Parties which arose or accrued prior to
termination and continue to exist, or have caused to exist, post-termination. In
the event of termination under this Section 7, such termination shall be
effective upon the date of the applicable taking. The provisions of this Section 7
with respect to termination shall be applicable if the applicable Owner makes a
conveyance in lieu of condemnation, in which event the day of the execution and
delivery of such conveyance shall be the date of termination. If this Agreement
is not terminated in accordance with the terms of this Section 7, then
this Agreement shall remain in full force and effect and Owner shall promptly
rebuild or restore the Casino Operation as a first-class gaming property as
required by any lease or sublease under which such Casino Operation operates
or, if there is no such requirement, consistent with the market in which such
Casino Operation competes at its sole cost and expense; provided, that, no
Management Fees relating to such Casino Operation (other than, if such Casino
Operation is the Cannery Operation or Rampart Operation, 50% of the
Management Fee set forth in Section 3.1(a)(i) or (ii), respectively,
so long as Manager is providing full and complete Development Services to such
Casino Operation) shall accrue or be payable by either CCR or the applicable
Owner from the time of such taking until the new Opening Date of such Casino
Operation.

 

8.                                       NON-DISTURBANCE

 

Each Owner hereby covenants and agrees, and
it is the essence of this Agreement and as an inducement to execution, that
Manager, subject to the terms and conditions of this Agreement and the
Operating Agreement, shall have uninterrupted control of and the exclusive
responsibility for the operation of and the right to operate and manage each Casino
Operation during the term. Except as set forth in this Agreement or the
Operating Agreement, no Owner will interfere or involve itself with the
day-to-day operation of any Casino Operation. Each Owner further agrees to take
such action as is from time-to-time necessary to preserve such rights in
Manager for the term. Manager acknowledges that it is a fiduciary with respect
to each Owner, and agrees that it will discharge its fiduciary duties and
responsibilities in the control and operation of each Casino Operation in good
faith, using all commercially reasonable efforts and for the purposes of
maximizing the total enterprise value of CCR as a whole; provided, however,
that in no event shall any Owner make any claim against Manager on account of
any alleged errors of judgment made in good faith and using all commercially
reasonable efforts in connection with operation of any Casino Operation, unless
such error results from the gross negligence, wanton or willful misconduct or
recklessness of Manager.

 

14

 

9.                                       DEFAULT

 

9.1                                 Default By Manager

 

The following events shall be deemed to be “Events
of Default” by Manager under this Agreement:

 

9.1.1                        Non-Compliance with Terms

 

Manager shall fail to comply, in any respect
material to CCR and the Owners in the aggregate, with any of the material terms,
conditions, provisions or covenants of this Agreement to be complied with or
performed by Manager and Manager shall not cure such failure within thirty (30)
days after written notice thereof given by the Oaktree Managers or the applicable
Owner to Manager, or, if such failure is not reasonably susceptible of being
cured within said thirty (30) day period, if Manager shall fail to commence to
cure such failure within said thirty (30) day period, or having commenced,
shall thereafter fail to complete the curing of such failure with reasonable
diligence and, in any event, within ninety (90) days after written notice
thereof has been given by the Oaktree Managers or the applicable Owner to
Manager.

 

9.1.2                        Insolvency

 

Manager shall become insolvent, shall make a
transfer in fraud of its creditors, or shall make an assignment for the benefit
of creditors.

 

9.1.3                        Bankruptcy Filing

 

Manager shall file a petition under any section or
chapter of the United States Bankruptcy Code, as amended, or under any similar
law or statute of any governmental authority, or if Manager shall be adjudged
bankrupt or insolvent in proceedings filed against Manager thereunder.

 

9.1.4                        Appointment of Receiver

 

A receiver or trustee shall be appointed for
Manager or for all or substantially all of the assets of Manager, and such
appointment is not vacated or otherwise caused to be set aside within ninety
(90) days from the occurrence thereof.

 

9.1.5                        Loss of License

 

Manager’s Gaming License to operate a Casino Operation
shall at any time be suspended for any reason by the Gaming Authorities and
Manager shall fail to cure such suspension within thirty (30) days from such
suspension or such other period as the Gaming Authorities shall provide, or
Manager or any holder of any equity interest in Manager shall be temporarily or
permanently prohibited from deriving any benefit from the operations of a
Casino Operation as a direct result of the investigation or Gaming License
process by the Gaming Authorities and Manager shall fail to cure such
prohibition within thirty (30) days thereafter.

 

15

 

9.2                                 Default by Owner

 

The following events shall be deemed to be
Events of Default by an Owner under this Agreement:

 

9.2.1                        Failure to Fund

 

Any Owner shall fail to provide sufficient
funds in the operating account established with respect to such Owner’s Casino
Operation to pay all of the current expenses, fees, bills or other charges in
connection with such Casino Operation, or to maintain the required working
capital deposits or Reserves (as hereinafter defined) as required herein, in
each case as set forth in this Agreement and consistent with the applicable
Budgets or other funding approved by Manager and the Oaktree Managers, within ten
(10) days after receiving written request therefor by Manager.

 

9.2.2                        Non-Compliance with Terms

 

Any Owner shall fail to comply, in any
material respect, with any of the material terms, conditions, provisions or
covenants of this Agreement to be complied with or performed by such Owner, and
such Owner shall not cure such failure within thirty (30) days after written
notice thereof given by Manager to such Owner, or, if such failure is not
susceptible of being cured within said thirty (30) day period, if such Owner
shall fail to commence to cure such failure within said thirty (30) day period,
or, having commenced, shall thereafter fail to complete the curing of such
failure with reasonable diligence and, in any event, within ninety (90) days
after written notice thereof has been given by Manager to such Owner.

 

9.2.3                        Insolvency

 

An Owner shall become insolvent, shall make a
transfer in fraud of its creditors, or shall make an assignment for the benefit
of its creditors.

 

9.2.4                        Bankruptcy Filing

 

An Owner shall file a petition under any section or
chapter of the United States Bankruptcy Code, as amended, or under any similar
law or statute of any governmental authority, or if an Owner shall be adjudged
bankrupt or insolvent in proceedings filed against such Owner thereunder.

 

9.2.5                        Appointment of Receiver

 

A receiver or trustee shall be appointed for an
Owner or for all or substantially all of the assets of an Owner and such
appointment is not vacated or otherwise caused to be set aside within ninety (90)
days from the occurrence thereof.

 

9.2.6                        Loss of License

 

An Owner’s Gaming License to own or operate such
Owner’s Casino Operation shall at any time be suspended for any reason by the
Gaming Authorities and such Owner shall fail to cure such suspension within
thirty (30) days from such suspension or such other period as the Gaming
Authorities shall provide, or an Owner or any holder of any equity interest in an
Owner

 

16

 

shall be temporarily or permanently
prohibited from deriving any benefit from the operations of the Casino
Operation as a direct result of the investigation or Gaming License process by
the Gaming Authorities and such Owner shall fail to cure such prohibition
within thirty (30) days thereafter.

 

9.3                                 Remedies for Default

 

Upon an Event of Default, Oaktree Managers
(in the case of an Event of Default by Manager under Section 9.1 above),
on behalf of CCR, or Manager (in the case of an Event of Default by an Owner
under Section 9.2 above) shall have the right to terminate this Agreement
without any prior notice to the defaulting Party, and to enforce this Agreement
and further, shall have such other rights and remedies on account of such
default, both at law and in equity (including the right to seek injunctive
relief without the posting of a bond which bond requirement, if applicable, is
hereby waived) as is provided, established or allowable under applicable law.

 

9.4                                 Automatic Termination

 

Upon the transfer of any Casino Operation at
a trustee sale or other foreclosure proceeding by or on behalf of any lender,
this Agreement shall automatically and immediately terminate with respect to
such Casino Operation and Manager shall have all remedies for default as set
forth in Section 9.3 herein but only with respect to such Casino Operation.

 

10.                                 MANAGEMENT
STANDARDS

 

Manager shall exclusively manage and maintain
the Operations in a manner utilizing standards and procedures which are
comparable to the management of a first-class gaming property as required
by any lease or sublease under which such Casino Operation operates or, if
there is no such requirement, consistent with the market in which such Casino
Operation competes, subject to such adjustments as Manager in its reasonable
discretion deems necessary. Manager shall establish such standards and
procedures in its reasonable discretion, subject to standards and procedures
required by law. Notwithstanding the foregoing, with respect to a Casino
Operation, Manager shall comply with the terms, conditions, provisions and
covenants under any lease or sublease under which such Casino Operation
operates (including, with respect to the Rampart Operation, the Rampart Sublease).

 

11.                                 COOPERATION
OF OWNER AND MANAGER

 

The Parties hereto shall cooperate fully with
each other during the term to facilitate the performance by the Parties of the
Parties’ obligations and responsibilities set forth in this Agreement. Owner
shall provide Manager with such information pertaining to such Owner’s Casino
Operation necessary to the performance by Manager of its obligations hereunder and
as may be reasonably and specifically requested by Manager from time to
time.

 

17

 

12.                                 INDEMNIFICATION

 

12.1                           Manager’s Indemnification

 

Except as otherwise set forth herein, Manager
covenants and agrees that it will protect, keep and defend each Owner forever harmless
and indemnified against and from any penalty or damage or charges imposed for
any violation of any laws or ordinances, including, without limitation, Gaming
Laws, occasioned by the gross negligence, wanton or willful misconduct or
recklessness of Manager or those holding under Manager, and that Manager will
at all times protect, indemnify, defend and save and keep each Owner harmless
against and from any and all claims and against and from any and all loss,
cost, damage or expense, including reasonable attorneys’ fees, arising out of
any gross negligence, wanton or willful misconduct or recklessness of Manager
in any respect to comply with and perform all the requirements and
provisions hereof; except to the extent that any penalty, damage, charge, loss,
cost or expense is caused by the gross negligence, wanton or willful misconduct
or recklessness of any Owner or its members, managers, officers, employees, or
agents. Without limiting the generality of the foregoing, and with the
inclusion of the same exceptions as set forth above, Manager covenants and
agrees that it will protect, keep and defend each Owner forever harmless and
indemnified against any and all debt, claim, demand, suit or obligation of
every kind, character and description that may be asserted, claimed, filed
or brought against any Owner where such claim arises out of or is asserted in
connection with any Management Services, including, without limitation, any
claim by any subtenant, guest, licensee or invitee of Manager. This indemnity
does not apply to loss or damage occasioned by defects in the Casino Operation.
Nothing in this Section 12 shall override the right of Manager to employ
counsel as an Operating Expense and assert defenses as set forth in Exhibit A.
Notwithstanding the foregoing, this indemnity does not apply to any claim,
loss, cost, damage, expense, penalty or obligation in the event such claim,
loss, cost, damage, expense, penalty or obligation is within the scope of or is
the subject of one or more policies of insurance obtained by Manager or any Owner.
Under no circumstances shall the liability of Manager for indemnification
hereunder exceed the amount of One Million Dollars ($1,000,000) per Casino
Operation. The foregoing indemnity shall survive the termination of this
Agreement.

 

12.2                           Owner’s Indemnification

 

Except as otherwise set forth herein, each Owner
covenants and agrees to protect, keep and defend Manager forever harmless and
indemnified against and from any penalty or damage or charges imposed for any
violation of any laws or ordinances, including, without limitation, Gaming
Laws, occasioned by the gross negligence, wanton or willful misconduct or
recklessness of such Owner or those holding under such Owner, and that such Owner
will at all times protect, indemnify, defend and save and keep Manager harmless
against and from any and all claims and against and from any and all loss,
cost, damage or expense, including reasonable attorneys’ fees, arising out of
any gross negligence, wanton or willful misconduct or recklessness of such Owner
in any respect to comply with and perform all of the requirements and
provisions hereof; except to the extent that any penalty, damage, charge, loss,
cost or expense is caused by the gross negligence, wanton or willful misconduct
or recklessness of Manager or its members, managers, officers, employees or
agents. Without limiting the generality of the foregoing, and with the
inclusion of the same exceptions as set forth above, such Owner covenants and
agrees that it will protect, keep and defend Manager forever harmless and
indemnified against any and all debt, claim, demand, suit or obligation of
every kind, character and description that may be asserted, claimed, filed
or brought against Manager where such claim arises out of or is asserted in
connection with such Owner’s ownership of the Casino Operation or the real
property, improvements or structures within which or on which the Casino
Operation are situated.

 

18

 

Notwithstanding the foregoing, this indemnity
does not apply to loss or damage occasioned by defects in the Casino Operation,
and this indemnity does not apply to any claim, loss, cost, damage, expense,
penalty or obligation in the event such claim, loss, cost, damage, expense,
penalty or obligation is within the scope of or is the subject of one or more
policies of insurance obtained by Manager or any Owner. Under no circumstances
shall the liability of an Owner for indemnification hereunder exceed the amount
of One Million Dollars ($1,000,000) per Casino Operation. The foregoing
indemnity shall survive the termination of this Agreement.

 

12.3                           Defense Counsel

 

Defense counsel engaged by Manager or any Owner,
as indemnitor, shall be reasonably acceptable to Manager and such Owner, as
indemnitee. 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.

 

13.                                 CONFIDENTIAL
INFORMATION

 

13.1                           Except as required to perform Manager’s
duties pursuant to this Agreement and except as otherwise provided herein, Manager
agrees to hold, and Manager shall use its best efforts to cause its Affiliates,
agents, representatives and consultants to hold, the Company Confidential
Information (as hereinafter defined) in the strictest confidence and not to
disclose the Company Confidential Information to any Person, entity, party,
firm or corporation (other than agents or representatives of Manager), without
the prior express written consent of the Oaktree Managers (except as such
disclosures are required by applicable federal or state securities laws, Gaming
Laws, Gaming Authorities or under order of a court of competent jurisdiction or
as such disclosure is requested pursuant to oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process). In addition, Manager agrees that it shall cause all Company Confidential
Information in tangible form (whether contained in documents, drawings,
plans or other materials) to be returned to CCR and the Owners upon the
termination of this Agreement. Manager hereby agrees and acknowledges that CCR
and the Owners shall have sole and exclusive right, title, interest and
ownership to Company Confidential Information. This Section 13.1 shall
survive the termination of this Agreement.

 

13.2                           Except as required to perform their
obligations pursuant to this Agreement and except as otherwise provided herein,
CCR and each Owner agrees (and CCR hereby agrees on behalf of any and each
Eligible NewCo) to hold, and CCR and each Owner shall use its best efforts to
cause (and CCR shall use its best efforts to cause any and each Eligible NewCo
to cause) its respective Affiliates, agents, representatives and consultants to
hold, the Manager Confidential Information (as hereinafter defined) in the
strictest confidence and not to disclose the Manager Confidential Information to
any Person, entity, party, firm or corporation (other than agents or
representatives of CCR or such Owner), without the prior express written
consent

 

19

 

of Manager (except as such disclosures are
required in applications or by applicable federal or state securities laws,
Gaming Laws, Gaming Authority or under order of a court of competent
jurisdiction or as such disclosure is requested pursuant to oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process). In addition, CCR and each Owner
agrees that it shall cause all Manager Confidential Information in tangible form (whether
contained in documents, drawings, plans or other materials) to be returned to
Manager upon the termination of this Agreement. CCR and each Owner hereby
agrees and acknowledges (and CCR hereby agrees and acknowledges on behalf of
any and each Eligible NewCo) that Manager has sole and exclusive right, title,
interest and ownership to Manager Confidential Information. This Section 13.2
shall survive the termination of this Agreement.

 

13.3                           “Company Confidential
Information” shall mean, other than Manager Confidential Information, all
information or data relating to CCR’s or any Owner’s finances or operations,
including, without limitation, all of the Intellectual Property (as defined in
the CUPA) used by CCR or any Owner in the conduct of its business, and all client
and customer lists and databases related to CCR or any Owner, as well as CCR’s
or any Owner’s ideas, inventions, creations, designs, plans, logos, diagrams,
motifs, works of authorship, works of visual art, business documents, contracts,
databases, and research and development information and data.

 

13.4                           “Manager Confidential
Information” shall mean all information or data relating to Manager’s finances
or know-how in managing casinos, including, without limitation, all research
and development information or data relating to player compensation
methodologies.

 

13.5                           In no event shall “Company
Confidential Information” or “Manager Confidential Information” include any information
or data that is:  (a) generally
publicly known, (b) learned from third parties or persons with a legal
right to disclose such information to the recipient, or (c) independently
created by the recipient through efforts in no manner associated with or
arising from any disclosure made by the other Party.

 

14.                                 HAZARDOUS
MATERIALS

 

“Hazardous Materials,” as used in this
Agreement, shall mean any substance or material 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 any Casino Operation or
the land upon which any Casino Operation is situated (if owned by CCR or any
Owner), or the structures or improvements (if owned by CCR or any Owner) within
which any Casino Operation is operated (collectively, the “Property”).

 

With respect to the Property of any Eligible
NewCo, the applicable Owner represents and warrants after inquiry and
investigation that: (i) any handling, removing, transportation, storage,
treatment or usage of Hazardous Materials or toxic substances that has occurred
in connection with the Property has been in compliance with all applicable
federal, state and local laws, regulations and ordinances; (ii) no leak,
spill, release, discharge, emission or disposal of Hazardous Materials or toxic
substances has occurred in connection with the Property; and

 

20

 

(iii) the Property is free of asbestos, toxic
or Hazardous Materials as of the date that the term of this Agreement commences
with respect to the Casino Operation of such Eligible NewCo.

 

Each Owner agrees to comply with all federal,
state and local environmental and real estate laws, including the Americans
With Disabilities Act, relating to such Owner’s ownership of such Owner’s
Casino Operations. Manager agrees to comply with all federal, state and local
environmental and real estate laws, including the Americans With Disabilities
Act, relating to Manager’s management and operation of the Casino Operations. All
expenses incurred in such compliance shall be Operating Expenses.

 

Without limiting the provisions of Section 13.2,
each Owner expressly agrees to indemnify, defend and hold Manager and its
managers, members, 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 reasonably selected
by Manager), which arise during or after the term as a result of any breach of such
Owner’s representation and warranty contained in this Section 14 or as a
result of such Owner’s failure to perform its covenant contained in this Section 14.
Without limiting the generality of the foregoing, the indemnification provided
by this Section 14 shall specifically cover costs 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 Property, or the soil,
groundwater or soil vapor on or under the Property, except to the extent the
Hazardous Materials are present as a result of the actions of Manager, its
managers, members, employees or agents. The foregoing indemnity shall survive
the termination of this Agreement.

 

Without limiting the provisions of Section 13.1,
Manager expressly agrees to indemnify, defend and hold each Owner and its
managers, members, 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 reasonably selected
by Owner), which arise during or after the term as a result of any breach of
Manager’s representation and warranty contained in this Section 14. Without
limiting the generality of the foregoing, the indemnification provided by this Section 14
shall specifically cover costs 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 Property, or the soil, groundwater or soil vapor on
or under the Property, except to the extent the Hazardous Materials are present
as a result of the actions of such Owner, its members, managers, employees or
agents. The foregoing indemnity shall survive the termination of this
Agreement.

 

15.                                 ESTOPPEL
CERTIFICATES

 

Owner and Manager shall, at any time and from
time-to-time upon not less than ten (10) days prior written request by the
other, execute, acknowledge and deliver a statement in writing certifying that:

 

21

 

(i)                                     This Agreement is unmodified and
in full force and effect (or, if modified, that the same is in full force and
effect, as modified, stating the modifications);

 

(ii)                                  The date to which payments have
been made under this Agreement; and

 

(iii)                               To the knowledge of each Owner
or Manager, as the case may be, no Event of Default hereunder on the part of
any other Party exists (except that if any such Event of Default does exist,
the certifying Party shall specify such Event of Default), it being intended
that any such statements delivered pursuant to this Section 15 may be
relied upon by any prospective purchaser, assignee, or mortgagee of any Owner’s
interest in such Owner’s Casino Operations, or of any Party’s interest in this
Agreement.

 

16.                                 NOTICES

 

All notices, offers or other communications
required or permitted to be given pursuant to this Agreement (including the Exhibit hereto),
including, without limitation, financial statements and cash reports delivered
pursuant to Exhibit A, shall be in writing and shall be considered as
properly given or made: (i) upon the date of personal delivery (if notice
is delivered by personal delivery); (ii) upon the date of delivery, as
confirmed electronically (if notice is delivered by facsimile transmission); (iii) upon
the date which is one (1) business day after deposit with a nationally
recognized overnight courier service (if notice is delivered by a nationally
recognized overnight courier service); or (iv) upon the date which is
three (3) business days after deposit with the U.S. Postal Service,
postage prepaid certified mail, return receipt requested (if notice is given in
such manner), and in any case addressed to the Parties at the addresses set
forth after their respective names below, or at such difference addresses as
they shall have advised the other in writing in accordance herewith.

 

	
  TO CCR (or its

  	
   

  
	
  MANAGEMENT

  	
   

  
	
  COMMITTEE) or

  	
   

  
	
  ANY OWNER:

  	
  211 North Rampart Boulevard

  
	
   

  	
  Las Vegas, Nevada 89145

  
	
   

  	
  Attn:

  	
  William Paulos

  
	
   

  	
  Attn:

  	
  William Wortman

  
	
   

  	
  Fax:

  	
  (702) 507-5992

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Michael E. Kearney

  
	
   

  	
  Santoro, Driggs, Walch, Kearney, Johnson &
  Thompson

  
	
   

  	
  400 South Fourth Street, Suite 300

  
	
   

  	
  Las Vegas, Nevada 89101

  
	
   

  	
  Fax:

  	
  (702) 791-1912

  
	
   

  	
   

  
	
   

  	
  and

  

 

22

 

	
   

  	
  [Person to be designated by Oaktree]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  [Person to be designated by Oaktree]

  
	
   

  	
   

  
	
   

  	
   

  
	
  TO OAKTREE

  	
   

  
	
  MANAGERS:

  	
  [Person to be designated by Oaktree]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  [Person to be designated by Oaktree]

  
	
   

  	
   

  
	
   

  	
   

  
	
  TO MANAGER:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

17.                                 APPROVAL

 

In any instance where the approval or consent
of CCR, an Oaktree Manager, an Owner or Manager is required or permitted
hereunder, such approval or consent shall be in writing and such consent or
approval except as may otherwise be specified in this Agreement, shall not
be unreasonably withheld or delayed.

 

18.                                 RELATIONSHIP
OF PARTIES

 

Nothing set forth in this Agreement shall
constitute, or be construed to be or to create, a partnership, joint venture or
agency relationship between CCR or any Owner, on the one hand, and Manager, on
the other, with respect to the management of the Casino Operations.

 

19.                                 NO
WAIVER

 

No waiver of any covenant, term or condition
of this Agreement by any Party shall be construed as a waiver of a subsequent
breach of the same covenant, term or condition. The consent or approval by any
Party to or of any act by any other Party requiring such consent or approval
shall not be deemed to waive or render unnecessary, consent to or approval of
any subsequent similar act.

 

23

 

20.                                 CHOICE
OF LAW AND FORUM

 

This Agreement shall be governed and
construed in accordance with the laws of the State of Nevada, regardless of the
places of its negotiation or execution and without regard to principles of
conflicts of law.

 

Subject to Section 29 below, the parties
hereto irrevocably agree that all actions shall be instituted in the federal or
state courts sitting in Reno, Nevada, and each party to this Agreement
irrevocably submits to the non-exclusive jurisdiction of and venue in the
courts of the State of Nevada and of the United States sitting in the City of Reno,
Nevada, in connection with any such proceeding, and waives any objection based
on forum non conveniens.

 

Subject to Section 29 below, each of the
Parties submits to the exercise of personal jurisdiction over them in the State
of Nevada in connection with any action or proceeding brought by any Party
relating to, arising from, or based on this Agreement, and each of the Parties
waives any objection to the exercise of personal jurisdiction over each of them
in connection with any such action or proceeding.

 

If any Party shall institute legal
proceedings against any other Party based on a cause of action or arising from
this Agreement, the non-prevailing Party in such proceeding shall pay the costs
and expenses incurred by the prevailing Party in such proceedings including
reasonable attorneys’ fees and any and all costs and fees incurred on appeal of
any lower court decision.

 

21.                                 ENTIRE
AGREEMENT; MODIFICATION

 

No employee, agent or representative of any
Party has the authority to bind any other Party to any oral additions,
modifications, representations or warranties concerning this Agreement. This
Agreement contains the entire agreement among the Parties with respect to its
subject matter, and no agreement shall be effective to change, modify or
terminate this Agreement in whole or in part, unless such agreement is in
writing and duly signed by the authorized representative of the Party against
whom enforcement of such change, modification or termination is sought. This
Agreement shall not be construed more strictly against one Party than against any
other Party merely by virtue of the fact that this Agreement may have been
physically prepared by one of the Parties, or such Party’s counsel, it being
agreed that all Parties and their respective counsel have mutually participated
in the negotiation and preparation of this Agreement.

 

22.                                 SURVIVAL
AND CONTINUATION

 

Notwithstanding the termination of this
Agreement, all terms, provisions and obligations of any Party contained herein
which in order to give them effect and to accomplish their intent or purpose,
need to survive such termination shall, by agreement among the Parties, survive
and continue until they have been fully satisfied or performed.

 

24

 

23.                                 DESCRIPTIVE
HEADINGS

 

The descriptive headings set forth in this
Agreement are inserted for convenience and for reference only and do not in any
way limit or amplify the terms and provisions of this Agreement.

 

24.                                 SUCCESSORS
AND ASSIGNS

 

The terms, provisions and covenants contained
in this Agreement shall apply to, inure to the benefit of, and be binding upon,
the Parties hereto and their respective successors and permitted assigns;
except as otherwise provided in this Agreement.

 

25.                                 FORCE
MAJEURE

 

The terms and condition of this Agreement
(with the exception of the obligation of Owner to pay any fee, cost or expense
or to transfer any funds or fund any Reserve or working capital reserve or fund
the amounts required by the terms of this Agreement or with regard to matters
pertaining to an approved assignment of this Management Agreement; provided,
that, no Owner shall be obligated to pay any Management Fee to the extent
Management Services relating to such Management Fee have been suspended) shall
be subject to force majeure. Neither Owner nor Manager shall be considered in
default in the performance of its obligation hereunder, if such performance is
prevented or delayed because of war, hostilities, revolution, civil commotion,
strike, lock-out, epidemic, fire, earthquake, wind, flood, or because of any
law, order, proclamation, regulation, or ordinance of any governmental
authority, or because of any act of God or any other cause whether of similar or
dissimilar nature beyond the reasonable control of the Party affected.

 

26.                                 AUTHORIZATION

 

Each of the Parties hereto represents to the
other Parties hereto that it has full power and authority to execute this
Agreement and to be bound by and shall perform in accordance with the
terms hereof. On request, each Party shall furnish to the other evidence of
such authority.

 

27.                                 COUNTERPARTS

 

Any number of counterparts of this Agreement may be
executed and delivered and each shall be considered an original and together
they shall constitute one agreement.

 

28.                                 SEVERABILITY

 

If any of the provisions of this Agreement or
its application shall be held by any court, regulatory agency, or other
governmental authority having competent jurisdiction over this Agreement, to be
invalid, illegal, or unenforceable in any respect, the Parties shall forthwith
cure such invalidity to the extent permitted by law, and notwithstanding the
fact that such provisions may be held to be of no force and effect, the
validity, legality, and enforceability of the remaining provisions contained
herein and any other application thereof shall not in any way be affected or
impaired thereby. If any such provision or portion thereof is declared invalid,
illegal, or unenforceable, the Parties to this agreement intend that, in lieu
of the invalid, illegal, or

 

25

 

unenforceable provision or portion thereof,
there be added to this agreement a provision or portion thereof as similar in
substance to such invalid, illegal, or unenforceable provision or portion
thereof as may be possible so as to accomplish the purposes of such
invalid, illegal, or unenforceable provision or portion thereof.

 

29.                                 ARBITRATION

 

Except as otherwise expressly provided
herein, any dispute, claim or controversy arising out of or relating to this
Agreement or the transactions contemplated hereby shall be submitted for
resolution by arbitration in Los Angeles, California, or such other location as
the parties may agree to, before a sole arbitrator, in accordance with the
laws of the State of Nevada applicable to agreements made and to be
performed entirely therein. The arbitration shall be administered by JAMS
pursuant to its Comprehensive Streamlined Arbitration Rules &
Procedures, and the parties agree that the arbitrator may impose sanctions
in their discretion to enforce compliance with discovery and other obligations.
The arbitrator’s decision shall be final and binding upon the parties, and may be
entered and enforced in any court of competent jurisdiction by either of the
parties. The arbitrator shall have the power to grant temporary, preliminary
and permanent relief, including without limitation injunctive relief and
specific performance. Unless otherwise ordered by the arbitrator, the
arbitrator’s expenses shall be shared equally by the parties.

 

30.                                 SUBORDINATION

 

Unless and until all secured debt of CCR or
any Owner as in effect on the Effective Date or thereafter, and any and all
renewals, modifications, consolidations, replacements and extensions of any
such secured debt (collectively, the “Senior Indebtedness”) has been
paid and satisfied in full, Manager shall not accept or receive from CCR or any
Owner any Management Fees (or any other payments, premiums or other amounts,
which may now or hereafter be owing to Manager by CCR or any Owner,
including, without limitation, any receiver, trustee or debtor in possession,
under or in connection with this Agreement, whether such sums represent
management fees, reimbursements of costs or expenses, attorneys’ fees, charges,
or other obligations due or not due, whether incurred directly or indirectly
and whether absolute or contingent) (all such indebtedness, obligations and
liabilities shall collectively hereinafter be referred to as the “Subordinated
Indebtedness”); provided, however, unless and until an event
of default under the documents and instruments evidencing the Senior
Indebtedness has occurred, Manager may receive from CCR or any Owner such
payments as are permitted to be paid under this Agreement, in the amounts and
at the times specified herein, but in no event shall CCR or any Owner pay, and
Subordinated Creditor shall in no event receive or accept, any prepayments of
such amounts. This Section 30 shall be self-operative and no further
instrument of subordination shall be required to make any Senior Indebtedness
superior to the interest of Manager (as provided herein). Notwithstanding the
foregoing, Manager shall execute and deliver promptly any certificate or
agreement that any lender of, or administrative agent with respect to, the
Senior Indebtedness may reasonably request in confirmation of such
subordination.

 

[signature
page follows]

 

26

 

IN WITNESS WHEREOF, each Party hereunto set its
hands effective as of the day and year first above written.

 

	
   

  	
  CANNERY:

  
	
   

  	
   

  
	
   

  	
  The Cannery Casino and Hotel, LLC,

  
	
   

  	
  a Nevada limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Cannery Casino Resorts, LLC,

  
	
   

  	
   

  	
  a Nevada limited liability company,

  
	
   

  	
  Title:

  	
  sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  William C.
  Wortman

  
	
   

  	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  William J.
  Paulos

  
	
   

  	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  RAMPART:

  
	
   

  	
   

  
	
   

  	
  Rampart Resort Management, LLC,

  
	
   

  	
  a Nevada limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Cannery Casino Resorts, LLC,

  
	
   

  	
   

  	
  a Nevada limited liability company,

  
	
   

  	
  Title:

  	
  sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  William C.
  Wortman

  
	
   

  	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  William J.
  Paulos

  
	
   

  	
   

  	
   

  	
  Manager

  

 

[signature
page continues]

 

27

 

	
   

  	
  CCR:

  
	
   

  	
   

  
	
   

  	
  Cannery Casino Resorts, LLC,

  
	
   

  	
  a Nevada limited liability company,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  William C.
  Wortman

  
	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  William J.
  Paulos

  
	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  MANAGER:

  
	
   

  	
   

  
	
   

  	
  Millennium Management Group II, LLC,

  
	
   

  	
  a Nevada limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  William C.
  Wortman

  
	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  William J.
  Paulos

  
	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  NEVADA PALACE:

  
	
   

  	
   

  
	
   

  	
  Nevada, LLC,

  
	
   

  	
  a Nevada limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Cannery Casino Resorts, LLC,

  
	
   

  	
   

  	
  a Nevada limited liability company,

  
	
   

  	
  Title:

  	
  sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  William C.
  Wortman

  
	
   

  	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  William J.
  Paulos

  
	
   

  	
   

  	
   

  	
  Manager

  
								

 

28

 

	
  Agreed and acknowledged

  
	
  as of the day first set forth above

  
	
  by:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  William C. Wortman

  
	
   

  
	
   

  
	
   

  	
   

  
	
  William J. Paulos

  

 

29

 

EXHIBIT A

 

General Management
Services

 

Manager shall provide, with respect to each
of the Casino Operations, on a Casino Operation-by-Casino Operation basis, such
management services as are usually and customarily performed by managers of a first-class gaming
property as required by any lease or sublease under which such Casino Operation
operates or, if there is no such requirement, consistent with the market in
which each such Casino Operation competes, in each case as set forth in this
Agreement and consistent with the applicable Budgets or other funding approved
by Manager and the Oaktree Managers, all at each such Casino Operation Owner’s
respective expense. Subject to the provisions of this Agreement and the
Operating Agreement, the Parties contemplate that Manager’s performance of the
Management Services will include Manager having uninterrupted control over the
operations of each Casino Operation, including, but not limited to, the casino,
hotel, entertainment and restaurant facilities of each such Casino Operation
(if any), and will, among other services, set various rates and prices, issue
casino credit, grant complimentaries, hire personnel and select marketing and
promotional campaigns, with respect to each such Casino Operation. In addition,
and more specifically, the following provisions shall govern certain of the
duties and obligations of each Owner and Manager with respect to each Casino
Operation (except as such Owner may agree that any of the following do not
apply with respect to such Owner’s Casino Operation):

 

A.                                   GENERAL
DUTIES

 

1.                                       Maximize
Patronage

 

Manager shall use all reasonable efforts to
maximize patronage of each Casino Operation.

 

2.                                       Prepare
Budgets

 

Manager shall prepare the Annual Operating
Budget and the Long-Term Budget in consultation with, and subject to the
approval of, the Oaktree Managers, and revise and update the Annual Operating Budget
and Long-Term Budget for each Casino Operation as required in consultation
with, and subject to the approval of, the Oaktree Managers. To the extent
required, Manager shall prepare a Construction Budget for any Owner
contemplating construction of substantial improvements and/or major
construction at a Casino Operation for approval by the Oaktree Managers.

 

3.                                       Sales,
Marketing and Advertising

 

Consistent with the Annual Operating Budget
for each Casino Operation or other funding approved by Manager and the Oaktree
Managers, Manager shall develop and update advertising, public relations, sales
and marketing plans; implement and supervise sales and marketing campaigns;
develop tour packages; develop and implement player development programs for
gaming activities; book entertainment appropriate for each Casino Operation;
and generally promote each Casino Operation and its respective Property.

 

30

 

4.                                       Centralized
Booking System

 

Manager shall participate in and monitor
centralized computerized booking and reservations systems, or, if the applicable
Casino Operation is operated under a “Flag” or franchise and is participating
in the franchise reservation system, monitor same for efficiency and
productivity.

 

5.                                       Incentives
and Extensions of Credit to Promote Patronage

 

Consistent with the Annual Operating Budget for
each Casino Operation or other funding approved by Manager and the Oaktree
Managers, and in conjunction with player development programs established with
respect to each such Casino Operation, Manager shall provide complimentary
rooms, amenities and extensions of credit to the Casino Operation patrons to
promote gaming activities at such Casino Operation. In the exercise of Manager’s
reasonable business judgment and in conjunction with player development
programs, Manager shall obtain from patrons receiving credit, to the extent
permitted, and in accordance with the Gaming Laws, appropriate “markers” or “I.O.U.’s”
(all forms of credit, including the foregoing, collectively referred to as “Markers”),
in accordance with overall credit policies established for each Casino
Operation from time-to-time in consultation with the Owner of each such Casino
Operation.

 

6.                                       Employment of
Staff

 

Other than as such action may involve a
manager or equityholder of Manager or a direct family member of a manager or
equityholder of Manager (which, in each case, shall require the prior written
consent of the Oaktree Managers before Manager may proceed; provided,
that, those related party transactions set forth on Schedule 3.25 of the
CUPA shall not require such prior written consent so long as the terms of such
related party transactions do not change in any material respect; provided,
further, that the promotion of a direct family member of a manager or
equityholder of Manager from a position set forth on Schedule 3.25 of the
CUPA to a position substantially identical in title and function to a
then-existing non-Senior Officer position of CCR or an Owner, at a salary
commensurate with what would be paid to such non-Senior Officer if not such a
direct family member, shall not require such prior written consent so long as
such promotion is justified based on past performance as reasonably determined
by Manager) and consistent with the Annual Operating Budget for each Casino
Operation or other funding approved by Manager and the Oaktree Managers, Manager
shall arrange for the employment, payment, supervision and discharge of all employees
of each Casino Operation in accordance with the applicable Owner-approved
policies adopted by the Owner of each such Casino Operation.

 

7.                                       Purchase of
Supplies; Engage Professionals

 

Other than as such action may involve
payments to Manager or an Affiliate, manager, officer or equityholder of
Manager or an Affiliate or direct family member of a manager, officer or
equityholder of Manager (which, in each case, shall require the prior written
consent of the Oaktree Managers before Manager may proceed; provided,
that, those related party transactions set forth on Schedule 3.25 of the
CUPA shall not require such prior written consent so long as

 

31

 

the terms of such related party transactions do not change in any
material respect) and consistent with the Annual Operating Budget for each
Casino Operation or other funding approved by Manager and the Oaktree Managers,
Manager shall arrange as necessary for the purchase of food, beverages,
operating supplies, merchandise, required FF&E and all other supplies
necessary for the proper operation of each Casino Operations as a first-class gaming
property as required by any lease or sublease under which such Casino Operation
operates or, if there is no such requirement, consistent with the market in
which such Casino Operation competes; arrange for the engagement of advisors,
consultants, or other professionals from time-to-time as reasonably necessary to
promote the sound and efficient operation of each Casino Operation, including
accountants, financial advisors, real estate advisors, computer consultants,
attorneys (subject to the limitations otherwise set forth herein), and such
other professionals as appropriate.

 

8.                                       Maintenance

 

Manager shall arrange and provide for the
maintenance and repair of each Casino Operation in accordance with the Annual Operating
Budget for each Casino Operation or other funding approved by Manager and the
Oaktree Managers, and standards consistent with each Casino Operation.

 

9.                                       Refurbish

 

Consistent with the Annual Operating Budget
for each Casino Operation or other funding approved by Manager and the Oaktree
Managers, Manager shall make available such of Manager’s personnel, and arrange
for such other personnel that, in Manager’s reasonable judgment, are needed to
prepare, review and implement plans and specifications for minor and routine
alteration or refurbishment of each Casino Operation as proposed by the
applicable Owner from time-to-time; and arrange for the design, selection, and
scope of replacement of FF&E.

 

10.                                 Improve Operations

 

Consistent with the Annual Operating Budget
for each Casino Operation or other funding approved by Manager and the Oaktree
Managers, Manager shall use Manager’s reasonable efforts to improve operations
or eliminate operational problems as necessary in the manner deemed appropriate
by Manager.

 

11.                                 Comply with Laws

 

Manager shall cause all such other things to
be done in or about each Casino Operation as shall be necessary to comply with
the Gaming Laws and requirements of the Gaming Authorities, and of any other
governmental authority having jurisdiction over the use, maintenance or
operation of each Casino Operation.

 

12.                                 Utility Services

 

Other than as such action may involve
payments to Manager or an Affiliate, manager, officer or equityholder of
Manager or an Affiliate or direct family member of a manager, officer

 

32

 

or equityholder of Manager
(which, in each case, shall require the prior written consent of the Oaktree
Managers before Manager may proceed) and consistent with the Annual
Operating Budget for each Casino Operation or other funding approved by Manager
and the Oaktree Managers, Manager shall arrange for utility services,
telephone, vermin extermination, security, trash removal and other services
necessary or reasonably required for the operation of each Casino Operation as
a first-class gaming property as required by any lease or sublease under
which such Casino Operation operates or, if there is no such requirement, consistent
with the market in which such Casino Operation competes.

 

13.                                 Collection of
Revenue

 

Manager shall use all reasonable efforts to
collect all charges, rents, Markers and other amounts due on account of each Casino
Operation and cause the recovery and/or cause the surrender of space, as
applicable and necessary from each Casino Operation’s guests, patrons, tenants,
subtenants, parties providing exclusive services and concessionaires.

 

14.                                 Legal Actions

 

Other than legal actions in which a conflict
of interest arises between CCR and/or an Owner, on the one hand, and Manager
and/or an Affiliate, manager, officer or equityholder of Manager and/or an
Affiliate or direct family member of a manager, officer or equityholder of
Manager (which, in each case, shall require the prior written consent of the Oaktree
Managers before Manager may proceed), on the other, and subject to the
limitations described hereafter, Manager shall commence legal actions
concerning each Casino Operation on behalf of the applicable Owner as are
necessary or reasonably required, in the good faith opinion of Manager, to
preserve and protect the assets constituting each Casino Operation and to collect
sums due on account of the operation of each Casino Operation; advise the Management
Committee of CCR of the commencement of material legal actions concerning such
Owner’s Casino Operations; and retain counsel, in the manner set forth
hereafter on behalf of the applicable Owner and Manager, in connection with any
action or proceeding commenced by or against the applicable Owner or Manager (to
the extent such action or proceeding by or against Manager relates to the
services provided by Manager under this Agreement)or concerning such Casino Operation.

 

15.                                 Concessions and
Leases

 

On behalf of the applicable Owner, Manager
shall grant concessions and leases for services customarily subject to
concession or lease, if, in Manager’s reasonable opinion, the granting of such
concessions and leases are deemed necessary or desirable; provided, that,
Manager may not grant such concession or lease to itself or an Affiliate,
manager, officer or equityholder of Manager or direct family member of a
manager, officer or equityholder of Manager, in each case without the prior
written consent of the Oaktree Managers.

 

16.                                 Licenses

 

Manager shall obtain and maintain all
Licenses as may be required by law in order to operate each Casino Operation,
including all alcoholic beverage facilities and gaming facilities as shall be
operated within each such Casino Operation.

 

33

 

17.                                 Accounting and
Financial Controls

 

Manager shall establish such accounting
systems and internal controls as may be required by applicable Gaming Laws
and render such periodic financial reports and other reports with respect to
operations of each Casino Operation from time-to-time as may be
specifically required hereunder.

 

18.                                 Insurance

 

Manager shall advise the applicable Owner
with respect to, and assist the applicable Owner in obtaining, insurance
coverage and insurance policies hereafter described.

 

19.                                 Consultation with
Owner

 

At an Owner’s reasonable request, Manager
shall make Manager’s personnel available, upon reasonable notice, to consult
with and advise such Owner concerning all policies and procedures affecting the
conduct of the business of such Casino Operation and to consider in good faith
any suggestions with respect thereto made by the applicable Owner.

 

20.                                 Periodic Reporting
Requirements

 

At the reasonable request of a parent entity
of any member of CCR, Manager shall provide such information regarding the
Casino Operations, in form and substance reasonably satisfactory to such
parent entity, as required by such parent entity to comply with periodic
reporting requirements under federal or state securities law.

 

B.                                     THE BUDGETS

 

Manager shall submit the Budgets (or so many
Budgets as may be applicable with respect to each Casino Operation) for CCR
and each Casino Operation to the Oaktree Managers and the applicable Owner for the
Oaktree Managers’ and such Owner’s approval not later than thirty (30) days
prior to the beginning of each Fiscal Year, in a form reasonably
satisfactory to the Oaktree Managers and each applicable Owner, which shall
include for the ensuing Fiscal Year or portion thereof (and in the case of the
Long-Term Budget the following two years), as applicable, the following:

 

1.                                       Profit &
Loss Statement:  An estimated monthly
profit and loss statement prepared generally in accordance with GAAP with any
variations based on the Gaming Laws or applicable local laws or regulations
being duly noted;

 

2.                                       Receipts &
Expenditures:  A budget of receipts
and expenditures (including Management Fees) required for the operation of such
Casino Operation pursuant to the terms of this Agreement, including rates to be
charged and expenditure proposals for:

 

(A)                              payroll, including wages,
other remuneration, and fringe benefits;

 

34

 

(B)                                food and beverage and
other operating supplies;

 

(C)                                FF&E;

 

(D)                               repair and maintenance;

 

(E)                                 revisions,
alterations, rebuilding, replacements, additions and improvements in and to such
Casino Operation;

 

(F)                                 advertising, marketing
and public relations;

 

(G)                                the engagement of
experts and consultants; and

 

(H)                               other operations.

 

3.                                       Assumptions:  Each Budget shall also contain, in narrative
form, the assumptions used as the basis of its preparation.

 

4.                                       Procedure for
Budget Approval and Dispute Resolution

 

The Oaktree Managers shall provide to Manager
their written approval or lack of approval (including written comments setting
forth in reasonable detail the reasons for the Oaktree Managers’ lack of
approval) of each Budget with respect to a Casino Operation not later than
thirty (30) days after the Oaktree Managers’ receipt of such Budget. If the
Oaktree Managers have not provided to Manager their lack of approval of such
Budget within such thirty (30) day period, such Budget shall be deemed approved
by the Oaktree Managers. If the Oaktree Managers do not approve all or any
portion of such Budget (a “Disputed Item”), Manager shall attempt to
reach an agreement with the Oaktree Managers with respect to the Disputed Items.
Both the Oaktree Managers and Manager will proceed with due diligence and in
good faith to attempt to reach agreement with respect to the Disputed Items. If
the Oaktree Managers and Manager have not reached an agreement with respect to
the Disputed Items within a thirty (30) day period after Manager’s receipt of
the Disputed Items (“Manager’s Review Period”), such Parties shall, not
later than seven (7) days after the expiration of Manager’s Review Period,
submit the Disputed Item(s) and all relevant information pertaining thereto,
without regard to the strict rules of evidence, to certified public
accountants of recognized standing mutually agreeable to the Oaktree Managers
and Manager (the “Determining Accountants”). Within thirty (30) days
after the receipt of the dispute for resolution, the Determining Accountants
shall determine the appropriate amount to be budgeted for the Disputed Item(s)
based upon all relevant factors, including the desire of the Oaktree Managers
and Manager to maintain and operate such Casino Operation in accordance with
standards for a first-class gaming property as required by any lease or
sublease under which such Casino Operation operates or, if there is no such
requirement, consistent with the market in which such Casino Operation competes,
the Gaming Laws, and applicable local laws and customs (to the extent such
local customs are consistent with the terms and intent of this Agreement). The
determination of the Determining Accountants with respect to the Disputed
Item(s) shall be final and conclusively binding upon the Oaktree Managers and
Manager. Pending Manager’s receipt of Oaktree Managers’ approval of a Budget with
respect to such Casino Operation pursuant to this Section B(4) and/or
a decision of the Determining

 

35

 

Accountants, Manager shall be entitled to operate such Casino Operation
in accordance with the last Long-Term Budget (but with reference only to the
Fiscal Year of such Long-Term Budget corresponding to the then-current Fiscal
Year) approved by the Oaktree Managers; provided, however, that Manager shall
endeavor in good faith to preserve the Oaktree Managers’ objections to any
Disputed Items pending the Determining Accountants’ decision. The final Budget
resulting from the Determining Accountant’s decision as to any Disputed Item(s)
shall be effective immediately upon receipt by Manager of the Determining
Accountants’ written decision, but such Budget shall not affect any
expenditures made or committed to by Manager in accordance with the immediately
preceding sentence.

 

5.                                       Compliance
with Modification to the Budgets

 

During each Fiscal Year, Manager shall, in
the performance of the Management Services with respect to each Casino
Operation, use and employ its reasonable efforts to comply with the Budgets
relating to such Fiscal Year with respect to each such Casino Operation. Manager
shall nevertheless retain the discretion to re-allocate part or all of the
amount budgeted with respect to any line item to another line item in the
budget provided the overall budget is maintained, and to make expenditures not
authorized under the applicable Budget under certain exigent circumstances if,
in Manager’s good-faith judgment, such expenditures are justifiable as a result
of recent changes in circumstances, such as increased bookings, increased
staffing needs or emergency repairs; provided, that, in each case, Manager
promptly provides the Management Committee of CCR a written explanation of such
re-allocation or expenditures. Notwithstanding the foregoing, in no event shall
Manager modify or adjust the Management Fees as provided in the Budget without
the prior written approval of the Oaktree Managers.

 

6.                                       Modification
to the Budget

 

If at any time during any Fiscal Year Manager
shall, in the performance of the Management Services with respect to each
Casino Operation, determine the Budget relating to such Fiscal Year with
respect to such Casino Operation is no longer appropriate due to significant
changes in conditions, circumstances or otherwise, Manager shall submit to the Oaktree
Managers for approval a revised Budget (the “Revised Budget”) for the
remainder of such Fiscal Year, indicating in narrative form the reasons
why the assumptions used as the basis of preparing the original Budget for such
Fiscal Year are no longer valid. If the Oaktree Managers do not approve all or
any portion of the Revised Budget, then the Oaktree Managers shall furnish
Manager with its written comments, in reasonable detail, setting forth the
reasons for its lack of approval, and the Oaktree Managers and Manager shall
attempt to agree with respect to the items to which the Oaktree Managers have
not approved. If an agreement is not reached before the expiration of a thirty
(30) day period immediately following the receipt by Manager of the Oaktree
Managers’ lack of approval, the dispute shall be submitted to the Determining
Accountants for resolution in accordance with the procedures set forth in Section B(4).

 

7.                                       Emergency
Expenditures

 

Whenever, by reason of circumstances beyond
the reasonable control of Manager with respect to each Casino Operation,
emergency expenditures are required to be made to ensure that

 

36

 

the operating standards of a first-class gaming property as
required by any lease or sublease under which such Casino Operation operates
or, if there is no such requirement, consistent with the market in which such
Casino Operation competes are maintained, or to protect life, person, or
property, Manager may make emergency expenditures beyond the provisions of
the applicable Budget without the prior written consent of the Oaktree Managers,
provided that such expenditure does not constitute a default under the loan
documents evidencing the loan to CCR and/or the Owners from their most senior
secured lender (the “Loan Documents”) and that Manager promptly provides the
Management Committee of CCR a written explanation of such expenditures.

 

C.                                     LEGAL SERVICES AND PROCEEDINGS

 

Other than legal proceedings in which a
conflict of interest arises between CCR and/or an Owner, on the one hand, and
Manager and/or an Affiliate, manager, officer or equityholder of Manager and/or
an Affiliate or direct family member of a manager, officer or equityholder of
Manager (which, in each case, shall require the prior written consent of the Oaktree
Managers before Manager may proceed), on the other, the following
provisions shall apply to any legal proceedings affecting a specific Casino Operation:

 

1.                                       Insured
Claims

 

All claims against the applicable Owner or
Manager (or Manager’s Affiliates who may be joined) arising out of the
operation of such Casino Operation that are covered in whole or in part by
insurance, shall be forwarded by Manager to the appropriate insurance carrier
or its agent for defense.

 

2.                                       Non-Extraordinary
Proceedings

 

(i)                                     Claims:  Manager shall have the right to commence
legal proceedings utilizing counsel designated by Manager and approved by the
applicable Owner of a non-extraordinary nature and involving monetary claims of
less than $250,000 relating to the operation of such Casino Operation, such as
collections, enforcement of contracts and leases and proceedings against the
guests, patrons, vendors, service contractors, and tenants of such Casino Operation.

 

(ii)                                  Defense:  Other than insured claims in which the
liability carrier has the right to choose counsel, Manager shall have the right
to defend, through counsel designated by Manager and approved by the applicable
Owner, legal proceedings of a non-extraordinary nature against the applicable Owner
or Manager (or Manager’s Affiliates who may be joined) resulting from the
operation of such Casino Operation, such as guest claims for loss of property,
or injury to persons, and claims relating to employment at such Casino
Operation.

 

3.                                       Extra-Ordinary
Proceedings

 

(i)                                     Claims:  Manager shall commence legal proceedings that
are of an unusual nature or involving monetary claims of $250,000 or more relating
to the operation of such Casino Operation upon the approval by the Management
Committee of CCR of the

 

37

 

proceeding and counsel designated by Manager. Manager shall furnish the
Management Committee of CCR with periodic status reports with respect to such
proceedings.

 

(ii)                                  Defense:  All claims against the applicable Owner or
Manager (or Manager’s Affiliates who may be joined) arising out of the
operation of such Casino Operation of a more significant nature and involving $250,000
or more and as to which any insurance company denies coverage (or reserves
rights as to coverage), shall be coordinated with the Management Committee of
CCR and counsel designated by Manager shall be subject to the approval of the Oaktree
Managers. Manager shall furnish the Management Committee of CCR with periodic
status reports with respect thereto.

 

4.                                       Coordinated
Defense

 

In the event that a suit is instituted
against Manager or its Affiliates, in which the applicable Owner is also named
as a party defendant, such Owner and Manager shall coordinate the defense of
such suit. Nothing herein contained shall be construed as preventing such Owner
from joining with Manager in any legal proceedings or any action on behalf of
or against the Casino Operation, whether of an extraordinary or non-extraordinary
nature. If a conflict of interest arises between the legal positions taken by the
applicable Owner and Manager that such Parties are unable to waive or otherwise
agree upon, then such Parties may each engage counsel of their own
choosing.

 

D.                                    CENTRALIZED PURCHASING AND
RELATED SERVICES

 

If any other hotels, casino hotels, resorts,
restaurants, casinos, gaming facilities, or related facilities operated by
Manager or its Affiliates maintain or adopt a centralized purchasing system
whereby operating supplies, food, FF&E, consumables, computer services,
insurance coverages under a group plan, public relation services, sales and
marketing services, group advertising, reservation systems, or other items or
services or programs are purchased or contracted for on behalf of the
participants from suppliers or providers designated by Manager or its
Affiliates (other than Manager or an Affiliate, manager, officer or
equityholder of Manager or an Affiliate or direct family member of a manager,
officer or equityholder of Manager, which, in each case, shall require the
prior written consent of the Oaktree Managers before Manager may proceed),
then Manager shall have the option (but not the obligation) to cause any or
each Casino Operation to participate in such centralized system for so long as
Manager is operating such Casino Operation provided that the cost to such
Casino Operation of such items, services, or programs (taking into account the
quality of the items, services, or programs purchased or contracted for and the
payment terms relating to such items, services, or programs) are not significantly
less favorable to such Casino Operation than the cost that could be obtained by
the Casino Operation from unaffiliated third parties.

 

E.                                      BANK ACCOUNTS

 

The following shall be applicable to all bank
accounts maintained in connection with each Casino Operation:

 

38

 

1.                                       Hotel and
Casino Accounts

 

Manager shall establish one or more bank
accounts bearing the name of such Casino Operation at a commercial bank or
banks selected by Manager in consultation with the applicable Owner that shall,
in all respects, have: (i) the capability of servicing all of the hotel (if
any) (“Hotel”) and casino (“Casino”) operations of such Casino
Operations; (ii) a substantial capital base; (iii) insured accounts,
if applicable; and (iv) armored or other available security services
(together with any accounts opened pursuant to Section E(6) below, the
“Accounts”).

 

2.                                       Deposit and
Transfer of Funds

 

All funds of any kind or nature received
either by Manager or the applicable Owner in connection with the operation of such
Casino Operation shall be deposited into the Accounts. Subject to the
requirements and prohibitions of applicable laws, in no event will any of the
monies deposited in the bank accounts be commingled with other funds. Manager may transfer
between the Accounts such funds which in Manager’s reasonable business judgment
may be needed for any area of operations. Checks and other documents of
withdrawal on the bank account need be signed only by duly authorized
representatives of Manager.

 

3.                                       Interest

 

All interest, if any, earned on the Accounts
shall accrue to the benefit of the applicable Owner. Manager shall make
available to the applicable Owner, from time-to-time, when reasonably requested
by the applicable Owner or the Oaktree Managers, all records with respect to
the bank accounts.

 

4.                                       Statements

 

Manager shall use its best efforts to provide
to the applicable Owner a report of the cash receipts of such Casino Operations
on a weekly basis or as soon as practicable. Manager shall provide a monthly
statement to the applicable Owner summarizing all activity in the Accounts.

 

5.                                       Fidelity
Bonds

 

All of each Owner’s employees or representatives
who are authorized signatories on any of the Accounts shall be bonded or
otherwise insured as to fidelity. The form and content of such bond or
insurance shall be subject to the reasonable approval of the applicable Owner. The
applicable Owner and Manager shall both be named as obliges or insureds, as
appropriate, under such bond or insurance policy and Manager and the applicable
Owner shall both have the right to enforce the terms of any such bond or
insurance policy.

 

6.                                       Other
Accounts, Funds of Owner

 

Manager shall open such other bank accounts with
respect to such Casino Operations as may be agreed upon from time-to-time
by the applicable Owner and Manager or as required by law. All funds in the bank
accounts and all other accounts relating to such Casino Operation maintained
pursuant to this Agreement shall, at all times, be deemed to be the funds of the
applicable Owner.

 

39

 

F.                                      OWNER’S OBLIGATION TO PROVIDE
FUNDING

 

The following shall apply to the funding
needs of each Casino Operation:

 

1.                                       Funding an
Essential Requirement

 

It is of the essence in this Agreement that each
Owner shall, at all times, maintain sufficient funds in such Owner’s applicable
Accounts, or other reserve accounts, to pay all duly and properly incurred
obligations of the applicable Casino Operation on a current basis as set forth
in this Agreement and consistent with the applicable Budgets or other funding
approved by Manager and the Oaktree Managers, and to comply with the Gaming
Laws and any other applicable laws or regulations pertaining to any accounts or
required reserves. The Parties acknowledge and agree that Manager shall have no
obligation to pay or satisfy any obligation or other cost or expense of
development, capitalization, property acquisition, operation, employment,
marketing or other costs and expenses of owning and operating such Casino
Operation that is the subject of this Agreement except such costs and expenses
as Manager may incur in connection with its own operations and
obligations.

 

2.                                       Working
Capital

 

Each Owner shall with respect to such Owner’s
Casino Operation make available to Manager sufficient working capital for the operation
of such Owner’s Casino Operation, including, without limitation, (a) sufficient
working capital or reserves as may be required by the Gaming Authorities
and lenders or mortgagees to conduct the operation of the Casino Operation and (b) such
sufficient additional Casino working capital as may be adequate to meet
the needs of the table betting limits appropriate to the Casino operations with
respect to such Owner’s Casino Operation in accordance with the related Annual
Operating Budget (collectively, with respect to each Casino Operation, the “Reserves”).
CCR in respect of the CCR Annual Operating Budget shall provide sufficient
working capital for the expenditures described in such Budgets.

 

3.                                       Failure to
Fund

 

If at any time the available Reserves, or any
other separate reserve, shall not be sufficient or available to pay all of the
current expenses, fees, bills or other charges incurred in connection with the
operation and maintenance of the applicable Casino Operation as set forth in
this Agreement and consistent with the applicable Budgets or other funding
approved by Manager and the Oaktree Managers, including the payment of the
Management Fee, all of which are to be paid from the applicable Account, or to
comply with applicable laws or regulations, or to meet or maintain Reserve
requirements at a level sufficient to maintain established betting limits,
Manager shall so advise the applicable Owner, in writing, and shall provide the
applicable Owner with a statement of the amount of funds necessary to cure such
insufficiencies. Thereupon, the applicable Owner shall immediately provide
sufficient monies to remedy any such insufficiency or shortfall. The failure of
the applicable Owner to provide such funds shall excuse Manager from only those
Management Services hereunder directly and materially affected by any such
insufficiency or shortfall during the occurrence thereof. Manager shall be free
in its reasonable business judgment to adjust betting limits to the extent
permitted under the

 

40

 

Gaming Laws, in order to: first, meet payment obligations for Operating
Expenses with respect to such Casino Operation; and second, continue gaming
operations and table betting limits to the extent and to the level permitted by
the available Reserves.

 

G.                                     FINANCIAL STATEMENTS

 

The financial statements for each Casino
Operation shall be prepared in the following manner:

 

1.                                       Monthly
Statements

 

Manager shall prepare and deliver to the
Management Committee of CCR within thirty (30) days after the end of each month
the following financial statements prepared generally in accordance with GAAP:

 

A.                                   A profit and loss
statement showing the results of operations of each Casino Operation for the
immediately preceding month and for the Fiscal Year through such month,
including a comparison with (1) the corresponding month for the
immediately preceding Fiscal Year and for the immediately preceding Fiscal Year
through such corresponding month and (2) the projections contained in the
applicable Budgets.

 

B.                                     A summary balance
sheet for each Casino Operation as of the end of the immediately preceding
month, including a comparison with the end of the corresponding month for the
immediately preceding Fiscal Year.

 

C.                                     A summary cash
flow statement for each Casino Operation for the immediately preceding month
and for the Fiscal Year through such month, including a comparison with the
corresponding month for the immediately preceding Fiscal Year and for the
immediately preceding Fiscal Year through such corresponding month.

 

D.                                    A summary statement
of costs, fees and expenses (including Management Fees) incurred, and
reimbursements paid to Manager, for each Casino Operation during the
immediately preceding month and for the Fiscal Year through such month.

 

Such statements shall be prepared from the
books of account maintained by Manager and shall be in form and substance
reasonably satisfactory to the Oaktree Managers.

 

2.                                       Annual
Statements

 

Not later than fifty (50) days immediately
following the end of each Fiscal Year, Manager shall cause to be prepared and
delivered to the Management Committee of CCR financial statements for such
Fiscal Year in form and substance reasonably satisfactory to the Oaktree
Managers (with respect to each Casino Operation, the “Annual Statement”),
which shall consist of: (i) a balance sheet; (ii) a profit and loss
statement showing the results of operations; (iii) a statement of earnings
and retained earnings; (iv) a statement of change in financial position;
and (v) such other financial statements or reports as are required by the
Gaming Authorities or Gaming Laws or by any parent entity of any member of CCR to
comply with

 

41

 

periodic reporting requirements under federal or state securities law. Such
financial statements shall be prepared by and shall contain a certificate of independent
certified public accountants of recognized standing selected by Manager and
reasonably satisfactory to the Oaktree Managers, to the effect that, subject to
such qualifications reasonably acceptable to the Oaktree Managers as shall be
contained therein, such financial statements fairly present the financial
position, results of the operations and changes in financial position of such
Casino Operation for the Fiscal Year, or other reporting period then ended, in
conformity with GAAP.

 

3.                                       Quarterly
Statements

 

Not later than twenty-five (25) days
immediately following the end of each quarter of a Fiscal Year, Manager shall
cause to be prepared and delivered to the Management Committee of CCR financial
statements for such quarter in form and substance reasonably satisfactory
to the Oaktree Managers, which shall consist of: (i) a balance sheet; (ii) a
profit and loss statement showing the results of operations; (iii) a
statement of earnings and retained earnings; (iv) a statement of change in
financial position; and (v) such other financial statements or reports as
are required by the Gaming Authorities or Gaming Laws or by any parent entity
of any member of CCR to comply with periodic reporting requirements under federal
or state securities law.

 

H.                                    PAYMENT IN EXCESS FUNDS TO OWNER

 

Upon the written request of an Owner, Manager
shall pay to the applicable Owner all funds in the Account in excess of those
reasonably required to meet all of the operating, capital, and other Reserves
imposed by any lender, and other financial requirements of such Casino
Operation including, without limitation, all minimum working capital
requirements and Reserve requirements imposed by law. Manager, at the request
of an Owner, shall establish such cash management procedures and accounts from
time-to-time at institutions directed by the applicable Owner, for the deposit
of such excess funds on behalf of such Owner. All income derived thereform shall
accrue to the applicable Owner.

 

I.                                         BOOKS, RECORDS AND ACCOUNTS

 

Manager shall keep full, adequate and
accurate books of account and other records relating to or reflecting the
results of operations of each Casino Operation on an accrual basis, in
accordance with GAAP, consistently applied, including costs, fees, and expenses
(including Management Fees) incurred by Manager, and reimbursements paid to
Manager, for the provision of Management Services to an Owner or with respect
to a Casino Operation (collectively, the “Books and Records”). The books
of account and all other records relating to or reflecting the results of operations
of each Casino Operation shall be kept at such Casino Operation and shall be
made readily available to the applicable Owner and its representatives, and the
Management Committee of CCR, the Oaktree Managers and its or their
representatives, and any other supervisory or regulatory authority having
jurisdiction over such Owner or such Casino Operation, including the Gaming
Authorities, at all reasonable times upon reasonable notice, for review, examination,
audit, inspection and transcription. All of such books and records pertaining
to such Casino Operation, including, without limitation, books of account,
guest records and front office records, shall at all times be the property of the
applicable Owner and shall not be removed from such Casino Operation by Manager
without the prior written consent

 

42

 

of the Oaktree Managers. Upon any termination hereof, all such books
and records shall immediately be turned over to the applicable Owner, so as to
ensure the orderly continuance of the operation of such Casino Operation with
copies (at the expense of the applicable Owner) retained by Manager.

 

J.                                        EMPLOYMENT AND LABOR ISSUES

 

1.                                       Compensation

 

Manager shall establish employee compensation
for nonexecutive employment, on a Casino Operation by Casino Operation basis. The
Management Committee of CCR shall have the final determination with respect to
any labor negotiations and by virtue of its participation in the preparation
and approval of each Budget, shall have general authority over employee
compensation. Executive compensation shall conform with the estimates of
the applicable Budget.

 

2.                                       Employment
Costs

 

All claims, liabilities or obligations
arising during or after the term with respect to the employees of a Casino
Operation relating to salaries, wages, compensation, overtime pay, holiday pay,
vacation pay, raises, bonuses, employee benefits, severance pay, grievances
under union contracts, unfair labor practice charges before any governmental
labor board or authority, worker’s compensation, disability, unemployment
benefit, breach of employment contracts, safety and health matters, and
employment discrimination of any nature whatsoever, and any and all court costs
and legal fees incurred in defending such claim (collectively, “Employment
Costs”) shall be charged to and payable by the applicable Casino Operation
as an Operating Expense.

 

3.                                       Disputes With
and Claims By Employee

 

The defense of employment and labor claims
(collectively, “Employment Claims”) to the extent appropriate, may be
defended at a Casino Operation’s administrative level with the assistance of
the Casino Operation’s human resources manager. Manager, on behalf of the
applicable Owner and itself, may engage employment and labor counsel as
needed. The cost of defending Employment Claims, as well as sums required for
settlement, reinstatement, back pay and the like, as required, shall be charged
as an Operating Expense with respect to a Casino Operation. Settlements that
exceed $100,000 shall be subject to the approval of the Management Committee of
CCR, which approval shall not be unreasonably withheld.

 

K.                                    PAYMENT OF TAXES

 

On behalf of each Owner, Manager shall, as an
expense of the applicable Casino Operation and as reflected in the applicable Budget,
pay or cause to be paid, before they become delinquent, all taxes, assessments,
excises, levies, License and permit fees and other charges (including all
penalties and interest relating thereto, regardless of whether such interest or
penalties are reflected in the applicable Budget) general and special, ordinary
and extraordinary, foreseen and unforeseen, of any kind or nature whatsoever,
which shall or may during the term

 

43

 

of this Agreement be levied, assessed,
charged and/or imposed by any public or quasi-public authority upon, or accrue,
or become due and payable, out of or on account of, or become a lien on, the Property,
the Casino Operation, FF&E, or other real and personal property serving the
Casino Operation, as applicable, and any related Property.

 

L.                                      PAYMENT OF MORTGAGES

 

Subject, with respect to Rampart and the
Rampart Operation, to the Rampart Sublease and the Casino Prime Lease
Agreement made and entered into as of April 1, 2002 by and between Hotspur
Resorts Nevada, Inc., a Nevada corporation, and Landlord (the “Casino
Lease”), on behalf of each Owner, Manager shall, as an expense of the Casino
Operation operated by such Owner, and as reflected in the applicable Budget,
pay or cause to be paid before they become delinquent, all mortgages, ground
leases, leases, and other liens secured, in whole or in part, by a lien or
leasehold on the Property and other real or personal property serving the Casino
Operation, as applicable, and any related Property.

 

M.                                 COMPLIANCE WITH LAWS

 

Manager shall:

 

(i)                                     Not use any Casino Operation or
any portion thereof, and Manager shall use diligent efforts to see that others
do not use such Casino Operation or any portion thereof, for any use or purpose
in violation of the Gaming Laws or of any other valid and applicable law or
regulation of any lawful authority having jurisdiction over the Casino
Operation;

 

(ii)                                  In all respects use
all reasonable efforts to cause the use and operation of the Casino Operation
to comply with all valid and applicable laws and regulations of all applicable
governmental authorities;

 

(iii)                               Other that as otherwise
required under this Section M, comply with the requirements of all
governmental authorities that may exercise governmental or
quasi-governmental control over any Casino Operation (provided that Manager
shall have no obligation to so comply or to correct any alleged defect unless
the same is specifically called to the attention of Manager by the applicable Owner
or by any such governmental authority); and

 

(iv)                              Comply with all
requirements of the Gaming Authorities and the Gaming Laws as modified from
time-to-time, as if such Gaming Laws were fully set forth herein.

 

N.                                    PHYSICAL PLANT AND PROPERTY
MAINTENANCE

 

Subject, with respect to Rampart and the
Rampart Operation, to the Rampart Sublease and the Casino Lease, the
following provisions shall apply to each Casino Operation’s physical plant, fixtures
and personalty:

 

1.                                       No Changes
Without Owner’s Consent

 

Except as set forth in Section N(2), no
changes shall be made to the Casino Operation’s structure or any improvements
now or hereafter comprising a Casino Operation without the

 

44

 

consent of the Management Committee of CCR, which consent such Management
Committee shall be entitled to withhold in its sole discretion; provided,
however, that such withholding of consent has not and will not cause such
Casino Operation to fall below a level of quality for a first-class gaming
property as required by any lease or sublease under which such Casino Operation
operates or, if there is no such requirement, consistent with the market in
which such Casino Operation competes.

 

2.                                       Alterations,
Remodeling, Demolition

 

Manager shall, consistent with the applicable
Budgets or other funding approved by Manager and the Oaktree Managers (and,
with respect to Rampart and the Rampart Operation, in accordance with
the provisions of the Rampart Sublease), have the right to alter, remodel
and/or demolish the Casino Operation’s structure and any improvements now or
hereafter comprising such Casino Operation, or to replace or add to any of the
FF&E located within the Casino Operation without any additional prior
consent of the applicable Owner.

 

3.                                       Repairs,
Replacements, Maintenance

 

Manager shall, from time-to-time consistent
with the applicable Budgets or other funding approved by Manager and the
Oaktree Managers (and, with respect to Rampart and the Rampart Operation,
in accordance with the Rampart Sublease), make such expenditures as an
Operating Expense for repairs and maintenance of FF&E, for the
replacements, renewals and additions to minor operating equipment, and for minor
capital improvements (meaning those capital improvements other than structural
repairs and changes and extraordinary repairs to or replacement of FF&E as
necessary or required, in Manager’s reasonable opinion) to keep the Casino
Operation operating as a first-class gaming property as required by any
lease or sublease under which such Casino Operation operates or, if there is no
such lease or sublease, consistent with the market in which such Casino
Operation competes. If any repairs or maintenance shall constitute corrective
work for which the applicable Owner has received or is entitled to the benefit
of the guarantee or warranty of any builder, contractor or any supplier of
labor or material in connection with the construction of the Casino Operation
or with respect to the FF&E installed therein, then Manager may invoke
such guarantees or warranties in either the applicable Owner’s or Manager’s
name and the applicable Owner shall cooperate fully with Manager in the
enforcement thereof. The applicable Owner reserves the right to sell any of the
FF&E located in its Casino Operations from time-to-time, provided that such
Owner substitutes FF&E of like kind, quality and utility.

 

4.                                       Required
Structural Repairs

 

If structural repairs or changes to the Casino
Operation or extraordinary repairs to, or replacement of, any FF&E shall be
required during the term of this Agreement by the provisions of any mortgage
encumbering the Casino Operation, any loan agreement with respect to the Casino
Operation, or any lease or sublease under which the Casino Operation operates, in
order to maintain the Casino Operation in the operating condition of a first-class gaming
property as required by any lease or sublease under which such Casino Operation
operates or, if there is no such requirement, consistent with the market in
which such Casino Operation competes, by reason of any laws or regulations now
or hereafter in force, by order of any governmental

 

45

 

authority or otherwise, or because Manager and the applicable Owner
jointly agree upon the desirability thereof, then, in any such event, such
repairs, changes or replacements shall be made by the applicable Owner, or at
the request of the applicable Owner, by Manager, at the applicable Owner’s sole
expense, and shall be made with as little hindrance to the operation of the
Casino Operations as is reasonably possible. Notwithstanding the foregoing, the
applicable Owner shall have the right to contest the need for any such repairs,
changes or replacements required by any law, regulation, or order of
governmental authority and may postpone compliance therewith, if so
permitted by law.

 

O.                                    INSURANCE

 

Consistent with the Annual Operating Budget
for each Casino Operation or other funding approved by Manager and the Oaktree
Managers, Manager shall procure and maintain, or cause to be provided and
maintained, with respect to each Casino Operation, insurance coverage in such
types and amounts as may be required by the Loan Documents, from time to
time.

 

1.                                       Other
Coverages

 

Consistent with the Annual Operating Budget
for each Casino Operation or other funding approved by Manager and the Oaktree
Managers, Manager may cause each or any Casino Operation to obtain such
coverages in respect of such other risks as Manager may reasonably
determine to be necessary or appropriate.

 

2.                                       Concessionaire’s
Coverage

 

Upon Manager granting any leases, licenses or
concessions in accordance with the provisions of this Agreement, Manager shall
require such tenants, licensees or concessionaires to carry such insurance as
is normal and customary for the relevant tenant, licensee or concessionaire,
and to furnish certificates evidencing such insurance in such reasonable
amounts as may be specified in the lease, license or concession or
otherwise agreed upon between Manager and the tenant, licensee and
concessionaire.

 

4.                                       Claim
Investigation

 

Manager shall promptly investigate or cause
to be investigated all accidents and claims for damage relating to the
operation and maintenance of the Casino Operation and related facilities, shall
report to the applicable Owner any such incident which is material, and Manager
shall investigate or cause to be investigated all damage to or destruction of
such Casino Operation or related facilities and shall report to the applicable Owner
any such incident which is material, together with the estimated cost of repair
thereof. In addition, Manager shall prepare any and all reports required by any
insurance company as a result of any such incident.

 

5.                                       Premium
Advance

 

If Manager, or any of its Affiliates, shall
pay or advance on behalf of the applicable Owner any insurance premiums or
related insurance costs, the applicable Owner shall repay same to Manager
promptly upon demand of Manager.

 

46

 

6.                                       Access to
Insurance Information

 

Manager shall at all times make available to the
Management Committee of CCR, the Oaktree Managers, the applicable Owner or the
applicable Owner’s insurance agents or insurance brokers, all information
relating to existing coverages, claims histories as applicable, copies of
policies, certificates, binders and the like. Manager further authorizes the Management
Committee of CCR, the Oaktree Managers, the applicable Owner and its insurance
agents or brokers, to obtain such information directly from Manager’s insurance
agents, brokers, and insurance carriers, and hereby grants to the Management
Committee of CCR, the Oaktree Managers, the applicable Owner and its insurance
agents or brokers, full access to all such information.

 

47

 

EXHIBIT B

 

Development, Construction and Pre-Opening Services

 

A.                                   PLANNING
AND CONSTRUCTION SUPERVISION SERVICES

 

With respect to any Eligible Operation, the Development
Services shall include: (a) consulting, pre-opening and technical services
to the applicable Owner in connection with planning, developing, constructing,
furnishing, equipping and staffing such Casino Operation; (b) assisting the
applicable Owner and the various Design Professionals (as defined below) and
contractors in the provision and coordination of their services, including, but
not limited to, the services set forth in below; and (c) all necessary
pre-opening services in preparation for the opening of the applicable Eligible
Operation, all in accordance with the applicable Budgets or other funding
approved by Manager and the Oaktree Managers. In addition, and more
specifically, the following provisions shall govern certain of the duties and
obligations of each Owner and Manager with respect to certain of the Eligible
Operations not constituting a Going Concern:

 

1.                                       Architect

 

Consistent with any Construction Budget or Development Budget for such
Casino Operation or other funding approved by Manager and the Oaktree Managers,
Manager shall review and critique architectural plans and specifications for the
Eligible Operation prepared and developed by the architect, as selected by the
applicable Owner (with respect to each Eligible Operation, the “Architect”);
and advise and consult with the Architect regarding the location and layout of
all hotel facilities and amenities, including, but not limited to, guest rooms,
public spaces, meeting and conference rooms, the casino, security and counting
rooms, and food and beverage facilities.

 

2.                                       Interior
Designer

 

Manager shall assist each Owner in selecting and retaining an interior
designer (the “Interior Designer”), and consistent with any Construction
Budget or Development Budget for such Casino Operation or other funding
approved by Manager and the Oaktree Managers, advise and consult with the
Interior Designer regarding the theme, layouts, design, and utility of the Eligible
Operation from an operational point of view; and review and critique design
proposals from the Interior Designer.

 

3.                                       Project
Manager

 

Manager shall meet with the project manager, as selected by the
applicable Owner (the “Project Manager”), on a regularly scheduled basis
to develop a construction schedule for the Eligible Operation; and assist
the Project Manager in coordinating the work of the Design Professionals (as
defined below).

 

48

 

4.                                       Other
Design Professionals

 

Manager shall assist the applicable Owner in
selecting and retaining design, technical and installation experts and
consultants (collectively with the Architect, the Interior Designer and the
Landscape Designer (as defined below), the “Design Professionals”)
required for the design, selection and installation of equipment for systems
required by the Eligible Operation, including, but not limited to, kitchen,
laundry, telephone, communications, sound, computer, security and surveillance
systems; advise and consult with the Design Professionals with respect to hotel
and casino operations and systems.

 

5.                                       Purchasing
Agent

 

Manager shall assist each applicable Owner in
selecting and retaining a purchasing agent (the “Purchasing Agent”) for
the purchase, delivery and installation of all FF&E required for the Eligible
Operation.

 

6.                                       Landscape
Designer

 

Manager shall assist the applicable Owner in
selecting and retaining a landscape designer (the “Landscape Designer”).

 

7.                                       Budgets

 

Manager shall assist each applicable Owner in
developing a budget for pre-construction activities, such as design,
engineering, permitting, etc. (the “Development Budget”) and a
construction and FF&E budget, including, including, but not limited to,
kitchen equipment, laundry equipment, telephone and communications equipment,
sound equipment, casino and gaming equipment, security, surveillance and
closed-circuit television equipment, and other individual categories of
FF&E; and assist each applicable Owner and the Architect in developing an
overall budget for the design, development and construction of the Operations
(the “Construction Budget”).

 

8.                                       Equipment
Selection

 

Manager shall assist each applicable Owner in
selecting equipment for the Eligible Operation, including, but not limited to,
kitchen equipment, laundry equipment, telephone and communications equipment,
office equipment, accounting and business machines, casino and gaming
equipment, security, surveillance and closed-circuit television equipment and
other equipment and systems required for the operation of the Eligible
Operation.

 

9.                                       Periodic
Inspections

 

Manager shall
conduct inspections and reviews from time-to-time in coordination with the
Project Manager during the construction period, as the applicable Owner may reasonably
request with regard to such matters as the applicable Owner determines may be
useful to the applicable Owner in the applicable Owner’s overall supervision of
the construction of the Eligible Operation. For purposes of this Section 9,
the construction period shall commence as of

 

49

 

the Effective Date and terminate on the Opening Date with respect to
each such Eligible Property.

 

10.                                 Responsibility
for Construction

 

Manager shall be responsible for supervising
construction of the Eligible Operation and all phases or portions thereof, and
the Project Manager shall report to Manager.

 

B.                                     PRE-OPENING
SERVICES

 

The Management Services shall also include
all necessary pre-opening services in preparation for the opening of the Eligible
Operation as follows:

 

1.                                       General
Pre-Opening Services

 

In general, consistent with the Pre-Opening
Budget for such Casino Operation or other funding approved by Manager and the
Oaktree Managers, Manager shall be responsible, on behalf of the applicable Owner,
for coordinating the activities necessary or reasonably required to open the Eligible
Operation for business, including (i) assuring that the applicable Owner
has properly staffed and equipped the Eligible Operation, and (ii) coordinating
and implementing a program for marketing the guest rooms, gaming operations,
facilities, and services of the Eligible Operation.

 

2.                                       Budget

 

Manager shall assist each applicable Owner in
preparing a Pre-Opening Budget for the Eligible Operation and its various
departments.

 

3.                                       Concepts
For Food and Beverage, Lounge and Other Specialized Facilities.

 

Manager shall develop operating concepts in
consultation with the applicable Owner for food, beverage and lounge facilities
and other specialized facilities of the Eligible Operation and assist the
applicable Owner in selecting and establishing menus, pricing and uniforms..

 

4.                                       Staffing
Tables

 

Consistent with the Pre-Opening Budget for
such Casino Operation or other funding approved by Manager and the Oaktree
Managers, Manager shall prepare and cause the Eligible Operation to implement
staffing tables, employment timetables, employee hiring and training guidelines
and other programs relating to staffing the Eligible Operation.

 

5.                                       Staff
Retention

 

Other than as such action may involve a
manager or equityholder of Manager or a direct family member of a manager or
equityholder of Manager (which, in each case, shall require the prior written
consent of the Oaktree Managers before Manager may proceed), and
consistent with the Pre-Opening Budget for such Casino Operation or other
funding approved by Manager

 

50

 

and the Oaktree Managers, Manager shall recruit and hire on behalf of the
applicable Owner at an appropriate time prior to the Operating Date with
respect to such Eligible Operation a general manager, a resident manager, if
applicable, a human resources manager, a food and beverage manager, a casino
manager, a controller, a director of sales, a head housekeeper, and other
required department heads in accordance with hiring criteria approved by the
applicable Owner; and thereafter, with the assistance of such department heads,
Manager will cause to be hired on behalf of the applicable Owner a full staff
of employees for the Eligible Operation.

 

6.                                       Casino
Concepts

 

Manager shall assist the applicable Owner in
developing casino operating concepts, selecting gaming equipment, preparing a
casino marketing strategy and player development programs, and developing a
credit policy and credit collection system.

 

7.                                       Advertising
and Marketing

 

Manager shall assist the applicable Owner in
preparing pre-opening advertising, marketing and public relations budgets which
will form part of the Pre-Opening Budget, hire on behalf of the
applicable Owner advertising and public relations firms, and manage and
coordinate their activities so as to develop a cohesive and coordinated
pre-opening program for advertising, marketing and public relations, all
subject to the applicable Owner’s approval.

 

8.                                       Sales
Personnel and Sales Office

 

Manager shall hire on behalf of the
applicable Owner sales and marketing personnel; establish a sales and marketing
program, which may include, with the applicable Owner’s consent,
participation in or maintenance of one or more remote sales and marketing offices
to attract group, corporate and package tour accounts (collectively, the “Sales
Office”) for the purpose of selling and marketing rooms, meeting rooms,
casino and gaming activities and other facilities of the Eligible Operation
prior to the Opening Date and thereafter. Manager may cause the Sales
Office and its staff to be shared and used in common with other casinos,
hotels, or other related facilities under management by Manager, or any of its
Affiliates, or other compatible gaming, hospitality, or travel industry
organizations in order to promote operational efficiencies.

 

9.                                       Centralized
Bookings

 

Manager shall cause the participation of the Eligible
Operation in a centralized telephone booking system, including the use of “800”
numbers, computerized bookings with computer-assisted confirmations, or include
such services as part of the services provided by a “Flag” or franchise,
if applicable.

 

10.                                 Licenses
and Permits

 

Manager shall assist the applicable Owner in
securing all Licenses necessary to own, open and operate the Eligible Operation,
including any approvals, licenses and permits required by the Gaming
Authorities (collectively, with respect to each Eligible Operation, “Gaming
Licenses”).

 

51

 

11.                                 Market
Studies

 

Consistent with the Pre-Opening Budget for
such Casino Operation, Manager shall cause the update of any market study
previously prepared on behalf of the Eligible Operation, as may be
reasonably required prior to the Opening Date.

 

12.                                 Accounting
Systems

 

Manager shall establish appropriate
accounting systems, internal financial controls, financial reporting systems,
and such other systems and methods of reporting, including those required by
applicable gaming laws and regulations (the “Gaming Laws”) as
promulgated by such applicable governmental authority supervising gaming
activities (the “Gaming Authorities”), and as may be necessary or
appropriate for the Operations and all of its activities.

 

13.                                 Tenants
and Concessionaires

 

Manager shall assist Owner in procuring
tenants and concessionaires, taking into account local custom and usage,
including the leasing, and when applicable, the operating of sundry shops,
beauty shops, boutiques, health clubs, recreational facilities and such shops and
facilities as may be deemed appropriate for the operation of the Eligible
Operation.

 

14.                                 Entertainment

 

Manager shall book entertainment appropriate
for the facilities of the Eligible Operation.

 

C.                                     OWNER’S OBLIGATION TO PROVIDE
FUNDING

 

The following shall apply to the funding
needs of each Casino Operation:

 

1.                                       Construction Finance

 

Each Owner shall, by a date reasonably in
advance of commencement of construction with respect to such Owner’s Casino
Operation (if applicable) and reasonably acceptable to Manager and the
applicable Owner, provide to Manager with evidence of the availability of
sufficient construction finance to complete the construction in accordance with
the related Construction Budget and sufficient working capital or reserves as may be
required by the lenders or mortgagees to commence such construction.

 

2.                                       Initial
Working Capital

 

Each Owner shall, by a date reasonably in
advance of the Opening Date with respect to such Owner’s Casino Operation (if
applicable) and reasonably acceptable to Manager and the applicable Owner, make
available to Manager sufficient initial working capital to commence operations
with respect to such Owner’s Casino Operation (if applicable) and sufficient
working capital or reserves as may be required by the Gaming Authorities
and lenders or mortgagees to commence Casino operations with respect to such
Owner’s Casino Operation (if applicable) and such sufficient additional Casino
working capital as may be adequate to meet the needs of the

 

52

 

table betting limits appropriate to the Casino operations with respect
to such Owner’s Casino Operation (collectively, with respect to each Casino
Operation, the “Reserves”).

 

3.                                       Failure to
Fund

 

If at any time the available construction
funds or any other reserve, shall not be sufficient or available to pay all costs
of construction under the related Construction Budget, or the pre-opening expenses,
fees, bills or other charges incurred in connection with the opening of the Owner’s
Casino Operation under the related Pre-Opening Budget, Manager shall so advise
the applicable Owner, in writing, and shall provide the applicable Owner with a
statement of the amount of funds necessary to cure such insufficiencies. Thereupon,
the applicable Owner shall immediately provide sufficient monies to remedy any
such insufficiency or shortfall. The failure of the applicable Owner to provide
such funds shall excuse Manager from only those Management Services hereunder
directly and materially affected by any such insufficiency or shortfall during
the occurrence thereof.

 

53Exhibit 10.12

 

CASINO SUBLEASE AGREEMENT

 

between

 

HOTSPUR CASINOS NEVADA, INC.,

 

a Nevada Corporation

 

and

 

RAMPART RESORT MANAGEMENT, LLC

 

a Nevada Limited Liability Company

 

 

TABLE OF
CONTENTS

 

	
  Article I —

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Article II —

  	
  PREMISES AND OTHER AREAS; TERM

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  Lease of Premises

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.2

  	
   

  	
  Common Areas

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.3

  	
   

  	
  Reciprocal Rights

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.4

  	
   

  	
  Signs

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.5

  	
   

  	
  Casino Intellectual Property and Patron Information

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.6

  	
   

  	
  Required Resort Hotel Amenities and Facilities

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.7

  	
   

  	
  Non-Compete Covenants

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.8

  	
   

  	
  Tenant’s Operating Covenant

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.9

  	
   

  	
  Landlord’s Termination Option

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.10

  	
   

  	
  Tenant’s Termination Option

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.11

  	
   

  	
  Mortgagee’s Termination Option

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.12

  	
   

  	
  Exclusivity Provisions

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Article III —

  	
  RENT; TENANT OBLIGATIONS

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Base Rent

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.2

  	
   

  	
  Fair Market Rent

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.3

  	
   

  	
  Calculation of Fair Market Rent

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.4

  	
   

  	
  Payment of Base Rent and Additional Rent

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.5

  	
   

  	
  Percentage Rent

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.6

  	
   

  	
  Right to Audit Tenant’s Books and Records

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.7

  	
   

  	
  Additional Third Party Tenant Obligations

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.8

  	
   

  	
  Lease Deposit

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.9

  	
   

  	
  Casino Personal Property

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.10

  	
   

  	
  Personal Property Reimbursement Payments

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.11

  	
   

  	
  Payment of Adjusted Operating Cash Flow

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IV —

  	
  OPERATING COSTS; LANDLORD’S OBLIGATIONS

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Operating Costs and Property Taxes

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.2

  	
   

  	
  Method of Allocation

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.3

  	
   

  	
  Billing and Payment

  	
  25

  

 

i

 

	
  Section 4.4

  	
   

  	
  Definition – Operating Costs

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.5

  	
   

  	
  Review of Prime Landlord and Landlord’s Books and
  Records

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.6

  	
   

  	
  Landlord’s Obligations

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.7

  	
   

  	
  Landlord Default

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  Article V —

  	
  USE AND OPERATION OF PREMISES

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
   

  	
  Casino Use

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.2

  	
   

  	
  Surveillance Room and Security

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.3

  	
   

  	
  Telephones; Switchboard

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.4

  	
   

  	
  Use of Other Property Facilities

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.5

  	
   

  	
  Operating Supplies

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.6

  	
   

  	
  Permits and Licenses; Gaming Laws

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.7

  	
   

  	
  Casino Mortgages and Transition Procedures

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.8

  	
   

  	
  Tenant’s Initial and Subsequent Capital Investments

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.9

  	
   

  	
  Tenant’s Capital Expense Reserve; Etc

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.10

  	
   

  	
  Current Licensor Standards

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.11

  	
   

  	
  Valet Parking

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.12

  	
   

  	
  Compliance with Licensor Standards

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.13

  	
   

  	
  Casino Functions

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.14

  	
   

  	
  WARN Act Liability

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VI —

  	
  CONDITION OF PREMISES, ALTERATIONS AND REPAIRS

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
   

  	
  As-Is Condition

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.2

  	
   

  	
  Maintenance and Cleaning Obligations

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.3

  	
   

  	
  Alterations

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.4

  	
   

  	
  Conditions of Work

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.5

  	
   

  	
  Inspection of Work

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.6

  	
   

  	
  End of Term

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VII —

  	
  INSURANCE

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
   

  	
  Landlord Insurance

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.2

  	
   

  	
  Tenant’s Insurance

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.3

  	
   

  	
  Policy Requirements

  	
  42

  

 

ii

 

	
  Section 7.4

  	
   

  	
  Additional Insurance Terms

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VIII —

  	
  DAMAGE OR DESTRUCTION AND CONDEMNATION

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
   

  	
  Damage and Destruction

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.2

  	
   

  	
  Condemnation

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IX —

  	
  ASSIGNMENT AND SUBLETTING

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1

  	
   

  	
  Transfers

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.2

  	
   

  	
  Notice of Transfer; Further Consent

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.3

  	
   

  	
  Subleases

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.4

  	
   

  	
  Landlord Acts

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.5

  	
   

  	
  Assignment of Sublease(s)

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.6

  	
   

  	
  Bankruptcy Provisions

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.7

  	
   

  	
  Bankruptcy of Assignee

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.8

  	
   

  	
  Survival

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  Article X —

  	
  LANDLORD’S RIGHT TO SELL, ETC., SUBORDINATION

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1

  	
   

  	
  Mortgages

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.2

  	
   

  	
  Subordination

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.3

  	
   

  	
  Tenant Obligations

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XI —

  	
  OBLIGATIONS OF TENANT; INDEMNIFICATION OF LANDLORD

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
   

  	
  Compliance with Laws; Licensor Standards, Etc

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.2

  	
   

  	
  Notice

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.3

  	
   

  	
  Indemnity

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.4

  	
   

  	
  Discharge of Liens

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.5

  	
   

  	
  Liability for Liens

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.6

  	
   

  	
  Gaming Authority Complaints

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.7

  	
   

  	
  Waiver of Subrogation

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.8

  	
   

  	
  Consequential Damages

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.9

  	
   

  	
  Casino Entertainment Tax

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XII —

  	
  DEFAULT BY TENANT; REMEDIES

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1

  	
   

  	
  Defaults

  	
  56

  

 

iii

 

	
  Section 12.2

  	
   

  	
  Remedies

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.3

  	
   

  	
  Certain Default Obligations

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.4

  	
   

  	
  Landlord’s Lien

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.5

  	
   

  	
  Legal Actions

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.6

  	
   

  	
  Legal Fees

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.7

  	
   

  	
  Landlord Performance

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.8

  	
   

  	
  Interest on Past Due Rent

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XIII —

  	
  NO WAIVER

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.1

  	
   

  	
  No Waiver

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.2

  	
   

  	
  No Exclusive Remedies

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XIV —

  	
  ESTOPPEL CERTIFICATES

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.1

  	
   

  	
  From Tenant

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.2

  	
   

  	
  From Landlord

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XV —

  	
  QUIET ENJOYMENT

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XVI —

  	
  SURRENDER

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 16.1

  	
   

  	
  End of Term

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 16.2

  	
   

  	
  Holding Over

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XVII —

  	
  ACCESS

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 17.1

  	
   

  	
  Landlord Access

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 17.2

  	
   

  	
  Landlord Work

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XVIII —

  	
  ENVIRONMENTAL MATTERS

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.1

  	
   

  	
  Restricted Use

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.2

  	
   

  	
  Notice

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.3

  	
   

  	
  Landlord Rights

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.4

  	
   

  	
  Remedial Actions

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.5

  	
   

  	
  Indemnity

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.6

  	
   

  	
  Remedial Work

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 18.7

  	
   

  	
  Landlord Studies

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XIX —

  	
  FINANCIAL STATEMENTS

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XX —

  	
  LIMITATION OF LIABILITY

  	
  69

  

 

iv

 

	
  Article XXI —

  	
  MISCELLANEOUS PROVISIONS

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.1

  	
   

  	
  Waiver of Jury Trial

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.2

  	
   

  	
  Certain Additional Definitions

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.3

  	
   

  	
  Construction of Lease

  	
  70

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.4

  	
   

  	
  Notices

  	
  70

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.5

  	
   

  	
  No Brokers

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.6

  	
   

  	
  Memorandum of Lease

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.7

  	
   

  	
  Time; Force Majeure

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.8

  	
   

  	
  Waiver of Default

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.9

  	
   

  	
  Attorneys’ Fees

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.10

  	
   

  	
  Hold Harmless

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.11

  	
   

  	
  Sublease, Subordination and Attornment

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 21.12

  	
   

  	
  Counterparts and Facsimile Signatures

  	
  72

  

 

v

 

This CASINO
SUBLEASE AGREEMENT (this “Lease”)
is made and entered into as April 1, 2002 by and between HOTSPUR CASINOS NEVADA, INC., a Nevada
corporation (“Landlord”) and RAMPART
RESORT MANAGEMENT, LLC, a Nevada limited liability company (“Tenant”),
who, for good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, agree as follows:

 

ARTICLE I —  DEFINITIONS

 

In addition to
any capitalized terms defined elsewhere in this Lease, the following terms
shall have the definitions set forth below:

 

“Adjusted
Operating Cash Flow” is a term that is used in this
Lease only for the purpose of determining the priority of the use of finds by
Tenant as described in Section 3.11 and means, with respect to a given
Lease Year, (a) gross revenue from the Casino Business for such Lease Year,
less, without duplication (b) all ordinary and necessary operating (non-capital)
expenses incurred by Tenant for the operation of the Casino Business
(calculated in accordance with GAAP), including, but not limited to, any Base
Rent, Fair Market Rent, Percentage Rent, and Additional Rent payable to
Landlord, Tenant’s Operating Cost Obligation, and the Tenant Management Fee;
(c) Tenant’s Approved Capital Expenditures; and (d) payments made by Tenant
with respect to Casino Personal Property Additions Capital Leases.

 

“Adjusted
Operating Cash Flow Statement” is defined in Section
3 .11.

 

“Affiliate”
shall mean, with respect to any corporation,
partnership, limited liability company or other business entity, another
corporation, partnership, limited liability company or other entity business
which directly or indirectly, controls or is controlled by or is under common
control with the former corporation, partnership, limited liability company, or
other business entity. For the purposes of this definition, “control”
(including “controlling”, “controlled by” and “under common control with”) as
used with respect to any corporation, partnership, limited liability company or
other business entity, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such corporation, partnership, limited liability company or other business
entity, whether through the ownership of voting securities, partnership interests,
by contract or otherwise.

 

“Alterations”
is defined in Section 6.3.

 

“Approved
Capital Expenditures” means expenditures made by
Tenant pursuant to the terms of Section 5.9 for the purpose of funding
capital improvements to the Premises or Casino Personal Property Additions and,
if permitted by the Gaming Laws, approved by Landlord.

 

“Arbitration
Commencement Date” is defined in Subsection 3.3(a).

 

“Audit
Period” is defined in Section 4.5.

 

“Bankruptcy
Code” means the provisions of 11 U.S.C. Section 101 et
seq. or any statute of similar purpose or nature as more particularly set forth
in Section 9.6.

 

“Base
Rent” is defined in Section 3.1.

 

1

 

“Buildings”
means (a) the Casino and the Casino Back-of-the-House
Areas, (b) the hotel consisting of approximately 461 guest rooms and 80 suites
together with an approximately 40,000 square foot spa and fitness facility,
approximately 50,000 square feet of conference and banquet center, meeting rooms,
restaurants and associated facilities, (c) an approximately 60,000 square foot
shopping arcade, (d) building equipment and (e) other improvements now or
hereafter erected on the Land. A site plan of the Land showing the Buildings is
attached hereto as Exhibit “A-2” and incorporated herein by this
reference.

 

“Business
Day” means any day other than a Saturday, a Sunday or
a day on which banking institutions in Las Vegas, Nevada, are authorized by law
to close.

 

“Capital
Expense Reserve” is defined in Section 5.9.

 

“Casino”
means the casino building on the Land consisting of
approximately 50,000 square feet, which is an integral part of the Buildings on
the Land and is connected to them by various corridors and internal and
external entries. The approximate location and boundaries of the Casino are
shown on the site plan attached hereto as Exhibit “A-3” and incorporated
herein by this reference. Exhibit “A-3” also shows the location of the
existing restaurants and bars which form a part of the Casino and the
anticipated future location of restaurants and other facilities which will form
part of the Casino in the future. The Casino includes the Casino Public Common
Areas, but excludes the Casino Back-of-the-House Areas.

 

“Casino
Back-of-the-House Areas” means those areas other than
the Casino within or outside of the Buildings used or required to be used by
managers, employees and/or business invitees of Tenant in connection with the
ownership, operation, or management of the Casino Business, as currently configured
or as the same may be reconfigured by or with the approval of Landlord from
time to time during the Term. The current location and configuration of the
Casino Back-of-the-House Areas is shown on Exhibit “A-4” attached hereto
and includes, without limitation, all service entrances, service corridors,
storage rooms, “hard” and “soft” count rooms and casino cages, service kitchens
and/or bars, administrative offices, employee lounges and break rooms
exclusively serving the Casino (if any), and the Surveillance Room.

 

“Casino
Business” means the ownership and/or operation of the
gaming casino business within the Casino and Casino Back-of-the-House Areas and
all ancillary food and beverage outlets, entertainment offerings, marketing and
promotional programs and events, and related activities as operated or offered
at the Casino in connection with such business, as the same may be modified
from time to time during the Term.

 

“Casino
Cash” means the items specified in Exhibit “5.7”,
including, but not limited to the following items:  (i) the amount of any and all cash or cash
equivalents, if any, in slot machines or other Gaming Equipment; (ii) the
amount of cash located in hard and soft count rooms and casino cages in the
Casino or Casino Back-of-the-House Areas; (iii) the amount of any cash, cash
equivalents or certificates of deposits posted to cover liability under the
Casino race book and sports pool operation; (iv) any other cash or cash
equivalents which remain on the Premises or are transferred for the benefit of
Tenant on or about the Commencement Date.

 

2

 

“Casino
Entertainment Laws” means NRS 463.4001 through NRS
463.406 and associated Regulation 13, and any successor statutes and
regulations

 

“Casino
Entertainment Tax” means the tax, imposed by and
further described in the Casino Entertainment Laws.

 

“Casino
FF&E” means the furniture, furnishings, fixtures
and equipment at the time in question situated on or about the Casino or the
Casino Back-of-the-House Areas, whether owned or leased, excluding, however,
the Gaming Equipment, but including, without limitation, all surveillance
equipment (including, without limitation, video recorders, tapes, cameras,
cable, and wiring) on or about the Buildings and all additions, replacements
and substitutions therefor. A schedule of the Casino FF&E existing as of
the date of this Lease will be prepared by Tenant, as provided in Section 3.9,
and will be attached hereto and incorporated herein by this reference as Exhibit
“A-5”.

 

“Casino
Hotel Rooms” is defined in Section 5.4.

 

“Casino
Intellectual Property and Patron Information” means
any and all right, title and interest of Landlord in or to any tangible or
intangible intellectual property, trade marks and names, service marks and
names, copyrights, internet domain names, telephone numbers, computer programs
and software, computer lists, electronic or other data or files, records,
reports or other similar property related to or used in connection with the
operation or management of the Casino, the Casino Back-of-the-House Areas, or
the Casino Business prior to the Commencement Date, including, without
limitation, casino customer or patron names, credit history, gaming history,
complimentaries issued and redeemed, accumulated slot club points and premiums
earned and redeemed, and all such similar information or data, whether stored
or maintained electronically, mechanically, manually, or otherwise related to
customers or patrons of the Casino prior to the Commencement Date; excluding,
however, any telephone numbers, computer lists, files or other information
owned, acquired or maintained by Landlord in connection with the operation of’
the Hotel. A schedule of Casino Intellectual Property and Patron Information
known to Landlord is attached hereto and incorporated herein by this reference
as Exhibit “A-6”.

 

“Casino
Name” shall mean the Rampart Casino at the Resort at
Summerlin.

 

“Casino
Name License Agreement” is defined in Subsection
2.5(b).

 

“Casino
NOI” means the EBITDA of the Casino Business after
deducting the following extraordinary expenses: (a) payments made to Landlord
with respect to Landlord’s Personal Property Investment; (b) payments made to
Tenant with respect to Tenant’s Initial Capital Investment and Tenant’s
Subsequent Capital Investment under Subsection 3.11(a)(iii) and (c)
payments made by Tenant from EBITDA (and not from the Capital Expense Reserve)
for Approved Capital Expenditures pursuant to Section 5.9. An
illustrative example of the calculation of Casino NOT is attached hereto as Exhibit
“A-7”.

 

“Casino
Personal Property” means all of the following as of
the Commencement Date: (i) the Casino FF&E and all other machinery,
appliances, equipment, furniture, fixtures, tangible and intangible personal
property and contractual rights of every kind or nature located in or on,

 

3

 

or attached to, or used or to
be used in connection with the Casino, and/or the Casino Back-of-the-House
Areas and all other trade fixtures which constitute all of the tangible and
intangible personal property assets and contractual rights related to or used
in connection with the Casino, the Casino Back-of-the-House Areas or the Casino
Business; (ii) all Operating Supplies; (iii) all building materials and goods
procured for use or in connection with the foregoing; and (iv) all Gaming
Equipment; including Participating Gaming Equipment.

 

“Casino
Personal Property Additions” means any additions to
and all substitutions, and replacements of Casino Personal Property and the
Casino Personal Property Additions.

 

“Casino
Personal Property Additions Capital Leases” means
capital leases entered into by Tenant for the acquisition of Casino Personal
Property Additions.

 

“Casino
Personal Property Mortgage” is defined in Section
3.9 and means the perfected first security interest in all of the Tenant’s
right, title and interest in the Gaming Equipment that will be granted by
Tenant to the Mortgagee pursuant to a restatement and amendment of certain existing
security documents as described in Section 5.7.

 

“Casino
Public Common Areas” means all areas of the Casino,
which are ancillary to, and open to the public for the use, and enjoyment of,
the Casino, including, but not limited to all lobbies, stairways, elevators,
elevator lobbies, corridors, restrooms, and similar public facilities.

 

“Casino
Standards” means a casino that is of equal or better
quality to that of the Hard Rock Café Casino, 4456 Paradise Road, Las Vegas,
Nevada 89109, as of the Commencement Date.

 

“Casino
Transition Procedures” is defined in Section 5.7
and Exhibit “5.7.”

 

“Closing
Date” means November 20, 2001, the date on which Prime
Landlord acquired the Resort from the Patch Lease Tenant.

 

“Commencement
Date” shall mean the first day of the first calendar
month following the date that all Gaming Authorities approve this Lease, the
Prime Lease and Tenant’s nonrestricted gaming license for the Casino and the
Casino Back-of-the-House Areas. The estimated Commencement Date is April 1, 2002.
When the Commencement Date is known, the Parties will enter into a supplemental
letter that confirms the Commencement Date.

 

“Common
Areas” means all areas, improvements and equipment
within the Buildings and the Land other than Casino Public Common Areas that
are open to the general public and made available or designated from time to
time by Prime Landlord or reasonably necessary for the common, non-exclusive
use and enjoyment of, or benefit by Prime Landlord, and all lessees of all or
any part of the Land, and their employees, customers, invitees, business
invitees and others on or about the Land in connection with any permitted use
under this Lease and not devoted to or for Prime Landlord’s or any one lessee’s
exclusive use and which shall include, without limitation, all driveways,
sidewalks, parking areas, parking structures, landscaped areas, lobbies,
stairways, elevators, elevator lobbies, loading and delivery areas, service
entrances, corridors (excluding guest room corridors in the Hotel), restrooms,
common use interior and exterior signs, if any, and similar public facilities.

 

4

 

“Common
Area Survey” shall have the meaning specified in Section
2.3.

 

“Current
Licensor Standards” shall have the meaning specified
in Section 5.10.

 

“Customary
Hazardous Substances” is defined in Section 18.1.

 

“Default
Rate” means five percent (5%) over the base rate
announced from time to time by Citibank, N.A. in New York, New York, as such
base rate may be adjusted and announced from time to time, or if unavailable,
the parties shall use the prime reference rate of any New York regional bank
selected by Prime Landlord.

 

“Deficiency”
is defined in Subsection 12.3(c).

 

“Deposit
Agreement” is defined in Subsection 5.8(a).

 

“EBITDA”
means earnings before deductions for interest, taxes,
depreciation and amortization, as determined under GAAP.

 

“Eminent
Domain” is defined in Subsection 8.2(a).

 

“Employee
Common Areas” means all areas of the Buildings and the
Land other than Casino Public Common Areas and Common Areas, not open to the general
public, reserved for the non-exclusive use of employees or management personnel
of Prime Landlord, Landlord, Tenant and other lessees of all or any part of the
Resort, and which shall include, without limitation, the employee cafeteria,
employee parking areas, employee break rooms, etc. as designated and/or
reconfigured by Prime Landlord from time to time during the Term.

 

“Environmental
Claims” is defined in Section 18.3.

 

“Environmental
Laws” is defined in Section 18.7.

 

“Exclusivity
Provisions” is defined in Section 2.12.

 

“Exhibits”
means the exhibits to this Lease which are described
in the List of Exhibits on the page following the signature page of this Lease,
each of which is attached to this Lease and incorporated herein by this
reference and “Exhibit” means one of the
Exhibits.

 

“Fair
Market Rent” is defined in Section 3.3.

 

“GAAP”
means generally accepted accounting principles,
consistently applied.

 

“Gaming
Authorities” means, collectively, the Nevada State
Gaming Control Board, Nevada Gaming Commission, the City of Las Vegas, and any
other governmental agency or entity with jurisdiction over Prime Landlord,
Landlord, Tenant and/or the Casino Business in accordance with applicable
Gaming Laws.

 

“Gaming
Equipment” means, collectively, all gaming devices as
that term is defined in Nevada Revised Statutes (“NRS”)
463.0155, games as that term is defined in NRS 463.0152 and associated
equipment as that term is defined in NRS 463.0136 existing at the Resort on the
date 

 

5

 

of this Lease, including any
Participating Gaming Equipment, and any replacements and substitutions
therefor, but excluding any additions thereto. Exhibit “A-5” will include
a schedule of the Gaming Equipment.

 

“Gaming
Laws” mean, collectively, the Nevada Gaming Control
Act and the regulations promulgated thereunder as well as any other Laws
applicable to Prime Landlord, Landlord, Tenant, or Tenant’s gaming operations
within the Premises.

 

“Hamada
Lease” is defined in Section 2.12.

 

“Hazardous
Substances” is defined in Section 18.7.

 

“Hotel”
means (a) two (2) hotel buildings consisting of
approximately 461 guest rooms and 80 suites; (b) an approximately 40,000 square
foot spa and fitness facility; and (c) an approximately 50,000 square feet of
conference and banquet center, meeting rooms, restaurants and associated
facilities, all located on the Land, the approximate location and boundaries of
which are shown on the site plan attached hereto as Exhibit “A-2” and
incorporated herein by this reference. The Hotel does not include the Casino,
the Casino Back-of-the-House Areas, the Common Areas or the Employee Common
Areas.

 

“Hotel
Name” means the JW Marriott Las Vegas Resort, Spa
& Golf at the Resort at Summerlin.

 

“Hotel
Operator” means the Person which contracts with Prime
Landlord for the operation of the Hotel and the Resort (other than the Casino
and the Casino Back-of-the-House Areas) and if there is no such Person, Hotel Operator
means Prime Landlord.

 

“Hughes”
means Howard Hughes Properties, Inc.

 

“Improvements”
means the Buildings and other improvements now or hereafter
erected on the Land.

 

“Inspector”
is defined in Section 6.5.

 

“Land”
means that certain real property owned in fee simple
by Prime Landlord and described on Exhibit “A-1” attached hereto and
incorporated herein by this reference.

 

“Landlord”
means Hotspur Casinos Nevada, Inc. and its successors
and assigns.

 

“Landlord
Claims” is defined in Subsection 11.3(a).

 

“Landlord
Guarantor” shall mean Hotspur Investment Holdings Inc.

 

“Landlord
Indemnified Parties” is defined in Subsection
11.3(a).

 

“Landlord’s
Personal Property Investment” is defined in Section
3.10.

 

“Landlord’s
Rent Notice” is defined in Subsection 3.3(a).

 

6

 

“Laws”
means all laws, ordinances, statutes, rules,
regulations, court decisions, and administrative rulings now or hereafter
promulgated, and all revisions, modifications, amendments, repeals, and other
changes thereof and thereto.

 

“Lease”
means this Sublease and the Exhibits hereto,
which are incorporated herein by this reference.

 

“Lease
Deposit” means the security deposit under this Lease,
which described in Section 3.8.

 

“Lease
Expenses” means all rent, reimbursement and other
amounts paid by Tenant to Landlord under this Lease.

 

“Lease
Termination Fee” is defined in Section 2.9.

 

“Lease
Year” means each period of twelve (12) consecutive
calendar months during the Term, beginning April 1st and ending
March 31st.

 

“Letter
of Credit” is defined in Subsection 3.8(b).

 

“License
Agreement” means any franchise agreement, license
agreement, or other similar agreement now or hereafter entered into between
Prime Landlord and any reputable, nationally recognized hotel or resort
company, which provides for the affiliation of the Hotel with such company.

 

“Licensor”
means the reputable, nationally recognized hotel or
resort company, which is the licensor or franchisor under any License
Agreement.

 

“Licensor
Standards” mean the Current Licensor Standards for
operation and maintenance of the Resort, as amended from time to time by the
Licensor and imposed upon the Resort pursuant to the terms of the License
Agreement.

 

“Marriott”
means Marriott International.

 

“Material
Violation of Gaming Laws” means a violation of the
Gaming Laws, which if not remedied could result in suspension or revocation of
the gaming license of the Person violating such Gaming Laws.

 

“Mendenhall”
is defined in Section 9.1.

 

“Millennium”
is defined in Section 9.1.

 

“Mortgagee”
means the holder of any security interest, mortgage or
deed of trust (collectively, a “Mortgage”)
made or given by Prime Landlord encumbering Prime Landlord’s interest in all or
any part of the Resort.

 

“NRS”
means Nevada Revised Statutes.

 

“Operating
Costs” are defined in Section 4.4.

 

7

 

“Operating
Cost Consultants” is defined in Subsection 4.2(c).

 

“Operating
Supplies” means all consumable items used in or
reasonably required in connection with the operation of the Casino Business,
including, without limitation, food and beverages, accounting and
administrative forms, and video tapes and other surveillance supplies.

 

“Participating
Gaming Equipment” means Gaming Equipment that is
leased or utilized by Tenant on a participation basis with a licensed operator
of an inter-casino linked system or operator of a slot machine route such as
Megabucks, Wheel of Fortune or Monopoly.

 

“Parties”
means Landlord and Tenant and “Party”
refers to either of them.

 

“Patch
Lease” means that certain Gaming Property lease dated
as of November 20, 2001, wherein Prime Landlord is landlord and the Patch Lease
Tenant is tenant pursuant to which the Patch Lease Tenant has retained title to
the Gaming Equipment pending the Commencement Date and pursuant to which the Patch
Lease Tenant is operating the Casino.

 

“Patch
Lease Tenant” means The Resort at Summerlin Limited
Partnership, a Nevada limited partnership.

 

“Percentage
Rent” is defined in Section 3.5.

 

“Percentage
Rent Statement” is defined in Section 3.5.

 

“Person”
or  “person” means
a natural person, a partnership, a corporation, a limited liability company, a
trust and/or any other form of business association or entity.

 

“Personal
Property Reimbursement Payments” means payments made
by Tenant to Landlord pursuant to the terms of Section 3.10.

 

“Permitted
Users” is defined in Section 2.2.

 

“Premises”
means the Casino and the Casino Back-of-the-House
Areas, but does not include the Casino Personal Property.

 

“Prime
Landlord” means Hotspur Resorts Nevada, Inc., its
successors and assigns.

 

“Prime
Lease” means that certain lease of even date with this
Lease, wherein Prime Landlord is landlord, and Landlord is tenant, including,
but not limited to, all renewals, extensions, modifications and amendments
thereof.

 

“Promotional
Fee” is defined in Subsection 2.6(e).

 

“Property
Facilities” is defined in Section 5.4.

 

“Property
Taxes” means all real property taxes, ad valorem taxes
in the nature of real property taxes, assessments and impositions charged by
any government agency or entity with jurisdiction, including, but not limited
to, any entity with jurisdiction under any covenants, conditions or restrictions
that affect the Land.

 

8

 

“Purchase
Agreement” means that certain Exchange Agreement dated
as of September 6, 2001 between Prime Landlord, as transferee, and The Resort
at Summerlin, Inc. and The Resort at Summerlin Limited Partnership, as
transferors.

 

“Remaining
Property” means that portion of the Resort that is not
the Hotel or the Casino or the Casino Back-of-the-House Areas, and includes the
Common Areas and the Employee Common Areas.

 

“Remedial
Work” is defined in Section 18.6.

 

“Rent”
is defined in Section 3.4.

 

“Rent
Adjustment Date” is defined in Section 3.2.

 

“Required
Bar” is defined in Subsection 2.6(a).

 

“Required
Food Facility” is defined in Subsection 2.6(a).

 

“Required
Food Facility Location” is defined in Subsection
2.6(c).

 

“Required
Hotel Rooms” is defined in Subsection 2.6(a).

 

“Required
Miscellaneous Facilities” is defined in Subsection
2.6(a).

 

“Resort”
means the Land and Improvements, including the Hotel,
the Casino, the Casino Back-of-the-House Areas, and the Remaining Property.

 

“Resort
Name” means The Resort at Summerlin, the name of the
resort hotel and casino operated on the Land as of the Commencement Date.

 

“Spiedini
Lease” is defined in Section 2.12.

 

“Sublease”
is defined in Section 9.3.

 

“Subtenant”
is defined in Section 9.3.

 

“Summerlin
CC&Rs” means those certain covenants, conditions, restrictions
and agreements filed in the official real estate records of Clark County, Nevada
under in Book 960815 as Document 01189, in Book 970521 as Document No. 01087,
and in Book 960815 as document 01190.

 

“Surveillance
Room” means that portion of the Premises more
particularly shown on Exhibit “A-4”, which shall serve as a management
and control center for Tenant’s security services.

 

“Tenant”
means Rampart Resort Management, LLC.

 

“Tenant
Claims” is defined in Subsection 11.3(b).

 

9

 

“Tenant
Indemnified Parties” is defined in Subsection
11.3(b).

 

“Tenant
Investment Gaming Equipment” is defined in Subsection
5.9(b).

 

“Tenant
Management Fees” means management fees equal to Two
Million Dollars ($2,000,000) per annum, which are paid or payable by Tenant to
an Affiliate of Tenant for the Management of the Casino Business.

 

“Tenant
Promotions” is defined in Subsection 2.6(e).

 

“Tenant’s
Actual Operating Cost Statement” is defined in Section
4.3.

 

“Tenant’s
Base Year Operating Costs” is defined in Subsection
4.2(b).

 

“Tenant’s
Gaming Equipment Investment” is defined in Subsection
5.9(b).

 

“Tenant’s
Initial Capital Investment” is defined in Subsection
5.8(a).

 

“Tenant Invitees” is defined in Section 5.4.

 

“Tenant’s
Operating Cost Estimate” is defined in Section 4.3.

 

“Tenant’s Operating Cost Obligation” is defined in Section
4.1.

 

“Tenant’s Rent Notice” is defined in Subsection 3.3(a).

 

“Tenant’s Share” is defined in Section 4.4.

 

“Tenant’s
Subsequent Capital Investments” is defined in Subsection
5.8(b).

 

“Term”
means the term of this Lease, which shall commence on
the Commencement Date and shall expire at 11:59 p.m. on the last day of the
calendar month proceeding the tenth (10th) anniversary of the
Commencement Date.

 

“Transfer”
is defined in Section 9.1.

 

“Transferee”
is defined in Section 2.11.

 

“Work”
is defined in Section 6.4.

 

ARTICLE II —  PREMISES AND OTHER AREAS; TERM

 

Section 2.1            Lease of Premises

 

(a)           For
the Term, Landlord, in consideration of the rents herein reserved and of the
terms, provisions, covenants and agreements on the part of Tenant to be kept,
observed and performed, does hereby lease, license, assign, transfer and demise
the Premises solely and exclusively unto Tenant, and Tenant does hereby hire
and take the Premises from Landlord. The Premises are shown on Exhibit “A-3.”

 

10

 

(b)           Tenant
shall have and is hereby granted the sole and exclusive right to operate the
Casino Business and the Gaming Equipment on or about the Land and within the
Resort and neither Prime Landlord, Landlord, nor any other lessee, licensee,
manager, operator or any other party under contract with Prime Landlord or
Landlord or on or about the Resort with Prime Landlord’s or Landlord’s
permission or at Prime Landlord’s or Landlord’s sufferance shall have any right
to operate a Casino Business or any Gaming Equipment. Landlord shall cause
Prime Landlord to include a corresponding prohibition of any such use in any
contract, lease, license, agreement or other document or instrument pursuant to
which Prime Landlord grants, permits, covenants, or otherwise agrees to the use
or enjoyment of any other part of the Resort by any third party. Without
limiting the generality of the foregoing, Landlord expressly acknowledges that
NRS 463.245 provides that a gaming license may not be issued to any person if
the issuance would result in more than one licensed operation at a single
establishment. Nothing contained in this Lease shall prohibit or restrict
Tenant from contracting with third parties to provide gaming services to Tenant
and its Casino Business in accordance with all applicable Gaming Laws,
including, without limitation, race book and sports pool services, inter-casino
linked systems, Participating Gaming Equipment and similar gaming-related
services.

 

(c)           The
parties expressly agree and acknowledge that the Premises include, without
limitation, the following food and beverage outlets currently installed in the
Casino: the “Round Bar,” “Addisons,” the
sports book bar, and the north and south service bars, all of which are shown
on Exhibit “A-3”. The Premises will also include the Required Food
Facility that Tenant will install in the future as provided in Subsection
2.6(a). Landlord acknowledges that such food and beverage outlets are an
integral part of the Casino Business, and that during the Term Tenant shall have
the sole and exclusive right to operate said food and beverage outlets in the
Casino and to retain any and all revenues and earnings therefrom and to suffer
any and all losses resulting therefrom. The parties also acknowledge that the
Premises may (but shall not be required to) include other food and beverage
outlets installed by Tenant in the Casino from time to time during the Term.

 

Section 2.2            Common
Areas

 

(a)           During
the Term, Landlord hereby grants to Tenant a non-exclusive, irrevocable right
and license to use the Common Areas and the Employee Common Areas in common
with Landlord, Prime Landlord, and its other lessees and licensees and, as
applicable, the respective employees, customers, invitees, business invitees,
contractors, agents, and others on or about the Land in connection with any use
or activity permitted hereunder (collectively, “Permitted
Users”) of Landlord, Prime Landlord, and its other lessees and
licensees. Prime Landlord shall have the right to promulgate reasonable rules
and regulations with respect to such use, provided that the same are non-discriminatory
among all lessees of Prime Landlord and shall have exclusive control over and
the exclusive right to manage the Common Areas and Employee Common Areas. Tenant
shall have no dominion or control over the Common Areas or the Employee Common
Areas. Prime Landlord shall have the right to make reasonable alterations,
expansions, contractions, relocations and other adjustments to the Common Areas
and Employee Common Areas from time to time as Prime Landlord deems reasonable
or appropriate, and no alteration or diminution thereof shall be deemed a
constructive or actual eviction of Tenant or entitle Tenant to compensation or
a reduction or abatement of Rent. In exercising control over and managing the
Common Areas and Employee Common Areas, Prime Landlord shall act

 

11

 

reasonably and in a manner that
does not unreasonably interfere with or have a material adverse impact upon
Tenant’s use of the Common Areas or Employee Common Areas.

 

(b)           During
the Term, Landlord hereby reserves and Tenant hereby grants to Prime Landlord,
Landlord, and their Permitted Users an irrevocable, non-exclusive right and
license to use the Casino Public Common Areas in common with Tenant and Tenant’s
Permitted Users. Notwithstanding any other provision of this Lease, Tenant
shall not interfere in any manner whatsoever with ingress to and egress from
the various interior and exterior parts of the Resort through the Casino Public
Common Areas by Prime Landlord, Landlord or any of their Permitted Users. Further,
in exercising control over the Casino Public Common Areas, Tenant shall act
reasonably and in a manner that does not unreasonably interfere with or have a
material adverse effect upon Prime Landlord’s or Landlord’s use of the Casino
Public Common Areas.

 

Section 2.3            Reciprocal
Rights

 

During the
Term, Landlord and Tenant hereby grant to each other and their Permitted Users
irrevocable, reciprocal rights of pedestrian access, ingress and egress through
the Common Areas and Casino Public Common Areas. Similarly, during the Term
Landlord and Tenant hereby grant to each other and their Permitted Users
irrevocable, reciprocal rights of vehicular access, ingress and egress with
respect to the vehicular drives, driveways and parking lots of the Resort. Nothing
contained in this Section 2.3 shall limit Prime Landlord’s, Landlord’s
or Tenant’s rights to temporarily close or partition such common areas in the
course of any maintenance, repairs, replacements, alterations, or other similar
activities contemplated under this Lease; provided, however, that Prime
Landlord’s rights under Subsection 2.2(b) shall govern over any
conflicting provisions of this Section 2.3; and provided further that in
exercising such rights Prime Landlord, Landlord, and Tenant shall each act
reasonably and in a manner that does not unreasonably interfere with or have a
material adverse impact upon the operations of the Resort. Any lease, license
or similar agreement with any third party to portions of the Resort shall
include similar reciprocal rights of access, ingress and egress between
adjacent common areas for the benefit of all Permitted Users. If a Mortgagee
requires it, Landlord shall cause a survey of the Common Areas, Employee Common
Areas, and Casino Public Common Areas to be prepared by a professional engineer
chosen by Landlord (the “Common Area Survey”).
When the Common Area Survey is completed, Prime Landlord and Landlord will
enter into a mutually acceptable amendment of the Prime Lease, and Landlord and
Tenant will enter into a mutually acceptable amendment to this Lease, which
shall establish specific licenses and easements shown on the Common Area Survey
in favor of Prime Landlord, Landlord, Tenant and the Permitted Users in lieu of
the general licenses and easements specified in Sections 2.2 and 2.3
this Lease. The Common Area Survey shall be subject to the reasonable approval
of Prime Landlord, Landlord, and Tenant. Landlord will cause Prime Landlord to
pay all reasonable costs of preparing the Common Area Survey and the amendment
of this Lease contemplated by this Section 2.3.

 

Section 2.4            Signs

 

At its sole
cost and expense, Tenant shall have the right to install such interior signs in
the Premises as Tenant may reasonably determine from time to time, provided
that each such sign is in full compliance with the standards for Tenant’s use
of the Premises that are set forth in

 

12

 

Section 5.1
and otherwise in this Lease, any applicable Licensor Standards, laws, Summerlin
CC&Rs, and the Casino Name License Agreement, Tenant shall also have the
right to install such temporary and permanent exterior signs as Landlord may
reasonably approve from time to time, provided that each such exterior sign is
in compliance with this Lease, any applicable laws, Licensor Standards,
Summerlin CC&Rs, and the Casino Name License Agreement. All such exterior
signs that are for the exclusive use of Tenant shall be considered part of the
Premises. Tenant shall pay all costs of such exterior signs that are for Tenant’s
exclusive use, including, but not limited to, the costs to obtain any required
permits and authorizations for such signs, the costs of erecting and
maintaining such signs, and the costs of operating, repairing and replacing
such signs. If any exterior sign is shared with Prime Landlord, Landlord or
other lessees, as part of the Operating Costs, Tenant shall pay its equitable
share of all costs of such shared signs, including, but not limited to, the
costs to obtain any required permits and authorizations for such shared signs,
the costs of erecting and maintaining such shared signs, and the costs of
operating, maintaining, repairing, and replacing such shared signs. Landlord
and Tenant acknowledge and agree that Licensor may be Marriott and it is highly
likely that Marriott will not permit the name “Marriott” to be used in
connection with the Casino or the Casino Back-of-the-House Areas in any manner whatsoever
because Marriott is not associated at this time with any casino operation in
North America. Landlord and Tenant will use reasonable commercial efforts to
obtain such approvals from Marriott (if any are required) to install
commercially effective exterior signage for the Casino. Similarly, Landlord and
Tenant acknowledge and agree that the Resort is located in Summerlin and that
the Summerlin CC&Rs impose restrictions upon exterior signage in Summerlin.
Landlord and Tenant will use reasonable commercial efforts to obtain approvals
from the appropriate party under the Summerlin CC&Rs to install
commercially effective signage for the Casino.

 

Section 2.5            Casino
Intellectual Property and Patron Information

 

(a)           Landlord
hereby grants to Tenant an exclusive, irrevocable license for the Term to use
the Casino Intellectual Property and Patron Information in connection with
Tenant’s use, operation or management of the Casino, the Casino Back-of-the-House
Areas and the Casino Business. Notwithstanding any other provision of this
Lease, during the Term Tenant shall not use the Casino Intellectual Property
and Patron Information with respect to any business except the Casino Business.
Landlord shall deliver any and all tangible personal property in its possession
or control relating to or necessary for the use of the Casino Intellectual
Property and Patron Information to Tenant on the Commencement Date. Tenant
acknowledges that Landlord is assigning its right to the Casino Intellectual
Property and Patron Information on an “As-Is, Where-Is” basis, and Landlord
makes no representation or warranty with respect to the quality, accuracy,
completeness or suitability of the Casino Intellectual Property and Patron
Information for any particular purpose. During the term of this Lease, Tenant
shall maintain ownership of the Casino Intellectual Property and Patron
Information and shall use reasonable commercial efforts to add to and enhance
the quantity and quality of the Casino Intellectual Property and Patron
Information with respect to the Casino. At the termination of this Lease, at no
cost to Landlord, but on an “As-Is, Where-Is” basis, Tenant shall assign to
Landlord or its designee all of the Tenant’s right, title, and interest in all
Casino Intellectual Property and Patron Information existing on the date of
termination of this Lease. Notwithstanding the assignment to Landlord, after
the termination of this Lease Tenant shall have an irrevocable license to use
the Casino Intellectual Property and Patron Information in any manner that is
not competitive with

 

13

 

Landlord’s use thereof. For the
purposes of this Lease, Tenant’s use of the Casino Intellectual Property and
Patron Information shall be deemed not to be competitive with Landlord’s use
after the termination of this Lease if all of the following conditions are met
with respect to the Casino Intellectual Property and Patron Information: (i) it
is not be used, directly or indirectly, in connection with any gaming facility
within a 5-mile radius of the Resort; (ii) it is not used, directly or
indirectly, in any gaming facility that is not owned and/or controlled by
Tenant or its principals, William J. Paulos and William C. Wortman, and (iii)
except for its use in the manner authorized by foregoing clauses (i) and (ii),
it shall be keep strictly confidential by Tenant and its principals and shall
not be disseminated to or otherwise made available to any Person. Tenant
expressly agrees and acknowledges that any default with respect to the
foregoing agreements may have a material, adverse effect on the financial
success of the operation of the Hotel and Casino. Tenant further agrees that
the money damages that Landlord may suffer as a result of any breach by Tenant
or its principals under this Subsection 2.5(a) may not be an adequate
remedy. Accordingly, Landlord shall have the right to specifically enforce the
restrictive covenants under this Subsection 2.5(a) by injunctive or
other equitable relief. The provisions of this Subsection 2.5(a) shall
survive the expiration or termination of this Lease.

 

(b)           Tenant
shall operate the Casino, the Casino Back-of-the-House Areas and Casino
Business under the Casino Name. Any changes to the Casino Name shall be subject
to the prior written approval of Landlord, Hughes, and Licensor, if required
under the License Agreement. Any and all costs and expenses with respect to the
Casino Name or any change thereof shall be paid by Tenant. Attached to this
Lease as Exhibit 2.5(b) is a copy of the License Agreement that Prime
Landlord is entering into with Hughes (“Casino
Name License Agreement”). Tenant shall fully comply with the terms
of the Casino Name License Agreement that relate to the Casino Name. It shall
be a material default under this Lease if Tenant fails to fully comply with
such terms within fifteen (15) days after written notice from Landlord.

 

Section 2.6            Required
Resort Hotel Amenities and Facilities

 

(a)           Landlord
expressly acknowledges that pursuant to NRS 463.1605, the Nevada Gaming
Commission may not approve a nonrestricted gaming license for an establishment
that is not a “resort hotel,” and that pursuant to NRS 463.01865, in addition
to a gaming area, a “resort hotel” must have (i) more than two hundred (200)
rooms available for sleeping accommodations (the “Required Hotel Rooms”), (ii) at least one bar with permanent
seating capacity for more than thirty (30) patrons that serves alcoholic
beverages sold by the drink for consumption on the premises (the “Required Bar”), and (iii) at least one
restaurant with permanent seating capacity for more than sixty (60) patrons that
is open to the public twenty-four (24) hours each day and seven (7) days each
week (the “Required Food Facility”).
Landlord further acknowledges that there may be local gaming laws, local zoning
ordinances, codes and regulations (including use permits), recorded covenants,
conditions and restrictions encumbering the Land, and other applicable laws or
encumbrances, that require the Casino Business to offer certain other non-gaming
amenities and facilities (the “Required
Miscellaneous Facilities”). The Premises include the Required Bar,
but not the Required Hotel Rooms or the Required Food Facility. Landlord and
Tenant are not aware of any Required Miscellaneous Facilities for the Casino or
the Casino Back-of-the-House Areas.

 

14

 

(b)           During
the Term, Landlord will cause Prime Landlord to operate, offer, and keep open
for business the Required Hotel Rooms. Until the date that Tenant completes and
opens a Required Food Facility within the Premises, Landlord will cause Prime
Landlord to operate, offer, and keep open for business the Required Food
Facility and permit Tenant and its Permitted Users to use the Required Food
Facility in common with all other Permitted Users of the Resort. The Required
Food Facility that Landlord will cause Prime Landlord to operate will be a
combination of the Ceres Restaurant, which shall be open daily from 6:30 a.m.
to 10:00 p.m. and the Irish Pub Restaurant, which shall be open daily from
10:00 p.m. to 6:30 a.m. Neither of these facilities shall be part of the
Premises. The Ceres Restaurant and the Irish Pub Restaurant are shown on Exhibit
“A-3.”  The menu for the Irish Pub
Restaurant has been changed to include breakfast offerings. Landlord shall have
no obligation to cause Prime Landlord to operate a Required Food Facility after
Tenant opens its Required Food Facility.

 

(c)           At
Tenant’s sole cost and expense, Tenant shall construct, equip and open for
business a Required Food Facility within the Premises as soon as practicably
possible after the date of this Lease, but no later than June 30, 2002. The
Required Food Facility will be located in the area shown on Exhibit “A-3.”
(the “Required Food Facility Location”). Landlord will make the part of the
Required Food Facility Location that is colored red on Exhibit “A-3”
available to Tenant on the Commencement Date and shall make the balance of the
Required Food Facility Location available to Tenant from time to time as it is
vacated by current tenants. Landlord and Tenant acknowledge that as of the date
of this Lease, all such current tenants have vacated their spaces, except
Occhiali, Inc. Landlord will deliver the space currently occupied by Occhiali,
Inc. as soon as possible after the date of this Lease. Landlord has sent a
relocation notice to Occhiali, Inc. and will diligently pursue the relocation
of Occhiali, Inc. or the termination of the lease with Occhiali, Inc.

 

(d)           Intentionally
Left Blank.

 

(e)           Tenant
acknowledges that pursuant to the Patch Lease, Prime Landlord permitted the
Patch Lease Tenant to spend a monthly promotional fee in the amount of One
Hundred Thousand Dollars ($100,000) on the first day of January, February, and
March, 2002. On the Commencement Date Landlord will pay One Hundred Thousand
Dollars ($100,000) to Tenant (the “Promotional Fee”). Tenant shall use the
Promotional Fee for special promotions of the Casino for the month of April
2002 (“Tenant Promotions”). The Tenant Promotions are fully described in Exhibit
2.6(e). Tenant represents and warrants to Landlord that Tenant shall cause
the Tenant Promotions to be conducted at the times and in the manner described
in Exhibit 2.6(e).

 

Section 2.7            Non-Compete
Covenants

 

During the
Term, neither Tenant nor any parent or subsidiary entity, nor any entity
controlled by or under common control with Tenant, nor any member, manager,
shareholder, partner, director or officer of Tenant or any of the foregoing
entities shall own, lease, manage or operate any nonrestricted gaming casino nor
have any ownership or equity interest greater than five percent (5%) in any
nonrestricted gaming casino within a five-mile radius of the Land, unless such
participation is consented to by Prime Landlord and Landlord in writing, in
their sole and absolute discretion. Tenant expressly agrees and acknowledges
that any such competitive

 

15

 

casino may have a material,
adverse effect on the financial success of the operation of the Hotel and
Casino. Tenant further agrees that the money damages that Prime Landlord and
Landlord may suffer as a result of Tenant’s default under this Section 2.7
may not be an adequate remedy. Accordingly, Prime Landlord and Landlord shall
have the right to specifically enforce the restrictive covenants under this Section
2.7 by injunctive or other equitable relief.

 

Section 2.8            Tenant’s
Operating Covenant

 

Tenant shall
commence operations of the Casino Business in the Premises on the Commencement
Date, and shall continuously operate the Casino Business on the entire Premises
without interruption, twenty four (24) hours per day, each day of the year
throughout the Term. The covenant set forth in this Section 2.8
constitutes material, bargained for consideration for Landlord’s agreement to
enter into this Lease, and the parties acknowledge that no adequate remedy at
law may exist for breach of the foregoing covenant. Therefore, in the event of
a breach of this Section 2.8 Landlord shall have the right, at Landlord’s
option, in addition to Landlord’s remedies for a default by Tenant hereunder,
to obtain an order for specific performance of the foregoing covenant.

 

Section 2.9            Landlord’s
Termination Option

 

Landlord shall
have the right to terminate this Lease upon the sale of the Resort to a bona
fide third party purchaser that is not an Affiliate of Prime Landlord or
Landlord upon sixty (60) days prior written notice to Tenant, provided that
upon termination of this Lease, Landlord shall pay to Tenant a “Lease Termination Fee” equal to the sum of
the following amounts: (a) Two Million Dollars ($2,000,000); plus (b) the
unreturned balance, if any, of Tenant’s Initial Capital Investment and Tenant’s
Subsequent Capital Investment; plus (c) an amount equal to the Casino NOI for
those months, if any, during the last full 12 months prior to the date of
termination for which no Percentage Rent was payable, but either Base Rent or
Fair Market Rent was payable; plus (d) an amount equal to fifty percent (50%)
of the Casino NOI for those months, if any, during the last full 12 months
prior to the date of termination for which Percentage Rent was payable. The
rights of Landlord under this Section 2.9 shall inure to the benefit of
any successor to Landlord, including, without limitation, any lender of Landlord.

 

Section 2.10         Tenant’s
Termination Option

 

If the Resort
is sold, but Landlord does not exercise its Lease termination option specified
in Section 2.9, Tenant shall have the option to terminate this Lease
effective on the date of closing of the sale of the Resort by written notice to
Landlord no later than ten (10) Business Days after Tenant receives written
notice from Landlord that Prime Landlord intends to sell the Resort, but
Landlord does not intend to exercise its option to terminate this Lease pursuant
to Section 2.9. Landlord’s notice to Tenant shall include a description
and resume of the potential purchaser, references, and such additional non-confidential
information as Landlord may have with respect to the potential purchaser and
its principals. Tenant’s right to terminate shall be effective only if the sale
of the Resort closes and only if Tenant is not in default under this Lease at
any time between the date that Tenant receives Landlord’s notice and the date
of closing of the sale of the Resort. Tenant shall not be entitled to a Lease
Termination Fee if Tenant elects to terminate pursuant to this Section 2.10.
If Tenant is obligated to pay Base Rent and Percentage

 

16

 

Rent under this Lease at the
time of the sale and this Lease is not terminated, Tenant shall pay Fair Market
Rent in lieu of Base Rent and Percentage Rent until the potential purchaser is
licensed or is found suitable. Thereafter, Tenant shall pay Base Rent and
Percentage Rent in lieu of Fair Market Rent.

 

Section 2.11         Mortgagee’s
Termination Option

 

If Prime
Landlord defaults under a Mortgage and the Mortgagee and/or its designee or any
other transferee (the “Transferee”)
obtains title to the Property by Judicial or nonjudicial foreclosure or deed in
lieu of foreclosure or by any other means, such Transferee shall have the right
to terminate this Lease by providing written notice to Tenant no less than
thirty (30) days prior to the date of termination of this Lease. In such event,
Landlord Guarantor shall pay to the Tenant the Lease Termination Fee. In no
event will such Transferee have any obligation to pay Tenant the Lease
Termination Fee. Exhibit 2.11 is a form of Guaranty that Landlord
Guarantor shall provide to Tenant to guarantee payment to Tenant of the Lease
Termination Fee pursuant to this Section 2.11.

 

Section 2.12         Exclusivity
Provisions

 

Tenant
acknowledges that Prime Landlord is a party to a lease dated November 10, 1998
with Hamada Resort, Inc. (the “Hamada Lease”),
which was rejected in a bankruptcy proceeding Section 6.8 of the Hamada
Lease prohibits the Prime Landlord from leasing to another restaurant tenant at
the Resort that has Asian Foods as its primary menu items. Similarly, Tenant
acknowledges that Prime Landlord is a party to a lease dated November 2, 1998
with Spiedini, Inc. (the “Spiedini Lease”),
which was rejected in a bankruptcy proceeding. Section 6.8 of the Spiedini
Lease prohibits the Prime Landlord from leasing to another restaurant tenant at
the Resort that has Italian Food as its primary menu items. The foregoing
restrictions in the Hamada Lease and the Spiedini Lease are referred to as the “Exclusivity Provisions.”  Section 6.8 of the Hamada Lease and Section
6.8 of the Spiedini Lease are set forth in Exhibit “2.12.” Tenant agrees
to comply with the Exclusivity Provisions and any new exclusivity provisions
that Prime Landlord may enter into with tenants of the Resort after the date of
this Lease; provided that Landlord shall cause Prime Landlord not to enter into
any new exclusivity provisions that would prevent Tenant from operating a
Required Food Facility and/or buffet. Notwithstanding any other provision of
this Lease, Landlord shall cause Prime Landlord not to enter into any lease
after the date of this Lease for any part of the Resort that restricts Tenant’s
ability to operate any of the following: (a) a fine dining restaurant; (b) a
steak house; or (c) a coffee shop, buffet or general purpose restaurant that
offers a varied menu.

 

ARTICLE III —  RENT; TENANT OBLIGATIONS

 

Section 3.1            Base Rent

 

Tenant shall
pay to Landlord as Base Rent for the Premises during the Term the sums set
forth in this Section 3.1 (as the same may be adjusted, if applicable,
pursuant to Section 3.2 hereof “Base Rent”). Base
Rent shall be payable in equal monthly installments on the first day of each
calendar month at the following rates:

 

(a)           Base
Rent for the first Lease Year shall be Four Million Dollars ($4,000,000).

 

17

 

(b)           Commencing
on the first day of the second (2nd) Lease Year, and continuing on
the first day of each Lease Year through the seventh (7th) Lease
Year, Base Rent shall increase by Three Hundred Thousand Dollars ($300,000) per
annum.

 

(c)           Base
Rent for the eighth (8th), ninth (9th), and tenth (10th)
Lease Years shall equal Six Million Dollars ($6,000,000) per Lease Year.

 

Section 3.2            Fair Market
Rent

 

If for any
reason Landlord does not obtain a nonrestricted gaming license or is not found
suitable by the Nevada Gaming Commission, Base Rent shall be increased or
decreased on the first day of the third (3rd) fifth (5th),
seventh (7th) and ninth (9th) Lease Years (each a “Rent Adjustment Date”) to the Fair Market
Rent for the two year period following the Rent Adjustment Date. In no event
shall the Fair Market Rent for any Lease Year be less than the Base Rent that
would have applied in such Lease Year under Section 3.1, or greater than
the sum of such Base Rent plus an amount equal to the Percentage Rent that would
have applied if Landlord had obtained a gaming license or had been found
suitable. If the Fair Market Rent adjustment to Base Rent pursuant to Section
3.2 comes into effect and Landlord thereafter obtains a nonrestricted
gaming license or is found suitable, from the first day of the first calendar
month following the date that Landlord obtains its gaming license or is found
suitable, and for so long as such license or finding of suitability remains in
effect, instead of paying Fair Market Rent, Tenant shall pay the Base Rent plus
Percentage Rent. If such license or finding of suitability becomes inapplicable
for any reason, during the period of inapplicability, Tenant shall pay Fair
Market Rent. Landlord covenants and agrees to use its reasonable commercial
efforts to apply for and obtain a nonrestricted gaming license or a finding of
suitability from the Nevada Gaming Commission as soon as possible following the
Commencement Date. Whenever Tenant is paying Base Rent as adjusted based upon
Fair Market Rent pursuant to this Section 3.2, references in this Lease
to “Base Rent” shall be deemed to mean Fair Market Rent.

 

Section 3.3            Calculation
of Fair Market Rent

 

For purposes
of this Lease, the term “Fair Market Rent” means
the annual Base Rent that a willing licensed tenant would pay to a willing
unlicensed landlord for comparable premises to the Premises based upon the
gross revenue generated by the Casino Business in the Premises for the Lease
Year immediately preceding the Rent Adjustment Date, less the expense of
capital leases for Casino Personal Property Additions during such Lease Year. Fair
Market Rent shall be calculated as follows:

 

(a)           Landlord
shall advise Tenant in writing of Landlord’s determination of Fair Market Rent
which shall include Landlord’s calculation of Fair Market Rent and any
supporting documentation, such as studies or appraisals (“Landlord’s Rent Notice”) no less than
sixty (60) days prior to each Rent Adjustment Date. Within fifteen (15)
Business Days following receipt of Landlord’s Rent Notice, Tenant shall notify
Landlord in writing (“Tenant’s Rent Notice”)
whether Tenant accepts Landlord’s determination of Fair Market Rent. If Tenant
disagrees with Landlord’s determination of Fair Market Rent, Tenant’s Rent
Notice shall set forth Tenant’s calculation of Fair Market Rent and any
supporting documentation, such as studies or appraisals. If Tenant fails to
give Tenant’s Rent Notice to Landlord within such period of fifteen (15)

 

18

 

Business Days, then Tenant
shall be deemed to have accepted Landlord’s Rent Notice. If Tenant does not
accept Landlord’s determination of Fair Market Rent, and Tenant has given
Tenant’s Rent Notice in a timely fashion, the parties (or their designated
representatives) shall promptly meet and attempt to agree on Fair Market Rent. If
the parties have not agreed on Fair Market Rent within thirty (30) days after
Tenant receives Landlord’s Rent Notice, the parties shall submit the matter to
arbitration in accordance with the terms of this Section. The first Business
Day after the thirtieth (30th) day following Tenant’s receipt of
Landlord’s Rent Notice is referred to in this Lease as the “Arbitration
Commencement Date”.

 

(b)           The
arbitration will be conducted by three (3) qualified business appraisers who
have been active over the ten (10) year period ending on the Arbitration
Commencement Date in the appraisal of Casino businesses in greater Las Vegas,
Nevada. Tenant will select one appraiser, Landlord will select one appraiser,
and the two appraisers so chosen will select the third appraiser. If the two
appraisers chosen by the parties do not agree on a third appraiser within ten
(10) days after the date the second appraiser has been appointed, the third
appraiser will be appointed by the Las Vegas office of the American Arbitration
Association upon the application of either party. Each party shall select its
appraiser within ten (10) days following the Arbitration Commencement Date. If
either party fails to select its appraiser within such ten (10) day period, and
the other party timely selects its appraiser, then the appraiser selected by
the other party shall be the sole arbitrator for determining Fair Market Rent.

 

(c)           Within
thirty (30) days after the selection of the third appraiser (or if only one
appraiser is to render the decision as provided in Subsection (b) above,
within thirty (30) days after the last day of the above-referenced ten (10) day
period), the appraiser(s) shall determine the Fair Market Rent. If more than
one appraiser has been appointed, each appraiser shall determine the Fair
Market Rent. The average of the two appraisals that are closest in value shall
be the Fair Market Rent.

 

(d)           This
Section is an agreement to arbitrate as such is defined in Chapter 38 of the
Nevada Revised Statutes; as the same may be amended from time to time,
provided, however, that: (i) Sections 38.075, 38.085 and 38.095 and 38.145(1)(d)
and any successor sections of such Chapter are hereby waived to the extent
permitted by applicable law; and (ii) the time periods contained in Sections
38.145(2) and 38.155(1) and any successor sections of such Chapter are hereby
shortened to thirty (30) days to the extent permitted by applicable law. The
arbitration shall be performed in Clark County, Nevada. To the extent permitted
by applicable law, Landlord and Tenant each consent to the procedure herein set
forth and waive any rights (including any right to a hearing, representation by
attorney at such hearing, or any rights with respect to witnesses, cross-examination,
subpoenas, and depositions) they may have or conflicting provisions of the
Nevada Uniform Arbitration Act, Nev. Rev. Stat. Subsection 38.015 et seq., as
the same may be amended from time to time.

 

(e)           If
the determination of Fair Market Rent pursuant to this Section 3.3 is
not made before the beginning of the Lease Year to which it applies, Tenant
shall continue to pay rent in the same amount that it was obligated to pay
during the prior Lease Year until the determination is made. Within ten (10)
days of the date that the determination of Fair Market Rent is made, Tenant
shall pay any deficiency to Landlord or Landlord shall refund any overpayment
to Tenant, as appropriate.

 

19

 

Section 3.4            Payment of
Base Rent and Additional Rent

 

Base Rent
shall be payable in equal monthly installments in advance on the first day of
each and every month during the Term, without previous demand therefore and
without offset or deduction of any kind whatsoever, other than as expressly
provided for herein. In addition to Base Rent, Tenant shall pay to Landlord
Additional Rent as and when specified elsewhere in this Lease, but if not
specified, then within ten (10) days following demand from Landlord. Base Rent
and Additional Rent for partial calendar months shall be prorated on a daily
basis (based on a thirty-day month and the actual number of days elapsed). All
Base Rent and Additional Rent payable by Tenant under this Lease is
collectively referred as “Rent” and
shall be made payable to Landlord and sent to Landlord’s at such address as
provided by Landlord in writing, from time to time.

 

Section 3.5            Percentage
Rent

 

If Landlord
obtains a nonrestricted gaming license from or is found suitable by the Nevada
Gaming Commission, then for the period commencing on the first day of the
calendar month following the issuance of such license or such finding of
suitability and continuing for so long as the license or finding of suitability
is in effect, as Additional Rent, Tenant shall pay Landlord Percentage Rent in
accordance with the terms of this Section 3.5. For purposes of this
Lease, “Percentage Rent” for each Lease Year
shall be equal to fifty percent (50%) of the Casino NOI for the Lease Year or
portion thereof for which such license or finding of suitability is in effect. Percentage
Rent for each Lease Year shall be due and payable no later than thirty (30)
days following the end of such Lease Year or the termination date of this Lease.
Each payment of Percentage Rent shall be accompanied by a statement setting
forth in reasonable detail Tenant’s calculation of Casino NOI and Percentage
Rent payable for the Lease Year, certified as correct by Tenant’s chief
financial officer (the “Percentage Rent Statement”).
In addition, Tenant shall provide Landlord with an audited financial statement
for the Lease Year, including a confirmation of the calculation of the Percentage
Rent, no later than one hundred twenty (120) days following the end of such
Lease Year. Within one hundred twenty (120) days following the termination of
this Lease, Tenant shall provide Landlord with an audited financial statement
covering the period from the end of the prior Lease Year to the termination
date of this Lease. The provisions of this Section 3.5 shall survive the
expiration or earlier termination of this Lease.

 

Section 3.6            Right to
Audit Tenant’s Books and Records

 

Landlord shall
have the right to review Tenant’s books and records pertaining to Percentage
Rent for the preceding Lease Year by giving Tenant written notice within six
(6) months after receiving Tenant’s audited financial statements and the
Percentage Rent Statement for the applicable Lease Year from Tenant pursuant to
Section 3.5. If in Landlord’s opinion such review discloses an error in
Tenant’s calculation of Percentage Rent, Landlord may cause an audit of Tenant’s
books and records that will be conducted by an independent certified public
accountant designated by Landlord. If any audit or review of Tenant’s books and
records discloses errors or discrepancies in the calculation of Percentage
Rent, Landlord shall provide Tenant with a written report specifying with
reasonable detail the alleged errors and discrepancies. Upon the completion of
any audit of Tenant’s books and records pursuant to this

 

20

 

Section, Landlord will provide
(or cause its auditor to provide) Tenant with a true and correct copy of the audit
report and all supporting information used by the auditor in compiling its
report. If any such audit discloses Tenant overpaid Percentage Rent for any
Lease Year, the amount of the overpayment shall be credited against the Base
Rent and Additional Rent next coming due under this Lease, or if the results of
the credit are not disclosed until the Lease Term has expired, Landlord shall
pay Tenant the amount of the overpayment within thirty (30) days after the
results of the audit have been disclosed to both parties. If any such audit
discloses Tenant underpaid Percentage Rent during any Lease Year, Tenant shall
pay Landlord the amount of the underpayment within thirty (30) days after the
results of the audit have been disclosed to both parties. Landlord shall pay
all costs and expenses of the audit; however, if the audit shows Tenant
understated Percentage Rent by more than two percent (2%) of the actual amount
payable by Tenant, Tenant shall reimburse Landlord for the reasonable costs and
expenses of the audit. The provisions of this Section 3.6 shall survive
the expiration or earlier termination of this Lease.

 

Section 3.7            Additional Third
Party Tenant Obligations

 

In addition to
Rent and Additional Rent, Tenant shall pay directly, to the third party or
governmental entity or agency to which such payment is due, on or before the
same shall become delinquent or give any rights or remedies to any such third
party, entity or agency to lien or otherwise enforce a lien on the Land or all
or any part of the Premises, the following: (i) all personal property taxes payable
with respect to any personal property, fixtures, or trade fixtures located on
or about the Premises or used by Tenant in connection with the Casino Business
and not taxed as real property as part of the improvements owned by Landlord;
(ii) all income taxes, sales taxes, use taxes and other taxes payable in
connection with the Casino Business, including, without limitation, any gaming
taxes payable with respect to any gaming activities within the Premises; (iii)
any casino entertainment tax payable with respect to any entertainment offered
by Tenant within the Premises; (iv) all amounts due and payable under any
equipment leases permitted hereunder that are entered into by Tenant and any
third party with respect to any personal property after the date of this Lease.

 

Section 3.8            Lease
Deposit

 

Concurrently
with the execution of this Lease, Tenant shall deposit with Landlord a security
deposit (the “Lease Deposit”),
which shall be in the form of an irrevocable, clean, unconditional letter of
credit (the “Letter of Credit”) in
the amount of One Million Dollars ($1,000,000). The Letter of Credit shall be
issued by a national banking association or other issuer acceptable to
Landlord, in its sole discretion. The Letter of Credit shall be issued for the
benefit of Landlord and/or the Mortgagee in such form as to enable the
beneficiary, at its option, to draw the same, in whole or in part, from time to
time on demand as permitted pursuant to this Section. Prior to any bankruptcy
filing by or against Tenant, the Letter of Credit shall be drawable by the
beneficiary upon notarized certification that Tenant is in default and has not cured
the default within the applicable cure period, if any, provided for in this
Lease. After any bankruptcy filing by or against Tenant, the Letter of Credit
shall be drawable by the beneficiary, without notice of default to Tenant, upon
notarized certification that Tenant has failed to pay Base Rent when due, or
failed to pay Additional Rent within five (5) days of its due date, or failed
to perform any other obligation of Tenant under this Lease within thirty (30)
days of its due date. Tenant shall cause the Letter of Credit to be renewed
annually for the second Lease

 

21

 

Year and for subsequent Lease
Years through the ninth Lease Year at least sixty (60) days prior to its then-existing
expiration date and renewed for a period of fifteen (15) months no later than
sixty (60) days prior to the commencement of the tenth Lease Year. A failure to
timely renew the Letter of Credit shall be a material default under this Lease
and shall be grounds for Landlord to draw the entire Letter of Credit and
terminate this Lease. The beneficiary of the Letter of Credit shall have the
right to assign the Letter of Credit to any Person determined by the
beneficiary from time to time. The Letter of Credit shall be in substantially
the form attached to this Lease as Exhibit “3.8”. The Letter of Credit
shall secure the full and timely performance of all of Tenant’s obligations
under this Lease. Landlord may apply the Letter of Credit against its damages
and sue Tenant for any deficiency. If any amount is drawn under the Letter of
Credit, Tenant shall cause the issuer to restore the Letter of Credit to its
original amount, One Million Dollars ($1,000,000), no later than ten (10)
Business Days following the date of such withdrawal. If Tenant is not in
default at termination of this Lease, the Letter of Credit shall be returned to
Tenant within ten (10) Business Days after the termination of this Lease and
payment by Tenant of any amounts owing under Section 3.11 and any
outstanding billings by Landlord for Tenant’s Operating Cost Obligations and
other sums, if any, payable by Tenant hereunder.

 

Section 3.9            Casino
Personal Property

 

On the
Commencement Date, Landlord shall transfer or cause the Patch Lease Tenant to
transfer to Tenant all Casino Personal Property that Landlord received pursuant
to the Purchase Agreement. No later than ninety (90) days after the Commencement
Date, Tenant shall cause an inventory to be prepared of the Casino Personal
Property. Landlord and Tenant shall each sign the inventory and attach it to
this Lease as Exhibit “A-5”. Tenant shall update the inventory from time
to time, but no less frequently than bi-annually. On the Commencement Date,
Landlord shall cause Prime Landlord to convey title to the Casino Personal
Property, excluding the Gaming Equipment, to Tenant and shall cause the Patch
Lease Tenant to convey title to the Gaming Equipment to Tenant. Tenant accepts
the Casino Personal Property in the physical condition existing on the
Commencement Date, As-Is – Where-Is. Landlord represents and warrants to Tenant
that the Casino Personal Property meets any applicable Licensor Standards on the
Commencement Date. On the Commencement Date, Tenant shall execute and deliver
to the Mortgagee a security agreement and financing statements in form and
content reasonably acceptable to the Mortgagee whereby Tenant grants to the
Mortgagee a blanket first priority security interest in all of Tenant’s right,
title and interest in the Gaming Equipment (the “Casino Personal Property
Mortgage”). The Casino Personal Property Mortgage shall provide that the
Mortgagee shall release ten percent (10%) of the Gaming Equipment from the
Casino Personal Property Mortgage for each Three Hundred Thousand Dollars
($300,000) payment of the Personal Property Reimbursement Payment. The Mortgagee
shall release its security interest in the Casino Personal Property, excluding
the Gaming Equipment, when the Casino Personal Property Mortgage is granted by
Tenant.

 

Section 3.10         Personal
Property Reimbursement Payments

 

Landlord and
Tenant agree that for purposes of this Agreement, the value of the Casino
Personal Property paid for by Landlord on behalf of Tenant is Ten Million
Dollars ($10,000,000) (“Landlord’s Personal
Property Investment”). Tenant covenants and agrees to reimburse

 

22

 

Landlord for Landlord’s
Personal Property Investment out of Adjusted Operating Cash Flow pursuant to
the terms of Section 3.11 below.

 

Section 3.11         Payment of
Adjusted Operating Cash Flow

 

(a)           Within
thirty (30) days following the end of each Lease Year and the termination date
of this Lease, Tenant shall calculate Adjusted Operating Cash Flow for such
Lease Year, and shall furnish to Landlord a written statement setting forth in
reasonable detail its calculation of Adjusted Operating Cash Flow, certified as
correct by Tenant’s chief financial officer (the “Adjusted Operating Cash Flow Statement”), and accompanied by
the payment of any amounts due or owing to Landlord pursuant to this Section
3.11. In addition, Tenant shall provide Landlord with an audited financial statement
for such Lease Year (or partial Lease Year), including a confirmation of the
calculation of the Adjusted Operating Cash Flow, no later than one hundred
twenty (120) days following the end of such Lease Year or the termination date
of this Lease, as applicable. Tenant shall apply adjusted Operating Cash Flow
as follows:

 

(i)                                     First,
to Tenant in payment of any accrued but unpaid Tenant Management Fees;

 

(ii)                                  Next,
to Tenant to the extent of any Personal Property Reimbursement payment paid by
Tenant to the Mortgagee pursuant to Section 3.9.

 

(iii)                               Next,
to Landlord and Tenant in proportion to their respective then-existing
investments (Landlord’s Personal Property Investment, on the one hand, and the
aggregate of Tenant’s Initial Capital Investment and Tenant’s Subsequent
Capital Investment, on the other hand) that have not been repaid in
reimbursement thereof until each has been repaid in full;

 

(iv)                              Then
equally to Landlord and Tenant.

 

(b)           Notwithstanding
the foregoing, Tenant shall not be required to make payments under Subsections
3.11(a) (ii), (iii) or (iv) above in the first Lease Year if and to the
extent that Tenant uses the excess Adjusted Operating Cash Flow to make
additional capital improvements to the Casino and/or the Casino Back-of-the-House
Areas, for marketing expenses for the benefit of the Casino Business, to
replace or upgrade existing Casino Personal Property, or for such other purpose
as may be reasonably agreed to between Landlord and Tenant. Tenant must
reinvest such amounts within a reasonable time following the end of the first
Lease Year (not to exceed 180 days). Any Adjusted Operating Cash Flow not
applied under this Subsection (b) shall be applied in accordance with Subsection
(a) above. Landlord shall have the right to review Tenant’s books and
records pertaining to the calculation of Adjusted Operating Cash Flow under the
procedure set forth in Section 3.6 by giving Tenant written notice
within six (6) months after receiving the statement for the applicable Lease
Year or partial Lease Year and the audited financial statement relating to such
statement.

 

(c)           At
the end of the Term or upon sooner termination of this Lease, Tenant shall
calculate Adjusted Operating Cash Flow within fifteen (15) Business Days of the
date of termination of this Lease and shall make the payments specified in Subsection
3.11(a) no later

 

23

 

than twenty (20) Business Days
after the date of termination of this Lease. The provisions of this Section
3.11 shall survive the expiration or sooner termination of this Lease.

 

ARTICLE IV —  OPERATING COSTS; LANDLORD’S OBLIGATIONS

 

Section 4.1            Operating
Costs and Property Taxes

 

As Additional
Rent, commencing on the Commencement Date, Tenant shall pay to Landlord the
following amounts incurred or paid by Prime Landlord or Landlord for the
benefit of Tenant during any Lease Year (collectively, “Tenant’s Operating Cost Obligation”): (a)
Property Taxes and Operating Costs that are allocable to the Casino and the
Casino Back-of-the-House Areas; but not the Hotel or the Remaining Property and
(b) Property Taxes and Operating Costs for the Remaining Property that are
appropriately allocable to the Casino and the Casino Back-of-the-House Areas. Property
Taxes and Operating Costs that are allocable to the Casino and the Casino Back-of-the-House
Areas, but not the Hotel or the Remaining Property, and Property Taxes and
Operating Costs with respect to the Remaining Property that are appropriately
allocable to the Casino and the Casino Back-of-the-House Areas shall be
determined by the Operating Cost Consultants. The Operating Cost Consultants
shall also determine the absolute amounts of and the applicable percentages of
the Property Taxes and Operating Costs appropriately allocated to the Casino
and the Casino Back-of-the-House Areas, and not the Hotel or the Remaining
Property, and appropriately allocated to the Casino and the Casino Back-of-the-House
Areas on account of the Remaining Property.

 

Section 4.2            Method of
Allocation

 

(a)           Subject
to the terms of Section 4.1, All Operating Costs and Property Taxes
incurred by Prime Landlord or Landlord with respect to the Resort shall be
allocated by Landlord among the Hotel, the Casino and the Casino Back-of-the-House
Areas, and the Remaining Property in compliance with the terms of this Section
4.2.

 

(b)           Tenant’s
Operating Cost Obligations shall be payable in equal monthly installments, in
arrears, on the first day of each calendar month beginning with the second
calendar month following the Commencement Date. Until the actual amount of
Tenant’s Operating Cost Obligations is determined by the Operating Cost
Consultants, Tenant shall pay on an estimated basis as if the actual amount
were Two Million Two Hundred Fifty Thousand Dollars ($2,250,000). From first
day of the first calendar month after the Operating Consultants determine the
actual amount of Tenant’s Operating Cost Obligations for Lease Year 1 (the “Tenant’s Base Year Operating Costs”),
Tenant shall pay its obligation based upon Tenant’s Base Year Operating Costs. If
at such time Tenant has overpaid, Landlord shall refund the overpayment within
ten (10) Business Days. Likewise, if Tenant has underpaid, Tenant shall pay the
underpayment to Landlord within ten (10) Business Days. For each Lease Year
after Lease Year 1, Tenant’s Operating Cost Obligation shall be determined
utilizing the percentages determined by the Operating Cost Consultants.

 

(c)           As
soon as practicably possible after the date this Lease is executed and Tenant
has delivered the Letter of Credit to Landlord, Prime Landlord, Landlord,, and
Tenant shall engage one or more qualified consultants selected by Prime Landlord
and approved by Landlord

 

24

 

and Tenant, each acting
reasonably (the “Operating Cost Consultants”)
to determine Tenant’s Base Year Operating Costs. Landlord and Tenant shall each
pay fifty percent (50%) of the fees and expenses of the Operating Cost
Consultants and each of them shall reasonably approve the contracts, including
work statements, for the Operating Cost Consultants. The Operating Cost
Consultants shall conduct a thorough review of the Resort operations and shall
determine an equitable allocation of Operating Costs and Property Taxes to the
Casino and the Casino Back-of-the-House Areas, and not the Hotel or the
Remaining Property and to the Casino and the Casino Back-of-the-House Areas on
account of the Remaining Property; provided that in no event shall Tenant’s
Base Year Operating Costs be less than One Million Five Hundred Thousand Dollars
($1,500,000) or more than Three Million Dollars ($3,000,000). The Operating
Cost Consultants shall use their best efforts to determine a fair and equitable
allocation of Operating Costs for the Casino and the Casino Back-of-the-House
Areas and a fair and equitable allocation to the Casino and the Casino Back-of-the-House
Areas of Operating Costs for the Remaining Property. To assist in determining
an equitable allocation of Operating Costs, Landlord, may, but shall not be
required to, install “check meters” throughout the Resort to monitor
consumption of utilities. Landlord and Tenant will each pay fifty percent (50%)
of the cost of installing such check meters. To the extent reasonably
practicable, electricity, gas, sewer, and water serving the Casino and the
Casino Back-of-the-House Areas shall be separately metered and, if possible,
shall be billed directly to the Tenant by the utility provider. Prime Landlord,
Landlord and Tenant shall cooperate fully with the Operating Cost Consultants and
shall provide access to books, records and other information that the Operating
Cost Consultants deem reasonably necessary in order to complete their
determinations.

 

(d)           Beginning
in Lease Year 3 and every second Lease Year thereafter, either party may
request in writing to the other that Operating Cost Consultants be appointed in
accordance with the provisions of Subsection 4.2(c) to review and amend,
if necessary, the then-existing determination of Tenant’s Operating Cost
Obligation. A party that makes such a request shall do so prior to the end of
the sixth month of the Lease Year and the review and adjustment shall be
completed as soon as practicably possible after the date that the Operating
Cost Consultants are appointed. The determination of the Operating Cost
Consultants shall be applied retroactively to such Lease Year. After such
determination, if Tenant has overpaid, Landlord shall refund the overpayment
within ten (10) Business Days. Likewise, if Tenant has underpaid, Tenant shall
pay the underpayment to Landlord within ten (10) Business Days.

 

Section 4.3            Billing and
Payment

 

No less than
ninety (90) days prior to the beginning of Lease Year 2 and each subsequent
Lease Year, Landlord will provide Tenant Landlord’s written estimate in
commercially reasonable detail of Tenant’s Operating Cost Obligation for the
coming Lease Year (collectively, the “Tenant’s
Operating Cost Estimate”). Tenant shall pay the amount set forth in
Tenant’s Operating Cost Estimate, in arrears, in equal monthly installments,
without deduction or offset on the first day of each calendar month beginning
on the first day of the second calendar month of the Lease Year to which the
estimate applies and ending on first day of the first calendar month of the
following Lease Year. Tenant shall continue to pay its share of Operating Costs
and Property Taxes based upon the most recent Tenant’s Operating Cost Estimate
until Landlord provides a new estimate. Within sixty (60) days after the end of
each Lease Year and the termination date of this Lease, Landlord will provide
Tenant with a statement of Landlord’s

 

25

 

calculations of the actual
amount of Tenant’s Operating Cost Obligation during such Lease Year or partial
Lease Year (the “Tenant’s Actual Operating
Cost Statement”). Within ten (10) Business Days after Tenant
receives Tenant’s Actual Operating Cost Statement, Landlord shall refund Tenant
any overpayment of Tenant’s Operating Cost Obligation for such Lease Year or
partial Lease Year, or Tenant shall pay Landlord any deficiency for such Lease
Year or partial Lease Year.

 

Section 4.4            Definition
– Operating Costs

 

As used in
this Article or elsewhere in this Lease “Operating
Costs” shall mean all expenses paid or incurred by Prime Landlord or
Landlord or charged to Prime Landlord or Landlord for maintaining, managing,
operating, repairing, replacing and administering the Casino and the Casino Back-of-the-House
Areas and the Remaining Property and any personal property used in conjunction
therewith throughout the Term of this Lease, including without limitation
water, sewer, electricity, heat, air conditioning, fuel, light, fire protection
and other utilities and services; supplies, janitorial and cleaning services;
window washing; garbage and refuse removal; security and information technology
services and systems; landscape maintenance and replacement; parking
maintenance and operations; compensation (including employment taxes and fringe
benefits) of all persons who perform duties in connection with the operation,
management, maintenance, repair and administration of the Casino and the Casino
Back-of-the-House Areas and the Remaining Property; capital expense reserves
required under the terms of any agreement with the Mortgagee; insurance premiums
for all insurance carried by Prime Landlord or Landlord with respect to the
Casino and the Casino Back-of-the-House Areas and the Remaining Property;
licenses, permits and inspection fees; subsidies fees and other payments
required by public bodies; management fees; easement and license fees; legal
and accounting expenses and all other expenses or charges whether or not here
and above described which, in accordance with generally accepted accounting and
management practices, would be considered an expense of maintaining, managing,
operating, repairing, replacing and administering the Casino and the Casino Back-of-the-House
Areas and the Remaining Property, and administrative fees in an amount equal to
fifteen percent (15%) of the foregoing, excluding taxes, utilities, insurance
premiums and management fees; and excluding the following: (a) costs of any
special services rendered to Tenant for which a special charge is made; (b)
ground lease rental payments and debt service on mortgages or deeds of trust; (c)
depreciation or amortization expenses; (d) costs required to be capitalized in accordance
with generally accepted accounting practices, except Operating Costs shall
include the amortization of capital expenditures for alterations, additions,
replacements and improvements (1) designed with a reasonable probability of
improving the operating efficiency of the Casino and the Casino Back-of-the-House
Areas or the Remaining Property, (2) required to comply with governmental laws
or regulations (including amendments to existing laws and regulations) taking
effect after the completion of the initial construction of the Casino and the
Casino Back-of-the-House Areas and the Remaining Property, or (3) made for the
general benefit or convenience of the Casino and the Casino Back-of-the-House
Areas or the Remaining Property, treating such capital expenditure as being
amortized on a straight line basis, together with interest at the rate of ten
percent (10%) per annum, over the shorter of ten (10) years or the useful life
of such item; and (e) Operating Costs separately billed to and paid by
individual tenants.

 

26

 

Section 4.5            Review of
Prime Landlord and Landlord’s Books and Records

 

(a)           So
long as Tenant is not then in default under this Lease, Tenant shall have the
right (no more frequently than once per calendar year) to review Prime Landlord’s
and Landlord’s books and records pertaining to Operating Costs and Property Taxes
for the preceding Lease Year by giving Prime Landlord and Landlord written
notice within six (6) months (the “Audit
Period”) after receiving Tenant’s Actual Operating Cost Statement
for the applicable Lease Year. Notwithstanding any other provision of this
Lease, if Tenant does not request a review of Prime Landlord’s and Landlord’s
books and records within the Audit Period or if Tenant requests a right to
review Prime Landlord’s and Landlord’s books and records within the Audit
Period but does not provide written notice of objection to Landlord within six
(6) months after the expiration of the Audit Period, Tenant shall be deemed to
have conclusively accepted Tenant’s Operating Cost Obligation for such Lease
Year, which shall no longer be subject to audit, inspection or objection by Tenant.
If, in compliance with this Section 4.5, Tenant sends written notice to
Landlord that, in Tenant’s opinion, such review discloses an error in Prime
Landlord’s and/or Landlord’s books and records with regard to the calculation of
Tenant’s Operating Cost Obligations, Tenant may cause an audit of Prime
Landlord’s and Landlord’s books and records which will be conducted by an
independent certified public accountant designated by Tenant and reasonably
acceptable to Landlord, who does not represent and is not employed by Prime
Landlord, Landlord or Tenant on any other matters, and is not in the business
of auditing or reviewing books and records of landlords on behalf of tenants on
a contingent fee basis. Nothing in this Section 4.5 is intended nor
shall be interpreted to relieve Tenant of its obligations to pay Tenant’s
Operating Cost Obligations during any review or audit of Prime Landlord’s and
Landlord’s books and records. The rights of Tenant under this Section 4.5
may not be exercised by or for the benefit of any subtenant of the Premises.

 

(b)           If
Tenant believes any audit or review of Prime Landlord’s and/or Landlord’s books
and records discloses errors or discrepancies in the amount of the Tenant’s
Operating Cost Obligations charged to Tenant by Landlord, Tenant shall provide
Landlord with a written report specifying with reasonable detail the alleged
errors and discrepancies. Upon the completion of any audit of Landlord’s books
and records pursuant to this Section, Tenant will provide (or cause its auditor
to provide) Landlord with a true and correct copy of the audit report and all
supporting information used by the auditor in compiling its report. If any such
audit discloses Tenant overpaid Tenant’s Operating Cost Obligations for any
calendar year, the amount of the overpayment shall be credited against the Base
Rent and Additional Rent next coming due under this Lease, or if the results of
the credit are not disclosed until the Lease Term has expired, Landlord shall
pay Tenant the amount of the overpayment within ten (10) Business Days after
the results of the audit have been disclosed to both parties. If any such audit
discloses that Tenant underpaid Tenant’s Operating Cost Obligations during any
calendar year, Tenant shall pay Landlord the amount of the underpayment within
ten (10) Business Days after the results of the audit have been disclosed to
both parties. Tenant shall pay all costs and expenses of the audit; however, if
the audit shows Landlord overstated Tenant’s Operating Cost Obligations for the
subject Lease Year by more than two percent (2%) of the actual amount payable
by Tenant, Landlord shall reimburse Tenant for the reasonable costs and
expenses of the audit.

 

(c)           Any
review or audit of Prime Landlord’s and/or Landlord’s books and records
pertaining to Operating Costs or Property Taxes shall occur at the office of
the Hotel manager

 

27

 

and shall occur during the
normal business hours of the Hotel manager, unless otherwise agreed in writing
by Landlord. Tenant shall not disclose any information with respect to Prime
Landlord’s and/or Landlord’s books and records to any person without the prior
written consent of Landlord, in its sole discretion, unless Tenant is required
by law to disclose such information. Prime Landlord and/or Landlord, at its
option, may require that Tenant’s auditor execute a confidentiality agreement
incorporating the terms and conditions of this Subsection.

 

Section 4.6            Landlord’s
Obligations

 

Landlord shall
cause Prime Landlord to operate the Hotel as a first class four-star hotel in
compliance with any Licensor Standards. Landlord and Prime Landlord expect
Licensor to be Marriott, Starwood or a similar franchisor of hotels with a four-star
or better rating in North America. Initially, the Hotel shall be operated as a
JW Marriott. Except for Tenant’s express obligations under this Lease, and
subject to Tenant’s obligation to reimburse Landlord for Tenant’s Operating
Cost Obligation, Landlord shall cause Prime Landlord to be responsible for, and
to pay (or cause any other lessee, licensee, or third party contractor with
rights to use the Land or the Buildings to pay), at its or their sole cost and
expense, as applicable, any and all costs or expenses in connection with the
ownership, use, operation, management, maintenance, repair, replacement of the
Land and the Buildings, or otherwise incurred or payable in connection with the
Land and the Buildings (including the Premises), which shall include (i) all
real property taxes, ad valorem taxes in the nature of real property taxes,
documentary transfer taxes, assessments and impositions charged by any
government agency or entity with jurisdiction over the Land, the Buildings,
and/or the Improvements; (ii) all personal property taxes (except any payable
with respect to Casino Personal Property or Casino Personal Property Additions,
which shall be paid by Tenant) payable with respect to any personal property,
fixtures, trade fixtures or otherwise located on or about the Land or owned by
or used under an equipment lease by Prime Landlord or Landlord; (iii) all
amounts due or arising under any declaration of covenants, conditions and
restrictions and other matters of record encumbering the Land, except any such
amounts that relate to the Casino, the Casino Back-of-the-House Areas or the
Casino Business, which amounts shall be paid by Tenant (iv) all rents, charges,
duties, impositions, license and permit fees, charges and fees for utilities
and similar services provided to or available at the Land (including, without
limitation, electrical, gas, water, sanitary sewer, cable television,
telephone, cable and fiber optics, fire alarms and alarm monitoring, and
security systems); (v) the maintenance, repair, and replacement of all
Buildings and Improvements now or hereafter constructed on the Land, including,
without limitation, all capital improvements thereto and all ordinary expenses
in connection therewith (and which shall include, without limitation, the
maintenance, repair and replacement of all mechanical and electrical systems
and equipment, all heating, ventilating and air conditioning systems and
equipment, all electrical systems, and all supply and waste water systems,
including those servicing the Premises); (vi) all landscaping maintenance and
replacements, trash removal, and insect/pest remediation and control; (vii) all
costs and expenses incurred in connection with compliance with all Laws, except
costs and expenses relating to Gaming Laws applicable to Tenant, which Tenant
shall pay; (viii) the liability and casualty insurance that Landlord is
required to maintain or cause Prime Landlord to maintain under this Lease or
the Mortgage; and (ix) any other amounts that Prime Landlord is obligated to
pay or reserve under the Mortgage, including, without limitation, any capital
improvement reserves.

 

28

 

Section 4.7            Landlord
Default

 

If Landlord
shall at any time be in default of any of its obligations or covenants under
this Lease, Tenant shall have the right to send written notice thereof to
Landlord, specifying the nature of such default. Landlord shall cure any
monetary default within thirty (30) days of receipt of such notice. With
respect to any non-monetary default, Landlord shall commence such cure promptly
upon receipt of such notice, shall use all commercially reasonable efforts to
cure such default, and shall complete such cure within thirty (30) days
following the delivery of such notice. However, if such cure is not capable of
completion within said thirty (30)-day period, Landlord shall have such
additional time as may be reasonably necessary to complete its performance so
long as Landlord proceeds in good faith and with diligence to prosecute such
cure to completion as soon as reasonably possible.

 

ARTICLE V —  USE AND OPERATION OF PREMISES

 

Section 5.1            Casino Use

 

Tenant shall use
and occupy the Premises only for the Casino Business, together with any
necessary, required or desirable related, ancillary, or adjunct use and any
other ordinary and customary use consistent with the nature and character of,
and compatible with, the Hotel Business. Tenant shall operate the Casino and
the Casino Back-of-the-House Areas at or above the Casino Standard at all times
during the Term. Tenant shall not create or suffer to exist any public or
private nuisance, hazardous or illegal condition or waste on or with respect to
the Premises. Tenant shall operate the Casino and the Casino Back-of-the-House
Areas and the Casino Business under the Casino Name in strict accordance with
the requirements of the Casino Name License Agreement and shall preserve the
Casino Name and all rights to use the Casino Name as the sole property of
Tenant and in good standing during the Term. Tenant shall transfer and assign
the Casino Name to Landlord at the expiration or sooner termination of this
Lease.

 

Section 5.2            Surveillance
Room and Security

 

As part of the
Premises, Tenant shall lease, use, operate, and control the Surveillance Room
and shall maintain, repair and replace when obsolete or beyond its useful life
all related equipment (including cameras, video tape recorders, monitors, and
tape copiers), and shall have access to all cameras, cables, conduits, wires,
and other equipment or fixtures outside the Surveillance Room related thereto. Tenant
shall provide certain surveillance services to Prime Landlord through the
Surveillance Room. Landlord shall cause Prime Landlord to reimburse Tenant for
the reasonable cost of any surveillance services provided by Tenant through the
Surveillance Room. Tenant shall employ, as casino employees, all security
officers on or about the Casino and the Casino Back-of-the-House Areas, and
shall schedule such employees for reasonable security coverage of the Casino
and the Casino Back-of-the-House Areas. Tenant shall also employ, as casino
employees, security officers reasonably approved by Prime Landlord, who shall
provide security services for the Hotel and the balance of the Resort. Prime
Landlord and Tenant shall agree upon the services and the cost of such services
and Prime Landlord shall pay Tenant the agreed cost of such services for the
Hotel and its share of the cost of such services for the balance of the Resort.
Prime Landlord may terminate security services provided by Tenant and provide
such services for the Hotel and the balance of the Resort itself or

 

29

 

through third parties. In such
event, Tenant and Prime Landlord shall agree upon Tenant’s share of the cost of
such services for the balance of the Resort and Tenant shall pay Prime Landlord
the agreed cost of such services. Landlord and Tenant shall fully cooperate
with each other and with Prime Landlord and any Person providing security
services with respect to any part of the Resort.

 

Section 5.3            Telephones;
Switchboard

 

Landlord shall
cause Prime Landlord or the Hotel Operator to manage any common telephone
switchboard system servicing all of the Improvements, and shall promptly
forward all calls directed to Tenant or its employees to the appropriate
extension. Notwithstanding the foregoing to the contrary, Tenant shall at all
times have the right to obtain and maintain, at its own cost and expense, its
own telephone system and own telephone numbers. Tenant shall be responsible for
the actual cost of any outgoing telephone calls (including internet access and
other telecommunications lines) connected through any central
telecommunications facilities not separately servicing the Premises. Tenant
reserves the right to terminate telephone and switchboard services from Prime
Landlord and to provide such services itself.

 

Section 5.4            Use of
Other Property Facilities

 

Landlord
acknowledges that the use of other facilities and property amenities within the
Buildings and Improvements and on the Land by Tenant’s customers, guests,
invitees, and business invitees and all other patrons of the Casino Business,
together with Tenant’s officers or employees while hosting or accompanying such
persons (collectively, “Tenant Invitees”)
is critical and integral to the operation and success of the Casino Business. Such
facilities and property amenities (collectively, the “Property Facilities”) include, without limitation, the hotel,
restaurants, ballroom and meeting rooms, pool, spa, entertainment venues,
retail shops, self parking and valet parking, and all other public or quasi-public
facilities and property amenities on or about the Buildings, Improvements or
Land. In all cases, the price charged to Tenant or any Tenant Invitees for any
use of the Property Facilities shall not exceed the retail price charged to the
general public, and shall be discounted as more particularly set forth below. At
Tenant’s option, Tenant shall have the right to offer the Property Facilities,
or any of them, to its Tenant Invitees on a complimentary or further discounted
basis. In such case, Tenant shall be responsible for paying the price charged
for such use, or the difference between the price charged and the discounted
amount paid by the Tenant Invitees. At all times during the Term, Prime
Landlord, Landlord and Tenant shall mutually cooperate to develop internal
accounting and control procedures for Tenant’s booking of all use of the
Property Facilities by any Tenant Invitees and for the payment of such amounts
by Tenant to Prime Landlord, or directly to Prime Landlord’s subtenant,
licensee, third party manager, or other party responsible for operating any
applicable Property Facilities. Without limiting the generality of the
foregoing, the following procedures will apply to Hotel rooms, spa facilities
and food and beverage facilities. Landlord will cause the Hotel Operator to
make available to Tenant thirty (30) (or such greater number as may be agreed
to by the Hotel Operator from time to time) Hotel rooms per night (the “Casino Hotel Rooms”) at the lowest
published rate for the general public for each such night. Landlord and Tenant
shall mutually agree to the lowest published rate for each Lease Year prior to
the commencement of such Lease Year. Such published rates shall not include any
of the following Marriott rates: (a) the Employee Rate; (b) the Friends and
Family Rate; (c) the Business Rate; (d) the Hotel Excellence Program Rate;
(e) the Travel Industry Rate; (f) the Famtastic Rate;

 

30

 

(g) the Entertainment
Program Rate; (h) the Quest Program Rate; (i) the VIP Athletic Program Rate;
(j) the AAA Rate; or (k) the AARP Rate. Tenant shall book the Casino Hotel
Rooms in coordination with the Hotel Operator and shall pay the Hotel Operator
the agreed rate for any Casino Hotel Rooms that are booked for such night or
are not released back to the Hotel Operator within seven (7) days of the
booking date for such Casino Hotel Rooms. Landlord shall also cause the Hotel
Operator to make spa services and Hotel food and beverage services available to
Tenant Invitees at a rate that is ninety percent (90%) of the rate available to
the general public for such services.

 

Section 5.5            Operating
Supplies

 

On the
Commencement Date, as part of the Casino Personal Property, Landlord shall
provide to Tenant the Operating Supplies at the Casino and the Casino Back-of-the-House
Areas, but not any gaming chips, tokens, dice, cards or similar items. Tenant
shall provide and maintain, at its expense, inventories of Operating Supplies
in an amount customary for the operation of the Casino and the Casino Back-of-the-House
Areas immediately prior to the purchase of the Resort by Prime Landlord. Subject
to compliance with any applicable Gaming Laws, at the termination of this Lease
Tenant shall deliver to Landlord or its designee, an inventory of Operating
Supplies in an amount not less than the average amount of Operating Supplies in
inventory at the Premises during the two full calendar years preceding such
termination. Notwithstanding the foregoing, Tenant shall not be required to
transfer any alcoholic beverages or Gaming Equipment to any Person other than a
duly licensed entity or to deliver any gaming chips, tokens, dice, cards, or
similar items with the name, logo or other identifying mark of Tenant’s Casino
or Casino Business.

 

Section 5.6            Permits and
Licenses; Gaming Laws

 

(a)           Provided
that Landlord causes Prime Landlord to offer the hotel rooms and restaurant
required in a resort hotel pursuant to NRS 463.01865, on or before the
Commencement Date, Tenant shall obtain, at its cost and expense, all necessary
permits, licenses and consents (i) from any or all Gaming Authorities required
for the “nonrestricted operation” of the Premises as a gaming casino under a “nonrestricted
license,” as said terms are defined in NRS 463.0177, and (ii) from any
regulatory agency or entity with jurisdiction required to sell alcohol at the
Premises. Tenant shall keep and maintain said permits, licenses and consents in
full force and effect throughout the Term. At all times during the Term, Tenant
shall comply with all Gaming Laws applicable to its use or occupancy of the
Premises and operation of the Casino Business.

 

(b)           Landlord
expressly acknowledges that, (i) pursuant to NRS 453.162(5)(a), NRS 453.165,
and NRS 453.167, the State Gaming Control Board and the Nevada Gaming
Commission may require a finding of suitability or the licensing of any person
who owns any interest in the premises of a licensed establishment or owns any
interest in real property used by a licensed establishment whether such person
leases the property directly to the licensee or through an intermediary; and
that (ii) pursuant to Regulation 3.020 promulgated under the Nevada Gaming
Control Act, the Commission or the Board may deem that premises are unsuitable
for the conduct of gaming operations by reason of ownership of any interest
whatsoever in such premises by a person who is unqualified or disqualified to
hold a gaming

 

31

 

license, regardless of the
qualifications of the person who holds a license to operate gaming in or upon
such premises. Further, pursuant to said regulations, in all cases in which the
premises wherein or whereon the gaming operation for which a state gaming
license is sought are not wholly owned by the applicant, the applicant must
furnish to the Board a statement of the name and address of the owner or owners
of such premises, a copy of all agreements whereby the applicant is entitled to
possession of the premises, and such other information as the board may require.
At its sole expense, Landlord shall at all times cooperate with Tenant and
shall cause Prime Landlord at all times to cooperate with Tenant in respect of
all Gaming Laws applicable to Prime Landlord and Landlord, including, without
limitation, the foregoing Gaming Laws, and shall provide any information
required by any Gaming Authority with jurisdiction, including, but not limited
to, filing all required applications and paying all costs of any required
investigation, and shall cooperate with all such Gaming Authorities if called
forward for any finding of suitability that may be required under any
applicable Gaming Laws. If Prime Landlord or Landlord is found unsuitable, then
this Lease shall terminate upon receipt by Prime Landlord, Landlord, and Tenant
of notice of such action by the Nevada Gaming Commission, and the provisions of
Section 16.1 shall govern such termination of this Lease.

 

Section 5.7            Casino
Mortgages and Transition Procedures

 

Tenant shall
maintain in and about the Premises at all times during the Term, such kinds and
quantities of casino personal property, including, but not limited to, gaming
equipment and casino furniture, fixtures and equipment as is customary and
usual for the operation of a casino at the Casino Standard and compatible with
the Hotel Business. Landlord and Tenant acknowledge and agree that on the
Commencement Date, all of Tenant’s right, title, and interest in the Gaming
Equipment will be subject to a casino personal property mortgage granted to the
Mortgagee by the Patch Lease Tenant, and the Casino Personal Property,
excluding the Gaming Equipment, will be subject to a casino personal property
mortgage granted to the Mortgagee by the Prime Landlord. On the Commencement
Date, Tenant will grant the Casino Personal Property Mortgage to the Mortgagee
with respect to all of Tenant’s right, title, and interest in the Casino
Personal Property, which shall be a restatement and amendment of the casino
personal property mortgage previously granted to the Mortgagee by the Patch
Lease Tenant and the casino personal property mortgage previously granted to
the Mortgagee by the Prime Landlord with respect to the Casino Personal
Property, excluding the Gaming Equipment. Tenant shall execute any and all
documents reasonably required by the Mortgagee to grant the Casino Personal
Property Mortgage and to perfect the security interest of the Mortgagee in the
Casino Personal Property. The Casino Personal Property Mortgage shall
acknowledge and confirm that, except for industry standard non-recourse
exceptions to the extent of the value of the Casino Personal Property, Tenant
shall have no liability for payment of the loan secured by the Casino Personal
Property Mortgage. From time to time, the Casino Personal Property Mortgage
shall be released in accordance with the provisions of Section 3.9. During
the term of this Lease, Tenant shall keep the Casino Personal Property and the
Casino Personal Property Additions in good order, condition, and repair,
ordinary wear and tear excepted, and shall replace the same, as reasonably
necessary when the same become obsolete or in poor condition not reasonably
subject to further repairs, or when Tenant desires to replace the same in the
ordinary course of the Casino Business. Any such replacement shall be of
substantially comparable or better quality, but may not be suitable for the
same use or purpose as the Casino Personal Property or Casino Personal Property
Additions, if the same is obsolete or no longer consistent with the nature and
character

 

32

 

of the Casino and the Casino Back-of-the-House
Areas at such time or Tenant’s business plan for the Casino Business at such
time, all as determined by Tenant in its reasonable discretion. At the
termination of this Lease, Tenant shall leave in place in the Casino and the
Casino Back-of-the-House Areas the Alterations to the Premises, all Casino
Personal Property and Casino Personal Property Additions, and all of Tenant’s
right, title and interest in and to the Alterations to the Premises, all Casino
Personal Property and Casino Personal Property Additions shall vest in Landlord
(or its licensed designee, if Landlord is not licensed at the termination of
this Lease) as of the termination of this Lease. Upon Landlord’s request,
Tenant shall promptly execute and deliver to Landlord such instruments as
Landlord may reasonably request to effectuate or confirm such vesting. On the
Commencement Date, Tenant shall pay Landlord the amount of the Casino Cash and
Landlord, Tenant and the Patch Lease Tenant shall implement the Casino
Transition Procedures described in Exhibit “5.7”. The parties agree that
Casino Personal Property that is released from the Casino Personal Property
Mortgage and Casino Personal Property Additions that are not subject to the
Casino Personal Property Mortgage shall not be subject to any lien or security
interest in favor of the Mortgagee.

 

Section 5.8            Tenant’s Initial
and Subsequent Capital Investments

 

(a)           Prior
to the Commencement Date, and as a condition to Landlord’s obligations under
this Lease, Tenant shall demonstrate to Landlord’s satisfaction that Tenant has
funds available in an amount acceptable to Landlord in cash or cash equivalents
set aside exclusively for investment in the Casino Business as provided under
this Section (“Tenant’s Initial Capital
Investment”). Tenant’s Initial Capital Investment shall be used for
(i) the Lease Deposit; (ii) purchasing the existing Casino Cash from the Patch
Lease Tenant and implementing the Casino Transition Procedures described in Exhibit
“5.7”; (iii) leveling the Casino floor and constructing and equipping the
Required Food Facility, pursuant to plans and specifications to be submitted to
and approved by Prime Landlord, Landlord and Mortgagee and, to the extent
required under the License Agreement, by Licensor, prior to the Commencement
Date pursuant to the provisions of Section 6.3; (iv) paying the
Mortgagee for the release of Casino Personal Property from the Mortgage as
described in Section 3.9; (v) other improvements to the Casino approved
in advance by Prime Landlord and Landlord; and (vi) capital lease payments to
acquire Casino Personal Property Additions pursuant to Casino Personal Property
Additions Capital Leases approved in advance by Landlord. Tenant covenants and
agrees to complete the construction of the Required Food Facility and open it for
business no later than June 30, 2002. On the Commencement Date, Tenant shall
cause Tenant’s Initial Capital Investment to be placed in an interest-bearing
reserve account pursuant to a Deposit Agreement in the form attached hereto as Exhibit
5.8 (“Deposit Agreement”) and pledged to
Landlord and/or Mortgagee for the fulfillment of Tenant’s obligations under
this Subsection 5.8(a). Tenant shall utilize Tenant’s Initial Capital
Investment for the purposes specified in this Subsection 5.8(a) during
the first Lease Year of the Term. Exhibit “5.8(a)” contains a
description of the improvements, the estimated costs of the improvements, and a
description of the other expenditures to be made by Tenant using Tenant’s
Initial Capital Investment. If Tenant does not use the entire amount placed in
the account (including interest), the remaining balance shall be the sole
property of Tenant and shall be released to Tenant upon demand after the
expenditures specified in this Subsection 5.8(a) are completed and
Tenant has demonstrated to Landlord’s reasonable satisfaction that no lien claims
against the Resort are outstanding with respect to the work performed by Tenant.
Tenant shall be entitled to reimbursement pursuant to Subsection 3.11(a)
for those amounts of Tenant’s Initial

 

33

 

Capital Investment expended by
Tenant during the first Lease Year and for those amounts expended by Tenant
pursuant to Subsection 5.8(b). The amount of Tenant’s Initial Capital
Investment shall be subject to audit by Landlord for a period of six (6) months
following the completion of the improvements by Tenant.

 

(b)           Without
duplication with Tenant’s Initial Capital Investment, from time to time prior
to first day of the calendar month in which Landlord obtains a nonrestricted
gaming license or is found suitable by the Nevada Gaming Commission, Tenant
shall expend additional funds for capital lease payments to acquire Casino
Personal Property Additions pursuant to Casino Personal Property Additions
Capital Leases approved in advance by Landlord (“Tenant’s Subsequent Capital Investments”). Tenant shall be
entitled to reimbursement for Tenant’s Subsequent Capital Investments as
provided in Subsection 3.11(a). The Parties intend that such funds
expended by Tenant for Casino Personal Property Additions Capital Leases after
the first day of the calendar month in which Landlord obtains a nonrestricted
gaming license or is found suitable shall not be considered Tenant’s Subsequent
Capital Investments.

 

(c)           Tenant
agrees that it shall obtain Casino Personal Property Additions in a
commercially reasonable manner at competitive prices and on competitive terms. Tenant
shall not obtain Casino Personal Property Additions from an Affiliate of Tenant
or any owner or member of Tenant or from any party with a financial interest in
Tenant or any owner or member of Tenant. Tenant shall keep all Casino Personal
Property Additions Capital Leases in good standing during the Term of this
Lease.

 

Section 5.9            Tenant’s
Capital Expense Reserve; Etc.

 

(a)           In
addition to Tenant’s capital investment requirements under Section 5.8, Tenant
covenants and agrees to invest approximately One Million Dollars ($ 1,000,000)
per Lease Year in Approved Capital Expenditures. Prior to such expenditures,
Tenant shall submit to Landlord a list, in reasonable detail, setting forth the
proposed expenditures. Tenant shall maintain on its books and records a Capital
Expense Reserve Account that shows in reasonable detail the expenditures made
by Tenant for Approved Capital Expenditures during the current Lease Year and all
prior Lease Years. To the extent, if any, that the aggregate Approved Capital
Expenditures by Tenant are less than One Million Dollars ($1,000,000) per Lease
Year, Tenant shall keep cash on hand (the “Capital Expense Reserve”)
and available for such purpose; provided that the maximum Capital Expense
Reserve shall be Three Million Dollars ($3,000,000). Tenant shall draw upon the
Capital Expense Reserve from time to time throughout the Term for the purpose
of funding capital improvements to the Premises and Casino Personal Property
Additions. Approved Capital Expenditures and the expenditure of the Capital
Expense Reserve shall be subject to the reasonable approval of Landlord, to the
extent, if any, permitted by the Gaming Laws. Any Capital Expense Reserve that
is not expended during the Term shall be distributed in accordance with the
provisions of Section 3.11. In no event shall Tenant expend more than
One Million Dollars ($1,000,000) in any Lease Year for Approved Capital
Expenditures unless the source of funding in excess of One Million Dollars
($1,000,000) is the Capital Expense Reserve or Tenant’s own funds as specified
in Subsection 5.9(b) below.

 

(b)           Landlord
and Tenant agree that Tenant shall have the right to expend sums for Gaming
Equipment (“Tenant Investment Gaming
Equipment”) in excess of the Approved

 

34

 

Capital Expenditures of One
Million Dollars ($1,000,000) and the Capital Expense Reserve without the prior
written consent of Landlord if such expenditures are made from Tenant’s own
funds (“Tenant’s Gaming Equipment Investment”)
that (i) are not derived from the Casino Business or (ii) are derived from
distributions to Tenant of profits from the Casino Business or Tenant’s
Management Fee or Tenant’s Initial Capital Investment. Before Tenant expends
funds for Tenant Investment Gaming Equipment, Tenant shall submit to Landlord a
list of the proposed Gaming Equipment and an explanation of Tenant’s reasons
for the proposed investment and shall seek Landlord’s reasonable approval of
the investment as an Approved Capital Expense or an expense from the Capital
Expense Reserve. If Landlord does not approve the investment as an Approved
Capital Expense or an expense from the Capital Expense Reserve, Tenant may make
the investment as Tenant’s Gaming Equipment Investment. In such event, the
Tenant Investment Gaming Equipment shall be the property of Tenant at the
expiration or sooner termination of this Lease and at such time Tenant shall
remove the Tenant Investment Gaming Equipment from the Premises and shall
repair any damage to the Premises resulting from such removal. This provision
shall govern over any conflicting provision of this Lease.

 

Section 5.10         Current
Licensor Standards

 

Landlord and
Tenant acknowledge that Marriott will require the following with respect to the
Casino and the Casino Back-of-the-House Areas (collectively, the “Current
Licensor Standards”): (a) the Casino and the Casino Back-of-the-House Areas
shall remain independent of the operation of the Hotel; (b) any commercial
transactions between the Casino and the Hotel shall be on an arms-length,
commercially reasonable basis; (c) the Casino Name shall not include the name
Marriott; (d) Tenant shall be not use any trademarks or trade names of Marriott
or its affiliates in the Casino and the Casino Back-of-the-House Areas, the
Casino marketing or advertising or for any other reason in connection with the
Casino and the Casino Back-of-the-House Areas; (e) except for the services
relating to Tenant’s Operating Cost Obligation, and otherwise as specifically
provided in this Lease, Landlord is not providing services to the Casino or the
Casino Business; (f) to the extent permitted by the Gaming Laws, if any, at the
election of Marriott, the Casino and the Casino Back-of-the-House Areas will be
subject to annual quality assurance reviews covering such areas as guest experience,
service delivery, maintenance and cleanliness and if the Casino and the Casino Back-of-the-House
Areas fail to achieve satisfactory scores on such quality assurance reviews,
Tenant shall take appropriate corrective actions; (g) the Casino and the Casino
Back-of-the-House Areas shall be operated in accordance with applicable Gaming
Laws; (h) the Casino and the Casino Back-of-the-House Areas shall comply with
Marriott Amenity Casino Requirements; and (i) there shall be no Gaming
Equipment in the Hotel. The Current Licensor Standards are set forth in Exhibit
“5.10.” Landlord and Tenant acknowledge and agree that Marriott is providing
no services to the Casino or the Casino Business.

 

Section 5.11         Valet Parking

 

Tenant shall
have the exclusive right to manage and operate the valet parking operations
adjacent to the entrance to the Casino. In connection therewith, Tenant shall
employ all valet parking attendants and managers at that location. Landlord or
the Hotel Operator shall manage and operate the valet parking operations
adjacent to the Hotel entrances. The parties shall mutually cooperate to
allocate available valet parking spaces to each such operation, based on

 

35

 

public demand from time to time.
In connection therewith, Tenant shall have the right to park and keep
limousines, vans, shuttle buses, and other public transportation vehicles on a
reasonably designated area of the parking lots on the Land.

 

Section 5.12         Compliance
with Licensor Standards

 

Tenant
covenants and agrees that, during the Term Tenant shall strictly comply with
the Licensor Standards. Notwithstanding any other provision of this Lease,
Landlord represents and warrants to Tenant that on the Commencement Date, the
Premises comply with Current Licensor Standards. Tenant shall promptly comply
with all requirements as requested by Landlord or its Mortgagee, including but
not limited to (i) providing written confirmation of compliance with certain
Licensor Standards, (ii) submitting to periodic inspections of the Premises as
required by the Licensor Standards, and (iii) providing such other assurances
as may be required by the Licensor in order to confirm Tenant’s continued
compliance with the Licensor Standards. Tenant acknowledges that Landlord’s
compliance with the Licensor Standards pursuant to the terms of the License
Agreement are dependent upon compliance of the entire Resort with the Licensor
Standards, including, in a material part, Tenant’s compliance with respect to the
Casino and the Casino Back-of-the-House Areas. Tenant further acknowledges that
Tenant’s agreement to comply with the Licensor Standards is a material
consideration for Landlord’s agreement to enter into this Lease. Tenant
acknowledges and agrees that any failure to comply with the Licensor Standards
that is not cured within the applicable notice and cure periods of Section
12.2 of this Lease shall constitute an Event of Default under this Lease. Landlord
and Tenant agree that Landlord (and not Tenant) shall pay the cost of complying
with any change in Licensor Standards with respect to the Casino to the extent
that Licensor Standards exceed the Casino Standards.

 

Section 5.13         Casino
Functions

 

Landlord and
Tenant agree that Tenant shall be responsible for all interior cleaning,
maintenance and repair with respect to the Casino and the Casino Back-of-the-House
Areas (excluding the maintenance and repair of common systems such as the air
conditioning system, which shall be the obligation of the Landlord and paid for
as part of Tenant’s Operating Cost Obligation).

 

Section 5.14         WARN Act
Liability

 

Landlord and
Tenant agree that Tenant shall hire or cause to be hired, effective at and upon
Commencement Date, and will maintain or cause to be maintained (other than upon
good cause) for a period of at least ninety (90) days after Commencement Date,
the employment at the Casino and/or the Casino Back-of-the-House Areas, on
terms and conditions reasonably comparable to those in effect on the date
hereof, of a number of the Patch Tenant’s employees who were employees
immediately before the Commencement Date, which is not less than:  (i) sixty-eight percent (68%) of the
employees who were employed by the Patch Tenant as of the Commencement Date at
the Casino and/or the Casino Back-of-the-House Areas; plus (ii) the number of
employees discharged by the Patch Tenant (other than for good cause) during the
term of the Patch Lease. To the extent that Tenant fails to comply with any of
the foregoing covenants, Tenant agrees that it shall be responsible for the
payment of any and all costs,

 

36

 

charges, penalties, compensation,
severance pay, and liabilities arising under the WARN Act and Tenant agrees to
indemnify, defend and hold Landlord harmless from and against any and all
claims, causes of action, judgments, damages, penalties and liabilities
asserted under the WARN Act whether against Landlord or Tenant, arising from
Tenant’s failure to comply with the foregoing covenants.

 

ARTICLE VI —  CONDITION OF PREMISES, ALTERATIONS AND
REPAIRS

 

Section 6.1            As-Is
Condition

 

Landlord and
Tenant acknowledge that Prime Landlord purchased fee title to the Land and
Improvements from a third party debtor in bankruptcy. In connection with Tenant’s
possession of the Premises, Tenant has examined the Premises, is familiar with
the physical condition, expenses, operation and maintenance, zoning, status of
title and use that may be made of the Premises and every other matter or thing
affecting or related to the Premises, and is leasing the same in the condition
existing on the Commencement Date. Tenant acknowledges and agrees that Landlord
has not made and does not make any representations or warranties whatsoever
with respect to the Premises or otherwise with respect to this Lease, express
or implied, including any warranty regarding the suitability of the Premises
for their intended commercial purposes. Tenant assumes all risks with respect
to all aspects of the Premises, physical and otherwise, including any apparent
or latent defects, and agrees that it is leasing the Premises in the condition
existing on the Commencement Date, “As-Is, Where-Is.”

 

Section 6.2            Maintenance
and Cleaning Obligations

 

In addition to
its obligations with respect to Common Area maintenance, repairs and
replacements, Landlord shall cause Prime Landlord to maintain and repair all
Improvements (including, without limitation, the Buildings) in order to keep
the same in good condition and repair, including all necessary or desirable
additions, alterations, improvements, replacements, renewals and substitutions.
Tenant shall provide custodial cleaning and other janitorial services to the
Premises on an ongoing basis throughout each day of the Term, including trash
removal and cleaning of ash trays as frequently as necessary, as well as heavy
duty deep carpet and other extensive cleaning on a periodic, but less frequent
basis, all as reasonably necessary to keep the same clean, neat, and sanitary
and in compliance with all Licensor Standards at all times. Tenant shall assign
a supervisor for such work who may be contacted by Prime Landlord’s authorized
representative or representatives at any time that Prime Landlord reasonably
believes additional work is necessary in order to comply with the Licensor Standards
or the terms of this Lease.

 

Section 6.3            Alterations

 

Tenant shall not
make any changes, alterations, additions or improvements (collectively, “Alterations”) in or to the Premises at a
cost of more than Fifty Thousand Dollars ($50,000) without Landlord’s prior
written consent, subject, however, in each case to all of the following:

 

(a)           No
Alteration shall be undertaken except after thirty (30) days’ prior notice to
Landlord, provided that no such notice shall be required with respect to any
Alteration made by Tenant on an emergency basis, in which case Tenant shall
notify Landlord of such emergency Alteration as soon as practicable.

 

37

 

(b)           No
structural Alteration or Alteration to the exterior of any Building of any kind
whatsoever, whether costing more or less than Fifty Thousand Dollars ($50,000)
shall be undertaken without Landlord’s prior written consent.

 

(c)           Any
Alteration shall, when completed, be of such a character as not to reduce the
value, utility or useful life of the Premises below that immediately before
such Alteration, and shall meet the Casino Standards and Licensor Standards. If
Landlord has given its approval to any Alteration, it shall be presumed that
the Alteration does not reduce the value of the Premises absent a showing that
materials and/or construction techniques have been utilized in the actual
construction of the Alteration which are inferior in quality, composition or
performance to those described in the request for Landlord’s consent.

 

(d)           SKIPPED
IN ORIGINAL

 

(e)           Tenant
acknowledges that the written consent of any Mortgagee may be required before
the commencement of any work hereunder, except work permitted under Subsection
(a) above.

 

(f)            Landlord
shall have no obligation to grant its consent to any Alteration proposed by
Tenant which would reduce the value, utility or useful life of the Premises
below that immediately before such Alteration or which materially reduces the
square footage of the Buildings being altered or weakens, temporarily or
permanently, the structure of the Buildings being altered or any part thereof,
or enables Tenant to conduct activity inconsistent with Tenant’s permitted use
of the Premises under this Lease, or would violate or conflict with the
Licensor Standards. For purposes of this Subsection (e), a material
reduction shall be deemed to mean a reduction of 500 square feet or more.

 

Section 6.4            Conditions
of Work

 

Tenant agrees
that all Alterations, repairs, Restoration (hereinafter defined) and other work
which Tenant shall be required or permitted to do under the provisions of this
Lease (each hereinafter called the “Work”)
shall be (i) performed in a good, workmanlike manner, and in accordance with
all applicable Laws, and in accordance with plans and specifications therefor
which shall have been approved by Landlord (if such approval is required
hereunder), and (ii) commenced and completed promptly and, to the extent not
inconsistent with any term thereof, in accordance with all of the following
terms and conditions:

 

(a)           If
the Work shall involve any structural repair, structural Alterations, exterior
Alterations, Restoration or other structural Work, or if the Work involves
interior Improvements where the aggregate cost of the Work exceeds $25,000,
then the Work shall not be commenced until detailed plans and specifications (including
layout, architectural, mechanical and structural drawings), prepared by a
licensed architect reasonably satisfactory to Landlord shall have been
submitted to and approved by Landlord, which approval shall not be unreasonably
withheld or delayed.

 

(b)           No
Work involving structural repair, structural Alteration, Restoration nor other
structural work shall be undertaken except under the supervision of a licensed
architect or other appropriate design professional reasonably satisfactory to
Landlord.

 

38

 

(c)           All
Work shall be commenced only after all required municipal and other
governmental permits, authorizations and approvals shall have been obtained by
Tenant, at its own cost and expense, and the originals or certified copies
thereof delivered to Landlord. Landlord will execute and/or will cause Prime
Landlord to execute, on Tenant’s written request, any documents necessary to be
signed by Prime Landlord and/or Landlord to obtain any such permits,
authorizations and approvals, provided that Tenant shall discharge any expense
or liability of Prime Landlord and Landlord in connection therewith.

 

(d)           The
Premises and Tenant’s leasehold estate therein shall at all times be kept free
from (i) liens for labor or materials supplied or claimed to have been supplied
to the Premises or Tenant, and (ii) chattel mortgages, conditional sales
contracts, title retention agreements; security interests and agreements, and
financing agreements and statements.

 

(e)           At
all times when any Work is in progress, Tenant shall maintain or cause to be
maintained with such companies and for such periods as Landlord may require (i)
worker’s compensation insurance covering all persons employed in connection
with the Work, in an amount at least equal to the minimum amount of such
insurance required by law (with a waiver of subrogation reasonably satisfactory
to Landlord); and (ii) for the protection of Prime Landlord, Landlord, Tenant
and any Mortgagee, (1) builder’s risk insurance, completed value form, covering
all physical loss, in an amount reasonable satisfactory to Landlord, and (2)
commercial general liability insurance against all hazards, with limits for bodily
injury or death to any one person, for bodily injury or death to any number of
persons in respect of any one accident or occurrence, and for property damage
in respect of one accident or occurrence in such amounts as Landlord may
require.

 

(f)            Upon
completion of any Work, Tenant, at Tenant’s expense, shall obtain certificates
of final approval of such Work required by any governmental or quasi-governmental
authority and shall furnish Landlord with copies thereof, together with “as-built”
plans and specifications for such Work.

 

(g)           Upon
completion of any Work, Tenant shall obtain unconditional, final lien waivers
and releases from all contractors, subcontractors or material suppliers
furnishing labor, materials or equipment to the Premises in connection with the
Work.

 

Section 6.5            Inspection
of Work

 

Following the
delivery of prior reasonable notice, any Work shall be subject to inspection at
any time and from time to time by Landlord, Prime Landlord, any architects
employed by Landlord and/or Prime Landlord, any Mortgagee, and the duly
authorized representatives of Landlord, Prime Landlord or any Mortgagee
(individually, an “Inspector”). If any Inspector shall be of the opinion, which
opinion shall not be unreasonable, that the Work is not being performed
substantially in accordance with the provisions of this Article VI or
the plans and specifications, or that any of the materials or workmanship are
not of good quality or are unsound or improper, unless Tenant reasonably
disputes such opinion, Tenant shall correct any such failure and shall replace
any unsound or improper materials or workmanship. Any disputes under this Article
VI with respect to the Work that the parties are not able to amicably
resolve

 

39

 

shall be resolved by final and
binding arbitration in Las Vegas, Nevada under the Construction Industry
Arbitration Rules of the American Arbitration Association.

 

Section 6.6            End of Term

 

All Work
permanently installed in or upon the Premises by Tenant during the Term shall
become the property of Landlord and shall remain upon and be surrendered with
the Premises. Tenant shall have no obligation to remove or demolish any
fixtures, structures or other improvements that are installed on the Premises
on the Commencement Date. If Landlord is not required to consent to any Work,
such Work shall not be subject to removal at the expiration or earlier termination
of the Term. If Landlord is required to consent to any Work under this Lease,
Landlord’s consent thereto shall be deemed to include Landlord’s consent to
Tenant’s leaving of the Work in place at the end of the Term unless Landlord’s
prior consent to the Work specifies to the contrary, and Tenant shall not be
obligated to remove all or any part thereof.

 

ARTICLE VII —  INSURANCE

 

Section 7.1            Landlord
Insurance

 

Throughout the
Term, Landlord shall maintain or cause Prime Landlord to maintain in full force
and effect such insurance coverage as Landlord may reasonably determine, which
may include the following coverages: (i) Comprehensive General Liability
Insurance, including blanket contractual liability, in a commercially
reasonable amount to be determined by Landlord in its reasonable discretion;
and (ii) all-risk insurance covering the Improvements and all personal property
located at the Resort, except the Casino Personal Property; (iii) any insurance
required to be maintained and kept in place by any Mortgagee; and (iv) any
other insurance coverage reasonably required by Landlord.

 

Section 7.2            Tenant’s
Insurance

 

Throughout the
Term, Tenant, at its own cost and expense, shall provide and keep in force, for
the benefit of Prime Landlord, Landlord, Tenant and any Mortgagee, the
following insurance policies. Prime Landlord, Landlord and any Mortgagee shall
be named as additional insureds under the policies described in Subsections
(a), (b) (c), (e), (f) and (i), if appropriate, below. In addition, the
policies of insurance described in Subsections (b) and (c) below shall
contain a so-called New York standard non-contributing mortgagee clause in
favor of Mortgagee.

 

(a)           Comprehensive
general liability insurance against claims for personal injury, bodily injury,
death or property damage occurring upon, in or about the Premises on the so-called
“occurrence form, including fire, blanket contractual liability, broad form
premises and operations, products and completed operations on an “if any”
basis, independent contractors, blanket contractual liability for all legal
contracts and contractual liability for the indemnities by Tenant contained in Section
11.3 and otherwise in this Lease, and such gaming coverage and endorsements
as may be required by law or prudent business practice, excluding umbrella
coverage, in an amount not less than Five Million Dollars ($5,000,000) combined
single limit per occurrence or such lesser amount of One Million Dollars
($1,000,000) or more as may be available to Tenant and Five Million Dollars
($5,000,000) in the aggregate or such lesser amount

 

40

 

of One Million Dollars
($1,000,000) or more as may be available to Tenant. Landlord and Tenant acknowledge
that on the Commencement Date Tenant shall have coverage in the amount of One
Million Dollars (S 1,000,000) combined single limit per occurrence and One
Million Dollars ($1,000,000) in the aggregate. Tenant shall increase the amount
of insurance coverage in both instances to such greater amounts as are
available to Tenant from time to time, not to exceed Five Million Dollars ($5,000,000).

 

(b)           All-risk
casualty insurance with extended coverages, including, but not limited to the
peril of earthquake, and flood and insurance covering all items included in
Tenant’s leasehold improvements and all heating, ventilating and air
conditioning maintained by Tenant, if any, all Casino Personal Property, Casino
Personal Property Additions and trade fixtures from time to time in, on or upon
the Premises, and all Alterations, additions or changes to the Premises made by
Tenant pursuant to the terms of this Lease, in an amount not less than one
hundred percent (100%) of their full replacement cost of such items from time
to time during the Term, providing protection against perils included within
the standard form of an “all risk” fire and casualty insurance policy. Any
policy proceeds from such insurance shall be held in trust by an insurance
trustee acceptable to Prime Landlord, Landlord, and if there is a Mortgage on
the Resort, the Mortgagee, for the repair, construction and restoration or
replacement of the property damaged or destroyed unless this Lease is
terminated under the terms of Section 8.1 of this Lease. Tenant shall
obtain terrorism insurance when such coverage is available at commercially
reasonable rates. Landlord and Tenant acknowledge and agree that such terrorism
insurance is not available on the Commencement Date at commercially reasonable
rates.

 

(c)           Business
income insurance covering risk of loss due to the occurrence of any of the
hazards covered by the insurance to be maintained by Prime Landlord or Landlord
hereunder, with coverage in a face amount of not less than the aggregate
amount, for a period of twenty four (24) months following the insured-against
peril, of 100% of all Rent to be paid by Tenant under this Lease; and

 

(d)           Worker’s
compensation insurance (including employers’ liability insurance), with a
waiver of subrogation reasonably satisfactory to Landlord, covering all persons
employed at the Premises by Tenant to the extent required by applicable Laws,
including, without limitation, during the course of work to the Premises.

 

(e)           At
all times during demolition or construction with respect to the Premises, owner’s
contingent or protective liability insurance and builder’s risk insurance in
form acceptable to Landlord.

 

(f)            Umbrella
liability insurance in addition to primary coverage in an amount not less than
Fifty Million Dollars ($50,000,000) per occurrence on terms consistent with the
primary public liability insurance mentioned above.

 

(g)           So-called
“dram shop” insurance or other liability insurance required in connection with
the sale of alcoholic beverages.

 

41

 

(h)           Insurance
against employee dishonesty in an amount not less than Two Million Dollars
($2,000,000) from the Premises and with a deductible no greater than Fifty
Thousand Dollars ($50,000).

 

(i)            Such
other insurance coverage as may be required by any Mortgagee with respect to
the Premises or the Casino Business.

 

Section 7.3            Policy
Requirements

 

The party
obligated to obtain and maintain any insurance policy hereunder shall deliver
an original certificate of insurance (on Acord Form 27 or its equivalent in the
case of casualty and on insurance company letterhead in the case of liability
or in a form otherwise acceptable to Landlord) evidencing such insurance to the
other party prior to the Commencement Date, and thereafter, at least thirty
(30) days prior to the expiration of any such coverage or policy. All insurance
required to be maintained by Tenant hereunder shall be written by insurance
companies: (i) rated A-/X or better in “Best’s Insurance Guide” (or any
substitute guide acceptable to Landlord); (ii) authorized to do business in the
State of Nevada; and (iii) of recognized responsibility and which are
satisfactory to Landlord. Any deductible amounts under Tenant’s business
interruption coverage may not exceed two (2) days income. All certificates for
Tenant’s General Liability Insurance shall expressly provide that the coverage
evidenced thereby shall be primary and that any policies carried by Prime
Landlord or Landlord shall be excess and noncontributory with Tenant’s primary
insurance. All insurance policies described in this Article VII shall be
endorsed to provide Prime Landlord, Landlord and Tenant, as applicable, and in
any case, Mortgagee, with thirty (30) days’ notice of cancellation or change in
terms. If either party shall fail to procure the insurance required to be
maintained by it under this Article VII in a timely fashion or to
deliver such certificates to the other party, the other party may, at its option
upon written notice to the obligated party, procure the same for the account of
the obligated party. If Tenant is the obligated party, Tenant shall pay
Landlord the cost thereof as Additional Rent. If Landlord is the obligated
Party, and Landlord does not reimburse Tenant the cost thereof within thirty
(30) days after written demand by Tenant to Landlord, Tenant shall have the
right to offset and deduct the cost thereof from its next installment(s) of
Base Rent.

 

Section 7.4            Additional
Insurance Terms

 

Tenant shall
not violate, or permit to be violated, any of the conditions of any of the said
policies of insurance, and Tenant shall perform and satisfy the requirements of
the companies writing such policies so that companies of good standing,
reasonably satisfactory to Landlord, shall be willing to write and/or continue
such insurance. Tenant shall not carry separate or additional insurance
affecting the coverage described in this Article VII, concurrent in form
and contributing in the event of any loss or damage to the Premises with any
insurance required to be obtained by Prime Landlord or Landlord or Tenant under
this Lease, unless such separate or additional insurance shall comply with and
conform to all of the provisions and conditions of this Article. Tenant shall
promptly give notice to Landlord of such separate or additional insurance. The
parties expressly acknowledge that this Lease may not provide for insurance
coverage of Tenant’s personal property on or about the Premises, and Tenant
shall be entitled to insure the same in any amount that Tenant desires or deems
appropriate. The insurance required by this Lease, at the option of the
insuring party, may be effected by blanket and/or umbrella policies

 

42

 

issued to the insuring party
covering the Premises and other properties owned or leased by the insuring
party, provided that the policies otherwise comply with the provisions of this
Lease and such policies and the certificates required hereunder specifically
allocate to the Premises the specified coverage required hereunder, without
possibility of reduction or coinsurance by reason of, or damage to, any other
premises named therein.

 

ARTICLE VIII —  DAMAGE OR DESTRUCTION AND CONDEMNATION

 

Section 8.1            Damage and
Destruction

 

(a)           Partial
Destruction. If the Premises are rendered partially untenantable by fire or
other insured casualty, and if the damage is repairable within ninety (90) days
of the occurrence, (with the repair work and preparations therefore to be
accomplished during regular working hours on regular work days), Landlord shall
or shall cause Prime Landlord to repair the Premises with due diligence,
provided there are sufficient insurance proceeds available to repair the damage.
Landlord shall or shall cause Prime Landlord also to repair the damage if there
are sufficient insurance proceeds available to repair the damage and the damage
is repairable within one hundred eighty (180) days if (i) the Gaming
Authorities agree to issue a new nonrestricted gaming license to Tenant for
continuation of this Lease after the completion of the restoration; (ii) the
Gaming Authorities agree to issue a new nonrestricted gaming license to
Landlord if Landlord had such a license prior to the damage or issue a new finding
of suitability to Landlord if Landlord had such a finding of suitability prior
to the damage; and (iii) the Gaming Authorities accept Prime Landlord as the
owner of the Casino. Notwithstanding the other provisions of this Subsection
8.1(a), if (i) thirty percent (30%) or more of the useable area of the
Buildings is destroyed or damaged, regardless of whether the Premises are
damaged, or (ii) more than thirty percent (30%) of the useable area of the
Premises is damaged or destroyed, or (iii) the Lease Term remaining after the
date of the damage or destruction is less than twelve (12) months, then
Landlord shall have the right to terminate this Lease as of the date of such
damage or destruction by giving notice to Tenant within thirty (30) days
thereafter of its election to so terminate this Lease. If Landlord elects to
terminate this Lease pursuant to this Subsection 8.1(a), at termination,
Landlord shall pay Tenant the Lease Termination Fee provided that Tenant has
delivered to Landlord any remaining Casino Personal Property and Casino Personal
Property Additions and all insurance proceeds relating to the damaged or
destroyed Casino Personal Property, Casino Personal Property Additions, and
Alterations to the Premises. Tenant shall deliver such items to Landlord free
and clear of liens, encumbrances, and defects of title, except any such matters
arising through Prime Landlord for the benefit of its Mortgagee and except for
Casino Personal Property Additions Capital Leases then outstanding. Notwithstanding
the foregoing, so long as Tenant is not in default under this Lease, Landlord
agrees not to terminate this Lease if Landlord rebuilds following partial
damage to the Premises.

 

(b)           Total
Destruction. If the Premises are completely destroyed by fire or other
casualty, or if they are damaged by uninsured casualty, or by insured casualty
to such an extent that the damage cannot be repaired within ninety (90) days of
the occurrence, Landlord shall have the option to restore or cause Prime
Landlord to restore the Premises or to terminate this Lease on thirty (30) days
written notice to Tenant, effective as of any date not more than sixty (60)
days after the occurrence. In such event, Landlord shall advise Tenant within
thirty (30) days after such casualty whether Landlord elects to restore the
Premises or to terminate this

 

43

 

Lease. If Landlord elects to
restore the Premises, it shall or shall cause Prime Landlord to commence and
prosecute the restoration work with diligence. If the Premises are totally
damaged or destroyed, and Prime Landlord’s or Landlord’s restoration of the
Premises has not been completed within ninety (90) days after the damage or
destruction, Tenant shall have the right to terminate this Lease by written
notice given to Landlord within five (5) Business Days after the end of the
foregoing period of ninety (90) days. Notwithstanding the other provisions of
this Subsection 8.1(b), Landlord and Tenant agree that neither of them
will terminate this Lease pursuant to this Subsection 8.1(b) if all of
the following conditions are met within the period of ninety (90) days
following the destruction: (i) sufficient insurance proceeds are available to
rebuild the Premises; (ii) the Gaming Authorities agree to issue a new
nonrestricted gaming license to Tenant for continuation of this Lease after the
completion of the restoration; (iii) the Gaming Authorities agree to issue a
new unrestricted gaming license to Landlord if Landlord had such a license
prior to the destruction or issue a new finding of suitability to Landlord if
Landlord had such a finding of suitability prior to the destruction; and (iv)
the Gaming Authorities accept Prime Landlord as the owner of the Casino. If
Landlord or Tenant elects to terminate this Lease because of insured casualty
pursuant to this Subsection 8.1(b), at termination, Landlord shall pay
Tenant the Lease Termination Fee provided that Tenant has delivered to Landlord
any remaining Casino Personal Property and Casino Personal Property Additions
and all insurance proceeds relating to the damaged or destroyed Casino Personal
Property, Casino Personal Property Additions, and Alterations to the Premises. Tenant
shall deliver such items to Landlord free and clear of liens, encumbrances, and
defects of title, except any such matters arising through Prime Landlord for
the benefit of its Mortgagee and except for Casino Personal Property Additions
Capital Leases then outstanding. If this Lease is terminated because of
uninsured casualty, Landlord shall have no obligation to pay the Lease
Termination Fee to Tenant.

 

(c)           Tenant’s
Obligations; No Abatement or Termination. Following damage or destruction
as described in this Section 8.1, Tenant shall take all commercially
reasonable measures necessary and available under any applicable Gaming Laws to
preserve its gaming license. If Tenant is the insured party with respect to any
damaged or destroyed Casino Personal Property, Tenant shall apply any available
insurance proceeds to replace such personal property at any time that Landlord
restores or causes Prime Landlord to restore the Premises. As material
consideration to Landlord for its agreement to enter into this Lease, the
parties agree that except as otherwise provided to the contrary in Subsections
8.1(a) or 8.1(b), this Lease shall not terminate or be forfeited or be
affected in any manner by reason of damage to or total, substantial or partial
destruction of the Premises or any part thereof or by reason of the
untenantability of the same or any part thereof, for or due to any damage or
destruction of the Premises from any cause whatsoever, and, notwithstanding any
law or statute, present or future, Tenant waives any and all rights to quit or
surrender the Premises or any part thereof on account of any damage or
destruction of the Premises. Tenant expressly agrees that its obligations under
this Lease, including the payment of Rent payable by Tenant under this Lease,
shall continue as though the Premises had not been damaged or destroyed and
without abatement, suspension, diminution or reduction of any kind; provided,
however, that Tenant’s Rent under this Lease shall be abated to the extent (but
only to the extent) that Landlord actually receives rental loss insurance
payments in lieu of such Rent.

 

44

 

Section 8.2            Condemnation

 

(a)           Taking.  If
all of the Premises are taken by Eminent Domain, this Lease shall terminate as
of the date Tenant is required to vacate the Premises and all Base Rent,
Additional Rent, and Percentage Rent (if applicable) shall be paid to that date.  The term “Eminent
Domain” shall include the taking or damaging of property by, through
or under any governmental or statutory authority, and any purchase or
acquisition in lieu thereof, whether the damaging or taking is by government or
any other person who under applicable law has the power to exercise the power
of condemnation or eminent domain.  If,
in the reasonable judgment of Landlord, a taking of any part of the Premises by
Eminent Domain renders the remainder thereof unusable for the business of
Tenant this Lease, at the option of either party, may be terminated by written
notice given to the other party not more than thirty (30) days after Landlord
gives Tenant written notice of the taking, and such termination shall be effective
as of the date when Tenant is required to vacate the portion of the Premises so
taken.  If this Lease is so terminated,
all Base Rent, Additional Rent, and Percentage Rent (if applicable) shall be
paid to the date of termination.  Whenever
any portion of the Premises is taken by Eminent Domain and this Lease is not
terminated, Landlord shall at its expense proceed with all reasonable dispatch
to restore, to the extent of available proceeds and to the extent it is
reasonably prudent to do so, the remainder of the Premises to the condition
they were in immediately prior to such taking, and Tenant shall at its expense
proceed with all reasonable dispatch to restore its personal property and all
improvements made by it to the Premises to the same condition they were in
immediately prior to such taking.  The
Base Rent payable hereunder shall be equitably reduced based on (i) the square
footage of the Premises so taken compared to the square footage of the entire
Premises, and (ii) the relative gross revenue from operations generated at such
time by the portion of the Premises taken compared to the gross revenue from
operations generated at such time by the remainder of the Premises.  If this Lease is terminated pursuant to this Subsection
8.2(a), Landlord shall pay Tenant the Lease Termination Fee provided that
Tenant has delivered to Landlord any Casino Personal Property and Casino
Personal Property Additions that are not taken and all condemnation proceeds
relating to the taken Casino Personal Property, the taken Casino Personal
Property Additions, any Alterations to the Premises and any and all damages
relating to the Casino Business and Tenant’s leasehold interest under this
Lease.  Tenant shall deliver such items
to Landlord free and clear of liens, encumbrances, and defects of title, except
any such matters arising through Prime Landlord for the benefit of its
Mortgagee and except for Casino Personal Property Additions Capital Leases then
outstanding.

 

(b)           Award.  Landlord
reserves all right to the entire damage award or payment for any taking by
Eminent Domain and Tenant waives all claims whatsoever against Landlord for
damages for termination of its leasehold interest in the Premises or for
interference with its business.  In
consideration of Landlord’s agreement to pay the Termination Fee to Tenant, as
provided in Subsection 8.2(a), Tenant hereby grants and assigns to
Landlord any right Tenant may now have or hereafter acquire to such damages and
agrees to execute and deliver such further instruments of assignment as
Landlord may from time to time request.

 

45

 

ARTICLE IX —  ASSIGNMENT AND SUBLETTING

 

Section 9.1            Transfers

 

Except in
strict accordance with the provisions of this Article IX, Tenant shall
not and Tenant shall not permit any sale, assignment, mortgage, encumbrance or
other transfer, directly or indirectly (collectively, “Transfer”),
of all or any portion of Tenant’s interest in this Lease or the Premises
without Landlord’s prior written consent, which may be granted or withheld in
Landlord’s sole, absolute and unfettered discretion.  If Landlord grants its consent to a Transfer
pursuant hereto, after the effective date of such Transfer, Tenant shall remain
liable for all future obligations accruing under the Lease.  For purposes of this Lease, a “Transfer” shall include, if Tenant is a
corporation, any transfer of this Lease by merger, consolidation or
liquidation, or any direct or indirect change in the ownership of, or power to
vote more than twenty percent (20%) of Tenant’s voting stock; if Tenant is a
partnership, a change in any general partner or in voting or decision-making
control of the partnership; or if Tenant is a limited liability company, a
change in any of the members in or more than twenty percent (20%) of the voting
or decision-making of the company.  Notwithstanding
the foregoing, if Tenant is not in default under this Lease, Landlord shall
approve the assignment of this Lease to Millennium Management Group, L.L.C. (“Millennium”)
or Mendenhall Millennium L.L.C. (“Mendenhall”) or the wholly owned affiliate of
Millennium or Mendenhall after the transferee receives a nonrestricted gaming
license with respect to the Premises, provided that such entity is wholly owned
by and/or controlled by William J. Paulos and William C. Wortman; and provided
that Tenant and such entity execute and deliver to Landlord such documents as
Landlord or Landlord’s lender may reasonably require to confirm such matters as
either of them may reasonably require, including, but not limited to,
confirmation that such entity fully assumes all of the obligations under this
Lease and that Tenant shall remain liable under the Lease after the assignment.  Notwithstanding anything contained herein to
the contrary, Tenant shall have the right, without the consent of the Landlord,
the Prime Landlord or any Mortgagee, to mortgage or pledge the leasehold estate
and interest of Tenant under this Lease to any leasehold mortgagee (a “Leasehold
Mortgagee”) in conjunction with Tenant’s obligations as a guarantor with
respect to the notes offering to be issued by Mendenhall Millennium, LLC and
previously disclosed to Landlord, Prime Landlord and Mortgagee.  Any Leasehold Mortgagee or its successor or
assignee or designee may become the legal owner and holder of Tenant’s
leasehold estate by foreclosure of its leasehold mortgage or leasehold deed of
trust, as applicable, or as a result of foreclosure or otherwise, provided that
prior to becoming the legal owner and holder of Tenant’s leasehold estate, such
Leasehold Mortgagee or its successor or assignee or designee shall fully comply
with all applicable Gaming Laws, cure any outstanding defaults of Tenant under
this Lease, and fully comply with all terms of any Mortgage and this Lease, including,
without limitation, the foregoing provisions of this Section 9.1, which apply
to any transfer of Tenant’s interest in this Lease.  Landlord, upon serving Tenant any notice of
default pursuant to the provisions of Article XII hereof shall at the same time
serve a copy of such notice upon each Leasehold Mortgagee in the manner
contemplated in Section 21.4 hereof.  The
Leasehold Mortgagee shall have the right, but not the obligation, to cure or
cause to be remedied a default in the payment of Rent during three (3) days
following receipt of such notice and during a period of thirty (30) days for
any other default after its receipt of such notice.

 

46

 

Section 9.2            Notice of
Transfer; Further Consent

 

In the event
of any Transfer, whether or not Landlord’s consent is required, Landlord shall
be given not less than thirty (30) days’ advance written notice of the proposed
effective date of such Transfer, which notice shall be delivered to Landlord
together with (i) either an executed counterpart or, if unavailable, a true and
complete copy of the proposed instrument(s) of the Transfer and (ii) such other
documents as Landlord may reasonably request. 
Any consent by Landlord under this Article IX shall apply only to
the specific transaction thereby authorized and shall not relieve Tenant from
the requirement of obtaining the prior written consent of Landlord to any
further Transfer of this Lease.  No
Transfer of all or a portion of this Lease shall release or relieve the
original named Tenant (or any previously approved transferee) from any
obligations of the Tenant hereunder, and the original named Tenant (or any
previously approved transferee) shall remain liable for the performance of all
obligations of Tenant hereunder.

 

Section 9.3            Subleases

 

Tenant shall
not sublease all or any portion of the Premises without obtaining Landlord’s
prior written consent which consent shall not be unreasonably withheld.  Landlord may attach such conditions to its
consent as Landlord, in its discretion, may require, including (without
limitation) payment to Landlord of all or a portion of the rent and other
consideration payable under the sublease and/or approval by Landlord of the
financial condition and operating experience of the Subtenant.  Tenant shall cause each subtenant (a “Subtenant”) permitted pursuant to this Article
IX to comply with its obligations under its respective sublease (the “Sublease”), and Tenant shall diligently
enforce all of its rights as the landlord thereunder in accordance with the
terms of such Sublease and this Lease.  The
fact that a violation or breach of any of the terms, provisions or conditions
of this Lease results from or is caused by an act or omission by any of the
Subtenants shall not relieve Tenant of Tenant’s obligation to cure the same.  Tenant shall take all necessary steps to
prevent any such violation or breach.

 

Section 9.4            Landlord
Acts

 

If this Lease
is assigned, or if the Premises or any part thereof is subleased or occupied by
anybody other than Tenant, Landlord may, after default by Tenant, collect Rent
from the assignee or Subtenants, and apply the net amount collected to the Rent
herein reserved, but no such assignment, sublease, occupancy or collection
shall be deemed a waiver of this covenant, or the acceptance of the assignee or
Subtenant as tenant, or a release of Tenant from the further performance by
Tenant of the terms, covenants, and conditions on the part of Tenant to be
observed or performed hereunder.  After
any assignment or subletting, Tenant’s liability hereunder shall continue
notwithstanding any subsequent modification or amendment hereof or the release
of any subsequent tenant hereunder from any liability, to all of which Tenant
hereby consents in advance.  The consent
by Landlord to any Transfer or Sublease shall not in any way be construed to
relieve Tenant from obtaining the express written consent of Landlord to any
further Transfer or Sublease.

 

47

 

Section 9.5            Assignment
of Sublease(s)

 

To secure the
prompt and full payment by Tenant of the Rent and the faithful performance by
Tenant of all the other terms and conditions herein contained on its part to be
kept and performed, Tenant hereby assigns, transfers and sets over unto
Landlord, subject to the conditions hereinafter set forth, all of Tenant’s right,
title and interest in and to all Subleases and hereby confers upon Landlord,
its agents and representatives, a right of entry (subject to prior notice) in,
and sufficient possession of, the Premises to permit and insure the collection
by Landlord of the rentals and other sums payable under the Subleases, and
further agrees that the exercise of said right of entry and qualified
possession by Landlord shall not constitute an eviction of Tenant from the
Premises or any portion thereof and that should said right of entry and
possession be denied Landlord, its agent or representative, Landlord, in the
exercise of said right, may use all requisite force to gain and enjoy the same
without responsibility or liability to Tenant, its servants, employees, guests
or invitees, or any Person whomsoever; provided, however, that
such assignment shall become operative and effective only if (a) an Event of a
Default shall occur, or (b) this Lease and the Term shall be cancelled or
terminated pursuant to the terms, covenants and conditions hereof, or (c) there
occurs repossession under a dispossess warrant or other re-entry or
repossession by Landlord under the provisions hereof, or (d) a receiver for the
Premises is appointed pursuant to applicable Laws, and then only as to such of
the subleases that Landlord may elect to take over and assume.  At any time and from time to time within five
(5) days after Landlord’s written demand, Tenant promptly shall deliver to
Landlord a schedule of all Subleases, setting forth the names of all
Subtenants, with a photocopy of each of the Subleases.  Upon reasonable request of Landlord, Tenant
shall permit Landlord and its agents and representatives to inspect all
Subleases affecting the Premises.  Tenant
covenants that each Sublease shall provide that the Subtenant thereunder shall
be required from time to time, upon request of Landlord or Tenant, to execute,
acknowledge and deliver, to and for the benefit of Landlord and Mortgagee, an
estoppel certificate confirming with respect to such sublease the information
set forth in Section 14.1 hereof. 
Concurrently with the execution of this Lease, Tenant is executing and
delivering to Landlord an Assignment of Sublease(s) in the forms set forth in Exhibit
“9.5,” which Landlord shall place in the public records to document the
assignment of Sublease(s).

 

Section 9.6            Bankruptcy
Provisions

 

If Tenant
assumes this Lease and proposes to assign the same pursuant to the provisions
of Title 11 of the United States Code or any statute of similar purpose or
nature (the “Bankruptcy Code”) to
any person or entity who shall have made a bona fide offer to accept an
assignment of this Lease on terms acceptable to Tenant, then notice of such
proposed assignment shall be given to Landlord by Tenant no later than ten (10)
days after receipt of such offer by Tenant, but in any event no later than five
(5) days prior to the date that Tenant shall file any application or motion with
a court of competent jurisdiction for authority and approval to enter into such
assumption and assignment.  Such notice
shall set forth (a) the name and address of the assignee, (b) all of the terms
and conditions of such offer, and (c) the proposal for providing adequate
assurance of future performance by such person under the Lease, including,
without limitation, the assurance referred to in Section 365 of the Bankruptcy
Code.  Any person or entity to which this
Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be
deemed without further act or deed to have assumed all of the obligations
arising under this 

 

48

 

Lease from and
after the date of such assignment.  Any
such assignee shall execute and deliver to Landlord upon demand an instrument
confirming such assumption.

 

Section 9.7            Bankruptcy
of Assignee

 

If, at any
time after Tenant may have assigned Tenant’s interest in this Lease, this Lease
shall be disaffirmed or rejected in any proceeding of the types described in Subsection
12.1(e) hereof, or in any similar proceeding, or in the event of
termination of this Lease by reason of any such proceeding or by reason of
lapse of time following notice of termination given pursuant to Article XII
based upon any of the events of default set forth in said Subsection 12.1(e),
Tenant, upon request of Landlord given within thirty (30) days next following
any such disaffirmance, rejection or termination (and actual notice thereof to
Landlord in the event of a disaffirmance or rejection or in the event of
termination other than by act of Landlord), shall (a) pay to Landlord all Base
Rent and Additional Rent due and owing by the assignee to Landlord under this
Lease to and including the date of such disaffirmance, rejection or
termination, and (b) as “tenant”, enter into a new lease with Landlord for a
term commencing on the effective date of such disaffirmance, rejection or
termination and ending on the expiration date of the Term, unless sooner terminated
as in such lease provided, at the same Base Rent and Additional Rent and upon
the then executory terms, covenants and conditions as are contained in this
Lease, except that (i) Tenant’s rights under the new lease shall be subject to
the possessory rights, if any, of the assignee under this Lease and the
possessory rights of any person claiming through or under such assignee or by virtue
of any statute or of any order of any court, (ii) such new lease shall require
all defaults existing under this Lease to be cured by Tenant with due
diligence, and (iii) such new lease shall require Tenant to pay all Base Rent
and Additional Rent reserved in this Lease which, had this Lease not been so
disaffirmed, rejected or terminated, would have accrued under the provisions of
this Lease after the date of such disaffirmance, rejection or termination with
respect to any period prior thereto.  If
Tenant shall default in its obligation to enter into said new lease for a
period of ten (10) days next following Landlord’s request therefor, then in
addition to all other rights and remedies by reason of such default, either at
law or in equity, Landlord shall have the same rights and remedies against
Tenant as if Tenant had entered into such new lease and such new lease had
thereafter been terminated as of the commencement date thereof by reason of
Tenant’s default thereunder.

 

Section 9.8            Survival

 

The provisions
of Sections 9.5 and 9.6 hereof shall survive the expiration or earlier
termination of this Lease.

 

ARTICLE X —  LANDLORD’S RIGHT TO SELL, ETC., SUBORDINATION

 

Section 10.1         Mortgages

 

Prime Landlord
shall have the right at any time and from time to time to place one or more
Mortgages on all or any part of the Resort, including all or any part of the
Premises, and to increase, renew, modify, consolidate, replace, and extend any
such Mortgage.  In no event shall Tenant
be required to pay any installment of principal or interest or other sums at
any time due under any Mortgage.

 

49

 

Section 10.2         Subordination

 

This Lease
shall be subject and subordinate to all Mortgages in favor of any Mortgagee now
or hereinafter in effect and to all renewals, modifications, consolidations,
replacements and extensions of any such Mortgages.  This Section 10.2 shall be self-operative
and no further instrument of subordination shall be required to make the
interest of any Mortgagee superior to the interest of Tenant hereunder.  Notwithstanding the previous sentence,
however, Tenant shall, together with the Mortgagee, execute and deliver
promptly any certificate or agreement that Prime Landlord or Landlord may
reasonably request in confirmation of such subordination.  If, in connection with the financing of the
Resort, including all or any part of the Premises, any lending institution or
Landlord shall request reasonable modifications of this Lease that do not
increase the monetary obligations of Tenant under this Lease or materially
increase the other obligations of Tenant under this Lease or materially and
adversely affect the rights of Tenant under this Lease, Tenant shall make such
modifications.

 

Section 10.3         Tenant
Obligations

 

(a)           Provided that Tenant has received notice from Landlord or
a Mortgagee stating the name and address of such Mortgagee, Tenant shall give
to any Mortgagee copies of all notices given by Tenant of default by Landlord
under this Lease at the same time and in the same manner as, and whenever,
Tenant shall give any such notice of default to Landlord.  Any such Mortgagee shall have the right to
remedy any default under this Lease, or to cause any default of Landlord under
this Lease to be remedied, and for such purpose Tenant hereby grants such
Mortgagee such period of time as may be reasonable to enable such party to remedy,
or cause to be remedied, any such default in addition to the period given to
Landlord for remedying, or causing to be remedied, any such default.  Tenant shall accept performance by such
Mortgagee of any term, covenant, condition or agreement to be performed by
Landlord under the Lease with the same force and effect as though performed by
Landlord.  No default by Landlord under
the Lease shall exist or shall be deemed to exist (i) as long as such
Mortgagee, in good faith, shall have commenced to cure such default and shall
be prosecuting the same to completion with reasonable diligence, subject to
force majeure, or (ii) if possession of the Premises is required in order to
cure such default, or if such default is not susceptible of being cured by such
Mortgagee, as long as such Mortgagee, in good faith, shall have notified Tenant
that such Mortgagee intends to institute proceedings under the Mortgage, and,
thereafter, as long as such proceedings shall have been instituted within
thirty (30) days thereafter, and shall prosecute the same with reasonable diligence
and, after having obtained possession, prosecutes the cure to completion with
reasonable diligence.

 

(b)           In the event of the termination of the Lease by reason of
any default by Landlord hereunder or for any other reason whatsoever except the
expiration thereof, upon such Mortgagee’s written request, given within thirty
(30) days after any such termination, Tenant, within fifteen (15) days after
receipt of such request, shall execute and deliver to such Mortgagee or its
designee or nominee a new lease of the Premises for the remainder of the Term
of the Lease upon all of the terms, covenants and conditions of this Lease.

 

(c)           Upon the conveyance of the Property by reason of judicial
or nonjudicial foreclosure of the Mortgage or the acceptance of a deed in lieu
of foreclosure or otherwise, at the 

 

50

 

option of Mortgagee or the transferee of the Property (the “Transferee”), this Lease shall not be terminated or
affected thereby, and this Lease shall continue in full force and effect as a
direct lease between the Transferee and Tenant upon all of the terms, covenants
and conditions set forth in this Lease, and in that event, Tenant agrees to
attorn to the Transferee and the Transferee shall accept such attornment,
provided, however, that Transferee shall not be (a) obligated to complete any
construction work required to be done by Landlord pursuant to the provisions of
this Lease or to reimburse Tenant for any construction work done by Tenant, (b)
liable (i) for Landlord’s failure to perform any of its obligations under this
Lease which have accrued prior to the date on which the Transferee shall become
the owner of the Property, or (ii) for any act or omission of Landlord, whether
prior to or after such foreclosure or sale, (c) required to make any repairs to
the Property or to the Premises required as a result of fire, or other casualty
or by reason of condemnation unless the Transferee shall be obligated under
this Lease to make such repairs and shall have received sufficient casualty
insurance proceeds or condemnation awards to finance the completion of such
repairs, (d) required to make any capital improvements to the Property or to
the Premises which Landlord may have agreed to make, but had not completed, or
to perform or provide any services not related to possession or quiet enjoyment
of the Premises, (e) subject to any offsets, defenses, abatements or
counterclaims which shall have accrued to Tenant against Landlord prior to the
date upon which the Transferee shall become the owner of the Property, (f) liable
for the return of rental security deposits, if any, paid by Tenant to Landlord
in accordance with this Lease unless such sums are actually received by the Transferee,
(g) bound by any payment of rents, additional rents or other sums which Tenant
may have paid more than one (1) month in advance unless (i) such sums are
actually received by the Transferee or (ii) such prepayment shall have been
expressly approved of by the Transferee, (h) bound to make any payment to
Tenant which was required under this Lease, or otherwise, to be made prior to
the time the Transferee succeeded to Landlord’s interest, (i) bound by any
agreement amending, modifying or terminating this Lease made without the
Transferee’s prior written consent prior to the time the Transferee succeeded
to Landlord’s interest or (j) bound by any assignment of this Lease or sublease
of the Premises, or any portion thereof, made prior to the time the Transferee
succeeded to Landlord’s interest other than if pursuant to the provisions of
this Lease.

 

(d)           Neither such Mortgagee nor its designee or nominee shall
become liable under this Lease unless and until such Mortgagee or its designee
or nominee becomes, and then only for so long as such Mortgagee or its designee
or nominee remains, the fee owner of the Premises.  Such Mortgagee shall have the right, without
Tenant’s consent, to foreclose the Mortgage or to accept a deed in lieu of foreclosure
of such Mortgage.

 

(e)           Landlord hereby notifies Tenant that as of the date of
this Lease the Mortgagee is HSBC Realty Credit Corporation (USA), as agent for
Lenders, having an address at 452 Fifth Avenue, New York, New York 10018,
Attention Andrew A. Daly, Vice President Real Estate Finance.

 

51

 

ARTICLE XI —  OBLIGATIONS OF TENANT; INDEMNIFICATION OF

LANDLORD

 

Section 11.1         Compliance
with Laws; Licensor Standards, Etc.

 

Tenant shall
promptly comply with all Laws (including, without limitation, Gaming Laws)
applicable to Tenant’s use or occupation of the Premises (or any part thereof)
or Tenant’s operation of the Casino Business. 
Tenant shall also promptly comply with all Licensor Standards and the
Summerlin CC&Rs applicable to Tenant’s use or occupancy of the Premises (or
any part thereof), or operation of the Casino Business.

 

Section 11.2         Notice

 

Tenant agrees
to give Landlord notice of any law, ordinance, rule, regulation or requirement
enacted, passed, promulgated, made, issued or adopted by any of the
governmental departments or agencies or authorities hereinbefore mentioned of
which Tenant has actual notice affecting in a material adverse manner (i) the
Premises, (ii) Tenant’s use thereof or (iii) the financial condition of Tenant,
a copy of which is served upon or received by Tenant, or a copy of which is
posted on, or fastened or attached to the Premises, or otherwise brought to the
attention of Tenant, by mailing within five (5) Business Days after such
service, receipt, posting, fastening or attaching or after the same otherwise
comes to the attention of Tenant, a copy of each and every one thereof to
Landlord.  At the same time, Tenant will
inform Landlord as to any Work that Tenant proposes to do or take in order to
comply therewith.  Notwithstanding the
foregoing, however, if such Work would require any Alterations which would, in
Landlord’s opinion, reduce the value of the Premises or change the general
character, design or use of the Building or other improvements thereon, and if
Tenant does not desire to contest the same, Tenant shall, if Landlord so
requests, defer compliance therewith in order that Landlord may, if Landlord
wishes, contest or seek modification of or other relief with respect to such
matters, so long as Tenant is not put in violation of any applicable Laws, but
nothing herein shall relieve Tenant of the duty and obligation, at Tenant’s
expense, to comply with all applicable Laws, as the same may be so modified,
whenever Landlord shall so direct.

 

Section 11.3         Indemnity

 

(a)           Subject to the limitations specified in Section 11.8,
Tenant shall defend, indemnify and save harmless Prime Landlord, Landlord,
Mortgagee and their respective officers, directors, employees and agents
(collectively, “Landlord Indemnified Parties”),
from any and all liabilities, claims, causes of actions, suits, damages and
expenses (collectively, “Landlord Claims”)
arising from or in connection with the Tenant’s use of, or in connection with
any of Tenant’s activities of any kind upon or affecting the Premises during
the Term, provided that no Landlord Indemnified Party shall be indemnified from
any Landlord Claims arising out of its own acts of gross negligence or willful
misconduct.  Tenant shall also indemnify
and hold the Landlord Indemnified Parties harmless from all costs, expenses and
liabilities incurred, including actual, customary and reasonable attorney’s
fees and disbursements through and including appellate proceedings, in or in
connection with any of such Landlord Claims. 
If any action or proceeding shall be brought against any of the Landlord
Indemnified Parties by reason of any such Landlord Claims, Tenant, upon notice
from any of the Landlord Indemnified Parties, shall 

 

52

 

resist and defend such action or proceeding, at its sole cost and
expense by counsel to be selected by Tenant but otherwise satisfactory to such
Landlord Indemnified Party in its reasonable discretion.  Tenant or its counsel shall keep each
Landlord Indemnified Party fully apprised at all times of the status of such
defense.  Notwithstanding the foregoing,
a Landlord Indemnified Party may retain its own attorneys to defend or assist
in defending any claim, action or proceeding involving potential liability in
excess of One Million Dollars ($1,000,000) unless such claim, action, or
proceeding is covered by insurance and the insurance carrier has confirmed in
writing both its obligation to defend such claim, action or proceeding and its
liability for any adverse judgment resulting therefrom, and Tenant shall pay
the actual, customary and reasonable fees and disbursements of such attorneys.  The provisions of this Subsection 11.3(a)
shall survive the expiration or earlier termination of this Lease.

 

(b)           Subject to the limitations set forth in Section 11.8,
Landlord shall defend, indemnify and save harmless Tenant and its members and
managers (collectively, “Tenant Indemnified
Parties”), from any and all liabilities, claims, causes of actions,
suits, damages and expenses (collectively, “Tenant Claims”)
arising from or in connection with the Landlord’s use of, or in connection with
any of Landlord’s activities of any kind upon or affecting the Premises during
the Term, provided that no Tenant Indemnified Party shall be indemnified from
any Tenant Claims arising out of its own gross negligence or willful
misconduct..  Landlord shall also
indemnify and hold the Tenant Indemnified Parties harmless from all costs,
expenses and liabilities incurred, including actual, customary and reasonable
attorney’s fees and disbursements through and including appellate proceedings,
in or in connection with any of such Tenant Claims.  If any action or proceeding shall be brought
against any of the Tenant Indemnified Parties by reason of any such Tenant
Claims, Landlord, upon notice from any of the Tenant Indemnified Parties, shall
resist and defend such action or proceeding, at its sole cost and expense by
counsel to be selected by Landlord but otherwise satisfactory to such Tenant
Indemnified Party in its reasonable discretion. 
Landlord or its counsel shall keep each Tenant Indemnified Party fully
apprised at all times of the status of such defense.  Notwithstanding the foregoing, a Tenant
Indemnified Party may retain its own attorneys to defend or assist in defending
any claim, action or proceeding involving potential liability in excess of One
Million Dollars ($1,000,000) unless such claim, action, or proceeding is
covered by insurance and the insurance carrier has confirmed in writing both
its obligation to defend such claim, action or proceeding and its liability for
any adverse judgment resulting therefrom, and Landlord shall pay the actual,
customary and reasonable fees and disbursements of such attorneys.  The provisions of this Subsection 11.3(b)
shall survive the expiration or earlier termination of this Lease.

 

Section 11.4         Discharge of
Liens

 

If at any time
prior to or during the Term (or within the statutory period thereafter if
attributable to Tenant), any mechanic’s or other lien or order for payment of
money, which shall have been either created by, caused (directly or indirectly)
by, or suffered against Tenant, shall be filed against the Premises or any part
thereof, Tenant, at its sole cost and expense, shall cause the same to be
discharged by payment, bonding or otherwise, within thirty (30) days after
Tenant receives notice of the filing thereof unless such lien or order is
contested by Tenant in good faith and Tenant provides sufficient security or
evidence of financial ability, in each case to the reasonable satisfaction of
Landlord, to pay the amount of such lien or order, and such contest by Tenant
is permitted by the terms of any Mortgage that affects the Resort or the
Premises, and 

 

53

 

Tenant pays
all costs and performs all obligations required to fully comply with applicable
provisions of any such Mortgage.  Exhibit
“11.4” contains the provision in the existing Mortgage that governs the
contest of liens.  Tenant shall, upon
notice and request in writing by Landlord, defend for Landlord, at Tenant’s
sole cost and expense, any action or proceeding which may be brought on or for
the enforcement of any such lien or order for payment of money, and will pay
any damages and satisfy and discharge any judgment entered in such action or
proceeding and save harmless Landlord from any liability, claim or damage
resulting therefrom.  In default of
Tenant’s procuring the discharge of any such lien as aforesaid Landlord may,
without notice, and without prejudice to its other remedies hereunder, procure
the discharge thereof by bonding or payment or otherwise, and all cost and
expense which Landlord shall incur shall be paid by Tenant to Landlord as
Additional Rent forthwith.  The
provisions of this Section 11.4 shall survive the expiration or earlier
termination of this Lease.

 

Section 11.5         Liability for
Liens

 

Landlord shall
not under any circumstances be liable to pay for any work, labor or services
rendered or materials furnished to or for the account of Tenant upon or in
connection with the Premises, and no mechanic’s or other lien for such work,
labor or services or material furnished shall, under any circumstances, attach
to or affect the reversionary interest of Landlord in and to the Premises or
any alterations, repairs, or improvements to be erected or made thereon.  Nothing contained in this Lease shall be
deemed or construed in any way as constituting the request or consent of
Landlord, either express or implied, to any contractor, subcontractor, laborer
or materialman for the performance of any labor or the furnishing of any
materials for any specific improvement, alteration to or repair of the Premises
or any part thereof, nor as giving Tenant any right, power or authority to
contract for or permit the rendering of any services or the furnishing of any
materials on behalf of Landlord that would give rise to the filing of any lien
against the Premises.

 

Section 11.6         Gaming
Authority Complaints

 

Tenant shall
promptly provide Landlord with a true and complete copy of any complaint or
pleading served upon Tenant by any Gaming Authority that contains any prayer
for relief involving the appointment of a supervisor as to any aspect of Tenant’s
operation of the Premises or the revocation of any gaming or liquor license
held by Tenant.

 

Section 11.7         Waiver of
Subrogation

 

Prime
Landlord, Landlord and Tenant shall each waive any and all rights of recovery
against the other or against any officer, employee, agent or representative of
the other party, on account of loss or damage occasioned to a party or its
property or the property of third parties if the loss or damage could be
insured against.  Prime Landlord,
Landlord and Tenant shall, upon obtaining the policies of insurance required
under this Section 11.7, give notice to their insurance carriers of this
waiver of subrogation and insure that all property insurance policies
maintained by them contain a waiver of subrogation.

 

54

 

Section 11.8         Consequential
Damages

 

Notwithstanding
any other provision of this Agreement, neither Prime Landlord nor Landlord
shall be liable to Tenant for any consequential damages to the business of
Tenant and Tenant shall not be liable to Prime Landlord or Landlord for any
consequential damages to the business of Prime Landlord or Landlord under this
Lease.

 

Section 11.9         Casino
Entertainment Tax

 

Landlord shall
cause Prime Landlord to perform such acts as may be reasonably required to allow
Tenant to comply with the Casino Entertainment Laws that are applicable from
time to time to the activities of Prime Landlord at the Resort.  Landlord acknowledges that the Casino
Entertainment Laws require Tenant to collect the Casino Entertainment Tax from
the Person affording the entertainment and to remit the Casino Entertainment
Tax to the Nevada Gaming Commission no later than the 24th day of each month
for the preceding month based upon the records of such Person.  Landlord shall cause Prime Landlord to (i)
properly account for and remit Casino Entertainment Tax to Tenant for Prime
Landlord’s activities at the Resort that are subject to the Casino
Entertainment Tax five (5) days or more before such remittances and payments
are due from Tenant to the Gaming Commission; (ii) maintain accurate and
detailed records of all receipts subject to the Casino Entertainment Tax for
admissions, food, merchandise and refreshment for no less than five (5) years
from the date of sale; (iii) fully cooperate with the Gaming Authorities in any
review or audit of Casino Entertainment Tax payable with respect to Prime
Landlord’s activities at the Resort; and (iv) except for deficiencies arising
out of Tenant’s failure to deliver to the Gaming Commission Casino Entertainment
Tax delivered to Tenant by Prime Landlord, indemnify and hold Tenant harmless
for any Casino Entertainment Tax deficiencies imposed by the Nevada Gaming
Commission with respect to Prime Landlord’s activities at the Resort.  Tenant acknowledges and agrees that Prime
Landlord shall make its remittances of the Casino Entertainment Tax payable to
the Gaming Commission and not to Tenant. 
Tenant shall (i) timely remit to the Gaming Commission Casino
Entertainment Tax delivered to Tenant by Prime Landlord; (ii) fully cooperate
with Prime Landlord and the Gaming Authorities in any review or audit of Casino
Entertainment Tax payable with respect to Prime Landlord’s activities at the
Resort; and (iii) shall indemnify and hold Prime Landlord harmless for any
Casino Entertainment Tax deficiencies arising out of Tenant’s failure to
deliver to the Gaming Commission Casino Entertainment Tax payments delivered to
Tenant by Prime Landlord.  Landlord shall
cause Prime Landlord to include a provision in Prime Landlord’s lease
agreements with each of its new tenants at the Resort and a provision in any
amendment to the existing leases at the Resort that requires each such tenant
to (i) properly account for and remit applicable Casino Entertainment Tax to
Tenant for activities of such tenant in its leased premises five (5) days or
more before such remittances and payments are due from Tenant to the Gaming
Commission; (ii) maintain accurate and detailed records of all receipts subject
to the Casino Entertainment Tax for admissions, food, merchandise and
refreshment for no less than five (5) years from the date of sale; (iii) fully
cooperate with the Gaming Authorities in any review or audit of Casino
Entertainment Tax payable with respect to such leased premises; and (iv) except
for deficiencies arising out of Tenant’s failure to deliver to the Gaming
Commission payments delivered by such tenant to Tenant, indemnify and hold
Tenant harmless for any Casino Entertainment Tax deficiencies imposed by the
Nevada Gaming Commission with respect to such tenant’s leased premises.  Tenant acknowledges and agrees each such
tenant of Prime 

 

55

 

Landlord shall
make its remittances payable to the Gaming Commission and not to Tenant.  Tenant shall (i) timely rent to the Gaming
Commission the Casino Entertainment Tax delivered to Tenant by any tenant of
Prime Landlord; (ii) fully cooperate with each such tenant and the Gaming
Authorities in any review or audit of Casino Entertainment Tax payable with
respect to the leased premises of such tenant; and (iii) shall indemnify and hold
each such tenant harmless from any Casino Entertainment Tax deficiencies
arising out of Tenant’s failure to deliver to the Gaming Commission the Casino
Entertainment Tax payments delivered to Tenant by such tenant.  Tenant and Landlord acknowledge and agree
that, except for the Patch Lease, none of Prime Landlord’s leases at the Resort
that exist on the date of this Lease contain provisions relating to the Casino Entertainment
Tax.  Further, Tenant and Landlord
believe that no tenant under any such existing lease, except the Patch Tenant,
is engaged in activity to which the Casino Entertainment tax would apply.  Notwithstanding any other provision of this
Lease, Landlord and Tenant acknowledge that the activities of Landlord or
Landlord’s lessees at the Resort may not be subject to the Casino Entertainment
Tax because of the following facts: (a) Landlord and its lessee and Tenant
are not related parties; (b) the activities of Landlord and its lessees are not
within the control of Tenant; and (c) Tenant derives no income from the
activities of Landlord or its lessees.  Landlord
and Tenant shall fully cooperate with each other in an effort to obtain a
determination that the Casino Entertainment Tax does not apply to the
activities of Landlord and Landlord’s lessees at the Resort.

 

ARTICLE XII —  DEFAULT BY TENANT; REMEDIES

 

Section 12.1         Defaults

 

Each of the
following shall be deemed an event of default (an “Event of
Default”) and a breach of this Lease by Tenant:

 

(a)           If Tenant shall fail to pay any installment of Base Rent
within five (5) days of its due date under this Lease.

 

(b)           If Tenant shall fail to pay any Additional Rent required
to be paid by Tenant hereunder and such failure is not cured within five (5)
days (or such longer period as may be specified herein) after Landlord has
delivered written notice that the same was due and payable.

 

(c)           If Tenant shall fail to perform or observe of any of the
other agreements, conditions, covenants or terms that Tenant is obligated to
perform or observe under this Lease and such failure is not remedied within
thirty (30) days (or such different period as may be specified herein) after
written notice thereof has been delivered by Landlord (or, if such default is
of a nature that it cannot be completely remedied within said thirty (30) day
period (or such different period as may be specified herein), then if Tenant
does not agree in writing within such thirty (30) day period (or such different
period as may be specified herein) to cure the same, commence and thereafter
diligently prosecute the cure and complete the cure within a reasonable period
of time under the circumstances, not to exceed ninety (90) days, after such
original written notice of default by Landlord to Tenant).

 

56

 

(d)           If Tenant shall sell, assign, mortgage, encumber, sublease
or transfer all or any of its interest in this Lease or the Premises or any
portion thereof without compliance with the provisions of this Lease applicable
thereto.

 

(e)           If (i) Tenant shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to Tenant or
seeking to adjudicate Tenant a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution, composition
or other relief with respect to Tenant or Tenant’s debts, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for
Tenant or for all or any substantial part of Tenant’s property; or (ii) Tenant
shall make a general assignment for the benefit of Tenant’s creditors; or (iii)
there shall be commenced against Tenant any case, proceeding or other action of
a nature referred to in clause (i) above or seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of Tenant’s property, which case, proceeding or other action
(A) results in the entry of an order for relief or (B) remains undismissed,
undischarged or unbonded for a period of sixty (60) days; or (iv) Tenant shall
take any action consenting to or approving of any of the acts set forth in
clause (i) or (ii) above; or (v) Tenant shall generally not, or shall be unable
to, pay Tenant’s debts as they become due or shall admit in writing Tenant’s
inability to pay Tenant’s debts.

 

(f)            If Tenant is a corporation and shall cease to exist as a
corporation in good standing in the state of its incorporation (unless Tenant
simultaneously becomes incorporated and in good standing in another state) or
if Tenant is a partnership or other entity and Tenant shall be dissolved or
otherwise liquidated, then if Tenant does not completely remedy such default
immediately (or if Tenant’s only knowledge of such default is by receipt of
written notice of such default, then within the ten (10) day period following
receipt of such written notice).

 

(g)           If Tenant fails or refuses to execute any subordination
agreement required pursuant to Article X or estoppel certificate
required pursuant to Article XIV within ten (10) Business Days after
Tenant’s receipt thereof

 

(h)           If Tenant’s liquor or gaming licenses are suspended or
revoked for a period of more than ten (10) consecutive days.

 

(i)            If Tenant receives notice of a Material Violation of
Gaming Laws from any of the applicable Gaming Authorities and fails to respond
to the violation or cure it within the time prescribed under said notice or
under applicable Gaming Laws.

 

Section 12.2         Remedies

 

(a)           If an Event of Default shall occur and be continuing
beyond any applicable cure periods following all required notices from
Landlord, Landlord, at any time thereafter, at its option, may give written
notice to Tenant stating that this Lease or (without terminating this Lease)
Tenant’s right to possess the Premises shall terminate on the date specified in
such notice, which date shall be not less than three (3) Business Days after
the giving of such notice, and all rights of Tenant under this Lease shall
terminate or (without terminating this Lease) Tenant’s 

 

57

 

right to possess the Premises shall terminate as specified in such
notice (if such notice does not specify whether this Lease or Tenant’s right to
possess the Premises shall terminate, then Landlord shall be deemed to have
elected to terminate Tenant’s right to possess the Premises without terminating
this Lease) and Tenant immediately shall quit and surrender the Premises, which
termination shall not relieve Tenant from any liability then or thereafter
accruing hereunder.  If Landlord elects
to terminate Tenant’s right to possess the Premises, it may at any time
thereafter elect to terminate this Lease.

 

(b)           If an Event of Default described in Subsections 12.1(a)
or (b) hereof shall occur and be continuing, or this Lease or Tenant’s
right to possess the Premises shall be terminated as provided in Subsection
12 2(a) hereof, Landlord, upon five (5) days prior written notice, and
following receipt of a court order, (i) may re-enter and repossess the Premises
using such force for that purpose as may be necessary without being liable to
indictment, prosecution or damages therefor, or (ii) may dispossess Tenant by
summary proceedings or otherwise, which re-entry and repossession by Landlord
shall not relieve Tenant from any liability then or thereafter accruing hereunder,
except for Rent not yet due and payable.

 

Section 12.3         Certain
Default Obligations

 

If this Lease
or Tenant’s right to possess the Premises shall be terminated as provided in Subsection
12.2(a) hereof and/or Tenant shall be dispossessed by summary proceedings
or otherwise as provided in Subsection 12.2(b) hereof:

 

(a)           Tenant shall pay to Landlord all Rent payable under this
Lease by Tenant to Landlord to the date upon which this Lease or Tenant’s right
to possess the Premises shall have been terminated or to the date of re-entry
upon the Premises by Landlord, as the case may be.  Additionally, Tenant shall pay to Landlord all
reasonable costs incurred by Landlord (including court costs and reasonable
attorneys’ fees and expenses) in (i) obtaining possession of the Premises, (ii)
removing and storing Tenant’s or any other occupant’s property, (iii) repairing
any damage to the Premises, and (iv) performing any of Tenant’s unperformed
obligations.

 

(b)           If Tenant’s right to possess the Premises is terminated,
Landlord may repair the Premises in such manner as necessary to put the same in
the condition required upon the expiration of the Term, without relieving
Tenant of any liability under this Lease or otherwise affecting any such
liability, and/or let or relet the entirety of the Premises with one lease or
sublease for the whole or any part of the remainder of the Term or for a longer
period, in Landlord’s name or as agent of Tenant, and out of any rent and other
sums collected or received as a result of such reletting Landlord shall: (i)
first, pay to itself the reasonable costs and expenses of terminating this
Lease, re-entering, retaking, repossessing, repairing and/or reletting the
Premises, and actual and customary legal expenses and attorneys’ fees and disbursements
but expressly excluding any costs of altering the Premises, or any part thereof
and brokerage commissions or tenant improvement expenses or other expenses of
preparing the Premises for reletting (which Landlord expressly acknowledges
were not incurred when Tenant accepted delivery of possession of the Premises “as
is” without any obligation of Landlord to improve the same and without any
liability for any brokerage commissions payable by Landlord), and (ii) second,
pay to itself any balance remaining on account of the liability of Tenant to
Landlord.  Subject to Landlord’s
obligation to mitigate its damages through reasonable diligence, Landlord 

 

58

 

shall not be responsible or liable for any failure to relet the
Premises or any part thereof, or for any failure to collect any rent due on any
such reletting, and, provided that Landlord has in good faith undertaken to
mitigate its damages through reasonable diligence, no such failure to relet or
to collect rent shall operate to relieve Tenant of any liability under this Lease
or to otherwise affect any such liability;

 

(c)           If Tenant’s right to possess the Premises is terminated,
Tenant shall be liable for and shall pay to Landlord, as damages, any deficiency
(referred to as “Deficiency”), between the Rent
reserved in this Lease for the period which otherwise would have constituted
the unexpired portion of the Term and the net amount, if any, of rents
collected under any reletting effected pursuant to the provisions of Subsection
12.3(b) hereof for any part of such period plus any amount that Tenant
proves Landlord could have mitigated through reasonable diligence, first
deducting from the rents collected under any such reletting all of the payments
to Landlord described in Subsection 12.3(b) hereof; any such Deficiency
shall be paid in installments by Tenant on the days specified in this Lease for
payment of installments of Rent, and Landlord shall be entitled to recover from
Tenant each Deficiency installment as the same shall arise, and no suit to
collect the amount of the Deficiency for any installment period shall prejudice
Landlord’s right to collect the Deficiency for any subsequent installment
period by a similar proceeding; and

 

(d)           If this Lease is terminated, Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to Landlord a sum equal to the amount
by which the Rent reserved in this Lease for the period which otherwise would
have constituted the unexpired portion of the Term exceeds the actual rent due
under any replacement lease of the Premises for the same period, less any
amount that Tenant proves Landlord could have mitigated through reasonable
diligence, discounted to the present worth of such amounts at the rate of the
then applicable rate of interest on United States Treasury Securities having
terms to maturity most closely matching the unexpired portion of the Term.

 

Section 12.4         Landlord’s
Lien

 

The Rent
payable by Tenant hereunder and each and every installment thereof, and all
costs, actual, customary and reasonable attorneys’ fees and disbursements and
other expenses which may be incurred by Landlord in enforcing the provisions of
this Lease on account of any Event of Default shall be and they hereby are declared
to constitute a valid lien upon the interest of Tenant in this Lease and in the
Premises.

 

Section 12.5         Legal Actions

 

(a)           Suit or suits for the recovery of damages, or for a sum
equal to any installment or installments of Rent payable hereunder or any
Deficiencies or other sums payable by Tenant to Landlord pursuant to this Article
XII, may be brought by Landlord from time to time at Landlord’s election,
and nothing herein contained shall be deemed to require Landlord to await the
date whereon this Lease or the Term would have expired by limitation had there
been no Event of Default by Tenant and termination.

 

59

 

(b)           Nothing contained in this Article XII shall limit
or prejudice the right of Landlord to prove and obtain as liquidated damages in
any bankruptcy, insolvency, receivership, reorganization or dissolution
proceeding an amount equal to the maximum allowed by a statute or rule of law
governing such proceeding and in effect at the time when such damages are to be
proved, whether or not such amount shall be greater than, equal to or less than
the amount of the damages referred to in any of the preceding Sections of this Article
XII.

 

(c)           No failure by Landlord to insist upon the strict
performance of any covenant, agreement, term or condition of this Lease or to
exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial Rent during the continuance of any such breach,
shall constitute a waiver of any such breach or of such covenant, agreement,
term or condition.  No covenant,
agreement, term or condition of this Lease to be performed or complied with by
Tenant, and no breach thereof, shall be waived, altered or modified except by a
written instrument executed by Landlord. 
No waiver of any breach shall affect or alter this Lease, but each and
every covenant, agreement, term and condition of this Lease shall continue in
full force and effect with respect to any other then existing or subsequent
breach thereof.

 

(d)           In the event of any Event of Default, provided that
Landlord has no adequate remedy at law, Landlord shall be entitled to seek a
decree compelling performance of any of the provisions hereof, and shall have
the right to invoke any rights and remedies allowed at law or in equity or by
statute or otherwise as though re-entry, summary proceedings, and other
remedies were not provided for in this Lease.

 

Section 12.6         Legal Fees

 

Provided that
Landlord is the prevailing party in any action to enforce any rights or remedies
under this Article XII, Tenant shall pay to Landlord all reasonable
costs and expenses, including, without limitation, actual, customary and
reasonable attorneys’ fees and disbursements, incurred by Landlord in enforcing
such rights and remedies and reasonably incurred as a direct result of any
Event of Default by Tenant.

 

Section 12.7         Landlord
Performance

 

If an Event of
Default shall occur and be continuing under this Lease, Landlord may (a) perform
the same for the account of Tenant and/or (b) make any expenditure or incur any
obligation for the payment of money in connection with any obligation owed by
Tenant to any third party, and all direct costs and expenses incurred by
Landlord in connection therewith shall be deemed to be Additional Rent hereunder
and shall be paid by Tenant to Landlord within ten (10) days after written
demand therefor, together with interest at the Default Rate.

 

Section 12.8         Interest on
Past Due Rent

 

If Tenant
shall fail to pay any installment of Base Rent when due or any Additional Rent
within ten (10) days after the date when such payment is due, Tenant shall pay
to Landlord, in addition to such installment of Base Rent or such Additional
Rent, as the case may be, interest on the amount unpaid at the Default Rate,
computed from the date such payment was due to and including the date of payment.

 

60

 

ARTICLE XIII
—  NO WAIVER

 

Section 13.1         No Waiver

 

No receipt of
moneys by Landlord from Tenant after the termination or cancellation of this
Lease or Tenant’s right to possess the Premises shall reinstate, continue or
extend the term, or affect any notice theretofore given to Tenant, or operate
as a waiver of the right of Landlord to enforce the payment of Rent then due,
or thereafter falling due, or operate as a waiver of the right of Landlord to recover
possession of the Premises by proper suit, action, proceeding or remedy; it
being agreed that, after the service of notice to terminate or cancel this
Lease or Tenant’s right to possess the Premises, or the commencement of suit,
action or summary proceedings, or any other remedy, or after a final order or
judgment for the possession of the Premises, Landlord may demand, receive and
collect any moneys due, or thereafter falling due, without, in any manner
whatsoever, affecting such notice, proceeding, suit, action, order or judgment;
and any and all such moneys collected shall be deemed to be payments on account
of the use and occupation of the Premises or, at the election of Landlord, on
account of Tenant’s liability hereunder. 
The failure of Landlord or Tenant to enforce any agreement, condition,
covenant or term, by reason of its breach by Tenant or Landlord, as the case
may be, shall not be deemed to void, waive or affect the right of Landlord or Tenant
to enforce the same agreement, condition, covenant or term on the occasion of a
subsequent default or breach.

 

Section 13.2         No Exclusive
Remedies

 

The specific
remedies to which Landlord may resort under the terms of this Lease are cumulative
and are not intended to be exclusive of any other remedies or means of redress
to which Landlord may be lawfully entitled in case of any breach or threatened
breach by Tenant of any of the terms, covenants and conditions of this Lease.  The failure of Landlord or Tenant to insist
in any one or more cases upon the strict performance of any of the terms,
covenants and conditions of this Lease, or to exercise any right or remedy
herein contained, shall not be construed as a waiver or relinquishment for the
future performance of such terms, covenants and conditions.  The receipt by Landlord, or payment by
Tenant, of Rent with knowledge of the breach of any of such terms, covenants
and conditions shall not be deemed a waiver of such breach.  The acceptance of any check or payment
bearing or accompanied by any endorsement, legend or statements shall not, of
itself, constitute any change in or termination of this Lease.  No surrender of the Premises by Tenant (prior
to any termination of this Lease) shall be valid unless consented to in writing
by Landlord.  In addition to the other
remedies in this Lease provided, Landlord or Tenant shall be entitled to the
restraint by injunction of the violation or attempted or threatened violation
of any of the terms, covenants and conditions of this Lease or to a decree
compelling performance of any of such terms, covenants and conditions.

 

ARTICLE XIV —  ESTOPPEL CERTIFICATES

 

Section 14.1         From Tenant

 

Tenant shall,
at any time and from time to time, upon not less than five (5) Business Days’
prior notice by Landlord execute, acknowledge and deliver to Landlord a
statement in writing certifying that this Lease is unmodified and in full force
and effect (or if there have been 

 

61

 

any
modifications, that the Lease is in full force and effect as modified and stating
the modifications), the dates to which the Rent have been paid, and stating
whether or not Landlord is in default in keeping, observing or performing any
term, covenant, agreement, provision, condition or limitation contained in this
Lease and, if in default, specifying each such default, the Commencement Date
and Expiration Date for the current Term and any other matters reasonably
requested by Landlord.  Prime Landlord
and any other landlord or any prospective purchaser of the Premises or any
Mortgagee thereof or any assignee of any Mortgage upon the Premises may rely
upon such statement delivered pursuant to this Article XIV.

 

Section 14.2         From Landlord

 

Landlord
shall, at any time and from time to time upon not less than five (5) Business
Days’ prior notice by Tenant execute, acknowledge and deliver to Tenant a
statement in writing certifying that this Lease is unmodified and in full force
and effect (or if there have been any modifications, that the Lease is in full
force and effect as modified and stating the modifications), the dates to which
the Rent have been paid, and stating whether or not Tenant is in default in
keeping, observing or performing any term, covenant, agreement, provision,
condition or limitation contained in this Lease and, if in default, specifying
each such default, the Commencement Date and Expiration Date for the current
Term and any other matters reasonably requested by Tenant; it being intended
that any such statement delivered pursuant to this Article XIV may
be relied upon by Tenant or any permitted assignee of Tenant’s interest in the
Premises.

 

ARTICLE XV —  QUIET ENJOYMENT

 

Tenant, upon
payment of the Rents herein reserved and upon the due performance and
observance of all the covenants, conditions and agreements herein contained on
Tenant’s part to be performed and observed, shall and may at all times during
the Term peaceably and quietly have, hold and enjoy the Premises without any
manner of suit, trouble or hindrance of and from any person claiming by,
through or under Landlord, subject, nevertheless, to the terms and provisions
of this Lease.

 

ARTICLE XVI —  SURRENDER

 

Section 16.1         End of Term

 

Tenant shall,
on the last day of the Term, or upon the sooner termination of the Term
(whether such sooner termination is caused by a finding by the Nevada State
Gaming Commission that Landlord is unsuitable or for any other reason), quit
and surrender to Landlord the Premises vacant and in good order and condition,
reasonable wear and tear excepted.  Upon
the expiration or early termination of the Term, all Alterations to the
Premises and all Casino Personal Property and Casino Personal Property
Additions shall immediately vest in and become the property of Landlord or,
with respect to the Gaming Equipment, its designee if Landlord is not licensed
or has not been found suitable at the time that this Lease is terminated.  At such time, Tenant shall assign and convey
all Alterations to the Premises, the Casino Personal Property and the Casino
Personal Property Additions to Landlord or its designee.  Tenant shall deliver such items to Landlord
free and clear of liens, encumbrances, and defects of title, except 

 

62

 

any such
matters arising through Prime Landlord for the benefit of its Mortgagee and
except for Casino Personal Property Additions Capital Leases then outstanding.  At such time, Casino Cash in the amount
purchased by Tenant from the Patch Lease Tenant on the Commencement Date and
any additional Casino Cash that was contributed to Casino Cash from cash flow
from operations while Percentage Rent was applicable to this Lease shall be
divided equally between Landlord and Tenant.  Any Casino Cash that was contributed by Tenant
from Tenant’s own funds and was not returned to Tenant as part of Tenant’s
Initial Capital Investment or any Casino Cash that was contributed to Casino
Cash when no Percentage Rent was applicable to this Lease shall be the sole
property of Tenant.  Tenant acknowledges
that, at Landlord’s election, the Casino Business shall not close upon the
expiration or earlier termination of this Lease, and Tenant shall cooperate with
Landlord, and take any and all steps which are necessary and appropriate, to
ensure the seamless turnover of the Casino Business upon termination.  In connection with such turnover, Landlord
and Tenant agree that the Casino Transition Procedures shall apply to the
turnover at the expiration or termination of this Lease.  Further, at no cost to Landlord, all of
Tenant’s right, title and interest in the Casino Name shall immediately vest in
Landlord, and Tenant shall execute and deliver to Landlord such documentation
to confirm such vesting as legal counsel for Landlord may reasonably require.  Landlord acknowledges that, prior to
operating any gaming at the Premises, Landlord must obtain all necessary gaming
licenses and approvals from the Gaming Authorities.  Upon the expiration or earlier termination of
the Term, all Base Rent, Additional Rent, Percentage Rent (if applicable), and
other items payable by Tenant under this Lease shall be apportioned to the date
of termination.  If this Lease is
terminated because Landlord is found unsuitable as provided in the last
sentence of Subsection 5.6(b), at termination, Landlord shall pay
Tenant the Lease Termination Fee provided that Tenant has delivered to Landlord
the Alterations to the Premises, the Casino Personal Property, and Casino
Personal Property Additions.  Tenant
shall deliver such items to Landlord free and clear of liens, encumbrances, and
defects of title, except any such matters arising through Prime Landlord for
the benefit of its Mortgagee and except for Casino Personal Property Additions
Capital Leases then outstanding.  Notwithstanding
any other provision of this Lease, at the end of the Term when Tenant delivers
such items to Landlord or its designee, Tenant shall have no obligation to
remove the Casino Personal Property Mortgage or any outstanding Casino Personal
Property Capital Leases from title to such items.

 

Section 16.2         Holding Over

 

Tenant
acknowledges that possession of the Premises must be surrendered to Landlord at
the expiration or sooner termination of the term of this Lease.  The parties recognize and agree that the
damage to Landlord resulting from any failure by Tenant to timely surrender
possession of the Premises as aforesaid will be extremely substantial, will
exceed the amount of the Rent theretofore payable hereunder, and will be impossible
to accurately measure.  Tenant therefore
agrees that if possession of the Premises is not surrendered to Landlord upon
the expiration or sooner termination of the term of this Lease, then Tenant
shall pay to Landlord, as liquidated damages for each month and for each
portion of any month during which Tenant holds over in the Premises after the
expiration or sooner termination of the term of this Lease, a sum equal to the
higher of (a) the then fair market rental value of the Premises, taking into account
the effect of all material factors reasonably relevant to such determination,
or (b) three (3) times the aggregate of the Base Rent and Additional Rent which
was payable under this Lease with respect to the last month of the term hereof.  Nothing herein contained shall be deemed to
permit Tenant 

 

63

 

to retain
possession of the Premises after the expiration or sooner termination of the
term of this Lease.  If Tenant holds over
in possession after the expiration or termination of the term of the Lease,
such holding over shall not be deemed to extend the term or renew this Lease,
but the tenancy thereafter shall continue as a tenancy from month to month upon
the terms and conditions of this Lease at the Rent as herein increased.  Tenant hereby waives the benefit of any law
or statute in effect in the state where the Premises is located which would
contravene or limit the provisions set forth in this Section 16.2.  This provision shall survive the expiration
or earlier termination of this Lease.

 

ARTICLE XVII
—  ACCESS

 

Section 17.1         Landlord
Access

 

Subject to
applicable Gaming Laws with respect to access to restricted areas or requiring
any accompanying employee of Tenant, and subject to Tenant’s reasonable
security polices and procedures regarding access to casino cages and count
rooms and the surveillance room on the Premises, Landlord shall at all times
during the Term have the right and privilege to enter the Premises at
reasonable times during business hours, following reasonable notice from
Landlord and so long as Landlord uses its reasonable best efforts to not unduly
interfere with Tenant’s normal business operations, for the purpose of
inspecting the same or for the purpose of showing the same to prospective
purchasers or Mortgagees thereof, provided however, such inspections shall be
accompanied by a representative or employee of Tenant.  Landlord shall also have the right and
privilege at all times during the Term to post notices of nonresponsibility for
work performed by or on behalf of Tenant and, during the last one (1) year of
the Term, Landlord shall have the right and privilege following reasonable
notice from Landlord and so long as such entry does not unduly interfere with
Tenant’s normal business operations, to enter the Premises at reasonable times
during business hours for the purpose of exhibiting the same to prospective new
tenants.  In the event of an emergency, subject
to applicable Gaming Laws, Landlord shall contact Tenant’s security personnel
for immediate access to any part of the Premises deemed reasonably necessary.

 

Section 17.2         Landlord Work

 

Subject to
applicable Gaming Laws, Landlord shall at all times during the Term have the
right to enter the Premises or any part thereof, following reasonable notice
from Landlord and so long as Landlord uses its reasonable best efforts to not
unduly interfere with Tenant’s or any Subtenant’s normal business operations,
for the purpose of making such repairs or Alterations therein as Landlord is
required or obligated to make pursuant to this Lease or as Landlord deems
necessary or advisable following the failure of Tenant to make any such repairs
or Alterations beyond any applicable notice and cure period that Tenant is
obligated to make pursuant to this Lease, but such right of access shall not be
construed as obligating Landlord to make any repairs to or replacements to the
Premises or as obligating Landlord to make any inspection or examination of the
Buildings.

 

64

 

ARTICLE XVIII
—  ENVIRONMENTAL MATTERS

 

Section 18.1         Restricted
Use

 

Except for
Hazardous Substances, if any, ordinarily and customarily used in connection
with the Casino Business (“Customary Hazardous
Substances”) used in compliance with all applicable Laws, Tenant
will not use, generate, manufacture, produce, store, release, discharge or
dispose of on, under, from or about the Premises or transport to or from the
Premises any Hazardous Substance (defined below) and will use its best efforts
not to allow or suffer any other person or entity to do so.  Except to the extent that any non-compliance
is caused by any act or omission of Tenant (which Tenant shall be responsible
for correcting), Landlord shall keep and maintain the Premises in compliance
with, and shall use its best efforts not to cause, permit or suffer the
Premises to be in violation of any Environmental Law (as defined below) as part
of Landlord’s maintenance, repair and replacement obligations under this Lease.

 

Section 18.2         Notice

 

Tenant shall
give prompt written notice to Landlord of the use, generation, manufacture,
production, storage, release, threatened release, discharge, or disposal of any
Hazardous Substance on, under, from or about the Premises by Tenant, except for
the use or storage of Customary Hazardous Substances.

 

Section 18.3         Landlord
Rights

 

Landlord shall
have the right, but not the obligation, to join and participate in, as a party
if it so elects, any legal proceedings or actions initiated with respect to the
Premises in connection with any Environmental Law.

 

Section 18.4         Remedial Actions

 

Without
Landlord’s prior written consent, which consent shall not be unreasonably
withheld or delayed, Tenant shall not take any remedial action, other than
pursuant to the plan developed in accordance with Section 18.6, in
response to the presence of any Hazardous Substance on, under, from or about
the Premises, nor enter into any settlement, consent or compromise which might,
in Landlord’s reasonable judgment, impair the value of Landlord’s interest in
the Premises; provided, however, that Landlord’s prior consent
shall not be necessary if the presence of Hazardous Substance on, under, from
or about the Premises either poses an immediate threat to the health, safety or
welfare of any individual or is of such a nature that an immediate remedial
response is necessary and it is not practical or possible to obtain Landlord’s
consent before taking such action.  In
such event Tenant shall notify Landlord as soon as practicable of any action so
taken.  Landlord agrees not to withhold
its consent, where such consent is required hereunder, if either (i) a
particular remedial action is ordered by a court or any agency of competent
jurisdiction, or (ii) Tenant establishes to the reasonable satisfaction of
Landlord that there is no reasonable alternative to such remedial action which
would result in less impairment of Landlord’s security hereunder.

 

65

 

Section 18.5         Indemnity

 

Tenant shall protect,
indemnify and hold harmless Prime Landlord, Landlord and each Mortgagee, their
respective directors, officers, partners employees, agents, successors and
assigns from and against any and all claim, loss, damage, cost, expense,
liability, fines, penalties, charges, administrative and judicial proceedings
and orders, judgments, remedial action requirements, enforcement actions of any
kind (including, without limitation, attorneys’ fees and costs) directly or
indirectly arising out of or attributable to, in whole or in part, the breach
of any of the covenants, representations and warranties of this Article XVIII
or the use, generation, manufacture, production, storage, release, threatened
release, discharge, or disposal of a Hazardous Substance on, under, from or
about the Premises by Tenant (except for Customary Hazardous Substances), or
any other activity carried on or undertaken on or off the Premises during the
Term by Tenant or any of its employees, agents, contractors or subcontractors (“Environmental Claims”), but expressly excluding, in all
cases, any Environmental Claims arising out of or in connection with (i) any
acts or omissions of any party other than Tenant or its employees, agents,
contractors or subcontractors; (ii) any pre-existing Hazardous Substances on or
about the Premises prior to the Commencement Date; and (iii) all consequential
damages.  Subject to the foregoing
exceptions, such Environmental Claims shall include, without limitation, (i)
the costs of any required or necessary environmental assessments and/or audits,
any repair, cleanup or detoxification of the Premises and the preparation and
implementation of any closure, remedial or other required plans including,
without limitation:  (A) the costs of
removal or remedial action incurred by the United States Government or the
state in which the Premises are located, or response costs incurred by any
other person, or damages from injury to, destruction of, or loss of natural
resources, including the costs of assessing such injury, destruction or loss,
incurred pursuant any Environmental Law; (B) the clean-up costs, fines, damages
or penalties incurred pursuant to the provisions of applicable state law, and
(C) the cost and expenses of abatement, correction or clean-up, fines, damages,
response costs or penalties which arise from the provisions of any other
statute, state or federal; and (ii) liability for personal injury or property
damage, including damages assessed for the maintenance of the public or private
nuisance, response costs or for the carrying on of an abnormally dangerous
activity.

 

(a)           The foregoing indemnity shall further apply to any
residual contamination on, under, from or about the Premises, or affecting any
natural resources arising in connection with the use, generation,
manufacturing, production, handling, storage, transport, discharge or disposal
of any such Hazardous Substance by Tenant or its employees, agents, contractors
or subcontractors in breach of this Article XVIII.  This indemnity is intended to be operable under
42 U.S.C. Section 9607(e)(1), and any successor section thereof and shall
survive expiration or earlier termination of this Lease and any transfer of all
or a portion of the Premises by Tenant.

 

(b)           The foregoing indemnity shall in no manner be construed to
limit or adversely affect Landlord’s rights under this Article XVIII,
including, without limitation, Landlord’s rights to approve any Remedial Work
(as defined below) or the contractors and consulting engineers retained in
connection therewith.

 

(c)           The foregoing indemnity shall not apply to any
contamination of the Premises caused by any act or omission of Landlord or its
contractors, subcontractors, agents or employees 

 

66

 

or any other lessee, licensee, or third party contractor of Landlord or
their contractors, subcontractors, agents or employees.

 

Section 18.6         Remedial Work

 

In the event
that any investigation, site monitoring, containment, cleanup, removal,
restoration or other remedial work of any kind or nature (the “Remedial Work”) is required by any applicable local, state
or federal law or regulation, any judicial order, or by any governmental entity
or person because of, or in connection with, the current or future presence,
suspected presence, release or suspected release of a Hazardous Substance in or
into the air, soil, groundwater, surface water or soil vapor at, on, about,
under or within the Premises (or any portion thereof), if such Remedial Work is
the obligation of Tenant pursuant to this Article XVIII, Tenant
shall within thirty (30) days after written demand for performance thereof by
Landlord (or such shorter period of time as may be required under any
applicable law, regulation, order or agreement), commence to perform, or cause
to be commenced, and thereafter diligently prosecute to completion within such
period of time as may be required under any applicable law, regulation, order
or agreement, all such Remedial Work at Tenant’s sole expense in accordance
with the requirements of any applicable governmental authority or Environmental
Law.  All such Remedial Work shall be
performed by one or more contractors, approved in advance in writing by
Landlord, which approval shall not be unreasonably withheld, and under the supervision
of a consulting engineer approved in advance in writing by Landlord.  All costs and expenses of such Remedial Work
shall be paid by Tenant, including, without limitation, the charges of such
contractor(s) and/or the consulting engineer, and Landlord’s actual, customary
and reasonable attorneys’ fees and costs incurred in connection with monitoring
or review of such Remedial Work.  In the
event Tenant shall fail to timely commence, or cause to be commenced, or fail
to complete any such required Remedial Work required to be undertaken by Tenant
within the time required above, Landlord may, but shall not be required to,
cause such Remedial Work to be performed and Tenant shall reimburse Landlord
for all reasonable costs and expenses thereof, or incurred in connection
therewith within thirty (30) days of Landlord’s delivery of written
documentation of the same.

 

Section 18.7         Landlord
Studies

 

Landlord shall
have the right, no more than once every other year, at Landlord’s sole cost and
expense, to engage an environmental consultant selected by Landlord in
consultation with Tenant, to review compliance by Tenant with all applicable
laws and standards existing at such time with respect to the practice relating
to contamination or hazardous waste methods, conditions and procedures and
Tenant’s development of a plan to identify, contain and remediate problems
caused by such Hazardous Substances.  The
foregoing sentence shall not be deemed to require an environmental compliance audit,
unless otherwise reasonably recommended pursuant to such review.  In the event that Landlord reasonably believes
that there may be a violation or threatened violation by Tenant of any
Environmental Law or a violation or threatened violation by Tenant of any
covenant under this Article XVIII, Landlord is authorized, but not
obligated, at its cost and expense, by itself, its agents, employees or workers
to enter at any reasonable time following reasonable notice, so long as
Landlord uses its reasonable best efforts to not unduly interfere with Tenant’s
normal conduct of business, upon any part of the Premises for the 

 

67

 

purposes of
inspecting the same for Hazardous Substances and Tenant’s compliance with this Article
XVIII, and such inspections may include, without limitation, soil borings.

 

All costs and
expenses which are specified to be the obligation of Tenant under this Article
XVIII, but are paid by Landlord shall be immediately due and payable as
Additional Rent within ten (10) days after written demand and shall bear
interest at the Default Rate from the date of notice of such payment by
Landlord and the expiration of any grace period provided herein until repaid.

 

“Environmental
Laws” shall mean any federal, state or local law,
statute, ordinance or regulation pertaining to health, industrial hygiene,
hazardous waste or the environmental conditions on, under, from or about the
Premises, including, without limitation, the laws listed in the definition of
Hazardous Substances below.

 

“Hazardous
Substances” shall mean any element, compound, chemical
mixture, contaminant, pollutant, material, waste or other substance which is
defined, determined or identified as a “hazardous substance”, “hazardous waste”
or “hazardous material” under any federal, state or local statute, regulation
or ordinance applicable to a Real Property, as well as any amendments and
successors to such statutes and regulations, as may be enacted and promulgated
from time to time, including, without limitation, the following: (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (codified in
scattered sections of 26 U.S.C., 33 U.S.C., 42 U.S.C. and 42 U.S.C. § 9601 et seq.); (ii) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.); (iii) the Hazardous Materials Transportation Act (49
U.S.C. § 1801 et seq.); (vi) the Toxic
Substances Control Act (15 U.S.C. § 2601 et
seq.); (v) the Clean Air Act (33 U.S.C. § 1251 et seq.); (vi) the Clean Air Act (42 U.S.C. § 7401 et seq.); (vii) the Safe Drinking Water Act
(21 U.S.C. § 349; 42 U.S.C. § 201 and § 300f et seq.); (viii) the National Environmental Policy Act of 1969 (42
U.S.C. § 3421); (ix) the Superfund Amendment and Reauthorization Act of
1986 (codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42
U.S.C.); (x) Title III of the Superfund Amendment and Reauthorization Act (40
U.S.C. § 1101 et seq.); (xi) Nevada Revised
Statutes (“NRS”) Sections 41.540 through 41.570;
(xii) NRS Chapter 445A; and (xiii) NRS Chapter 459.

 

All
representations and warranties contained in this Article XVIII shall
supersede any previous disclosures, written or oral, made by Tenant or its
agents to Landlord with respect to the Premises.  Landlord and any Mortgagee shall be entitled
to rely on the representations and warranties contained herein in pursuit of
its rights and remedies for a breach thereof without regard to any such
previous disclosures.

 

All
representations, warranties, covenants and indemnities of Tenant in this Article
XVIII first arising prior to the expiration or earlier termination of this
Lease shall continue to be binding upon Tenant, and its successors and assigns,
after the expiration or earlier termination of this Lease.

 

ARTICLE XIX —  FINANCIAL STATEMENTS

 

Tenant shall
furnish financial reports to Landlord as soon as available and in any event no
later than the 15th day of each calendar month for the prior
calendar month and no later than sixty 

 

68

 

(60) days
after the end of each Lease Year for such Lease Year.  The monthly financial reports shall be in the
form reasonably agreed between Landlord and Tenant from time to time and
certified by the chief financial officer of Tenant and shall include the unaudited
balance sheet of Tenant as of the end of each calendar month, together with the
related statements of profit and loss and changes in financial position for
such period, setting forth in each case, in comparative form, the corresponding
figures for the same month in the preceding Lease Year.  The annual financial reports shall be in the
same form but based upon the Lease Year instead of the calendar month, but
shall be audited and prepared by an independent certified public accounting
firm of recognized standing.  All
financial reports furnished by Tenant to Landlord hereunder shall be prepared
in accordance with generally accepted accounting principles consistently
applied.  Landlord shall keep such
financial reports confidential, subject to its right to disclose such reports
to existing or prospective Mortgagees and to any governmental authority,
including the Securities and Exchange Commission.  In addition to the foregoing, unless
prohibited from doing so by the Gaming Laws, Tenant shall provide Landlord with
copies of all financial information and reports furnished to Gaming Authorities
as required under applicable Gaming Laws.

 

ARTICLE XX —  LIMITATION OF LIABILITY

 

INTENTIONALLY
LEFT BLANK.

 

ARTICLE XXI —  MISCELLANEOUS PROVISIONS

 

Section 21.1         Waiver of
Jury Trial

 

It is mutually
agreed by and between Landlord and Tenant that the respective parties shall and
they hereby do waive trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other on any matters
whatsoever arising out of or in any way connected with this Lease, Tenant’s use
or occupancy of the Premises, and/or any claim of injury or damage excluding
any claim for personal injury or property damage.

 

Section 21.2         Certain
Additional Definitions

 

(a)           The term “Landlord” as
used herein shall mean only the owner or the mortgagee in possession for the
time being of the Premises, so that in the event of any sale, transfer, or
conveyance of the Premises, the prior owner of the Premises, as the Landlord
under this Lease, shall be and hereby is entirely freed and relieved of all
agreements, covenants and obligations of Landlord thereafter accruing under
this Lease (but not freed from obligations arising prior to such conveyance
while such party owned or was in possession of the Premises), and it shall be
deemed and construed without further agreement between the parties or their
successors in interest or between the parties and the purchaser, transferee or
grantee at any such sale, transfer or conveyance that such purchaser,
transferee or grantee has assumed and agreed to carry out any and all
agreements, covenants and obligations of Landlord hereunder.

 

(b)           The term “Tenant” as
used herein shall mean the tenant named herein, and from and after any valid assignment
or transfer in whole of said Tenant’s interest under this Lease pursuant to the
provisions of Article IX, shall mean only the assignee or transferee
thereof; but the foregoing shall not release the assignor or transferor from
liability under this Lease.

 

69

 

(c)           The
words “enter”, “re-enter”,
“entry” and “re-entry”
as used in this Lease shall not be restricted to their technical legal meaning.

 

(d)           The
use herein of the neuter pronoun in any reference to Landlord or Tenant shall
be deemed to include any individual Landlord or Tenant, and the use herein of
the words “successor and assigns” or “successors or assigns” of Landlord or Tenant shall be
deemed to include the heirs, executors, administrators, representatives and
assigns of any individual Landlord or Tenant.

 

Section 21.3         Construction
of Lease

 

(a)           The
article, section and other headings and section titles used in this Lease are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope or intent of this Lease nor in any way affect this
Lease.

 

(b)           This
Lease shall be governed by and construed in accordance with the laws of the
State of Nevada, without resort to conflict of laws principles.

 

(c)           This
Lease contains the entire agreement between the parties and may not be extended,
renewed, terminated or otherwise modified in any manner except by an instrument
in writing executed by the party against whom enforcement of any such
modification is sought.

 

(d)           All
prior understandings and agreements between the parties and all prior working
drafts of this Lease are merged in this Lease, which alone expresses the
agreement of the parties.  The parties
agree that no inferences shall be drawn from matters deleted from any working
drafts of this Lease.

 

(e)           The
agreements, terms, covenants and conditions herein shall bind and inure to the
benefit of Landlord and Tenant and their respective heirs, personal
representatives, successors and, except as is otherwise provided herein, their
assigns.

 

(f)            If
any provision of this Lease shall be invalid or unenforceable, the remainder of
the provisions of this Lease shall not be affected thereby and each and every
provision of this Lease shall be enforceable to the fullest extent permitted by
law.

 

(g)           The
parties took equal part in drafting this Lease and no rule of construction that
would cause any of the terms hereof to be construed against the drafter shall
be applicable to the interpretation of this Lease.

 

Section 21.4         Notices

 

Notice
whenever provided for herein shall be in writing and shall be given either by
personal delivery, overnight express mail or by certified or registered mail,
return receipt requested, to Landlord at the address hereinabove set forth, and
to Tenant at the address hereinabove set forth, or to such other persons or at
such other addresses as may be designated from time to time by written notice
from either party to the other.  Notices
shall be deemed given (i) when delivered personally if delivered on a Business
Day (or if the same is not a Business Day, then the next Business Day after
delivery), (ii) three (3) Business Days after being sent by United States mail,

 

70

 

registered or
certified mail, postage prepaid, return receipt requested or (iii) if delivery
is made by Federal Express or a similar, nationally recognized overnight
courier service for 9:00 a.m. delivery, then on the date of delivery (or if the
same is not a Business Day, then the next Business Day after delivery), if
properly sent and addressed in accordance with the terms of this Section
21.4.

 

Section 21.5         No
Brokers

 

Landlord and
Tenant each represent and warrant to the other party that such party has not
dealt with any real estate broker in connection with this Lease, and Landlord
and Tenant agree to indemnify the other party and save the other party harmless
from any and all claims for brokerage commissions by any other person, firm,
corporation or other entity claiming through such party to have brought about
this Lease transaction.  The provisions
of this Section 21.5 shall survive the expiration or earlier termination
of this Lease.

 

Section 21.6         Memorandum
of Lease

 

A memorandum
of this Lease as set forth on Exhibit “21.6” attached hereto and
incorporated herein by this reference shall be recorded.  The memorandum of lease shall incorporate the
basic terms and conditions hereof but shall delete any statement or mention of
the rental payments.

 

Section 21.7         Time;
Force Majeure

 

Time is of the
essence of each and every provision of this Lease.  The time within which either party hereto
shall be required to perform any act under this Lease, other than the payment
of money, shall be extended by a period of time equal to the number of days
during which performance of such act is delayed by strikes, lockouts, acts of
God, governmental restrictions, failure or inability to secure materials or
labor by reason of priority or similar regulation or order of any governmental
or regulatory body, enemy action, civil disturbance, fire, unavoidable
causalities or any other cause beyond the reasonable control of either party
hereto.

 

Section 21.8         Waiver
of Default

 

The waiver by
either party of any default in the performance by the other of any provision,
covenant or condition contained in this Lease shall not be construed to be a
waiver of any preceding or subsequent default of the same or any other
provision, covenant or condition contained herein.

 

Section 21.9         Attorneys’
Fees

 

If either
party shall file any action or bring any proceeding against the other party
arising out of this Lease or for the declaration of any rights hereunder, the
prevailing party therein shall be entitled to recover from the other party all
costs and expenses, including reasonable attorneys’ fees, incurred by the
prevailing party as such party is determined by a court, an arbitrator or by
settlement.  Such attorneys’ fees shall
be deemed to have accrued on the commencement of such action or proceeding and
shall be paid whether or not such action is prosecuted to judgment.

 

71

 

Section 21.10       Hold
Harmless

 

If either
party (“Secondary Party”), without its fault, is
made a party to litigation instituted by or against the other party or by or
against any person holding under or through the other party (“Primary Party”), and if defense of such litigation is not undertaken
by any insurance carrier under its policy coverage obligations, the Primary
Party shall save and hold the Secondary Party harmless from any liability or
judgment rendered against the Secondary Party, or the Premises or any part
thereof, and shall pay to the Secondary Party all costs and expenses, including
reasonable attorneys’ fees, incurred by the Secondary Party in connection
therewith.

 

Section 21.11       Sublease,
Subordination and Attornment

 

(a)           Landlord
and Tenant acknowledge and agree that this Lease is a sublease and that
Landlord is leasing the Premises from Prime Landlord pursuant to the Prime
Lease.  The Prime Lease is Exhibit
21.11(a) to this Lease.  This Lease
and the rights of Tenant herein are subject and subordinate in all respects to
the Prime Lease.

 

(b)           Concurrently
with the execution of this Lease, Prime Landlord and Tenant are entering into a
Subordination, Attornment and Non-Disturbance Agreement in the form set forth
in Exhibit 21.11(b).

 

(c)           Landlord
shall cause Prime Landlord to fully perform all of its obligations under this
Lease and the Prime Lease.

 

(d)           In
each instance in this Lease where the consent, approval or cooperation of Prime
Landlord and Landlord are required, if Landlord provides such consent, approval
or cooperation, Landlord shall cause Prime Landlord to provide its consent,
approval or cooperation at same time that such consent, approval or cooperation
is provided by Landlord.  In each
instance in this Lease where notice to Landlord and Prime Landlord is required,
notice given to one of them shall be deemed notice to both of them.

 

Section 21.12       Counterparts
and Facsimile Signatures

 

This Lease may
be entered into in more than one counterpart, each of which shall be deemed an
original when executed, and which together shall constitute one and the same
Lease.  The Parties agree that facsimile
signatures shall be binding with respect to this Lease.

 

72

 

IN WITNESS
WHEREOF, Landlord and Tenant have executed and delivered this Lease as of the
date first set forth opposite their respective signatures below.

 

	
   

  	
  “Landlord”

  
	
   

  	
   

  
	
   

  	
  HOTSPUR CASINOS NEVADA, INC., 

  a Nevada corporation

  
	
   

  	
   

  
	
  Executed on April 1, 2002

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Thaddas L. Alston 

  	
   

  
	
   

  	
  Its: President, Thaddas L. Alston

  
	
   

  	
   

  
	
   

  	
  “Tenant”

  
	
   

  	
   

  
	
   

  	
  RAMPART RESORT MANAGEMENT, 

  LLC, 
a Nevada Limited Liability Company

  
	
   

  	
   

  
	
  Executed on April 1, 2002

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ William J. Paulos 

  	
   

  
	
   

  	
  Its: Manager, William J. Paulos

  

 

73

 

LIST OF EXHIBITS

 

	
  Exhibit A-1:

  	
   

  	
  Legal Description of Land

  
	
   

  	
   

  	
   

  
	
  Exhibit A-2:

  	
   

  	
  Site Plan of Hotel and Buildings

  
	
   

  	
   

  	
   

  
	
  Exhibit A-3:

  	
   

  	
  Site Plan of Casino, Required Food Facility

  
	
   

  	
   

  	
   

  
	
  Exhibit A-4:

  	
   

  	
  Casino Back-of-the-House Areas and Surveillance Room

  
	
   

  	
   

  	
   

  
	
  Exhibit A-5:

  	
   

  	
  Inventory of Casino FF&E and Casino Personal Property

  
	
   

  	
   

  	
   

  
	
  Exhibit A-6:

  	
   

  	
  Casino Intellectual Property and Patron Information

  
	
   

  	
   

  	
   

  
	
  Exhibit A-7:

  	
   

  	
  Illustration of Casino NOI Calculation

  
	
   

  	
   

  	
   

  
	
  Exhibit 2.5(b)

  	
   

  	
  Casino Name License Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit 2.6(e)

  	
   

  	
  Description of Promotional Activities

  
	
   

  	
   

  	
   

  
	
  Exhibit 2.11

  	
   

  	
  Form of Landlord Guarantor Guaranty

  
	
   

  	
   

  	
   

  
	
  Exhibit 2.12

  	
   

  	
  Exclusivity Provisions

  
	
   

  	
   

  	
   

  
	
  Exhibit 3.8:

  	
   

  	
  Form of Letter of Credit – Security Deposit

  
	
   

  	
   

  	
   

  
	
  Exhibit 5.7

  	
   

  	
  Transition Procedures – Casino Cash – Patch Lease and Guaranty

  
	
   

  	
   

  	
   

  
	
  Exhibit 5.8

  	
   

  	
  Deposit Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit 5.8(a)

  	
   

  	
  Description of Improvements and Costs – Tenant Initial Capital
  Investment

  
	
   

  	
   

  	
   

  
	
  Exhibit 5.10

  	
   

  	
  Current Licensor Standards

  
	
   

  	
   

  	
   

  
	
  Exhibit 9.5

  	
   

  	
  Assignment of Sublease(s)

  
	
   

  	
   

  	
   

  
	
  Exhibit 11.4

  	
   

  	
  Existing Mortgage Provision – Contest of Liens

  
	
   

  	
   

  	
   

  
	
  Exhibit 21.6:

  	
   

  	
  Memorandum of Lease

  
	
   

  	
   

  	
   

  
	
  Exhibit 21.11(a)

  	
   

  	
  Prime Lease

  
	
   

  	
   

  	
   

  
	
  Exhibit 21.11(b)

  	
   

  	
  Subordination, Attornment, and Nondisturbance Agreement

  

 

74

 

	
  State of
  Nevada

  	
  )

  
	
   

  	
  ) ss

  
	
  County of
  Clark

  	
  )

  

 

The foregoing
instrument was acknowledged before me this 1 day of April, 2002, by Thaddas L.
Alston, President of Hotspur Casinos Nevada, Inc., a Nevada corporation.

 

 

	
   

  	
  Notary: 

  	
  /s/: Francine Mazzella

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Notarial Seal]

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
  Francine Mazzella

  	
   

  
	
   

  	
   

  
	
   

  	
  Notary Public, Sate of Nevada

  
	
   

  	
   

  
	
   

  	
  My Commission Expires: 

  	
  1-24-06

  	
   

  
								

 

 

	
  State of
  Nevada

  	
  )

  
	
   

  	
  ) ss

  
	
  County of
  Clark

  	
  )

  

 

The foregoing
instrument was acknowledged before me this 1 day of April, 2002, by William J.
Paulos, Manager of Rampart Resort Management, LLC, a Nevada limited liability company.

 

	
   

  	
  Notary: 

  	
  /s/: Francine Mazzella

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Notarial Seal]

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
  Francine Mazzella

  	
   

  
	
   

  	
   

  
	
   

  	
  Notary Public, Sate of Nevada

  
	
   

  	
   

  
	
   

  	
  My Commission Expires: 

  	
  1-24-06

  	
   

  
								

 

75

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]