-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WrB/zzGv9R8ftVTKugw4dNY+p31VCuYMpx+M8dnHVYKjA+irjHcliFTQTxOYo+dW PQnZzthSg7FiySxc2UwaAQ== 0000906477-95-000056.txt : 19951030 0000906477-95-000056.hdr.sgml : 19951030 ACCESSION NUMBER: 0000906477-95-000056 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951013 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951027 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHOWBOAT INC CENTRAL INDEX KEY: 0000089966 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880090766 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07123 FILM NUMBER: 95584949 BUSINESS ADDRESS: STREET 1: 2800 FREMONT ST CITY: LAS VEGAS STATE: NV ZIP: 89104 BUSINESS PHONE: 7023859123 FORMER COMPANY: FORMER CONFORMED NAME: NEW HOTEL SHOWBOAT INC DATE OF NAME CHANGE: 19690122 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest October 13, 1995 event reported) SHOWBOAT, INC. (Exact name of Registrant as specified in charter) Nevada (State or other jurisdiction of incorporation) 1-7123 88-0090766 (Commission File Number) (IRS Employee Identification No.) 2800 Fremont Street, Las Vegas, Nevada 89104 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (702) 385-9123 Not Applicable (Former name or former address, if changed since last report) Item 5. OTHER EVENTS Showboat Lemay, Inc. ("Showboat Lemay"), a wholly-owned subsidiary of Showboat, Inc. (the "Company"), owns an 80% interest in Southboat Limited Partnership, a Missouri limited partnership ("Southboat"). Showboat Lemay is the sole general partner of Southboat. On or about October 13, 1995, Southboat entered into a lease and development agreement (the "Lease") with the St. Louis County Port Authority, a public body corporate and politic of the State of Missouri ("SLCPA") for the lease of an approximately 29-acre parcel of real property located along the Mississippi River in the Lemay area of St. Louis County, Missouri (the "Premises"). Subject to obtaining a Missouri gaming license, Southboat anticipates constructing, developing and operating a dockside riverboat casino and permanently-moored barge gaming facility (collectively, the "Project") on the Premises. On October 17, 1995, Southboat submitted an application to the Missouri Gaming Commission for the necessary gaming licenses to operate the Project. The term of the Lease shall commence, if at all, on the date (i) the Missouri Gaming Commission commences the investigation of Southboat for a Missouri gaming license; and (ii) Southboat has obtained all permits or licenses issued by the U.S. Army Corps of Engineers and other governmental bodies necessary to enable Southboat to commence construction of the Project. The term of the Lease shall be for 99 years. Fees and rent for the Premises are payable by Southboat as follows: a $500,000 acceptance fee after the due diligence period; (ii) a $750,000 security deposit on the commencment date of the Lease; (iii) a $2.5 million fee on the commencement date of the Lease; (iv) a $2.5 million fee on the opening date of the Project; (v) beginning on the commencement date and continuing until the opening date of the Project, rent in the amount of $2.0 million per annum payable in equal monthly installments; and (vi) beginning on the opening date of the Project and continuing until the expiration of the term of the Lease, the greater of 4% of adjusted gross receipts or Minimum Rent (as defined below). "Minimum Rent" means $3.0 million during the first 12-month period occurring after the opening of the Project; $2.8 million during the second 12-month period; $2.6 million during the third 12-month period; $2.4 million during the fourth 12-month period; $2.2 million during the fifth 12-month period; and $2.0 million beginning on the fifth anniversary of the opening of the Project and continuing through the 15th lease year (the "Guarantee Period"). In addition to rent, Southboat is responsible for payment of all costs, charges, fees and expenses and other sums incurred in connection with Southboat's ownership, leasing, construction, development, management and operation of the Project, including, without limitation, fees, utility charges, sewage disposal charges, real estate, ad valorum, sales and use taxes, insurance and special assessments. Southboat has a period of 120 days from the date of execution of the Lease to perform, at its sole cost and expense, certain due diligence in connection with the following areas: (i) condition of SLCPA's title to the Premises; (ii) required rezoning of the Premises to be obtained by St. Louis County; (iii) environmental condition of the Premises; and (iv) scope and quality of certain off-site improvements. If Southboat, in its discretion, determines that the Premises are not acceptable with respect to any of the above-referenced items and SLCPA fails to cure same, Southboat, subject to certain conditions, may terminate the Lease without any further obligation or liability. In addition, both Southboat and SLCPA have the right to terminate the Lease (i) if investigation by the Missouri Gaming Commission has not commenced within 14 months of the execution of the Lease or Southboat reasonably determines that the Commission will not commence investigation before such time, or (ii) upon the occurrence of certain other enumerated events, including an event of default as provided in the Lease. If the Lease is terminated by SLCPA as a result of an event of default by Southboat, Southboat is responsible to SLCPA for the damages sustained by SLCPA. The Company is the guarantor of the Lease and has executed an unconditional guarantee for Southboat's payment of Minimum Rent for the Guarantee Period of 15 years and Southboat's timely completion of construction of, and payment for, all improvements and installations in connection with Southboat's development of the Project on the Premises. If Southboat fails to pay any monthly installment of Minimum Rent,or if the Lease is terminated at any time within the Guarantee Period due to an event of default, the Company must pay the full sum of unpaid Minimum Rent due SLCPA under the Lease for the remainder of the Guarantee Period. A predecessor of Southboat and Showboat Operating Company, a wholly-owned subsidiary of the Company, entered into a Management Agreement (including an Administrative Services Agreement and Trademark License Agreement) dated May 2, 1995, whereby Showboat Operating Company, or its assigns ("SBOC") agreed to manage the proposed gaming operations at the Project. SBOC will receive an aggregate management fee equal to 5 1/4% of gross gaming revenues net of all gaming taxes, plus an incentive management fee equal to (i) 20% of earnings between $30.0 to $35.0 million before any interest expense, income taxes, capital lease rent, depreciation and amortization, and (ii) 10% of earnings in excess of $35.0 million before any interest expense, income taxes, capital lease rent, depreciation and amortization. Pursuant to Section 23.02 of the Management Agreement, the Management Agreement was automatically assigned to Southboat upon the execution of its Agreement of Limited Partnership. Item 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired. Not Applicable. (b) Pro Forma Financial Information. Not Applicable. (c) Exhibits. EXHIBIT DESCRIPTION NO. 10.01 Agreement of Limited Partnership of Southboat Limited Partnership, a Missouri limited partnership, effective as of May 1, 1995, by and between Showboat Lemay, Inc. and Futuresouth, Inc. 10.02 Management Agreement dated May 2, 1995, by and between Southboat Partnership (a predecessor of Southboat Limited Partnership) and Showboat Operating Company; Administrative Services Agreement dated May 2, 1995, by and between Southboat Partnership and Showboat Operating Company; and Trademark License Agreement dated May 2, 1995, by and between Southboat Partnership and Showboat, Inc. 10.03 Lease and Development Agreement dated October 13, 1995, by and between the St. Louis County Port Authority and Southboat Limited Partnership. 10.04 Escrow Agreement dated October 13, 1995, by and between the St. Louis County Port Authority, Southboat Limited Partnership, Showboat, Inc. and Boatmen's Trust Company. 10.05 Guarantee of Minimum Rent dated October 13, 1995, by Showboat, Inc. 10.06 Guarantee of Completion dated October 13, 1995, by Showboat, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SHOWBOAT, INC. (Registrant) Dated: October 26, 1995 By: /s/ H. Gregory Nasky Executive Vice President and Secretary EXHIBIT INDEX EXHIBIT DESCRIPTION PAGE NO. 10.01 Agreement of Limited Partnership of Southboat Limited Partnership, a Missouri limited partnership, effective as of May 1, 1995, by and between Showboat Lemay, Inc. and Futuresouth, Inc. 10.02 Management Agreement dated May 2, 1995, by and between Southboat Partnership (a predecessor of Southboat Limited Partnership) and Showboat Operating Company; Administrative Services Agreement dated May 2, 1995, by and between Southboat Partnership and Showboat Operating Company; and Trademark License Agreement dated May 2, 1995, by and between Southboat Partnership and Showboat Inc. 10.03 Lease and Development Agreement dated October 13, 1995, by and between the St. Louis County Port Authority and Southboat Limited Partnership. 10.04 Escrow Agreement dated October 13, 1995, by and between the St. Louis County Port Authority, Southboat Limited Partnership, Showboat, Inc. and Boatmen's Trust Company. 10.05 Guarantee of Minimum Rent dated October 13, 1995, by Showboat, Inc. 10.06 Guarantee of Completion dated October 13, 1995, by Showboat, Inc. EX-10.01 2 EXHIBIT 10.01 AGREEMENT OF LIMITED PARTNERSHIP OF SOUTHBOAT LIMITED PARTNERSHIP A MISSOURI LIMITED PARTNERSHIP AGREEMENT OF LIMITED PARTNERSHIP OF SOUTHBOAT LIMITED PARTNERSHIP A MISSOURI LIMITED PARTNERSHIP TABLE OF CONTENTS PAGE ARTICLE I 1 1.01 Adjusted Capital Account Deficit 1 1.02 Adjusted Capital Contribution 2 1.03 Affiliate 2 1.04 Cash Available for Distribution 3 1.05 Casino 3 1.06 Casino Facilities 4 1.07 Code 4 1.08 Commission 4 1.09 Depreciation 4 1.10 General Partner 4 1.11 Gross Asset Value 5 1.12 Gross Revenue 6 1.13 Initial Capital Contribution 6 1.14 Interest 6 1.15 Limited Partner 6 1.16 Majority Interest 6 1.17 Minimum Gain 6 1.18 Net Profits and Losses 7 1.19 Non-recourse Deductions 8 1.20 Opening 8 1.21 Original General Partner 8 1.22 Original Limited Partner 8 1.23 Partner 8 1.24 Partner's Capital Contribution 8 1.25 Partnership 8 1.26 Partnership Property 8 1.27 Project 9 1.28 Regulations 9 1.29 Riverboat 9 1.30 Southboat Property 9 ARTICLE II 10 2.01 Agreement of Limited Partnership 10 2.02 Amendment to Certificate of Limited Partnership 10 2.03 Fictitious Business Name Statement 10 2.04 Name 10 2.05 Purpose 10 2.06 Term 10 2.07 Principal Place of Business 11 2.08 Title to Property 11 ARTICLE III 12 3.01 Original General Partner 12 3.02 Original Limited Partner 12 3.03 No Interest on Capital Contributions 13 3.04 Withdrawal of Capital Contributions 13 3.05 Capital Accounts 13 3.06 Limited Liability and Capacity of Limited Partners 15 3.07 Additional Capital Contributions 15 3.08 Failure to Contribute 19 ARTICLE IV 21 4.01 Partner's Loans to the Partnership 21 4.02 Loans to the Partnership 21 4.03 General Partner Advances and Affiliate Loans 21 4.04 Loans from the Partnership 22 ARTICLE V 22 5.01 Allocations and Distributions Among Limited Partners 22 5.02 Net Profits 22 5.03 Net Losses 23 5.04 Special Allocations 23 5.05 Curative Allocations 24 5.06 Other Allocation Rules 24 5.07 Tax Allocations Code Section 704(c) 25 5.08 Certain Elections 25 ARTICLE VI 26 6.01 Operating Distributions 26 6.02 Distributions Upon Dissolution or Liquidation 27 6.03 Restoration of Capital Account 27 6.04 Distributions to Owners of Record 28 ARTICLE VII 28 7.01 Fiscal Year of Partnership 28 7.02 Books and Records 28 7.03 Tax Returns and Reports to Partners 30 ARTICLE VIII 31 8.01 Authority of General Partner 31 8.02 Duties of the General Partner 31 8.03 Rights of the Limited Partners 33 8.04 Partnership Meetings 34 8.05 Activities of Partners 34 8.06 Liability of General Partner 39 8.07 Indemnification of General Partner 40 8.08 Representations 40 8.09 Right to Rely Upon the Authority of the General Partner 41 ARTICLE IX 41 9.01 Bank Accounts 41 9.02 Expenses of the Partnership 41 ARTICLE X 42 10.01 Transfer of a Limited Partner's Interest 42 10.02 Effectiveness of Substitution 43 10.03 Further Limitations of Transfers 44 10.04 Put/Call Option 44 ARTICLE XI 47 11.01 Cessation 47 11.02 Withdrawal of a General Partner 48 11.03 Participation of a New General Partner 49 11.04 Payment to Withdrawing General Partner 49 ARTICLE XII 50 12.01 Force Majeure Defined 50 12.02 Actions to Resolve Force Majeure Events 51 ARTICLE XIII 51 13.01 Events of Dissolution 51 13.02 Winding-Up of Partnership Business 52 13.03 Distribution of Partnership Property Upon Dissolution 53 13.04 Assets Other Than Cash 53 13.05 Capital Account Adjustments 53 ARTICLE XIV 53 ARTICLE XV 54 15.01 Limited Power of Attorney 54 15.02 Amendment 55 15.03 Foreign Gaming Licenses 56 15.04 Binding Effect; Further Instruments 56 15.05 Headings 56 15.06 Gender and Number 56 15.07 Severability 56 15.08 Partial Invalidity 57 15.09 Cooperation with Gaming Authorities 57 15.10 Confidentiality 58 15.11 Waiver of Action for Partition 58 15.12 Governing Law 58 15.13 Arbitration; Attorneys' Fees and Costs 58 15.14 Integration 59 15.15 Counterparts 60 15.16 No Broker/Finder 60 15.17 Exhibits 60 15.18 Stockholders 60 15.19 Futuresouth Room and Signing Privileges 60 AGREEMENT OF LIMITED PARTNERSHIP OF SOUTHBOAT LIMITED PARTNERSHIP A MISSOURI LIMITED PARTNERSHIP This Agreement of Limited Partnership of Southboat Limited Partnership, a Missouri Limited Partnership ("Agreement"), is made as of this ____ day of May 1995 ("Date of this Agreement"), by and among SHOWBOAT LEMAY, INC. a Nevada corporation (hereinafter referred to as the "Original General Partner" or the "General Partner"), FUTURESOUTH, INC., a Missouri corporation (hereinafter referred to as the "Original Limited Partner" or the "Limited Partner"). RECITALS The parties hereto have joined together for the purpose of forming a limited partnership pursuant to the Uniform Limited Partnership Act under the laws of the state of Missouri, upon the terms and conditions and for the purposes hereinafter set forth. The parties desire to form a limited partnership on the terms and conditions set forth herein to design, develop, construct, own and operate a riverboat casino project, as further described herein, to be located on approximately twenty-nine (29) acres at the St. Louis County Port Authority site in Lemay, Missouri (the "Riverboat Casino Site"), for the other purposes set forth herein. NOW, THEREFORE, in consideration of the mutual promises made herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement, and in addition to terms defined elsewhere herein, the following terms shall have the following meanings: 1.01 ADJUSTED CAPITAL ACCOUNT DEFICIT Adjusted Capital Account Deficit means, with respect to any Partner, the deficit balance, if any, in such Partner's capital account as of the end of the relevant fiscal year, after giving effect to the following adjustments: (a) Credit to such capital account any amounts which such Partner is obligated to restore (pursuant to any provision of this Agreement, pursuant to the terms of such Partner's promissory note, if any, or otherwise) or is deemed to be obligated to restore pursuant to the penultimate sentence of Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5); and (b) Debit to such capital account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations. The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. 1.02 ADJUSTED CAPITAL CONTRIBUTION As of any date, a Partner's Capital Contribution adjusted as follows: (a) Increased by the amount of any Partnership liabilities which, in connection with distributions pursuant to Section 6.01 or Section 6.02 hereof, are assumed by such Partner or are secured by any Partnership Property distributed to such Partner; and (b) Reduced by the amount of cash and the Gross Asset Value of any Partnership Property distributed to such Partner pursuant to Section 6.01 or Section 6.02 hereof, and the amount of any liabilities of such Partner assumed by the Partnership or which are secured by any property contributed by such Partner to the Partnership. In the event any Partner transfers all or any portion of his Interest in accordance with the terms of this Agreement, his transferee shall succeed to the Adjusted Capital Contribution of the transferor to the extent it relates to the transferred Interest. 1.03 AFFILIATE (i) Any person ("first person") directly or indirectly controlling, controlled by, or under common control with a second person, or owning or controlling 10% or more of the outstanding securities of that second person; (ii) any officer, director, partner or member of the immediate family of that first person; and (iii) if that second person is an officer, director or partner, any company for which that second person acts in that capacity. "Person" includes any individual, partnership, corporation, limited liability company, association or other legal entity. The term "control" (including the terms "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. 1.04 CASH AVAILABLE FOR DISTRIBUTION Total Gross Revenues generated by the Partnership Property and miscellaneous sources, including, without limitation, cash proceeds from (a) any loan secured by the Partnership Property, (b) a sale or refinancing of all or part of the Partnership Property remaining after retirement of debt secured by such Partnership Property and all expenses relating to the transaction and retention of reasonable reserves, and (c) net condemnation proceeds; less cash expenditures (including but not limited to, fees for services and commissions to the General Partner or any Affiliate of the General Partner, debt service, (including but not limited to repayment of loans to the Partnership in accordance with the terms and conditions of this Agreement), and operating expenses and amounts set aside for reserves, but not including any amount which, if distributed, would cause a default of any covenant contained in any financing agreement between the General Partner, any Affiliate thereof or the Partnership and a third party lender; provided, however, that no covenant in any financing agreement shall restrict distributions to the Original Limited Partner in any manner which is different from the restrictions which are imposed on distributions to the General Partner. The foregoing restriction on covenants in financing agreement shall not limit the right of any Partner to receive priority distributions which are repayments of any loan which the Partner has made to the Partnership provided that the creation of such loan and such repayment is in accordance with the provisions of this Agreement. 1.05 CASINO Those areas reserved for the operation of slot machines, table games and any other legal forms of gaming permitted under the laws of the State of Missouri, and ancillary service areas, including reservations and admissions, cage, vault, count room, surveillance room and any other room or area or activities therein regulated or taxed by the state of Missouri by reason of gaming operations. 1.06 CASINO FACILITIES All equipment and other property used in connection with the ownership and operation of the Casino and anything used in connection with or in support of the Casino including, but not limited to, docks, barges, piers, restaurants, entertainment facilities, gaming areas, cages, vehicular parking area(s), working areas, restrooms, administrative offices for, but not limited to, accounting, purchasing, and management information services (including offices for Showboat management personnel), and any associated warehouse areas. 1.07 CODE The Internal Revenue Code of 1986, as amended, codified as Title 26 of the U.S. Code. 1.08 COMMISSION The Missouri Gaming Commission. 1.09 DEPRECIATION For each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner. 1.10 GENERAL PARTNER Showboat Lemay, Inc., a Nevada corporation, or any individual, partnership, corporation, limited liability company, association, or other legal entity or person that succeeds it as the General Partner of the Partnership or becomes an additional General Partner thereof, pursuant to the terms and conditions of this Agreement. 1.11 GROSS ASSET VALUE With respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (a) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, as determined by the contributing Partner and the Partnership. (b) The Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as determined by the General Partner, as of the following times: (i) The acquisition of an additional Interest in the Partnership (other than as otherwise provided herein) by any new or existing Partner in exchange for more than a de minimis capital contribution; (ii) The distribution by the Partnership to a Partner of more than a de minimis amount of Partnership Property as consideration for an Interest in the Partnership if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership; and (iii) The liquidation of the Partnership within the meaning of Regulations Section 1.704- 1(b)(2)(ii)(g). (c) The Gross Asset Value of any Partnership assets distributed to any Partner shall be the gross fair market value of such asset on the date of distribution. (d) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustment to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining capital accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and Section 5.04(d) (Code Section 734(b) or Code Section 743(b) adjustments) hereof; provided, however, that gross asset values shall not be adjusted pursuant to this Section 1.11(d) to the extent the General Partner determines that an adjustment pursuant to Section 1.11(b) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this Section 1.11(d). If the Gross Asset Value of an asset has been determined or adjusted pursuant to Section 1.11(a), (b) or (d) hereof, such gross asset value shall thereafter be adjusted by the depreciation taken into account with respect to such asset for purposes of computing profits and losses. 1.12 GROSS REVENUE All of the revenue from the ownership and operation of the Project. 1.13 INITIAL CAPITAL CONTRIBUTION Nineteen Million Five Hundred Thousand Dollars ($19,500,000) contributed by the Original General Partner, in cash or contributed equipment, goods or services ("Initial Capital Contribution of the Original General Partner" or "Original General Partner's Capital Contribution"), and Five Hundred Thousand Dollars ($500,000) contributed by the Original Limited Partner in cash ("Initial Capital Contribution of the Original Limited Partner" or "Original Limited Partner's Capital Contribution"). 1.14 INTEREST The proportionate interest of a Partner in the profits, losses, and capital of the Partnership. 1.15 LIMITED PARTNER An individual, partnership, corporation, limited liability company, association, or other legal entity which is admitted to the Partnership as a Limited Partner. 1.16 MAJORITY INTEREST Any combination of Interests (as defined above) that, in the aggregate, constitutes more than fifty percent (50%) of all Interests. 1.17 MINIMUM GAIN The meaning set forth in Section 1.704-2(b) of the Regulations. 1.18 NET PROFITS AND LOSSES For each fiscal year or other period, an amount equal to the Partnership's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(l) shall be included in taxable income or loss) with the following adjustments: (a) Any income of the Partnership that is exempt from federal income tax or not otherwise taken into account in computing Net Profits or Net Losses pursuant to this Section 1.18, shall be added to such taxable income or loss; (b) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Profits or Losses pursuant to this Section 1.18 shall be subtracted from such taxable income or loss; (c) In the event the Gross Asset Value of any Partnership Property is adjusted pursuant to Section 1.11(b) or Section 1.11(d) hereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Profits or Net Losses; (d) Gain or loss resulting from any disposition of any Partnership Property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the Partnership Property disposed of, notwithstanding that the adjusted tax basis of such Partnership Property differs from its Gross Asset Value; (e) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account depreciation for such fiscal year or other period, computed in accordance with Section 1.09 hereof; and (f) Notwithstanding any other provision of this Section 1.18, any items which are specially allocated pursuant to Sections 5.04 or 5.05 hereof, shall not be taken into account in computing Net Profits or Losses. 1.19 NON-RECOURSE DEDUCTIONS The meaning set forth in Regulations Section 1.704- 2(c). The amount of Non-recourse Deductions for a Partnership fiscal year equals the net increase, if any, in the amount of Minimum Gain during the fiscal year determined according to Regulations Section 704-2(d)(1). 1.20 OPENING The date the Project opens to the public for business for gaming activities by paying customers. 1.21 ORIGINAL GENERAL PARTNER Showboat Lemay, Inc., a Nevada corporation. 1.22 ORIGINAL LIMITED PARTNER Futuresouth, Inc. a Missouri corporation. 1.23 PARTNER Any participant in the Partnership either as a General Partner or a Limited Partner. 1.24 PARTNER'S CAPITAL CONTRIBUTION The Initial Capital Contribution, Supplemental Capital Contributions and Additional Capital Contributions of each Partner as set forth in Article III hereof. 1.25 PARTNERSHIP Southboat Limited Partnership, a Missouri limited partnership. 1.26 PARTNERSHIP PROPERTY The Partnership's interest in the Southboat Property, and such other property, whether real or personal, as may from time to time belong to the Partnership. 1.27 PROJECT The riverboat casino development, and associated amenities and facilities, to be acquired, designed, developed, constructed, owned and operated on the Southboat Property, which Project is more particularly depicted and described in the Response to Request for Proposal ("RFP") submitted to the St. Louis County Port Authority on or about March 17, 1995 which is incorporated by reference into this Agreement as though fully set forth at length herein, as the same may be changed from time to time in accordance with the provisions of this Agreement; provided, however, that the Original Limited Partner understands and agrees that changes have been made to the Project as set forth in the RFP, which changes do not materially modify the Project as described and depicted in the RFP. 1.28 REGULATIONS The regulations promulgated by the U.S. Treasury under the Code. 1.29 RIVERBOAT The riverboat facility, including any barge or barges, and any and all other amenities and facilities used in connection therewith, to be owned and operated by the Partnership at the Riverboat Casino Site, in conjunction with the Casino and Casino Facilities, including, but not limited to, the barge(s), facilities and other amenities, as the same may be changed from time to time in accordance with the provisions of this Agreement. 1.30 SOUTHBOAT PROPERTY The real property consisting of approximately 29 acres located at the St. Louis County Port Authority development site in Lemay, Missouri, which property shall be leased and developed by the Partnership from St. Louis County Port Authority under the terms and conditions set forth in that certain Lease Agreement dated _______________, 1995 (the "Lease"), which Lease is by this reference incorporated herein as though it were an exhibit attached hereto. ARTICLE II FORMATION AND ORGANIZATION MATTERS 2.01 AGREEMENT OF LIMITED PARTNERSHIP The Original General Partner and the Original Limited Partner agree to form a limited partnership pursuant to the provisions of the Uniform Limited Partnership Act, under the laws of the state of Missouri, and upon the terms and conditions set forth in this Agreement. 2.02 AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP The General Partner shall file an amendment to the Certificate of Limited Partnership in the office of the Secretary of State of Missouri when required. 2.03 FICTITIOUS BUSINESS NAME STATEMENT The General Partner shall execute and promptly cause to be filed in the office of the Secretary of State of Missouri, and in such other offices as may be required, a Fictitious Business Name Statement, or such other document which may be required, with respect to the name of the Partnership and with respect to any other fictitious names used by the Partnership in carrying out its purposes. 2.04 NAME The name of the Partnership shall be Southboat Limited Partnership. 2.05 PURPOSE The purposes of the Partnership are to (a) acquire, design, develop, construct, own and operate the Project, (b) to acquire, lease, sell, or otherwise dispose of other properties used or useful in connection with the foregoing, (c) carry on any other activities necessary or incidental to the foregoing, and (d) engage in any other business if such business is approved and agreed upon unanimously by the Partners prior to entering into such business. 2.06 TERM The term of the Partnership shall commence upon the filing of the Partnership Certificate of Limited Partnership in the office of the Missouri Secretary of State and shall continue until either (i) December 31, 2094; (ii) the sale of the Project; or (iii) the sale of all or substantially all of the Partnership property and Project, unless the life of the Partnership shall be terminated or extended pursuant to law or any provision of this Agreement (the "Initial Term"). The term of the Partnership shall be continued for successive one-year terms after December 31, 2094 until terminated as provided herein (the "Renewal Term(s)"). In the event that the Partnership fails to successfully negotiate and enter into the Lease as set forth herein, or otherwise fails to acquire exclusive use and occupancy of the Riverboat Casino Site or other alternative site acceptable to the Original General Partner, whether by deed, lease or otherwise, the Partnership shall terminate. If the General Partner desires that the Partnership terminate upon the expiration of the Initial Term of the Partnership or any Renewal Term thereafter, the General Partner shall give written notice to the other Partner(s) of its intention to cause such termination at least ninety (90) days prior to the end of the Initial Term or any Renewal Term thereafter. If there shall be more than one General Partner, all General Partners shall agree to the termination of the Partnership, unless one General Partner holds a Majority Interest of the Partnership, then such General Partner may give the notice of termination of Partnership set forth herein. The Partnership shall terminate thereafter at the end of the Initial Term or such Renewal Term, as the case may be, and shall thereafter be liquidated in accordance with the provisions hereof. 2.07 PRINCIPAL PLACE OF BUSINESS The location of the principal place of business of the Partnership shall be in the metropolitan area of St. Louis, Missouri, as shall be designated by the General Partner in its sole and absolute discretion, or at such other place as the General Partner may from time to time determine. 2.08 TITLE TO PROPERTY Legal title to all Partnership Property shall be taken and at all times held in the name of the Partnership, and none of the right, title or interest therein shall be held in the name of any Partner. A Partner may be a lessor or sublessor of property which is leased to the Partnership, so long as such property which is to be leased to the Partnership is of a kind and type which is usually and customary leased by business operations reasonably equivalent to the Project, upon the written consent of the General Partner, which consent may be unreasonably withheld. ARTICLE III CAPITAL CONTRIBUTIONS 3.01 ORIGINAL GENERAL PARTNER The Original General Partner's Initial Capital Contribution shall be Nineteen Million Five Hundred Thousand Dollars ($19,500,000), in cash (including but not limited to monies expended on behalf of the Partnership for expenses and services, incurred at any time after January 1, 1995, in furtherance of the Project) or in equipment, goods or services contributed by the Original General Partner (including but not limited to such equipment, goods and services contributed by the Original General Partner at any time after January 1, 1995, in furtherance of the Project provided such services were performed after January 1, 1995.) In addition to the Original General Partner's Initial Capital Contribution, but not as a capital contribution,the Original General Partner shall arrange for such funds, up to a total maximum of One Hundred Seven Million Nine Hundred Thousand Dollars ($107,900,000), (including the Initial Capital Contribution of the Original General Partner and the Initial Capital Contribution of the Original Limited Partner), as shall be necessary for the design, development, construction and operation of the Project. Of such $107.9 million, the Original General Partner shall borrow Seventy Five Million Dollars ($75,000,000) on behalf of the Partnership for the Project. Such financing shall be the sole obligation of the Partnership, and neither the Original General Partner nor the Original Limited Partner, nor any Affiliate thereof, shall assume any liability therefor. The remainder of the Original General Partner's funding obligation shall be in the form of equipment financing in such amounts, upon such terms and in such manner as the General Partner shall determine, in its sole and absolute discretion. Any and all such equipment financings shall be the sole obligation of the Partnership, and neither the Original General Partner not the Original Limited Partner, not any Affiliate thereof, shall assume any liability therefor. The Interest of the Original General Partner in the Partnership shall be eighty percent (80%). 3.02 ORIGINAL LIMITED PARTNER The Original Limited Partner's Initial Capital Contribution shall be cash in the amount of Five Hundred Thousand Dollars ($500,000) on the date of Opening. The Interest of the Limited Partner in the Partnership shall be twenty percent (20%). 3.03 NO INTEREST ON CAPITAL CONTRIBUTIONS Capital contributions to the Partnership shall not bear interest. 3.04 WITHDRAWAL OF CAPITAL CONTRIBUTIONS Except as expressly provided in this Agreement, no part of the contributions of any Partner to the capital of the Partnership may be withdrawn by such Partner without the prior written consent of the General Partner. The Partners shall not have the right to receive property, other than cash, in return for their Capital Contributions, but this shall not be construed to limit the Partners' rights to receive their respective Interest of any property distribution made pursuant to this Agreement. If the Original General Partner shall withdraw its contribution to the capital of the Partnership, or any portion thereof, then the Original Limited Partner shall have the right to withdraw its contribution to the capital of the Partnership, or any portion thereof, on a pro rata basis. 3.05 CAPITAL ACCOUNTS There shall be established and maintained on the books of the Partnership a separate capital account for each Partner. The Partnership shall maintain such capital accounts in accordance with the capital account maintenance rules of Regulations Section 1.704-1(b)(2)(iv), as such rules may be amended from time to time. Unless otherwise required by such rules, the capital account of each Partner shall be maintained for such Partner in accordance with the following provisions: (a) To each Partner's capital account there shall be credited such Partner's Initial Capital Contribution, such Partner's distributive share of profits and any items in the nature of income or gain which are specially allocated pursuant to Section 5.04 or Section 5.05 hereof, and the amount of any Partnership liabilities assumed by such Partner or which are secured by any Partnership Property distributed to such Partner; (b) To each Partner's capital account there shall be debited the amount of cash and the Gross Asset Value of any Partnership Property distributed to such Partner pursuant to any provision of this Agreement, such Partner's distributive share of losses and any items in the nature of expenses or losses which are specially allocated pursuant to Section 5.04 or Section 5.05 hereof, and the amount of any liabilities of such Partner assumed by the Partnership or which are secured by any property contributed by such Partner to the Partnership; (c) In the event any Interest in the Partnership is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the capital account of the transferor to the extent it relates to the transferred interest; (d) In determining the amount of any liability for purposes of Article V, there shall be taken into account Code Section 752(c) and any other applicable provision of the Code and Regulations. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of capital accounts are intended to comply with Regulations Section 1.704-1(b)(2)(iv), and shall be interpreted and implied in a manner consistent with such Regulations. In the event the General Partner shall determine that it is prudent to modify the manner in which the capital accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which are assumed by the Partnership or the General Partner) are computed in order to comply with such Regulations, the General Partner may make such modification, provided that it is not likely to have a material adverse effect on the amount distributable to any Partner pursuant to Section 6.02 hereof upon the dissolution of the Partnership. The General Partner also shall (i) make any adjustments that are necessary or appropriate to maintain the agreed ratios between the Capital Accounts of the General Partner and the Limited Partner(s) and the amount of Partnership capital reflected on the Partnership's balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b). Notwithstanding the foregoing, the General Partner shall at all times during the term of this Partnership, maintain a minimum capital account balance of an amount equivalent to no less than one percent (1%) of the aggregate of all capital accounts. 3.06 LIMITED LIABILITY AND CAPACITY OF LIMITED PARTNERS No Limited Partner shall be liable for any obligation of the Partnership, or any General Partner or any other Limited Partner. No Limited Partner, in his capacity as Limited Partner, shall take part in the management of the business of the Partnership or transact any business for or in the name of the Partnership (except as otherwise provided in this Agreement). No Limited Partner shall have the power to sign for or to bind the Partnership, at any time or under any circumstances, unless expressly authorized by the General Partner. No salary shall be paid to any Limited Partner, except as may be specifically designated by the General Partner. No Limited Partner shall have a Partnership drawing account. No Limited Partner shall be entitled to any distribution from the Partnership or to withdraw on demand any part of his Capital Contribution except as specifically provided in this Agreement. 3.07 ADDITIONAL CAPITAL CONTRIBUTIONS Subject to the terms and conditions of this Agreement, at such time as the General Partner determines, in its reasonable judgment, that additional capital ("Additional Capital Contribution") is required by the Partnership in order to accomplish or further the purposes of the Partnership as set forth in Section 2.05 hereof, the General Partner may require an Additional Capital Contribution by all Partners. The obligation of the Original Limited Partner to make such Additional Capital Contributions shall be limited to Additional Capital Contributions for the following purposes and subject to the following limitations: (i) If the cost of the Project exceeds One Hundred Twenty Million Dollars ($120,000,000.00). As of the Execution Date of this Agreement, as hereinafter defined, the General Partner represents and warrants to the Original Limited Partner that, to its best knowledge, information and belief after making inquiry, the cost of the Project the Partnership presently intends to construct will not exceed One Hundred Twenty Million Dollars ($120,000,000.00). (ii) If cash flow from operation of the Project is negative. Any demand for Additional Capital Contribution pursuant to this clause may be made only on an annual basis after the close of the fiscal year. (iii) If there is change in the scope of the Project which requires additional capital, an Additional Capital Contribution pursuant to this subparagraph (iii) may be required only if either: (a) the Original Limited Partner executes a written consent to the Additional Capital Contribution, or (b) if the change in scope and demand for Additional Capital Contribution with respect thereto occurs after the tenth anniversary of the date ("Tenth Anniversary Date") upon which the Project opens to the public for gaming ("Project Opening Date"), or (c) if the change in scope and demand for Additional Capital Contribution with respect thereto occurs after the fifth anniversary of the date ("Fifth Anniversary Date") of the Project Opening Date, but before the Tenth Anniversary Date, the General Partner demonstrates (whether to the reasonable satisfaction of the Original Limited Partner, as set forth below, or as determined by binding arbitration) that the proposed change in scope is economically viable for the Project and the Partnership; provided, however, that if the General Partner so demonstrates such economic viability on or before seven and one-half years after the Project Opening Date, the Interest of the Original Limited Partner may only be diluted as specifically set forth herein. (iv) A "change in the scope of the Project" for the purposes of this Agreement shall mean any increase in the overall gross square footage area of the Project. Any demand for Additional Capital Contribution with respect to a change in scope of the Project shall be required to be made concomitantly with the change in scope; provided, however, that the foregoing shall not affect the right of the General Partner to make demand for Additional Capital Contributions at a later time for unanticipated expenses and cost overruns associated with such change in the scope of the Project. If the Project shall become a land-based gaming facility, such change from a riverboat cruising gaming facility to a land-based gaming facility shall automatically constitute a "change in the scope of the Project" for the purposes of this Agreement. Before the Tenth Anniversary Date, the General Partner shall have the right to make any changes in the scope of the Project which it determines necessary, appropriate, expedient, or in the best interests of the Project and the Partnership, in its sole and absolute discretion. If the General Partner determines to make a change in the scope of the Project on or before the Fifth Anniversary Date, then the General Partner shall so notify the Original Limited Partner of the change in scope but the Original Limited Partner shall have no obligation to make any Additional Capital Contributions wit respect to any changes in the scope of the Project on or before the Fifth Anniversary Date, nor shall the Original Limited Partner have its Interest diluted for failure to make any Additional Capital Contribution with respect to any changes in the scope of the Project on or before the Fifth Anniversary Date; provided, however, that the refusal of the Original Limited Partner (including absence of consent due to omission or inaction) to make any Additional Capital Contribution with respect to any change in the scope of the Project shall not affect in any manner whatsoever the right of the General Partner to make the change in the scope of the Project, and to the extent that such change in the scope of the Project may be financed, to cause such financing for the change in the scope of the Project to be the obligation of the Partnership. (v) If the General Partner determines to make a change in the scope of the Project from the Fifth Anniversary Date up to and including the Tenth Anniversary Date, then the General Partner shall demonstrate to the reasonable satisfaction of the Original Limited Partner that the proposed change in the scope of the Project is economically viable for the Project and the Partnership. If the General Partner shall so demonstrate to the reasonable satisfaction of the Original Limited Partner, then the General Partner shall have the right to require the Original Limited Partner make its pro rata share of the Additional Capital Contribution based upon its Interest for such purpose. If the General Partner and the Original Limited Partner do not agree that the General Partner has demonstrated to the reasonable satisfaction of the Original Limited Partner that the proposed change in the scope of the Project is economically viable for the Project and the Partnership, then either or both Partners may submit the dispute to arbitration in accordance with the provisions of Section 15.13(b) hereof. If the General Partner demonstrates the economic viability of the proposed change in the scope of the Project as set forth above, whether to the reasonable satisfaction of the Original Limited Partner or as a result of binding arbitration, and such demonstration occurs on or before seven and one-half years after Project Opening, if the Original Limited Partner refuses to make its pro rata share of the Additional Capital Contribution with respect to such change in the scope of the Project the Original Limited Partner's Interest shall be diluted in accordance with the provisions of this Agreement, but in no event shall the Interest of the Original Limited Partner be diluted to less than five percent (5%) of the total Interest of the Partnership. (vi) The Original General Partner and the Original Limited Partner understand and agree that the Original General Partner may in its sole and absolute discretion, determine to construct a hotel as part of the Project and the addition of a hotel facility to the Project automatically shall constitute a change in the scope of the Project, except as otherwise specifically provided herein. If the General Partner determines to develop, construct and operate a hotel facility before the Fifth Anniversary Date, the General Partner shall give written notice thereof to the Original Limited Partner and then, unless the Original Limited Partner consents thereto in writing (which consent shall include the Original Limited Partner's agreement to contribute its pro rata share of the Additional Capital Contribution required for the hotel facility), the Partnership itself shall not undertake the development, construction and operation of a hotel facility. In such event, the General Partner shall have the right to cause an Affiliate, or any other legal entity, to undertake the development, construction and operation of the hotel facility. In such event, the hotel facility shall not be part of the Project for the purposes of this Agreement. Under such circumstances, neither the Partnership, nor any other Partner (other than the General Partner and/or its Affiliate or other legal entity created for the purpose of developing, constructing and operating the hotel facility) shall have any right, title or interest in, or claim to, the hotel facility, the furniture, fixtures or equipment therein, or any amenities or facilities associated therewith, or any revenues derived therefrom. If the hotel facility is developed, constructed and operated separate from the Partnership and the Project as described above, any agreements entered into by and between the Partnership and the owner or operator of the hotel facility shall be subject to the provisions of Section 8.05(a) hereof, to the extent that such provision relates to arms length transactions. If, after the Fifth Anniversary Date, but before the passage of seven and one-half years from Project Opening, the General Partner demonstrates (whether to the reasonable satisfaction of the Original Limited Partner or as a result of binding arbitration), that the development, construction and operation of a hotel facility, or any other change in the scope of the Project is economically viable for the Partnership and the Project, then the General Partner may require an Additional Capital Contribution be made by each Partner, including the Original Limited Partner pro rata on the basis of each Partner's Interest; provided, however, that if the Original Limited Partner refuses to make such Additional Capital Contribution and, accordingly its Interest is diluted as set forth herein, in no event shall the Interest of the Original Limited Partner be diluted to less than five percent (5%) of the total Interest of the Partnership. (vii) Subject to the limitations contained in the preceding subsections of this Section 3.07, any and all Additional Capital Contributions shall be made by all Partners, including but not limited to the Original Limited Partner, in proportion to the Partners' Interest. Notwithstanding the foregoing, the Original Limited Partner may elect to either contribute its share of the Additional Capital Contribution or to have its Interest diluted in the manner set forth in Section 3.08, but subject to the provisions of this Section 3.07. If any Partner shall fail to make any Additional Capital Contribution, then the General Partner shall have the right, subject to the provisions of this Agreement, to acquire, on behalf of the Partnership, such additional capital as may be required, from whatever sources, in whatever amounts, and upon whatever terms and conditions, the General Partner deems necessary and appropriate in its business judgment to meet the needs of the Partnership. 3.08 FAILURE TO CONTRIBUTE If any Partner should fail to make any Additional Capital Contribution which such Partner is required to make pursuant to the terms and conditions of this Agreement, on or before the date such Additional Capital Contribution is due ("Non-Contributing Partner"), then the General Partner may, at any time thereafter while the contribution remains unpaid, serve written notice ("Notice of Demand") upon the Non-Contributing Partner requiring it to make the Additional Capital Contribution, together with all costs and expenses that may have been incurred by the Partnership by reason of the non-payment. The Notice of Demand shall specify a date (which shall be not less then thirty (30) days, nor more than sixty (60) days after the date of the Notice) upon which, and the place at which, the Additional Capital Contribution and such costs and expenses are to be paid. In the event of the non-payment of the Additional Capital Contribution on such date and at such place, the General Partner shall have the right but not the obligation to: (a) First, loan to the Partnership an amount equal to the Non-Contributing Partner's required Additional Capital Contribution. The amount so loaned, together with any corresponding Capital Contribution made by the Contributing Partner(s) for its (their respective) own account(s) shall be considered loans to the Partnership and shall be repaid by the Partnership to such Contributing Partner(s) with interest thereon at an annual rate six percentage points above the rate shown in the WALL STREET JOURNAL (or its successor publication) from time to time as the prime rate for money center banks, but with the floor at twelve percent (12%) per annum, which rate shall be determined on the first day of each month and shall be applied to the loan balance for the month. However, in no event shall the interest rate exceed the maximum lawful rate. Such interest shall be payable quarterly. Any loan made pursuant to this provision shall be repaid by the Partnership upon demand by the Partner(s) making the loan to the extent that funds shall be available for such repayment. In any event, such loan shall be repaid before any distributions of cash or return of Capital Contributions to the Partners are made, but after repayment of loans incurred under Section 4.03; or (b) Second, advance to the Partnership an amount equal to the Non-Contributing Partner's required Additional Capital Contribution not made by the Non- Contributing Partner as an additional capital contribution by the Contributing Partner. The amount so advanced shall be considered an Additional Capital Contribution by the Partner advancing the funds which shall have the effect of increasing the advancing Partner's Interest in the Partnership, and decreasing the Non-Contributing Partner's Interest on a pro rata basis in the Partnership. If the Non-Contributing Partner is the Original Limited Partner, then the Interest of the Non-Contributing Partner shall be computed as set forth hereinafter, subject, however, to the limitation concerning dilution set forth in Section 3.07, if applicable. Following the Non-Contributing Original Limited Partner's failure to make a required Additional Capital Contribution, its Interest in the Partnership shall be reduced to a fraction in which the numerator is the sum of the Non-Contributing Original Limited Partner's Capital Contributions plus Three Million Five Hundred Thousand Dollars ($3,500,000.00) and the denominator is the sum of all Partners' Capital Contributions. The other Partner's Interest in the Partnership shall be changed to a fraction equal to 1 minus the fraction representing the Non-Contributing Partner's newly calculated Interest in Partnership. For the purposes of this subsection, only equity contributions and not debt shall be considered in determining a Partner's Capital Contribution; or (c) Third, seek Additional Capital Contributions by admitting additional General or Limited Partners, in the sole and absolute discretion of the Original General Partner. To the extent that the Original General Partner shall deem it necessary and appropriate to admit additional Partners for the purpose of raising such as additional capital (provided that the Interests of the Partners shall not be affected in a manner different than such Interests would be affected if the additional capital was provided pursuant to Section 3.08(b) above), the Original General Partner shall have the right to amend and modify this Limited Partnership Agreement, as the Original General Partner may deem necessary and appropriate, in its sole and absolute discretion, to accommodate the terms and conditions of such additional financing. ARTICLE IV LOANS 4.01 PARTNER'S LOANS TO THE PARTNERSHIP Except as provided above, no Partner shall lend or advance money to, on behalf of or for the Partnership's benefit without the prior written consent of the General Partner. If any Partner shall make loans or lend money to the Partnership or advance money on its behalf, the amount of any such loan or advance shall not be an increase in the Partner's Capital Account or Interest, nor shall it entitle such Partner to any increase in its share of the distributions of the Partnership, nor subject such Partner to any greater proportion of the losses which the Partnership may sustain. The amount of any such loan or advance shall be a debt due from this Partnership to such Partner, at such rate and upon such terms and conditions as shall be reasonably determined by the General Partner. Such loan shall be evidenced in writing by a promissory note or other document of indebtedness. Any loan made pursuant to this provision shall be repaid in accordance with the payment schedule and term of the loan as shall be reasonably specified by the General Partner. 4.02 LOANS TO THE PARTNERSHIP If, at any time, the General Partner determines that funds are reasonably necessary for maintaining and protecting the assets of the Partnership, conducting its business, or making capital improvements (or similar expenditures) or expanding the scope of the Project, the General Partner is authorized (but not obligated) to borrow the needed funds on the Partnership's behalf on commercially reasonable terms existing at the time of the borrowing, and all or any portion of the Partnership Property may be pledged or conveyed as security for the indebtedness. 4.03 GENERAL PARTNER ADVANCES AND AFFILIATE LOANS From time to time, the General Partner and/or its Affiliates may advance to the Partnership such funds as shall be required for the business expenses or other obligations of the Partnership. Such loan or advance shall become an obligation and liability of the Partnership, shall be evidenced in writing by a promissory note (whether secured or unsecured by Partnership Property) or other document of indebtedness and shall bear interest at an annual rate six percentage points above the rate shown in the WALL STREET JOURNAL (or its successor publication) from time to time as the prime rate for money center banks, but with a floor of twelve percent (12%) per annum, which rate shall be determined on the first day of each month and shall be applied to the loan balance for the month. Such interest shall be payable quarterly, and otherwise be subject to the terms and conditions as shall be provided in such note or document. The General Partner and/or its Affiliates shall not require a prepayment charge or penalty on any such loan. The General Partner and/or its Affiliates shall not provide permanent financing for the Partnership. With respect to any loans or advances made by the General Partner and/or its Affiliates pursuant to any section hereof, such Partner or party shall be entitled to receive repayment thereof prior to any distributions to the Limited Partners, including distributions pursuant to the provisions herein. 4.04 LOANS FROM THE PARTNERSHIP No loans shall be made from the Partnership to any Partner. ARTICLE V ALLOCATIONS OF PROFITS AND LOSSES 5.01 ALLOCATIONS AND DISTRIBUTIONS AMONG LIMITED PARTNERS Allocations and distributions to the Limited Partner(s) shall be allocated to or distributed amongst each Limited Partner pro rata on the basis of such Limited Partner's Interest in the Partnership. 5.02 NET PROFITS After giving effect to the any special allocations set forth herein, Net Profits for any fiscal year shall be allocated as follows: (a) First, one hundred percent (100%) to the General Partner in an amount equal to the excess, if any, of (i) the cumulative Net Losses allocated to the General Partner pursuant to Section 5.03(b) hereof for all prior fiscal years, over (ii) the cumulative Net Profits allocated to the General Partner pursuant to this Section 5.02(a) for all prior fiscal years; and (b) The balance, if any, one hundred percent (100%) to the Partners in proportion to their respective Interests. 5.03 NET LOSSES After giving effect to the special allocations set forth in Section 5.04 and 5.05 hereof, Net Losses for any fiscal year shall be allocated as follows: (a) First, one hundred percent (100%) to the Partners in proportion to their respective Interests, provided that Net Losses shall not be allocated pursuant to this Section 5.03(a) to the extent such allocations would cause any Limited Partner to have an Adjusted Capital Account Deficit at the end of any fiscal year; and (b) The balance, if any, one hundred percent (100%) to the General Partner. 5.04 SPECIAL ALLOCATIONS (a) QUALIFIED INCOME OFFSET. Except as provided in Section 5.04(b) hereof, in the event any Partner who is not a General Partner unexpectedly receives any adjustments, allocations or distributions described in Regulations Section 1.704- l(b)(2)(ii)(d)(4), (5) or (6) items of Partnership income and gain shall be specially allocated to each such Partner in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Partner as quickly as possible. (b) MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of this Section 5.04, if there is a net decrease in Partnership Minimum Gain, as defined in the Regulations, during any Partnership fiscal year, each Partner who would otherwise have an Adjusted Capital Account Deficit at the end of such year shall be specially allocated items of Partnership income and gain for such year (and, if necessary subsequent years) in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible. The items to be so allocated shall be determined in accordance with Regulations Section 1.704- 2(b). This Section 5.04(b) is intended to comply with the minimum gain chargeback requirement in such section of the Regulations and shall be interpreted consistently therewith. (c) NON-RECOURSE DEDUCTIONS. Non-recourse deductions for any fiscal year or other period shall be allocated eighty percent (80%) to the General Partner and twenty percent (20%) to the Limited Partner(s) in proportion to its/their respective Interests. (d) CODE SECTION 754 ADJUSTMENTS. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining capital accounts, the amount of such adjustment to the capital accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss ( if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Partners in the manner consistent with the manner in which their capital accounts are required to be adjusted pursuant to such section of the Regulations. 5.05 CURATIVE ALLOCATIONS The allocations set forth in Sections 5.03(b), 5.04(a), 5.04(b) and 5.04(c) (the "Regulatory Allocations") are intended to comply with certain requirements of Regulations Section 1.704-1(b). Notwithstanding any other provisions of this section (other than the Regulatory Allocations), the Regulatory Allocations shall be taken into account in allocating other profits, losses and items of income, gain, loss and deduction among the Partners so that, to the extent possible, the net amount of such allocations of other profits, losses and other items and the regulatory allocations to each Partner shall be equal to the net amount that would have been allocated to each such Partner if the regulatory allocations had not occurred. 5.06 OTHER ALLOCATION RULES (a) Generally, all Net Profits and Net Losses allocated to the General and Limited Partner(s) pursuant to Sections 5.01 through 5.05 hereof, are in turn allocated among the Limited Partner(s) in proportion to the Interest held. In the event Limited Partners are admitted to the Partnership on different dates during any fiscal year, the Net Profits (or Net Losses) allocated to the Limited Partners for each such fiscal year shall be allocated among the Limited Partners in proportion to the Interest each holds from time to time during such fiscal year in accordance with any convention permitted by law and selected by the General Partner. (b) For purposes of determining the Net Profits, Net Losses or any other items allocable to any period, Net Profits, Net Losses and any other such items shall be determined on a daily, monthly or other basis, as determined by the General Partner using any permissible method under Code Section 706 and the Regulations thereunder. (c) Except as otherwise provided in this Agreement, all items of Partnership income, gain, loss, deduction and any other allocation not otherwise provided for shall be divided among the Partners in the same proportion as they share Net Profits or Net Losses, as the case may be, for the year. (d) The Partners are aware of the income tax consequences of the allocations made by this Article V and hereby agree to be bound by the provisions of this Article V in reporting their share of Partnership income and loss for income tax purposes. 5.07 TAX ALLOCATIONS CODE SECTION 704(C) In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the capital of the Partnership shall, solely for tax purposes, be allocated among the Partners so as to take into account any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and its initial Gross Asset Value (computed in accordance with Section 1.11 hereof). In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to Section 1.11(b) or 1.11(d) hereof, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the regulations thereunder. Any elections or other decisions relating to such allocations shall be made by the General Partner in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 5.07 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any person's capital account or share of profits, losses, other items or distributions pursuant to any provision of this Agreement. 5.08 CERTAIN ELECTIONS Where a distribution of property is made in the manner provided in Code Section 734 or where a transfer of a Partnership Interest permitted by this Agreement is made in the manner provided in Code Section 743, the General Partner shall have the sole and absolute discretion to file or not to file on behalf of the Partnership, upon any Partner's written request, an election under Code Section 754 in accordance with the procedures set forth in the applicable Regulations. Except insofar as an election pursuant to Code Section 754 has been made with respect to the Interest of any Partner, the determination of profits, losses, distributions, and capital accounts shall be made as provided for in this Agreement. With respect to any Partner whose Interest has been affected by an election pursuant to Code Section 754, appropriate adjustments shall be made with respect to the determination of profits, losses, distributions, and capital accounts. Each Partner agrees to promptly provide the General Partner with all information necessary to give effect to such election. ARTICLE VI DISTRIBUTIONS 6.01 OPERATING DISTRIBUTIONS The General Partner shall distribute Cash Available for Distribution from time to time, but at least as frequently as quarterly, to the extent that there shall be any Cash Available for Distribution, in such amounts and at such times as the General Partner may determine; provided, however, that the aggregate amount of each such distribution shall be that amount which the General Partner reasonably determines is not required to be retained by the Partnership to meet the reasonably foreseeable cash requirements and needs of the business and activities of the Partnership and to establish an adequate reserve for the payment of Partnership liabilities and contingencies, or otherwise is restricted as a result of the covenants of third party financing. The Original General Partner covenants and agrees that it shall use its best efforts to distribute to the Original Limited Partner amounts sufficient to pay the tax liability of the Original Limited Partner, as incurred, in any given tax year; provided, however, that the best efforts of the Original General Partner in this regard shall not require it to compromise in any respect its reasonable business judgment with regard to the cash flow, reserves, debt coverage and other expense needs of the Project, considering the terms, covenants, and conditions otherwise set forth in this Agreement. All distributions made pursuant to this Section 6.01 shall be made in cash and shall be divided among the Partners as follows: (a) First, to reimburse the General Partner for all out-of-pocket expenses incurred by the General Partner on behalf of the Partnership concerning the Project which have not previously been reimbursed to the General Partner, including, without limitation, legal and other professional fees incurred to organize the Partnership; (b) The balance, if any, one hundred percent (100%) among the Partners in proportion to each Partner's respective Interest in effect at the time the distribution is made. 6.02 DISTRIBUTIONS UPON DISSOLUTION OR LIQUIDATION Upon dissolution or liquidation of the Partnership, cash and any other assets being distributed in- kind shall be distributed in the following order of priority: (a) First, to the payment and discharge of all of the Partnership's debts and liabilities (including any Partners who are creditors of the Partnership) and including the establishment of any necessary contingency reserves; (b) Second, to the General Partner to the extent the amounts described in Section 6.01 have not previously been satisfied; and (c) The balance, if any, to the Partners, in proportion to their positive capital accounts as of the date of such distribution, after giving effect to all contributions, distributions and allocations for all periods, including the period during which such distribution occurs. 6.03 RESTORATION OF CAPITAL ACCOUNT Distributions made pursuant to Section 6.01 or Section 6.02 shall not be made in violation of Regulations Section 1.704-1(b)(2)(ii)(b). If the General Partner's capital account has a deficit balance (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such General Partner shall contribute to the capital of the Partnership the amount necessary to restore such deficit balance to zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3). If any Limited Partner has a deficit balance in his capital account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such Limited Partner shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or any other Person for any purpose whatsoever. In the discretion of the General Partner, a pro rata portion of the distributions that would otherwise be made to the Partners pursuant to Section 6.02 may be: (a) distributed to a trust established for the benefit of the Partners for the purposes of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the General Partner arising out of or in connection with the Partnership. The assets of any such trust shall be distributed to the Partners from time to time, in the reasonable discretion of the General Partner, in the same proportions as the amount distributed to such trust by the Partnership would otherwise have been distributed to the General and Limited Partner(s) pursuant to this Agreement; or (b) withheld to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided that such withheld amounts shall be distributed to the Partners as soon as practicable. 6.04 DISTRIBUTIONS TO OWNERS OF RECORD Distributions shall be made only to persons who, according to the books and records of the Partnership, are the owners of record on a date to be determined by the General Partner with respect to each distribution. Neither the General Partner nor the Partnership shall incur any liability for making distributions in accordance with the preceding sentence. ARTICLE VII BOOKS AND RECORDS, ACCOUNTING, AND TAXES 7.01 FISCAL YEAR OF PARTNERSHIP The fiscal year of Partnership shall end on June 30 of each year for purposes of both Partnership accounting and income tax reporting. 7.02 BOOKS AND RECORDS The Partnership shall maintain full and accurate books and records at its principal place of business, as required under the Missouri Uniform Limited Partnership laws, and all Partners shall have the right to inspect and copy, at the Partner's expense, such books and records during ordinary business hours. The Original Limited Partner shall have the right to audit the books and records of the Partnership, upon no less than thirty (30) days notice to the General Partner, during regular business hours, at such offices where the Partnership books and records are located, or at such other location as the General Partner may specify, at the Original Limited Partner's sole cost and expense. The right of the Original Limited Partner to conduct such audit is expressly conditioned upon the designation by the Original Limited Partner of a certified public accountant ("CPA") as the sole and exclusive agent of the Original Limited Partner for the purpose of examining the Partnership books and records and conducting such audit. Before permitting such CPA to commence conduct of such audit, the General Partner may require such CPA to sign a confidentiality agreement, which Confidentiality Agreement is attached hereto and incorporated by reference herewith as Exhibit ___. The members of the Board of Directors of the Original Limited Partner shall have the right to receive a copy of the audit, and copies of any documents which the CPA has obtained in the course of conducting the audit; provided, however, that each of the members of the Board of Directors of the Limited Partner shall execute the Board of Directors Confidentiality Agreement, which is attached hereto and incorporated by reference herewith as Exhibit ___. Notwithstanding the foregoing, CPA may disclose to the Original Limited Partner whether the CPA has determined as a result of such audit that a discrepancy as specifically described below in this Section 7.02 exists, the magnitude of such discrepancy and such other information as is required for the CPA to amend the tax return of the Original Limited Partner. The General Partner shall have no obligation whatsoever to permit photocopies to be made of the books and records of the Partnership. Except with regard to the limitation set forth above concerning permitting photocopies of the books and records of the Partnership, the Original Limited Partner does not waive, and hereby reserves, any and all rights to information concerning the Partnership as provided for under applicable law, including but not limited to, the provisions of Sections 359.011 et. seq. of the Missouri Revised Uniform Limited Partnership Act, as amended. Under no circumstances shall the Original Limited Partner audit the books and records of the Partnership more frequently than once a year. If any such audit conducted by the Original Limited Partner shall reveal a discrepancy which affects either the amount which should have been distributed to the Original Limited Partner or the amounts reported on the Original Limited Partner's Internal Revenue Service Form 1065, Schedule K-1 in an amount in excess of five percent (5%) of the amount distributed or reported on the Schedule K-1, then the Partnership shall pay the reasonable costs and expenses associated with such audit together with the reasonable costs and expenses incurred by the Original Limited Partner to amend the Original Limited Partner's tax return if such tax return was filed based upon such erroneous information received from the General Partner, and only if such tax return was not filed based upon other sources of income from other business interests of the Original Limited Partner. The General Partner shall maintain such books and records under the accrual method of accounting and shall have the authority to determine the necessary federal, state and local tax return elections as the General Partner deems advisable and in the best interests of the Partnership. The books shall be closed at the end of each fiscal year. In addition to the foregoing audit right, the Original Limited Partner shall have the right, upon one occasion, at a date and time mutually agreeable to the Original General Partner and the Original Limited Partner (which shall not constitute its once a year audit of the Partnership's books and records) to have its CPA travel to the office of the Original General Partner in Atlantic City, New Jersey in order to review the organizational expenses (including, but not limited to attorneys' fees) of the Partnership for the purpose of determining (1) the Partnership books and records with regard to such organizational expenses have been set up in accordance with generally accepted accounting principles; (2) that the organizational expenses reflected therein are expenses of a kind, type and nature as are reasonably recorded as organizational expenses for the Partnership in accordance with generally accepted accounting principles; and (3) that such expenses were reasonably related to forwarding the interests of the Partnership or were expended on behalf of the Partnership. Such examination and determination by the CPA expressly shall not include any judgment with regard to the amount or amounts of such organizational expenses, whether by individual expense item or collectively with regard to the total amount of such organizational expenses. Within thirty (30) days after the completion of such review, the CPA objects to any organizational expense of the Partnership, the General Partner shall not treat such expense as an organizational expense, or any other expense, of the Partnership. The General Partner shall pay for the travel, lodging, meals and ground transportation incurred by such CPA in connection with such review. Notwithstanding the foregoing, the Partners expressly understand and agree that, the General Partner shall not have any obligation at any time, nor under any circumstances, to provide any Partner with any books, records, information or other documentation in any form whatsoever, which the General Partner, in its sole and absolute discretion, deems to be proprietary, containing any trade secret, or containing information which may be business sensitive in light of the competitive environment of the Project and the Partnership. 7.03 TAX RETURNS AND REPORTS TO PARTNERS The General Partner shall make a reasonable effort to deliver to each Partner as soon as reasonably possible, but in no event later than March 15th of each year, a copy of each Partner's Internal Revenue Service Form 1065, Schedule K-l, or such successor form, to be filed with the Partner's own tax return. A copy of the income tax returns of the Partnership shall be available to any Partner upon reasonable request to the General Partner. The General Partner shall provide the Limited Partner(s) with quarterly unaudited financial statements and annual audited financial statements of the Partnership. ARTICLE VIII POWERS AND OBLIGATIONS OF PARTNERS 8.01 AUTHORITY OF GENERAL PARTNER The General Partner shall have full, exclusive, and complete authority to direct and manage the affairs of the Partnership with all rights and powers generally conferred by law together with those that are necessary or appropriate for the overall management and control of the Partnership's business, as required under the Missouri Uniform Limited Partnership Laws. 8.02 DUTIES OF THE GENERAL PARTNER The General Partner will use its best efforts to carry out the purpose, business, and objectives of the Partnership and will devote such time to Partnership business as is reasonably required. The General Partner will use its best efforts to reasonably assure the efficient management and operation of the Partnership and will fully discharge its fiduciary duties to the Partnership and the Limited Partner(s). The General Partner will use its best efforts to cause the Partnership to comply with its obligations under the Lease described above, and the Partnership shall perform its obligations under the Lease according to the terms and conditions thereof. Without limiting the generality of the foregoing, and in addition to all other duties imposed by law of this Agreement, the General Partner is obligated to: (a) Subject to the provisions hereof, act in a fiduciary manner regarding the Partnership, the Limited Partner(s) and the Partnership Property; (b) File and publish all certificates, statements, or other documents required by law for the formation and operation of the Partnership and for the conduct of its business in all appropriate jurisdictions; provided, however, that performance will be excused whenever the Limited Partner(s) refuse to cooperate and their cooperation is required in order to perform these duties; (c) Furnish the Limited Partner(s) with the reports and information specified in this Agreement; (d) Maintain complete books of account and records regarding Partnership operations and business affairs; (e) Keep all books and records of the Part nership available for inspection and audit by the Limited Partners or their representatives; (f) Use best efforts to maintain the status of the Partnership as a "partnership" for federal income tax purposes; (g) File all federal, state, or local tax returns and reports and make all other filings which are required by law or governmental agencies on a timely basis; (h) Use reasonable efforts to operate the business of the Partnership; (i) Cause the Partnership at all times to maintain insurance (including liability insurance) in the amounts against the risks as are generally maintained for comparable property and business; (j) Invest the funds of the Partnership (including reserves) that are not distributed to the Partners and temporarily are not, in the General Partner's opinion, required for the conduct of the Partnership's business in (a) governmentally insured interest-bearing savings accounts, (b) short-term governmental obligations, or (c) certificates of deposit of a commercial bank or savings and loan association having at least $10,000,000 of assets; (k) Act as the "tax matters Partner" of the Partnership pursuant to Code Section 6231(a)(7) and cause the Partnership to make such timely federal, state and local income tax elections as may be in the best interests of the Partnership; (l) Make all decisions concerning the scope of the Project, and operational aspects of the Partnership and execute and deliver all contracts, deeds, and other instrumentation in connection therewith; (m) Borrow money on behalf of the Partnership in amounts up to one hundred percent (100%) of the fair market value of Partnership Property and execute and deliver in the name of the Partnership notes evidencing the same and mortgages, deeds of trust, and any other security instruments securing the same. The signature of the General Partner shall be sufficient to bind the Partnership and all the Partners as to the execution of any documents concerning the Partnership's acquisition, development, rental and/or sale of any or all the Partnership Property or the execution of any mortgages, deeds of trust, or any other security instruments securing any borrowing by the Partnership; (n) Pay from Partnership assets all expenses of organizing and conducting the business of the Partnership, including, without limitation, legal and accounting fees; (o) Execute any and all instruments and take any and all other action necessary or desirable to carry out the purposes and business of the Partnership; (p) Employ, at the expense of the Partnership, such consultants, accountants, attorneys, brokers, escrow agents, property managers and other professionals as the General Partner shall deem necessary or desirable, some of whom may also be employed by the General Partner itself; and (q) Assume the overall duties imposed on a general partner by the Uniform Limited Partnership laws of the state of Missouri. 8.03 RIGHTS OF THE LIMITED PARTNERS (a) Except as otherwise specifically provided in this Agreement, the Limited Partners shall have the right to vote only upon the following matters: (i) The admission of additional General Partner(s) or Limited Partner(s); provided, however, that if the Interest of any such additional General Partner(s) or Limited Partner(s) shall be allocated only from the Interest of the Original General Partner, the Limited Partners shall have no right to vote on the admission of such Partner; (ii) The dissolution and winding up of the Partnership; (iii) The removal of a General Partner, as specifically provided herein; or (iv) The sale, exchange or other transfer of all or substantially all of the assets of the Partnership. (b) No Limited Partner may own more than a twenty percent (20%) Interest in the Partnership, without the prior written approval of the Original General Partner, which approval may be unreasonably withheld. (c) Notwithstanding any other provision of this Agreement, but subject to the provisions of Sections 3.07 and 3.08, no additional General Partner(s) or Limited Partner(s) shall be admitted to the Partnership in any manner which dilutes the Original Limited Partner's Interest in the Partnership except (i) with the Original Limited Partner's consent or (ii) as a result of the failure of the Original Limited Partner to make its pro rata contribution of Additional Capital Contributions to the extent the Original Limited Partner is required to make such Additional Capital Contributions pursuant and subject to the terms and conditions of this Agreement. 8.04 PARTNERSHIP MEETINGS The Partnership may, in the General Partner's discretion, hold annual meetings for any reason. Partnership meetings may be held when and where designated by the Original General Partner in the State of Missouri. If the General Partner shall not have held an annual meeting, the Original Limited Partner shall have the right to request and call an annual meeting by sending such written request to the General Partner. An annual meeting shall be held within thirty (30) days of the date upon which the General Partner receives such written request, at a location in the St. Louis metropolitan area. The General Partner shall provide written notice to the other Partners at least ten (10) days before the date of such meeting specifying the date, time and location of such meeting. 8.05 ACTIVITIES OF PARTNERS (a) It is expressly understood that any Partner, any Affiliate or any stockholder of any Partner may engage in any business, investment, or profession, and neither the Partnership nor any other Partner shall have any rights in and to said business, profession or investment, or in the income or profits derived therefrom by reason of this Agreement. The fact that a Partner, or a person or an entity that is an Affiliate of or related to such Partner, is directly or indirectly interested in or connected with any person, firm, or corporation employed by the Partnership to render services or perform a service or to sell or to buy merchandise or other property shall not prohibit the General Partner from employing or contracting with such person, firm, or corporation or from dealing with him or it, and neither the Partnership nor the Partners shall have any rights in or to any income or profits derived therefrom. With respect to any matter, business or transaction involving the Partnership or the Project, the General Partner shall not enter into any agreement, contract, commitment, undertaking, or understanding with any person, including but not limited to any Partner, any Affiliate of any Partner, or any stockholder of any Partner or any Affiliate, unless such agreement, contract, commitment, undertaking, or understanding with any such person is entered into in good faith and upon an arm's length basis, upon terms and conditions no less favorable to the Partnership than are commercially available to the Partnership from other customarily available sources. (b) The Partners understand and agree that the Partners and their respective Affiliates may be interested, directly or indirectly, in various other businesses and undertakings, including without limitation, gaming businesses outside the greater metropolitan area of St. Louis, Missouri and the State of Missouri, and non-gaming businesses in St. Louis or elsewhere, not included in or related to the Partnership ("Unrelated Businesses"). The Partners hereby agree that the creation of the Partnership and the assumption by each Partner of its duties hereunder shall be without prejudice to its right (or the right of its Affiliates) to have Unrelated Businesses and to receive and enjoy the profits or compensation therefrom; provided, however, that if any Partner acquires knowledge that such Partner, any Affiliate or any stockholder in such Partner is or shall become directly or indirectly employed by, interested in or affiliated or connected with any person, firm, or entity of any kind, type or nature whatsoever which is involved in the gaming business in any manner whatsoever ("Other Gaming Business"), such Partner, Affiliate or stockholder in any Partner, as the case may be, shall notify the General Partner in writing immediately and disclose the nature of the employment, interest, affiliation or connection with the Other Gaming Business. Upon the written request of the General Partner, each Partner shall be obligated, no more frequently than once a year, to make inquiry of all its Affiliates and stockholders concerning whether such Affiliate or stockholders are directly or indirectly employed by, interested in or affiliated or connected with in any manner whatsoever any Other Gaming Business. Within thirty (30) days after such written request by the General Partner, each Partner shall report in writing to the General Partner the results of such inquiry. Upon such disclosure, the General Partner, in its sole and absolute discretion, may request such Partner, Affiliate or stockholder to sign a confidentiality agreement, substantially similar in form to the Board of Directors Confidentiality Agreement attached hereto and incorporated by reference herewith, stating that such party shall not disclose any information concerning the Partnership or the Project, or general business matters related thereto which may have or shall come into such party's knowledge or possession by reason of its role as Partner, or Affiliate or stockholder thereof, to such Other Gaming Business. The Original Limited Partner shall use its best efforts to cause each of its Affiliates and stockholders to execute a confidentiality agreement substantially in the form of the Board of Directors Confidentiality Agreement within six months of the Execution Date of this Agreement. For the purposes of this section the term "best efforts" shall not require the payment of money or other consideration, to cause any such Affiliate or stockholder to sign any such confidentiality agreement, nor shall it require the Original Limited Partner to institute any legal proceedings to compel execution of the Confidentiality Agreement, nor shall the Original Limited Partner be required to take any action to remove such stockholder as a stockholder from the Original Limited Partner. The failure of any such Affiliate or stockholder to sign such confidentiality agreement shall not constitute a breach or default under this Agreement by the Original Limited Partner. At the expiration of such six month period, the Original Limited Partner shall deliver to the General Partner all of the executed Confidentiality Agreements, together with a list of any stockholder or Affiliate who has refused to execute such Confidentiality Agreement. If the party who is employed by, interested in, or affiliated or connected with any such Other Gaming Business is a member of the Board of Directors (or any other similar management position without regard to the form of the legal entity of the Partner) of any Limited Partner, then the General Partner shall have the right to require that such party be removed from the Partner's Board of Directors. For the purposes of this provision, a party shall not be considered to be "interested in or affiliated or connected with" any Other Gaming Business as a result of the fact that such party owns stock (or other security) in an Other Gaming Business which is a publicly-held corporation, so long as such party's holdings do not exceed five percent (5%) of the then issued and outstanding stock of such Other Gaming Business. (c) The Partners agree that the Original General Partner, and its Affiliates are pursuing gaming opportunities throughout the United States and other jurisdictions and may pursue other gaming opportunities in Missouri, so long as such gaming opportunities are not within the boundaries of the Non- Compete Zone, which for purposes of this Agreement shall be defined to mean upon any property located south of the River Des Peres to the St. Louis County boundary. No Partner, nor any Affiliate or stockholder of any Partner, or any Affiliate thereof, shall pursue or become involved in any manner whatsoever with any gaming venture within the Non-Compete Zone; provided, however, that no Partner, Affiliate or stockholder of any Partner shall be prevented from providing non-gaming related services (e.g. construction services) to an Other Gaming Business. The Partners understand and agree that any such involvement in any gaming venture within the Non-Compete Zone may have serious detrimental consequences to the Project. The Original Limited Partner shall cause each member of its Board of Directors to agree in writing for the benefit of the Partnership that such Board member shall not pursue or become involved in any manner whatsoever with any Other Gaming Business within the Non-Compete Zone (the "Non-Compete Agreement") during the term of such member on the Board of Directors, and for a period of one year thereafter. Additionally, the Original Limited Partner shall use its best efforts to cause each of its stockholders, and any Affiliates of the Original Limited Partner, to execute a Non- Compete Agreement within six months after the Execution Date of this Agreement. The Non-Compete Agreement shall be prepared by the Original General Partner, in accordance with the terms and conditions of this provision, subject to reasonable review and approval of the Original Limited Partner. At the expiration of such six month period, the Original Limited Partner shall deliver to the General Partner all executed Non-Compete Agreements, together with a list of any Affiliates or stockholders of the Original Limited Partner who have refused to execute the Non- Compete Agreement. The Partners understand and agree that, for the purposes of this provision, the "best efforts" of the Original Limited Partner shall not require the Original Limited Partner to pay monies to its stockholders or Affiliates to obtain the execution of such Non-Compete Agreement, nor shall the Original Limited Partner be required to institute legal proceedings to compel execution of the Non-Compete Agreement. The failure of any stockholder or Affiliate of the Original Limited Partner to sign such Non-Compete Agreement shall not constitute a breach or default by the Original Limited Partner under this Agreement. The Original Limited Partner covenants and agrees that, if the Original General Partner shall determine, in its reasonable business judgment, that a stockholder or stockholders of the Original Limited Partner are taking or have taken actions which constitute a conflict of interests with or are, or may materially and adversely impact upon the best interests of the Project or the Partnership, the Original Limited Partner shall use its best efforts, taking any and all actions necessary and appropriate to cause such stockholder to cease such activity. The term "best efforts" as used in the preceding sentence shall have the same meaning, and be subject to the same limitations as set forth above. (d) Neither the General Partner nor any Affiliate shall be obligated to present any particular investment opportunity to the Partnership, even if the opportunity is of a character that, if presented to the Partnership, could be taken by the Partnership, and subject to Section 8.05(c) above the General Partner shall have the right to take for its own account or to recommend to others any investment opportunity. (e) Each Partner covenants and agrees to use its best efforts to diligently obtain all state and local licenses, including but not limited to gaming licenses, necessary to conduct the gaming operations of the Project. The Limited Partner agrees to use its best efforts to provide to the General Partner, upon such General Partner's request as soon as reasonably possible in order to allow the General Partner adequate time to review and analyze the information provided, but in no event later than the sooner to occur of (i) when such information is required to be provided to any licensing authority or (ii) within thirty (30) days of the date after receipt of such request, any and all copies of applications, reports, letters and documents filed with or provided to the state and local licensing authorities, including but not limited to any applications, reports, letters and other documents submitted concerning any individual associated with the Limited Partner in any manner whatsoever. In the event that the Original General Partner, as a result of any communication or action by the Missouri Gaming Commission or on the basis of consultations with its counsel and/or other professional advisors, reasonably believes in good faith that the Commission is likely to (i) fail to license and/or approve the Partnership or its Affiliates to own and operate the Project, and/or any gaming related business; (ii) grant required gaming licensing and/or approval only upon terms and conditions which are unacceptable to the General Partner; (iii) significantly delay the licensing and/or approval contemplated by this Agreement; or (iv) revoke any existing license or casino operating contract of the Partnership, any Partner, or any Affiliate, or any stockholder of any Partner due to concerns of any aspect of suitability of any such party, then such party shall divest itself of its Interest in the Partnership, the respective Partner or Affiliate. The General Partner shall notify the Limited Partner of such concerns promptly, together with a statement of the action required to resolve such suitability concerns. If such suitability concerns relate to one or more stockholders or other Affiliates of the Limited Partner, the Limited Partner shall take such action as may be necessary to disassociate such stockholder(s) or other Affiliates from the Limited Partner as soon as practical, after the General Partner notified the Limited Partner of such concerns; unless the Gaming Commission requires such removal within a specified period in which event such stockholder shall be removed within the specified period; provided, however, that if after thirty (30) days, the Limited Partner has not effectuated the disassociation, the General Partner shall have the right to demand that the Limited Partner effectuate such disassociation within five (5) days thereafter. If the Limited Partner fails to take the required action, then the General Partner may purchase the entire Interest of the Limited Partner at a purchase price equal to the return of the Capital Contribution of the Limited Partner. If, however, the events described above arise from concerns with respect to the suitability of a Partner ("Selling Party"), then the entire Interest of such Partner may be purchased by the other Partner(s) at a purchase price equal to the return of the Capital Contribution of such Partner in its original form. (f) The Original Limited Partner represents and warrants that it is a Missouri corporation, duly incorporated, validly existing and in good standing under the laws of the State of Missouri. The Original Limited Partner further represents and warrants that, it has now and will continue to have for the term of the Partnership, such rights and remedies under its Articles of Incorporation, Bylaws, Stockholders' Agreement or otherwise, to enable the Original Limited Partner to effect the remedies which may be required pursuant to various terms and conditions of this Agreement. (g) Limited Partner acknowledges that Affiliates of the Original General Partner have been granted licenses and approvals by various state and/or municipal regulatory agencies (collectively, "Regulatory Agency") in order to conduct their respective businesses. If Original General Partner is informed, or otherwise learns, that any Regulatory Agency may (i) fail to license, approve and/or renew the ownership or operation of the Affiliate(s) business; (ii) fail to grant or renew any required or requested licenses or approvals; (iii) grant and/ore renew any required or requested licenses approvals upon terms and conditions which are unacceptable to the Affiliate(s); (iv) significantly delay the licensing, approval and/or renewal sought by the Affiliate(s); (v) revoke and/or condition any existing or contemplated license, approval or order; or (vi) discipline, in any manner, the Affiliate(s), based, in whole or in part, upon the Partnership, any of the Partners, any Affiliate or any individual or entity directly or indirectly related thereto, then such party shall divest itself of its Interest in, or relationship to, the Partnership, the respective Partner or Affiliate within such period of time as determined by Original General Partner in its sole and absolute discretion. No Partner, Affiliate, or other individual or entity directly or indirectly related thereto, shall do, or cause to be done, any act or omission which may jeopardize any licenses or approvals held by the Original General Partner's Affiliates or subject such entities to any form of disciplinary action; provided, however, that if a stockholder of the Original Limited Partner shall do, or cause to be done, any act or omission which may jeopardize any licenses or approvals held by the Original General Partner's Affiliates or subject such entities to any form of disciplinary action, then the sole remedy of the General Partner shall be to require immediate removal of such stockholder as a stockholder in the Original Limited Partner. 8.06 LIABILITY OF GENERAL PARTNER The General Partner shall not be liable in damages or otherwise to the Partnership or the Limited Partner(s), or any of them, for any loss suffered by it or them, or any of them, in connection with the activities of the Partnership; provided, however, where such loss or liability arises out of any action or inaction of the General Partner: (a) The General Partner must have determined, in good faith, that its course of conduct was in the best interests of the Partnership, and (b) The course of conduct producing the loss or liability must not have constituted willful misconduct by the General Partner. The General Partner shall not be personally liable for the return of any capital of any Limited Partner, or for the return of any other contribution to the Partnership made by any Limited Partner, other than loans made pursuant to this Agreement. 8.07 INDEMNIFICATION OF GENERAL PARTNER The Partnership shall indemnify and hold harmless the General Partner from and against any and all loss, liability, claim, damage, and the like, including reasonable attorneys' fees, suffered by a General Partner solely by virtue of its acting as General Partner in this Partnership in connection with any activity of the Partnership. The provisions of this Section, to hold the General Partner harmless and indemnify the General Partner, shall be enforceable only against and out of the assets of the Partnership and not against or out of the assets of the Limited Partners, or any of them, individually. The Partnership shall indemnify and hold harmless the Limited Partner from and against any and all loss, liability, claim, damage, and the like, including reasonable attorneys' fees, suffered by the Limited Partner solely by virtue of its status as a Limited Partner in the Partnership. The provisions of this Section, to hold the Limited Partner harmless and indemnify the Limited Partner, shall be enforceable only against and out of the assets of the Partnership and not against or out of the assets of the General Partner(s), their respective Affiliates, or any of them, individually. 8.08 REPRESENTATIONS Each of the Partners acknowledges and agrees (i) that no representation or promise not expressly contained in this Agreement has been made by any other Partner or by any of such Partner's agents, employees, or representatives; (ii) that this Agreement is not being entered into on the basis of, or in reliance on, any promise or representation, expressed or implied, other than such as is set forth expressly in this Agreement; (iii) that each Partner has had the opportunity to be represented by counsel of said Partner's choice in this matter, including the negotiations and transactions that preceded the execution of this Agreement; and (iv) that each Partner, or counsel representing such Partner has read this Agreement and agrees to be bound by the terms contained herein. Each Limited Partner acknowledges that the legal counsel for the Partnership and the General Partner does not represent the Limited Partners in this Agreement. 8.09 RIGHT TO RELY UPON THE AUTHORITY OF THE GENERAL PARTNER No person dealing with the General Partner shall be required to determine its authority to make any commitment or undertaking on behalf of the Partnership nor to determine any fact or circumstance bearing upon the existence of its authority. In addition, no purchaser of any property or interest owned by the Partnership shall be required to determine the sole and exclusive authority of a General Partner to sign and deliver on behalf of the Partnership any such instrument of transfer or to see to the application or distribution of revenues or proceeds paid or credited in connection therewith, unless such purchaser shall have received written notice affecting the same. ARTICLE IX BANK ACCOUNTS 9.01 BANK ACCOUNTS All funds of the Partnership shall be deposited in the name of the Partnership in such bank account or accounts as shall be determined by the General Partner. All withdrawals therefrom shall be made upon checks signed on behalf of the Partnership by such individuals as may be designated from time to time by the General Partner. The General Partner shall not make deposits in or issue any checks against the Partnership bank account without full, proper, and complete supporting records. 9.02 EXPENSES OF THE PARTNERSHIP All operating and administrative expenses of the Partnership shall be billed directly to the Partnership, in the name of the Partnership, and shall be paid by the Partnership from funds received by it. ARTICLE X TRANSFER OF A PARTNERSHIP INTEREST 10.01 TRANSFER OF A LIMITED PARTNER'S INTEREST No Limited Partner shall voluntarily or involuntarily sell, transfer, assign, gift, encumber, pledge, or convey (collectively, for purposes of this Article X, "Transfer") all or any part of his Interest in the Partnership, except as provided herein. (a) In the event a Limited Partner ("Transferring Partner") desires to Transfer all or any part of such Partner*s Interest, he shall so notify the General Partner in writing and submit to the General Partner such information ("Transferee Notice") concerning the proposed Transfer, transferee, consideration, and terms and conditions relating thereto as the General Partner may require in its sole discretion. Within five (5) days after receiving the Transfer Notice, the General Partner will transmit such notice to the remaining Limited Partners who, for a ten (10)-day period after receiving the Transfer Notice, shall have the option to acquire all or part of the Interest proposed to be transferred. After such ten (10)-day period, the remaining Interest proposed to be transferred which has not been acquired by the other Limited Partners may be transferred by the Transferring Partner upon the terms and conditions contained in the Transfer Notice. (b) Any transferee acquiring an Interest pursuant to Section 10.01(a) above shall be entitled to be admitted to the Partnership as a substituted Limited Partner, and this Agreement shall be amended to reflect such admission provided that the following conditions are complied with: (i) The General Partner approves the form and content of the instrument of assignment; (ii) The Transferring Partner and the transferee and their spouses, if necessary, execute and acknowledge such other instrument or instruments as the General Partner may deem necessary or desirable to effectuate such admission; (iii) The transferee acknowledges all the terms and provisions of this Agreement as the same may have been amended and agrees to be bound by the same; (iv) The transferee pays or obligates himself to the General Partner for all reasonable expenses connected with such admission including, but not limited to, legal fees and costs (i.e. the cost of filing and publishing any amendment to this Agreement or to the Certificate of Limited Partnership to effectuate such admission); (v) The transferee provides the Partnership, if required by the General Partner, proof of the investment intent and financial status of the transferee; and (vi) If requested, the transferring Limited Partner shall provide an opinion from counsel acceptable to the General Partner that the transfer will not violate the registration requirements of applicable state or federal securities laws, and otherwise complies with all applicable federal and state securities laws. (c) Upon the death or legal incompetency of an individual Limited Partner, his personal representative shall have all the rights of a Limited Partner for the purpose of settling or managing the Limited Partner's estate, and such power as the decedent or incompetent possessed to designate a successor as a transferee of his interest in the Partnership, and to join with such transferee in making an application to substitute such transferee as a Limited Partner. The estate of a deceased Limited Partner shall be liable for the decedent's liabilities as a Limited Partner. Upon the bankruptcy, insolvency, dissolution, or other cessation of the existence, as a legal entity, of a non-individual Limited Partner, the authorized representative of such entity shall have the rights of a Limited Partner for the purpose of effecting the orderly disposition of the Interest of said Limited Partner. (d) In the event of the Transfer of all or any part of the Interest of any Limited Partner, for the fiscal year during which the Transfer occurs, the share of Net Profit or Net Loss or any item of income, gain, loss, deduction, or credit of the Partnership allocable to the Interest transferred shall be allocated between the transferror and the transferee in accordance with the provisions of Code Sections 706(c) and 706(d). 10.02 EFFECTIVENESS OF SUBSTITUTION The failure to obtain the requisite approvals and consents to the substitution of an assignee as a Limited Partner of the Partnership shall not affect the validity or effectiveness of any such instrument as an assignment to an assignee of the right to receive that share of the profits or other compensation by way of income, or the return of contributions, to which his assignor would otherwise be entitled and which were assigned, provided a duly executed and acknowledged written instrument of assignment in proper form and substance, the terms of which are not in contravention of any of the provisions of this Agreement, is filed with the Partnership. However, an assignee of a Limited Partner who has not obtained the requisite approvals and consents has no right to require any information or account of the Partnership transactions or to inspect the Partnership books, or to vote on any matters as to which a Limited Partner would be entitled to vote. Such an assignee of a Limited Partner is only entitled to receive the share of the profits or other compensation by way of income, or the return of capital contributions, to which the assignor would otherwise be entitled. In the event of the admission of a Partner, a permitted withdrawal of a Partner, or transfer by a Partner, this Agreement promptly will be amended as necessary to reflect any changes in the profit and loss allocations of Partners, to reflect the capital contributions of the newly admitted Partner or the withdrawal of capital by any withdrawing Partner, and to set forth any new provisions or to amend any existing provisions of this Agreement that may be necessary or desirable in light of the admission of a Partner or Transfer by a Partner. In the event such an amendment of this Agreement is required, such newly admitted Partner or withdrawing Partner shall bear all costs associated with such amendment. 10.03 FURTHER LIMITATIONS OF TRANSFERS No Transfer shall be permitted if: (i) the proposed Transfer or the proposed transferee will, or could, impair the ability of the Partnership to be taxed as a Partnership under the federal income tax laws; (ii) the Transfer will, or could, cause the Partnership's tax year to close, or the Partnership to terminate, for federal income tax purposes, or impair the validity of the Partnership under Missouri law; or (iii) such transfer would cause the Partnership to be in default under the any Partnership Loan. Any purported Transfer in violation of the terms of this Section 10.03 shall be null and void and of no force and effect. 10.04 PUT/CALL OPTION By complying with the provisions of this Section 10.04, the Original General Partner or the Original Limited Partner (the "Initiating Partner") shall have the right at any time after a date which is no sooner than ten (10) years after the Project Opening Date to cause the other Partner (a "non-Initiating Partner") to either (i) purchase such Initiating Partner's entire Interest in the Partnership, or (ii) sell such non-Initiating Partner's entire Interest in the Partnership to such Initiating Partner. An Initiating Partner desiring to invoke the provisions of this Section 10.04 shall give written notice, in the manner provided herein, to the non-Initiating Partner of the Initiating Partner's intention to invoke the provisions hereof (the "Put/Call Notice"). The Put/Call Notice shall set forth the cash price for a one percent interest in the Partnership, provided that (i) in no event shall the cash price for the entire Original General Partner's Interest based upon the percentage of Interest as of the Date of this Agreement, be less than Sixteen Million Dollars ($16,000,000.00), adjusted as necessary on a pro rata basis based upon any transfers of the Original General Partner's Interest after the Date of this Agreement [i.e. if the Original General Partner transfers one-half of its entire Interest the sixteen million ($16,000,000) would be adjusted to eight million dollars ($8,000,000)], and (ii) in no event shall the cash price for the entire Original Limited Partner's Interest based upon the percentage of Interest as of the Date of this Agreement be less than Four Million Dollars ($4,000,000.00), adjusted as necessary on a pro rata basis based upon any transfers of the Original Limited Partner's Interest after the Date of this Agreement other than a transfer or reduction of the Original Limited Partner's Interest as a result of its failure to meet a call for an Additional Capital Contribution [i.e. if the Original Limited Partner transfers one-half of its entire Interest the four million dollars ($4,000,000) would be adjusted to two million dollars ($2,000,000]. Delivery of the Put/Call Notice shall constitute an irrevocable offer by the Initiating Partner (x) to sell such Initiating Partner's entire interest in the Partnership, at a price equal to the price set forth in the Put/Call Notice for a one percent interest in the Partnership multiplied by the percentage Interest in Partnership Capital owned by the Initiating Partner, and (y) to purchase the entire Interest in the Partnership of the non-Initiating Partner at a price equal to the price set forth in the Put/Call Notice multiplied by the respective percentage Interest in Partnership Capital owned by the non-Initiating Partner. The terms of the purchase or sale shall be as set forth herein. Beginning upon receipt of the Put/Call Notice, a non- Initiating Partner shall have a period of nine (9) months (the "Acceptance Period") in which to elect to purchase such Initiating Partner's Interest in the Partnership or sell such non- Initiating Partner's entire Interest in the Partnership to the Initiating Partner. Failure by a non-Initiating Partner to respond to the Put/Call Notice within the Acceptance Period shall conclusively be deemed an acceptance by such non-Initiating Partner of the Initiating Partner's offer to purchase the entire Interest in the Partnership of the non-Initiating Partner. The closing of any purchase and sale occurring pursuant to the provisions of this Section 10.04 shall occur on the thirtieth (30th) day succeeding the expiration of the Acceptance Period ("Closing Date") at the office of the Partnership, or at such sooner time and/or other place as may be agreed upon by the Partners. Payment must be in full and in cash, cashier's check, or wire transfer of "good funds." Neither (i) failure by a Partner obligated to sell such Partner's entire Interest in the Partnership hereunder to appear at the closing, execute and deliver any documents or instruments necessary or incident to the transfer and sale of such Partner's entire Interest in the Partnership, or to take any acts necessary or incident to the transfer and sale thereof, or (ii) actions taken by any such Partner in hinderance or delay of the transactions contemplated hereby, shall affect the closing of the sale of such Partner's entire Interest in the Partnership. In order to effectuate the provisions of this Section 10.04, each Partner hereby irrevocably appoints the other Partner as such Partner's true and lawful attorney-in-fact (which appointment the Partners acknowledge constitutes a power coupled with an interest) for the limited purposes of (i) receipting for the purchase price on behalf of the Partner obligated to sell its entire interest in the Partnership hereunder, (ii) executing and delivering any documents, instruments or consents necessary or appropriate to the transfer and sale thereof, and (iii) taking all actions necessary and appropriate to the consummation of the transfer and sale thereof. In the event of the failure by any Partner obligated to purchase the entire Interest in the Partnership of any other Partner ("Acquiring Partner") pursuant hereto to appear at the closing, to deliver the purchase price at the closing, or to execute and deliver any documents or instruments necessary or incident to the transfer and sale contemplated hereby, the Partner who otherwise would have sold their entire Interest in the Partnership ("Disposing Partner") shall have a period of five (5) days following the Closing Date within which to elect, by written notice to the Acquiring Partner who failed to perform, to purchase such Acquiring Partner's entire Interest in the Partnership at the price determined as if the Disposing Partner originally elected to purchase such Interest pursuant to the Put/Call Notice. If such Disposing Partner so elects, the closing of the sale contemplated by this paragraph shall occur at the office of the Partnership on the tenth (10th) day succeeding the date of the Notice referred to in this paragraph. If such Disposing Partner does not so elect in a timely fashion, then the Acquiring Partner shall automatically be deemed to have transferred and assigned to the Disposing Partner, and does hereby transfer and assign to the Disposing Partner, one-half (1/2) of the entire Interest of the Acquiring Partner in the Partnership for the purchase price of one dollar ($1.00); and all of the Partners hereby irrevocably consent to such transfer and assignment free and clear of all of the restrictions set forth in Article X of this Agreement except for the provisions of subparagraph (d) of Article X which shall apply to any such transfer and assignment. ARTICLE XI TERMINATION OF THE GENERAL PARTNER 11.01 CESSATION The General Partner shall immediately cease to act in such capacity if any one of the following events shall occur; (a) An order for relief against the General Partner is entered under Chapter 7 of the federal bankruptcy law, or the General Partner: (i) makes a general assignment for the benefit of creditors, (ii) files a voluntary petition under the federal bankruptcy law, (iii) files a petition, answer, or any other application, motion or pleading seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation, (iv) files an answer, response or any other pleading admitting or failing to contest the material allegations of a petition filed against the General Partner in any proceeding of this nature, (v) consents to or acquiesces in the conversion of a case filed under Chapter 7 of the federal bankruptcy law to Chapter 11 of the federal bankruptcy law, or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the General Partner or of all or any substantial part of its properties. (b) If within sixty (60) days after the commencement of any proceeding against the General Partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation, the proceeding has not been dismissed; OR if within sixty (60) days after the appointment (without the General Partner's consent or acquiescence) of a trustee, receiver, or liquidator of the General Partner or of all or any substantial part of its properties, such appointment is not vacated or stayed; OR within sixty (60) days after the expiration of any such stay, the appointment is not vacated. (c) In the case of a General Partner who is an individual, either of the following: (i) the death of that Partner or (ii) the entry by a court of competent jurisdiction of an order adjudicating the Partner incompetent to manage the General Partner's person or estate. (d) In the case of a General Partner who is acting as a General Partner by virtue of being a trustee of a trust, the termination of the trust (but not merely the substitution of a new trustee, in which case the new trustee automatically becomes the new General Partner). (e) In the case of a General Partner that is a separate partnership, the dissolution of the separate partnership. (f) In the case of a General Partner that is a corporation, the filing of a certificate of dissolution, or its equivalent, for the corporation. (g) In the case of a General Partner that is an estate, the distribution by the fiduciary of the estate's entire interest in the Partnership. Upon such cessation, if there is a remaining General Partner or General Partners, then the business of the Partnership shall continue to be conducted by the remaining General Partner(s) in accordance with this Agreement. If upon such cessation there is no remaining General Partner, then the Partnership shall thereafter only conduct activities necessary to wind up its affairs, unless within ninety (90) days after the date of the event that caused such cessation, all the Limited Partners elect in writing or vote to continue the Partnership pursuant to applicable Missouri Limited Partnership laws. If an election to continue the Partnership is made, then a successor General Partner may be selected and approved by a vote of all the Limited Partners, and the Partnership shall continue in accordance with the provisions of this Agreement. 11.02 WITHDRAWAL OF A GENERAL PARTNER Upon the retirement or withdrawal of the General Partner, if there is a remaining General Partner or General Partners, then the business of the Partnership shall continue to be conducted by the remaining General Partner(s) in accordance with this Agreement. Unless required to do so by a licensing authority or unless, as a result of action threatened by a competent authority having jurisdiction over the General Partner, or any Affiliate thereof, the General Partner determines that it must retire or withdraw immediately or face unacceptable risk of loss with regard to its gaming licenses or damage to its business reputation generally, the General Partner shall not retire or withdraw without giving the Limited Partner at least ninety (90) days prior written notice of the General Partner's intent to withdraw. If upon such retirement or withdrawal there is no remaining General Partner, then the Partnership shall thereafter only conduct activities necessary to wind up its affairs, unless within three hundred and sixty-five (365) days after the date of the General Partner's notice of retirement or withdrawal, sixty percent (60%) or more of the Interest of the then existing Limited Partners elect in writing or vote to continue the Partnership pursuant to applicable Missouri Limited Partnership laws. If an election to continue the Partnership is made, then a successor General Partner may be selected and approved by a vote of sixty percent (60%) or more of the Interests of the then existing Limited Partners, and the Partnership shall continue in accordance with the provisions of this Agreement. In the event the General Partner retires or withdraws because it is required to do so by a licensing authority or as a result of action threatened by a competent authority having jurisdiction over the General Partner or any Affiliate thereof, the General Partner determines that it must retire or withdraw immediately or face unacceptable risk of loss with regard to its gaming licenses or damage to its business reputation generally, then no remaining General Partner of Limited Partner shall have any claim against such withdrawing or retiring General Partner, for damages or otherwise. 11.03 PARTICIPATION OF A NEW GENERAL PARTNER Any new or substitute General Partner serving in the place of a former General Partner shall have no interest in the share of Partnership capital, profits, and losses previously vested in the Original General Partner, with the prior written consent of the Original General Partner, which consent may be unreasonably withheld or delayed. A new or additional General Partner may only participate in the capital, profits, and losses allocated under this Agreement immediately after the admission of such new General Partner, and the amount of such Interest shall be determined by the Original General Partner in its reasonable business discretion. 11.04 PAYMENT TO WITHDRAWING GENERAL PARTNER Unless the Limited Partner votes to liquidate the Partnership upon the withdrawal or retirement of the General Partner (it being agreed that the Limited Partner shall have the right to have the Partnership liquidated upon the General Partner withdrawing or retiring). The Partnership shall pay to the withdrawing General Partner all amounts then accrued and owing to him, together with an amount equal to the then present fair market value of the withdrawing General Partner's interest in income, gains, losses, deductions, credits, distributions, and capital determined by agreement of the withdrawing General Partner and any remaining General Partners. If there are no remaining General Partners or if they cannot agree within thirty (30) days following the effective date of termination of the General Partner, the purchase price to be paid by the Partnership shall be the fair market value of such interest determined by appraisal. The withdrawing General Partner shall appoint an appraiser who is a member of the Appraisal Institute of the American Association of Real Estate Appraisers (an "MAI" appraiser) and the appraiser so appointed shall determine the fair market value of the withdrawing General Partner's interest. The appraiser's determination shall be final and binding upon the General Partner(s), the Limited Partner(s), the Partnership and their successors in interest. The costs and expenses of all such appraisal shall be borne by the Partnership. The purchase shall be consummated within thirty (30) days following (i) the date of receipt by the Partnership of the appraisal or (ii) the date of agreement in writing by the withdrawing General Partner and the Partnership with respect to the fair market value of the withdrawing General Partner's interest in the Partnership. ARTICLE XII FORCE MAJEURE 12.01 FORCE MAJEURE DEFINED The following events are beyond the control of any Partner (a "Force Majeure Event"): a. The passage of material new legislation which reduces the projected internal rate of return to the Original General Partner for the Project by more than thirty percent (30%), before taxes, compared to the projection of the Original General Partner; b. An increase in the cost of the Project which exceeds the Initial Capital Budget by more than twenty-five percent (25%); c. The receipt of material new conditions imposed by the St. Louis County Port Authority, St. Louis County or the Missouri Gaming Commission or any other governmental entity which may have regulatory authority over the Partnership, the Partners or the Project, which reduces the projected internal rate of return to the Original General Partner by more than twenty-five percent (25%), before taxes, compared to the projections of the Original General Partner; d. A delay in the Opening of the Project for more than one hundred eighty (180) days after the Opening date has been established by the Original General Partner or a closure of the Project after Opening for more than one hundred eighty (180) days; e. Any other event which materially alters the assumptions and underlying facts upon which this Agreement is based and which is reasonably expected by the Original General Partner to reduce the projected internal rate of return to the Original General Partner by more than thirty percent (30%), before taxes compared to the projections of the Original General Partner; f. Fire or other casualty, national emergency, condemnation, enemy action, civil commotion, strikes, lockouts, inability to obtain labor or materials, war or national defense preemptions, acts of God, energy shortages, or any other similar causes beyond the reasonable control of any party. 12.02 ACTIONS TO RESOLVE FORCE MAJEURE EVENTS No General Partner shall be deemed to be in default of the performances of its duties under this Agreement to the extent that such duties cannot reasonably be performed as a result of such Force Majeure Event from the date upon which the Force Majeure Event first exists until the date upon which (1) the General Partner determines that the Force Majeure Event may be resolved and is able to take such actions as are necessary and appropriate to resolve such Force Majeure Event; (2) the General Partner determines that the Force Majeure Event cannot be resolved but determines not to terminate this Agreement and abandon the Project; or (3) the General Partner determines that the Force Majeure Event cannot be resolved and elects to terminate this Agreement and abandon the Project. If the General Partner determines that the Force Majeure Event cannot be cured or cannot otherwise reasonably be expected to be resolved within thirty (30) days, then the General Partner may elect to terminate this Agreement and abandon the Project. ARTICLE XIII DISSOLUTION OF PARTNERSHIP 13.01 EVENTS OF DISSOLUTION The Partnership shall be dissolved and terminated upon the first to occur of the following events: (a) Upon the occurrence of an event described in Section 11.01 above, (if there is no remaining General Partner), unless the Limited Partners elect to continue the Partnership and a new General Partner is elected under the provisions hereof; (b) Upon retirement or withdrawal by the General Partner (if there is no remaining General Partner), unless the Limited Partners elect to continue the Partnership and a new General Partner is elected under the provisions of hereof; (c) The expiration of the term of the Partnership; (d) Except as otherwise provided in this Agreement, by operation of law; (e) Upon the sale by the Partnership of all or substantially all the Partnership Property and the final distribution of the proceeds thereof (whether the same be cash, notes, or other property); (f) Upon the occurrence of a Force Majeure Event, at the election of the General Partner; (g) Upon the written consent of the General Partner; or (h) The termination of the Lease or Development Agreement. 13.02 WINDING-UP OF PARTNERSHIP BUSINESS (a) Upon termination of the Partnership upon the occurrence of any of the events described in Section 13.01 above, the Partnership shall be dissolved, and the General Partner shall take full account of the Partnership's assets and liabilities. The receivables of the Partnership shall be collected and its assets liquidated as promptly as is consistent with obtaining the fair value thereof upon dissolution. The Partnership shall engage in no further business thereafter other than as necessary to develop, maintain or market the Partnership Property on an interim basis, collect its receivables, and liquidate its assets. (b) Upon completion of winding up the Partnership's affairs and the dissolution of the Partnership, the General Partner shall cause to be prepared, executed, and filed with the Secretary of State of Missouri, a Certificate of Cancellation of Certificate of Limited Partnership or any certificate required by any amendment of such provision or successor provision. 13.03 DISTRIBUTION OF PARTNERSHIP PROPERTY UPON DISSOLUTION Upon dissolution or liquidation of the Partnership, the proceeds realized upon sale and liquidation of the Partnership Property shall be applied and distributed in accordance with the provisions hereof. 13.04 ASSETS OTHER THAN CASH Assets other than cash that are distributed in kind shall be distributed on the basis of (i) in the case of notes receivable, their then fair market value, and (ii) in the case of real estate or in the case of other assets, their then fair market value as determined by an independent appraiser appointed by the General Partner. As necessary, distributions in kind will be made to the Partners as tenants-in-common, or in trust as provided in Section 6.03, hereof. If Partnership Property should be sold, and a portion of the consideration for such sale should be notes or other evidences of indebtedness, then such notes or other evidences of loans may be sold or hypothecated to realize funds for distribution to the Partners including at a discount from the face value thereof. Sale or hypothecation of evidences of indebtedness constituting substantially all the assets of the Partnership may be accomplished only with the same consent of the Partners as is necessary for the sale of substantially all the Partnership Property. It is agreed that such sale or borrowing on the security of said notes or other evidence of indebtedness affects the basic structure of the Partnership. 13.05 CAPITAL ACCOUNT ADJUSTMENTS To the extent not otherwise recognized to the Partnership, the amount by which the fair market value of any property to be distributed in kind to the Partners exceeds (or is less than) the basis of such property shall be allocated as gain (or loss) to the Partners' capital accounts as if such property had been sold. Such property shall then be distributed at its fair market value with appropriate adjustments made to the capital accounts of the Partners receiving it. ARTICLE XIV NOTICES Any notice which may be or is required to be given hereunder shall be deemed given three (3) days after such notice has been deposited, by registered or certified mail, in the United States mail, addressed to the Partnership or the Partners at the addresses set forth after their respective names below, or at such different addresses as to the Partnership or any Partner as it shall have theretofore advised the other parties in writing: Partnership: Southboat Limited Partnership c/o Showboat Lemay, Inc., General Partner _________________________ _________________________ with a copy to: _________________________ _________________________ _________________________ Futuresouth Futuresouth, Inc. 3630 S. Geyer Road St. Louis, Missouri 63127 Attention: Dennis P. Long with a copy to: Riezman & Blitz 120 S. Central Avenue 10th Floor Clayton, Missouri 63105 Attention: Richard M. Riezman Showboat: Showboat Development Company 3720 Howard Hughes Parkway Las Vegas, Nevada 89109 Attention: H. Gregory Nasky with a copy to: Kummer Kaempfer Bonner & Renshaw Seventh Floor 3800 Howard Hughes Parkway Las Vegas, Nevada 89109 Attention: John N. Brewer ARTICLE XV MISCELLANEOUS PROVISIONS 15.01 LIMITED POWER OF ATTORNEY Each Limited Partner, by the Limited Partner's execution of this Agreement, irrevocably constitutes and appoints the General Partner as such Limited Partner's true and lawful attorney-in-fact and agent, with full power and authority in such Limited Partner's name, place, and stead to execute, acknowledge and deliver and to file or record in any appropriate public office (i) any certificate or other instrument that may be necessary, desirable, or appropriate to qualify or to continue the Partnership as a Limited Partnership or to transact business as a Limited Partnership in any jurisdiction in which the Partnership conducts business; (ii) any amendment to this Agreement or to any certificate or other instrument that may be necessary, desirable, or appropriate including an amendment to reflect the admission of a Partner, the withdrawal of a Partner, or the transfer of all or any part of the interest of a Partner in the Partnership or any additional capital contributions or withdrawal of capital contributions made by a Partner, all in accordance with the provisions of this Agreement; (iii) any certificates or instruments that may be appropriate, necessary, or desirable to reflect the dissolution and termination of the Partnership; and (iv) any certificates necessary to comply with the provisions of this Agreement. This power of attorney shall be deemed to be coupled with an interest and shall survive a subsequent bankruptcy, death, adjudication of incompetence, disability, incapacity, dissolution, or termination of the Limited Partner as well as the transfer by the Limited Partner of the Interest in the Partnership. Notwithstanding the existence of this power of attorney, each Limited Partner agrees to join in the execution, acknowledgment, and delivery of the instruments referred to above if requested to do so by the General Partner. This power of attorney to the General Partner is a limited power of attorney that does not authorize the General Partner to act on behalf of a Limited Partner except to execute the documents described in this paragraph. 15.02 AMENDMENT Subject to Section 15.01 above, an amendment to this Agreement may be made only in writing and signed by the General Partner. Notwithstanding the foregoing, this Agreement may be amended from time to time by the General Partner without the consent of any of the Limited Partners (i) to add to the representations, duties, or obligations of the General Partner or its Affiliates or to surrender any right or power granted to the General Partner or its Affiliates herein, for the benefit of the Limited Partners; (ii) to cure any ambiguity, to correct or supplement any provision that may be inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under this Agreement that will not be inconsistent with the provisions of this Agreement; (iii) to reflect reductions in the capital contributions of the Limited Partners resulting from the return of capital to the Limited Partner(s) in accordance with the requirements of this Agreement; (iv) to delete or add any provision of this Agreement required to be so deleted or added by the staff of the Securities and Exchange Commission or state securities officials, which addition or deletion is deemed by the official to be for the benefit or protection of the Limited Partner(s); (v) to elect for the Partnership to be governed by any successor Missouri statute governing limited partnerships; and (vi) as otherwise provided for pursuant to this Agreement. The General Partner shall notify the Limited Partner(s) within a reasonable time of the adoption of any amendment. Notwithstanding anything to the contrary contained in this Agreement, this Agreement may not be amended without the consent of all Partners to be adversely affected by an amendment that (i) converts a Limited Partner into a General Partner; or (ii) affects the status of the Partnership as a Partnership for federal income tax purposes. 15.03 FOREIGN GAMING LICENSES If the Original General Partner determines, at its sole and absolute, that any of its gaming licenses in other jurisdictions may be adversely affected or in jeopardy as a result of its status as a Partner, the Original General Partner have the option at any such time to sell its Interest. In the event of a sale by the Original General Partner of its Interest under this section, the Management Agreement shall terminate. 15.04 BINDING EFFECT; FURTHER INSTRUMENTS This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective heirs, personal representatives, successors, and assigns. The parties hereto agree for themselves and for their heirs, personal representatives, successors, and assigns to execute any and all instruments in writing that may be necessary or proper to carry out the purposes and intent of this Agreement. 15.05 HEADINGS The headings of the paragraphs of this Agreement are inserted solely for convenience of reference and are not a part of or intended to govern, limit, or aid in the construction of any term or provision hereof. 15.06 GENDER AND NUMBER Whenever required by the context, the singular shall be deemed to include the plural, and the plural shall be deemed to include the singular, and the masculine, feminine, and neuter genders shall each be deemed to include the other. 15.07 SEVERABILITY In the event that any provision or any portion of any provision contained in this Agreement is unenforceable, the remaining provisions, and in the event that a portion of any provision is unenforceable, the remaining portion of such provision, shall nevertheless be carried into effect. 15.08 PARTIAL INVALIDITY If any term, covenant, or condition of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such term, covenant, or condition to persons or circumstances, other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term, covenant, or condition of this Agreement shall be valid, enforced to the full extent permitted by law. 15.09 COOPERATION WITH GAMING AUTHORITIES The Partners shall use their best efforts to cause their respective officers, directors, stockholders, and employees to provide gaming authorities in the jurisdiction in which the Partnership, or any Partner currently does business, and the authorities of any other jurisdiction in which the Partnership or any Partner presently may have or may in the future have gaming operations with such documents and information necessary for the Partnership or the Original General Partner to (i) obtain the approval of such authorities to conduct gaming operations, and (ii) maintain the Original General Partner's and its Affiliates gaming licenses. The Limited Partner understands and agrees that the Original General Partner's and the Original General Partner's Affiliates good standing with such gaming authorities may be adversely affected by any honesty and integrity deficiencies in the operations of persons or entities with whom or with which the Original General Partner or its Affiliates becomes associated, including the Limited Partner. The Limited Partner agrees to conduct itself, its business and maintain its association so as not to jeopardize the Original General Partner's or the Original General Partner's Affiliates licenses and good standing in all jurisdictions. Moreover, the Limited Partner represents, warrants, covenants and agrees that its, principals, officers, directors, and stockholders are persons who have conducted their respective business dealing with honesty and integrity. 15.10 CONFIDENTIALITY Each Partner agrees for itself and its respective Affiliates, agents, representatives and consultants to hold in strictest confidence and not to disclose to any person, entity, party, firm or corporation (other than agents or representatives of such Partner who are also bound by this paragraph) without the prior express consent of the General Partner (except as such disclosures are required in applications or by applicable gaming and securities laws) any of the other Partner's confidential data, whether related to the Project or to general business matters, which shall come into their possession or knowledge, except to the extent such information shall already be part of the public domain. In addition, each Partner agrees that it shall cause all documents, drawings, plans or other materials developed by another Partner in connection with the Project to be returned to the other Partner in the event of termination of this Agreement and that the other Partner shall not make use of such information in connection with the Project or any other undertaking by that Partner without the prior express written consent of the other Partner, which may reasonably entail the reimbursement to that Partner of its costs, direct and indirect, incurred in pursuing this Agreement, and the affiliated agreements. 15.11 WAIVER OF ACTION FOR PARTITION During the term of the Partnership and during any period of winding up and dissolution of the Partnership, each of the Partners irrevocably waives any right that he may have to maintain any action for partition as to the Partnership Property. 15.12 GOVERNING LAW The Partnership shall be governed and this Agreement shall be construed in accordance with the internal laws, and not the law of conflicts, of the State of Missouri applicable to agreements made and to be performed in such state. 15.13 ARBITRATION; ATTORNEYS' FEES AND COSTS (a) In the event any dispute should arise between the parties hereto as to the validity, construction, enforceability, or performance of this Agreement or any of its provisions, such dispute shall be settled by arbitration before an American Arbitration Association panel. Said arbitration shall be conducted at St. Louis, Missouri, in accordance with the commercial rules then in use by the American Arbitration Association. The decision of the arbitrator shall be final and may be entered as a judgment by a court of competent jurisdiction. The unsuccessful party to such arbitration shall pay to the successful party all reasonable costs and expenses, including reasonable attorneys' fees, incurred therein by such successful party. The successful party shall be determined by the arbitrator. (b) Notwithstanding the foregoing, if a dispute arises under Section 3.07 as to whether the General Partner has demonstrated to the reasonable satisfaction of the Original Limited Partner that a proposed change in the scope of the Project is economically viable for the Project and the Partnership, such dispute shall be arbitrated under the provisions of this subsection (b). In such event, the arbitration shall be conducted in the greater St. Louis, Missouri metropolitan area, before a panel of three arbitrators to be agreed upon by the Partners. There shall be an arbitration hearing on the dispute with thirty (30) days after a Partner gives notice to the other Partner that it seeks to arbitrate the dispute. At such arbitration hearing, the subject matter of the hearing shall be confined and limited to the sole issue whether the General Partner has demonstrated that the proposed change in the scope of the Project is economically viable for the Project and the Partnership. At such arbitration hearing, each Partner shall have the opportunity to present a written and oral statement of its position on the dispute, and the other Partner shall have the opportunity to respond to the same. Any written statement to be presented at the arbitration hearing shall be submitted to the arbitrators and the other Partner no later than ten (10) days before the date of the commencement of the arbitration hearing. The arbitrator shall render a written decision with an explanation of the reasons for such decision within ten (10) days after the date upon which the hearing is concluded, and a copy of such written decision shall be provided to each Partner. The decision of the arbitrator shall be final and conclusive determination concerning the right of the General Partner to require an Additional Capital Contribution for the purpose of the proposed change in the scope of the Project, binding upon all of the Partners. The unsuccessful party to such arbitration shall pay to the successful party all reasonable costs and expenses of the successful party associated with such arbitration, including but not limited to attorneys' fees. 15.14 INTEGRATION This Agreement sets forth the entire agreement among the parties with regard to the subject matter hereof. All agreements, covenants, representations, and warranties, express and implied, oral and written, of the parties with regard to the subject matter hereof are contained herein, in the Exhibits hereto, and in the documents referred to herein or implementing the provisions hereof. No other agreements, covenants, representations, or warranties, express or implied, oral or written, have been made by either party to the other as to the subject matter of this Agreement. All prior and contemporaneous conversations, negotiations, possible and alleged agreements and representations, covenants, and warranties as to the subject matter hereof are waived, merged herein, and superseded hereby. 15.15 COUNTERPARTS This Agreement may be executed in counterparts and all counterparts so executed shall constitute one Agreement binding on all the parties. It shall not be necessary for each party to execute the same counterpart. 15.16 NO BROKER/FINDER Each Partner represents and warrants to the other that it has not engaged any broker, agent or other person for whose commission(s) or finders fee the other Partner may be held liable. Each Partner hereto covenants and agrees to indemnify and hold the other Partner harmless at all times in respect of any and all liabilities, actions, suits, proceedings, demands, assessments, judgments costs, and expenses, including but not limited to attorneys' fees and costs, arising from, by reason of or in connection with any fees, finders fees, commissions, or other compensation which shall be alleged to be due to any broker, finder, agent, person or other party ("Fee Claimant") in connection with this Project or the transactions related thereto, if the Fee Claimant is found to have been engaged by either Partner or if such services are found to have been provided at the request of either Partner. 15.17 EXHIBITS Exhibits referred to in this Agreement are incorporated by reference into this Agreement. 15.18 STOCKHOLDERS In those sections of this Agreement in which reference is made to "stockholders" of any Partner, the term "stockholders" shall be deemed to mean any owner of any equity interest in any legal entity which may be a Partner of this Partnership, including but not limited to members of a limited liability company, partners in any general partnership, any owner or owners of a sole proprietorship or otherwise. 15.19 FUTURESOUTH ROOM AND SIGNING PRIVILEGES The General Partner shall cause to be designed and constructed adjacent to the Casino a VIP room with capacity for one hundred (100) people. The General Partner also shall cause to be designed and constructed adjacent to such VIP room a private, furnished room which shall be known as the "Futuresouth Room". The Futuresouth Room shall available for the use of the Original Limited Partner for private meetings, social gatherings and other uses, which use of the Futuresouth Room shall be at no cost or expense to the Original Limited Partner. The Original Limited Partner shall have signing privileges for food and beverage at the Project up to Five Thousand Dollars ($5,000.00) a month, which food and beverage shall be charged to the Original Limited Partner at cost. Such food and beverages costs and expenses shall be paid in full by the Original Limited Partner to the Partnership on or before the end of each fiscal quarter. IN WITNESS WHEREOF, the parties have executed this Agreement on this ____ day of September, 1995 (the "Execution Date of this Agreement") in multiple originals as of the date first written hereinabove. THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES. GENERAL PARTNER: Showboat Lemay, Inc. a Nevada corporation, By:/s/H. Gregory Nasky H. Gregory Nasky, Secretary LIMITED PARTNER: Futuresouth, Inc. a Missouri corporation By:/s/Dennis P. Long Dennis P. Long, President EX-10.02 3 EXHIBIT 10.02 MANAGEMENT AGREEMENT MANAGEMENT AGREEMENT TABLE OF CONTENTS PAGE ARTICLE 1. RECITALS AND DEFINITIONS 2 ARTICLE 2. APPOINTMENT/TERM/OPTION TO EXTEND TERM 10 Section 2.01 Appointment. 10 Section 2.02 Term. 10 Section 2.03 Opening the Casino. 10 ARTICLE 3. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS DURING DEVELOPMENT TERM 11 Section 3.01 Construction of Riverboat/Compliance with Law. 11 Section 3.02 Engagement of Manager As Consultant. 12 Section 3.03 Preliminary Plans and Specifications. 12 Section 3.04 Pre-Opening Committee. 12 Section 3.05 Obligations during Development Term. 13 Section 3.06 Construction. 13 Section 3.07 Pre-Opening Services by Manager. 13 Section 3.08 Payment of Pre-Opening Expenses. 14 ARTICLE 4. OPERATIONS 14 Section 4.01 Accounting Procedures and Services Books and Records. 14 Section 4.02 Owner's Access to Gaming Financial Records.15 Section 4.03 Audits. 15 Section 4.04 Monthly Financial Statements. 16 Section 4.05 Expenses. 16 Section 4.06 Standards. 16 Section 4.07 Plans and Budgets. 19 Section 4.08 Management. 21 Section 4.09 Bank Accounts. 21 Section 4.10 Credit. 22 Section 4.11 Owner's Advances. 22 Section 4.12 Special Events. 24 Section 4.13 Cooperation of Owner and Manager. 24 Section 4.14 Financing Matters. 25 Section 4.15 Conflict of Interest/Non-Competition. 27 ARTICLE 5. MANAGEMENT FEE 28 Section 5.01 Payments to Manager. 28 ARTICLE 6. MANAGER'S RIGHT OF FIRST REFUSAL TO MANAGE RIVERBOAT 28 ARTICLE 7. TAXES AND ASSESSMENTS, AND PAYMENTS TO THE RIVERBOAT AUTHORITIES 29 Section 7.01 Payment of Taxes and Assessments. 29 Section 7.02 Exceptions. 30 ARTICLE 8. USE AND OCCUPANCY OF THE CASINO 30 Section 8.01 Uses. 30 Section 8.02 Name. 30 ARTICLE 9. MAINTENANCE AND REPAIRS 31 Section 9.01 Owner's Maintenance and Repairs. 31 ARTICLE 10. INSURANCE AND INDEMNITY 32 Section 10.01 Owner Insurance Obligations. 32 Section 10.02 Parties Insured. 35 Section 10.03 Approved Insurance Companies. 36 Section 10.04 Approval of Insurance Coverage. 36 Section 10.05 Failure to Obtain Required Insurance. 36 Section 10.06 Waiver of Subrogation. 37 Section 10.07 Mutual Cooperation. 37 Section 10.08 Delivery of Insurance Policies. 37 Section 10.09 Indemnification by Manager. 38 Section 10.10 Indemnification by Owner. 39 Section 10.11 Selection of Counsel/Conduct of Litigation.40 ARTICLE 11. CASUALTY 40 ARTICLE 12. TAKING OF THE RIVERBOAT 41 Section 12.01 Definitions. 41 Section 12.02 Entire Taking of the Support Areas. 42 Section 12.03 Duty to Restore. 43 ARTICLE 13. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS 43 Section 13.01 Trustee. 43 Section 13.02 Deposits of Insurance Proceeds and Awards. 44 Section 13.03 Procedure for Distribution of Insurance Proceeds and Awards. 44 ARTICLE 14. ASSIGNMENT AND SUBLETTING 46 ARTICLE 15. AFFIRMATIVE COVENANTS OF MANAGER 47 Section 15.01 Corporate Status. 47 Section 15.02 Compliance with Laws. 47 Section 15.03 Gaming Approvals. 47 Section 15.04 Confidential Information. 48 Section 15.05 Gaming Applications. 48 ARTICLE 16. AFFIRMATIVE COVENANTS OF OWNER 48 Section 16.01 Corporate Status. 48 Section 16.02 Maintenance of Insurance. 49 Section 16.03 Compliance with Laws. 49 Section 16.04 Cooperation with Gaming Authorities. 50 Section 16.05 Confidential Information. 50 Section 16.06 Compliance with Loan Covenants. 51 Section 16.07 Non-Interference. 51 Section 16.08 Gaming Applications. 51 ARTICLE 17. REPRESENTATIONS AND WARRANTIES 51 Section 17.01 Owner Corporate Status. 51 Section 17.02 Manager Corporate Status. 52 Section 17.03 Authorization/No Conflict. 52 Section 17.04 Permits/Approvals. 53 Section 17.05 Accuracy of Representations. 53 Section 17.06 Development Plans. 54 Section 17.07 Maintenance of Gaming and Other Licenses. 54 Section 17.08 Financings; Governmental Approval. 54 Section 17.09 Condition of Riverboat During Term. 55 Section 17.10 Utilities. 55 Section 17.11 Impair Reputation. 55 ARTICLE 18. ARBITRATION 55 SECTION 18.01 Appointment of Arbitrators. 55 Section 18.02 Inability to Act. 57 ARTICLE 19. DEFAULT/STEP-IN RIGHTS 57 Section 19.01 Definition. 57 Section 19.02 Manager's Defaults. 57 Section 19.03 Step-In Rights. 58 Section 19.04 Owner's Default. 60 Section 19.05 Bankruptcy. 61 Section 19.06 Reorganization/Receiver. 61 Section 19.07 Delays and Omissions. 61 Section 19.08 Disputes in Arbitration. 62 ARTICLE 20. TERMINATION 62 Section 20.01 Termination Events. 62 Section 20.02 Notice of Termination. 63 Section 20.03 Remedies Upon Termination. 63 Section 20.04 Delivery of Riverboat. 64 ARTICLE 21. HAZARDOUS MATERIALS 64 Section 21.01 No Hazardous Materials. 64 Section 21.02 Compliance With Laws. 65 Section 21.03 Indemnification. 65 Section 21.04 Hazardous Material Defined. 66 ARTICLE 22. NOTICES 67 ARTICLE 23. MISCELLANEOUS 68 Section 23.01 Time of the Essence. 68 Section 23.02 Heirs, Successors, Assigns 68 Section 23.03 Construction. 68 Section 23.04 Governing Law. 68 Section 23.05 Severability. 68 Section 23.06 Relation of the Parties. 69 Section 23.07 No Broker or Finder. 69 Section 23.08 Default Interest Rate. 70 Section 23.09 Attorneys' Fees. 70 Section 23.10 Entire Agreement. 70 Section 23.11 Counterparts. 70 Section 23.12 Force Majeure. 71 Section 23.13 No Warranties. 71 Section 23.14 Headings. 71 Section 23.15 Waiver. 72 MANAGEMENT AGREEMENT This Management Agreement ("Agreement") is dated as of May 2, 1995, and is made and entered into by and between Southboat Partnership, a Missouri general partnership or its successors and assigns ("Owner"), whose address is 3630 S. Geyer Road, St. Louis, Missouri 63127, and Showboat Operating Company, a Nevada corporation, or its successors and assigns ("Manager"), whose address 2800 Fremont Street, Las Vegas, Nevada 89104. RECITALS A. Owner is designing and developing a riverboat casino in order to conduct a riverboat gaming business on the Mississippi River to be located on approximately 29 acres (the "Casino Site") at the southernmost portion of the St. Louis County Port Authority Site in Lemay, Missouri. B. Owner expects to have completed construction of the riverboat and all ancillary facilities, including, but not limited to, docking, parking areas and administrative offices, and to have obtained all licenses necessary to open the riverboat to the public for gaming operations approximately by October 1996. C. Manager has experience in designing interior gaming premises, and in starting up and conducting a gaming business. D. Owner desires to engage Manager as a consultant to Owner in designing the interior gaming area of the riverboat, training staff and installing gaming equipment for public use, and, upon completion of the construction of the riverboat and all ancillary facilities, including the receipt of all gaming and other approvals, to manage and operate the gaming operations associated with the riverboat. E. Manager desires to be engaged as a consultant to assist in the design of the interior gaming area of the riverboat and, upon completion of the construction of the riverboat and all ancillary facilities, to manage and operate the gaming operations associated with the riverboat. F. As of the date of this Agreement, neither Owner nor Manager has obtained a permanent riverboat gaming license from the Missouri Gaming Commission. NOW, THEREFORE, in consideration of the mutual promises contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and with the intention of being bound by this Agreement, the parties stipulate and agree as follows: ARTICLE 1. RECITALS AND DEFINITIONS The foregoing Recitals are true and correct. The following defined terms are used in this Agreement: "Affiliate" shall mean a person who, directly or indirectly, or through one or more intermediaries, (i) controls, is controlled by, or is under common control with the person in question; (ii) is an officer, director, five percent (5%) stockholder, partner in or trustee of any person referred to in the preceding clause; or (iii) is a spouse, father, mother, son, daughter, brother, sister, uncle, aunt, nephew or niece of any person described in clauses (i) and(ii). "Audit Day" is defined in Section 4.03. "Audited Statements" is defined in Section 4.03. "Award" is defined in Section 12.01. "Bad Debts" shall mean the amount equal to gaming accounts receivables which have not been collected for more than 120 days. "Bank Accounts" is defined in Section 4.09. "Business Days" shall mean all weekdays except those that are official holidays of the state of Missouri or the U.S. government. Unless specifically stated as "Business Days," a reference in this Agreement to "days" means calendar days. "Casino" shall mean those areas reserved for the operation of slot machines, table games, electronic games of chance, electronic games of skill and any other legal forms of gaming permitted under applicable law, and ancillary service areas, including reservations and admissions, cage, vault, count room, surveillance room and any other room or area or activities therein regulated or taxed by the Riverboat Authorities by reason of gaming operations. "Casino Bankroll" shall mean an amount reasonably determined by Manager as funding required to bankroll Casino Gaming Activities, but in no case less than the amount required by Missouri gaming law. In no event shall such Casino Bankroll include amounts necessary to cover Operating Expenses or Operating Capital. Casino Bankroll shall include the funds located on the casino tables, in the gaming devices, cages, vault, counting rooms, or in any other location in the Casino where funds may be found and funds in a bank account identified by Owner for any additional amount required by Missouri gaming law or such other amount as is reasonably determined by Manager. "Casino Gaming Activities" shall mean the casino cage, table games, slot machines, video machines, electronic games of chance, electronic games of skill, and any other form of gaming managed by Manager in the Casino. The area reserved in the Riverboat for the Casino Gaming Activities shall be an area of approximately 26,000 square feet. If permitted by the Missouri Gaming Commission, the area reserved on the barges for Casino Gaming Activities shall be an area of approximately 22,000 square feet. Owner expressly reserves the right to expand or decrease the area reserved for gaming based upon changes in existing facts and circumstances which may affect the Riverboat Casino project. "Casino Operating Budget" shall be the budget of Casino Operating Expenses. "Casino Operating Expenses" shall mean expenses incurred by Manager on behalf of Owner in the management of the Casino, including, but not limited to, gaming supplies, maintenance of the Casino area, gaming marketing materials, uniforms, complimentaries, Casino employee training, Casino employee compensation and entitlements, and Gaming Taxes. "Control" shall mean, in relation to a person that is a corporation, the ownership, directly or indirectly, of voting securities of such person carrying more than 25% of the voting rights attaching to all voting securities of such person and which are sufficient, if exercised, to elect a majority of its board of directors; "Controls" and "Controlled" shall have similar meanings. "Commencement Date" shall mean the first day on which a revenue-paying customer is admitted to the Casino. "Credit Policy" shall mean the policy approved by Owner, whose approval shall not be unreasonably withheld, regarding the extension and collection of credit to patrons of the Casino, which Credit Policy shall be prepared by Manager based on (i) the target markets of the Casino; (ii) prudent business judgment; and (iii) such changes and refinements as Owner may reasonably require and shall comply and conform in all respects with the rules and regulations of the Riverboat Authorities. "Default" or "Event of Default" is defined in Section 19.01. "Development Term" shall mean the period beginning on the date of this Agreement and ending on the Commencement Date. "Earnings" shall mean Gross Revenue less Operating Expenses. "Effective Date" is defined in Section 2.02. "FF&E" shall mean all furniture, furnishings, equipment, and fixtures, including gaming equipment, computers, housekeeping and maintenance equipment, necessary or convenient to the operations of the Riverboat in conformity with this Agreement and in accordance with applicable law. "Gaming Taxes" shall mean any tax imposed by the state of Missouri on Gross Gaming Revenue, including, without limitation, any state admissions tax (currently 20% of Gross Gaming Revenue and $2.00 per customer). "Gross Food and Beverage Revenue" shall mean all of the revenue resulting from the operation of all of the restaurants, snack bars, lounges, bars, vending machines and any other areas or facilities which serve food or beverages at the Riverboat. "Gross Gaming Revenue" shall mean all of the revenue from the operation of the Casino. "Governmental Authorities" shall mean the United States, the state of Missouri, county of St. Louis, city of Lemay, any other political subdivision in which the Riverboat is located or does business, and any court or political subdivision agency, commission, board or instrumentality or officer thereof, whether federal, state or local, having or exercising jurisdiction over Owner, Manager or the Riverboat, including the Casino. "Gross Revenue" shall mean Gross Gaming Revenue plus all other revenue resulting from the operation of Riverboat. "Hazardous Material" is defined in Section 21.04. "Impositions" is defined in Section 7.01. "Incentive Management Fee" shall mean 20% of Earnings in excess of $30,000,000, before any interest expense, income taxes, capital lease rent, depreciation and amortization. The Incentive Management Fee shall be reduced to ten percent (10%) of Earnings in excess of $35,000,000, before any interest expense, income taxes, capital lease rent, depreciation and amortization. "Initial Inventory" shall mean the list of operating supplies required for the operation of the Riverboat for the initial 30-day period following the Commencement Date. "Initial Inventory Price" shall mean the cost of purchasing the Initial Inventory. "Institution" is defined in Section 13.01. "Institutional Mortgage" is defined in Section 13.01. "Loan Documents" shall mean all of the documents evidencing, securing and relating to any indebtedness owing by Owner to any person, including, without limitation, all promissory notes, loan agreements, mortgages, pledges, assignments, certificates, indemnities and other instruments or agreements. "Management Fee" shall mean that sum which is equal to (i) 2 1/4% of Gross Gaming Revenue net of all Gaming Taxes, and (ii) the Incentive Management Fee. "Management Fee Account" shall be the bank account established by Manager into which the Management Fee shall be deposited. "Manager's Management Team" is defined in Section 4.06(d). "Manager Pre-Opening Expenses" are those expenses incurred during the Development Term including, but not limited to, travel by Manager employees, officers and directors, rent, regulatory fees, salaries, wages and benefits, and other costs of Manager employees which are operational in nature. The Manager Pre- Opening Expenses are estimated to be at least $250,000 per month. "Nevada Gaming Authorities" shall mean the Nevada Gaming Commission and the Nevada Gaming Control Board. "Operating Budget" shall mean the Casino Operating Budget and the budget for all other operations of the Riverboat. "Operating Capital" shall mean such amount in the Bank Accounts as will be reasonably sufficient to assure the timely payment of all current liabilities of the Riverboat, including the operations of the Casino, during the term of this Agreement, and to permit Manager to perform its management responsibilities and obligations hereunder, with reasonable reserves for unanticipated contingencies and for short term business fluctuations resulting from monthly variations from the Operating Budget. "Operating Expenses" shall mean actual expenses incurred following the Commencement Date in operating the Riverboat, including, but not limited to, the Management Fee, the Casino Operating Expenses, employee compensation and entitlements, including Manager's employees assigned to the Riverboat, Operating Supplies, maintenance costs, fuel costs, utilities and taxes. "Operating Supplies" shall mean gaming supplies, paper supplies, cleaning materials, marketing materials, maintenance supplies, uniforms and all other materials used in the operation of the Riverboat. "Organizational Chart" shall be the Organizational Chart attached hereto as Exhibit A, detailing the reporting lines of representatives of Owner and Manager in relation to the operations of the Riverboat. "Owner's Advances" is defined in Section 4.11. "Pre-Opening Budget" shall mean the budget of anticipated Pre-Opening Expenses. "Pre-Opening Expenses" shall mean all costs and expenses incurred by Owner and Owner's Affiliates and Manager and Manager's Affiliates in implementing the Pre-Opening Plan, including, but not limited to, Manager Pre-Opening Expenses, the costs of recruitment and training for all employees of the Riverboat, costs of licensing or other qualification of Casino employees prior to the Commencement Date, the cost of pre-opening sales, marketing, advertising, promotion and publicity, the cost of obtaining all operating permits, and permits for employees, and the fees and expenses of lawyers and other professionals and consultants retained by Owner or Manager in connection therewith. "Pre-Opening Plan" shall mean the plan and schedule for implementing and performing the Pre-Opening Services. "Pre-Opening Services" is defined in Section 3.07. "Riverboat" shall mean the Vessel and all necessary ancillary facilities to the Vessel, including, but not limited to, barges, restaurants, entertainment facilities, docks, piers, vehicular parking area, waiting areas, restaurants, restrooms, administrative offices for, but not limited to, accounting, purchasing, and management information services (including offices for Manager's Management Team) and other areas utilized in support of the operations of the Riverboat. "Riverboat Authorities" shall mean the Missouri Gaming Commission. "Taking" is defined in Section 12.01. "Taking Date" is defined in Section 12.01. "Term" is defined in Section 2.02. "Trustee" is defined in Section 13.01. "Vessel" shall mean the riverboat cruise vessel constructed by Owner for operation of the Casino on the Missouri River in Lemay, Missouri. ARTICLE 2. APPOINTMENT/TERM/OPTION TO EXTEND TERM Section 2.01 APPOINTMENT. Owner hereby appoints and employs Manager to act as its agent for the supervision and control of the management of the Riverboat on Owner's behalf, upon the terms and conditions set forth herein. Manager hereby accepts such appointment and undertakes to manage the Riverboat upon the terms and conditions hereinafter set forth. Section 2.02 TERM. This Agreement shall be effective upon execution ("Effective Date"). The terms of this Agreement shall commence upon the Effective Date and shall continue until the Manager or its Affiliates no longer hold an equity position in the Owner or its successor (hereinafter referred to as the "Term"). Section 2.03 OPENING THE CASINO. The Commencement Date shall be a date established by Owner upon giving written notice thereof to Manager and shall be a date no earlier than ten (10) days after, and no later than fifteen (15) days after, the satisfaction of all the following conditions: (i) the project architect has issued to Owner a certificate of substantial completion confirming that the Riverboat has been substantially completed in accordance with the plans and specifications, (ii) the project interior designer has issued to Owner a certificate of substantial completion confirming that the FF&E has been substantially installed in the Riverboat in accordance with the FF&E specifications contained in the plans and specifications, (iii) all operating permits for the Riverboat and its operations (including, without limitation, a certificate of occupancy or local equivalent, gaming, liquor and restaurant licenses) have been obtained, (iv) the Operating Capital and the Casino Bankroll for the Casino has been furnished by Owner, (v) Manager shall have given written notice to Owner that all operational systems have been tested on a "dry-run" basis to the satisfaction of Manager and, to the extent required by applicable law, the Riverboat Authorities, and (vi) all other material state and federal governmental requirements necessary to open, occupy and operate the Riverboat, have been satisfied. Owner shall use its best efforts to assure that the conditions set forth in clauses (i)-(iv) and (vi) are met on or before October, 1996. Manager shall use its best efforts in the performance of its duties under this Agreement to assist Owner in achieving the satisfaction of all of the foregoing requirements. ARTICLE 3. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS DURING DEVELOPMENT TERM Section 3.01 CONSTRUCTION OF RIVERBOAT/COMPLIANCE WITH LAW. Owner, at its sole cost and expense, shall construct the Riverboat and install the FF&E. The Riverboat and its systems (including but not limited to plumbing, heating, air conditioning, electrical, and life safety systems, if applicable) shall comply with the Missouri Gaming Act, and all regulations promulgated thereunder, all appropriate building, fire and zoning codes, the Americans With Disability Act, maritime law, including all regulations governing maritime vessels adopted by the United States Coast Guard. Section 3.02 ENGAGEMENT OF MANAGER AS CONSULTANT. Owner engages Manager to be Owner's consultant in the configuration, layout, interior design and construction of the Casino. Additionally, Manager shall recommend to Owner and advise Owner as to the suggested placement of all gaming equipment and ancillary furnishings and the configuration of ancillary areas within the Riverboat. Section 3.03 PRELIMINARY PLANS AND SPECIFICATIONS. Owner, at its sole and separate expense, shall prepare preliminary design plans, working drawings, and specifications of the Riverboat. Manager shall evaluate the preliminary design plans, working drawings and assist Owner in designing the Casino. Owner shall have the sole and exclusive right to manage, direct, control, coordinate and prosecute the construction of the Riverboat and the installation of the FF&E. Section 3.04 PRE-OPENING COMMITTEE. Owner and Manager shall form a Pre-Opening Committee which shall consist of four persons, two persons appointed by Owner and two persons appointed by Manager immediately upon execution of this Agreement. Within three (3) weeks of the date hereof, Manager shall prepare and submit to the Pre-Opening Committee, the Pre-Opening Budget for the committee's approval. The Pre- Opening Committee shall also prepare promptly the Pre-Opening Plan detailing each party's responsibilities (including those set forth in Section 3.07) and the time frame for the performance of such responsibilities during the Development Term. Each party agrees to use its best efforts to timely complete each task, in accordance with the Pre-Opening Plan and the Pre-Opening Budget. The Pre-Opening Committee shall submit progress reports to Owner on a regular basis. Manager agrees not to exceed the Pre-Opening Budget without the prior approval of Owner. Section 3.05 OBLIGATIONS DURING DEVELOPMENT TERM. (a) Owner represents that it has commenced the construction of the Riverboat, and agrees that it shall diligently complete the construction of the Riverboat by approximately October, 1996. (b) Owner and Manager shall file all applications necessary to obtain all required permits and other approvals necessary to operate the Riverboat, and the Casino located therein, as contemplated by this Agreement. Section 3.06 CONSTRUCTION. The construction of the Riverboat shall be in accordance with appropriate laws, regulations and ordinances of any kind and nature. Section 3.07 PRE-OPENING SERVICES BY MANAGER. (a) Prior to the Commencement Date, Manager, as agent of Owner, shall, among other things, perform or arrange for others to perform the following services on behalf of and for the account of Owner pursuant to the Pre-Opening Plan and Pre-Opening Budget (the "Pre-Opening Services"). (b) Manager shall implement the marketing portion of the approved Pre-Opening Plan, including, but not limited to, direct sales, media and direct mail advertising, promotion, publicity and public relations designed to attract customers to the Riverboat from and after the Commencement Date. (c) Manager shall recruit, hire, provide orientation to and train all executive and general staff of the Riverboat, including all personnel to be utilized during the period from the date hereof until the Commencement Date in accordance with the Pre- Opening Plan. (d) Manager shall prepare and deliver to Owner a list of all Operating Supplies necessary to operate the Casino and Owner shall timely purchase the initial inventories for the Casino and the Riverboat. Section 3.08 PAYMENT OF PRE-OPENING EXPENSES. The cost of the Pre-Opening Expenses shall be paid by Owner. Pre-Opening Expenses and the time schedule for incurring such expense shall be established in the Pre-Opening Budget and Pre- Opening Plan. Owner shall deposit such sums to fund the Pre- Opening Expenses in accordance with the schedules as shall be established by the parties in the Pre-Opening Plan and Pre- Opening Budget and Owner shall maintain sufficient funds therein to timely provide for any and all Pre-Opening Expenses. ARTICLE 4. OPERATIONS Section 4.01 ACCOUNTING PROCEDURES AND SERVICES BOOKS AND RECORDS. Manager shall use its best efforts to cause Owner's employees to maintain a complete accounting system in connection with the operation of the Riverboat. The books and records shall be kept in accordance with generally accepted accounting principles consistently applied and in accordance with federal tax laws. Such books and records shall be kept on a calendar year basis. Books and accounts shall be maintained at the Riverboat. Manager shall use its best efforts to cause Owner to comply with all requirements with respect to internal controls in accounting and Owner shall prepare and provide all required reports under the rules and regulations of the Riverboat Authorities regarding the operations of the Riverboat. The cost of preparing such reports shall be an Operating Expense. All operating bank accounts shall be maintained in the state of Missouri. Section 4.02 OWNER'S ACCESS TO GAMING FINANCIAL RECORDS. Owner, at its option and at its sole cost and expense, may engage and appoint a representative to review, examine, and copy the gaming books and records, including all daily reports, prepared by Manager detailing the results of operations of Manager's business conducted from the Riverboat during regular business hours. Any representative's review, examination and copying shall be conducted in such a manner so as to not be disruptive to Manager's operations. Such representative shall at all times be bound by Owner's confidentiality covenant contained in Section 16.05 hereof. Section 4.03 AUDITS. Owner shall engage a certified public accountant to audit the operations of the Riverboat as of and at the end of each calendar year (or portion thereof) occurring after the date of this Agreement (the "Audited Statements") by a nationally recognized reputable accounting firm ("Regular Auditor"), and a sufficient number of copies of the Audited Statements shall be furnished to Owner and Manager as soon as available to permit Owner and Manager to meet any public reporting requirements as may be applicable to them, but in no event later than ninety (90) days following the end of such fiscal period (such 90th day to be the "Audit Day"). All costs and expenses incurred in connection with the preparation of the Audited Statements shall be Operating Expenses. Nothing herein contained shall prevent either party from designating an additional reputable accounting firm ("Special Auditor") to conduct an audit of the Riverboat as of the end of the calendar year during regular business hours at the requesting party's expense; provided, however, that if the additional audit shall reveal a discrepancy within the control of Manager in the computation of Gross Gaming Revenue of more than 5% from the audit performed by the Regular Auditor, then the special audit shall be paid for by Manager. In the event of any dispute between the Regular Auditor and the Special Auditor as to any item subject to audit, the Regular Auditor and the Special Auditor shall select a third national, reputable accounting firm whose resolution of such dispute shall bind the parties. Section 4.04 MONTHLY FINANCIAL STATEMENTS. On or before the thirtieth (30th) day of each month, Owner shall prepare under the supervision of Manager an unaudited operating statement for the preceding calendar month detailing the Gross Revenue and expenses incurred in the operation of the Riverboat (the "Monthly Financial Statements"). The Monthly Financial Statements shall include a statement detailing drop figure accounts on all Gross Gaming Revenue. Section 4.05 EXPENSES. All costs, expenses, funding or operating deficits and Operating Capital, real property and personal property taxes, insurance premiums and other liabilities incurred due to the gaming and nongaming operations of the Riverboat shall be the sole and exclusive financial responsibility of Owner, except for those instances herein where it is expressly and specifically stated that such costs and expenses shall be the responsibility of Manager. It is understood that statements herein indicating that Manager shall furnish, provide or otherwise supply, present or contribute items or services hereunder shall not be interpreted or construed to mean that Manager is liable or responsible to fund or pay for such items or services, except in those instances specifically mentioned herein. Section 4.06 STANDARDS. (a) Manager shall exclusively manage and maintain the Riverboat in a manner reasonably consistent with other riverboat gaming operators in the management of riverboat casinos of the same or similar type, class and quality, located in Missouri subject to such adjustments as Manager in its reasonable discretion deems necessary to adjust to the Lemay, Missouri riverboat gaming market. Manager shall establish such standards and procedures in its reasonable business judgment, subject only to standards and procedures required by law. (b) Owner hereby agrees that Manager shall have uninterrupted control of and the exclusive responsibility for the operation of the Riverboat during the Term of this Agreement. Owner will not interfere or involve itself with the day-to-day operation of the Riverboat, and Manager shall operate the Riverboat free of eviction or disturbance by Owner or any third party claiming by, through or under Owner. Manager agrees that it will discharge its duties and responsibilities in the control and operation of the Casino in good faith and for the purposes of maximizing Gross Gaming Revenue; provided, however, that in no event shall Owner make any claim against Manager on account of any alleged errors of judgment made in good faith in connection with the operation of the Riverboat. Manager agrees that, notwithstanding the foregoing, it shall not alter the interior and exterior design and architecture, including color schemes of the Casino, nor make any structural engineering modifications without the prior written consent of Owner. (c) All persons employed in connection with the operations of the Riverboat, including the Casino located therein, shall be employees of Owner or a subsidiary of Owner, except for Manager's Management Team. Manager shall determine the fitness and qualifications of all Casino employees, whether Owner employees or Manager's Management Team, subject only to Missouri riverboat gaming licensing standards. Manager shall hire, supervise, direct the work of, and discharge all personnel working in the Riverboat. Manager shall determine the wages and conditions of employment of all employees, all of which shall be comparable to the existing standards therefor in Missouri for employees of riverboat casinos. Manager and Owner shall consult, and if Owner approves, Manager may hire at Owner's expense consultants or independent contractors for surveillance, security and other matters. All wages, bonuses, compensation and entitlements of employees of the Riverboat and the Manager's Management Team (although not employees of the Riverboat), shall be an expense of Owner. (d) Manager shall assign experienced gaming executives to direct and supervise the management of the Riverboat (the "Manager's Management Team"). Manager shall solely select individuals who shall collectively represent Manager's Management Team. (e) Manager shall formulate, coordinate and implement promotions and sales programs for casino operations on the Riverboat and Owner shall cause the Riverboat to participate in such sales and promotional campaigns and, as appropriate, activities involving complimentary food and beverages to patrons of the Riverboat in Manager's sole discretion in the exercise of good management practice. All such promotion and sales programs shall be an expense of Owner. Section 4.07 PLANS AND BUDGETS. (a) Manager shall furnish Owner with the Operating Budget within thirty (30) days of the Effective Date of this Agreement. Manager shall use its best efforts to comply with the Operating Budget to meet or exceed the goals set forth therein. (b) Owner shall approve or disapprove the Operating Budget within twenty (20) days of receipt of the budget, provided that if Owner does not give written notice to Manager of its approval or disapproval within such time period, the Operating Budget shall be deemed approved. Owner's approval of the Operating Budget cannot be unreasonably withheld or delayed. Owner may hire a consultant to evaluate the Operating Budget. In the event that Owner disagrees with any line item contained in the Operating Budget, Owner shall discuss its disagreement with Manager. Manager will, within ten (10) days of notice of Owner's disagreement, offer constructive corrections to resolve Owner's concerns. During any period that Owner disapproves of the Operating Budget, Manager will continue to manage the Riverboat in accordance with the Operating Budget for the preceding year plus ten percent (10%), as the same may be adjusted for increases year-to-year in the Consumer Price Index applicable to the St. Louis area. (c) The Operating Budget may be amended from time to time with Owner's and Manager's approval, which approvals shall not be unreasonably withheld or delayed, after submission by Manager or Owner, as applicable, of the amendments to such budget and the rationale for such amendments. (d) Manager and Owner make no guaranty, warranty or representation whatsoever in regard to either of the Operating Budget, the same being intended as reasonable estimates only. (e) Manager shall furnish Owner with the Initial Inventory and the Initial Inventory Price on or before ____________, 1995. Section 4.08 MANAGEMENT. Manager shall have the discretion and authority to determine operating policies and procedures, standards of operating, staffing levels and organization, win payment arrangements, standards of service and maintenance, food and beverage quality and service, pricing, and other policies affecting the Riverboat, or the operation thereof, to implement all such policies and procedures, and to perform any act on behalf of Owner which Manager deems necessary or desirable in its reasonable business judgment for the operation and maintenance of the Riverboat on behalf of, for the account of, and at the expense of Owner. Section 4.09 BANK ACCOUNTS. Immediately upon giving written notice to Manager of the Commencement Date, Owner shall have established bank accounts that are necessary for the operation of the Riverboat, including an account for the Casino Bankroll, and to effect the Pre-Opening Plan at various banking institutions chosen by Owner and reasonably acceptable to Manager (such accounts are hereinafter collectively referred to as the "Bank Accounts"). The Bank Accounts shall be in Owner's name. Checks drawn on the Bank Accounts shall be signed only by representatives of Manager who are covered by the fidelity insurance described in Section 10.01 and Manager may be the only signatures on checks drawn on the Bank Accounts which do not exceed $50,000. Any checks exceeding $50,000 shall be executed by a representative of Owner and a representative of Manager. The Bank Accounts shall be interest bearing accounts if such accounts are reasonably available and all interest thereon shall be credited to the Bank Accounts. All Gross Revenue shall be deposited in the Bank Accounts and Manager shall use its best efforts to cause Owner to pay out of the Bank Accounts, to the extent of the funds therein, from time to time, all Operating Expenses and other amounts required by Manager to perform its obligations under this Agreement. All funds in the Bank Accounts shall be separate from any other funds of any of Owner's Affiliates and Owner may not commingle any of Owner's funds with the funds of any of Owner's Affiliates in the Bank Accounts. Owner shall bear the risk of the insolvency of any financial institutions holding such Bank Accounts. Section 4.10 CREDIT. If permitted by Missouri law, all decisions regarding the granting and collection of credit shall be governed by the Credit Policy to be developed by Manager and Owner. All credit consistent with the Credit Policy shall be for the account of and at the sole risk of Owner. Section 4.11 OWNER'S ADVANCES. Owner shall advance to Manager on a timely and prompt basis immediately available funds to conduct the affairs of the Riverboat and maintain the Riverboat (hereinafter referred to as "Owner's Advances") as set forth in this Agreement and as otherwise provided hereunder. (a) Pre-Opening Budget. Owner shall timely deposit in the Bank Accounts the amounts set forth in the Pre-Opening Plan and Pre-Opening Budget or any revisions thereof approved by Owner. In the event that Owner or Manager anticipates a delay in the opening of the Riverboat beyond October, 1996, each shall be obligated to immediately notify the other in writing and Owner shall, at the request of Manager, at any time and from time to time, deposit any additional amounts that are reasonably necessary to pay the additional pre-opening expenses attributable to the delay, which shall include, without limitation, wages and other expenses relating to the Riverboat personnel already employed. (b) Initial Cash Needs. Two (2) weeks prior to the Commencement Date, Owner shall fund the Operating Capital necessary to commence operating the Riverboat, in an amount not to exceed the estimated operating expenses for eight (8) weeks, as set forth in the Operating Budget, and an amount equal to the Casino Bankroll. (c) Operating Capital. During the Term of this Agreement, within five (5) Business Days after receipt of written notice from Manager, Owner shall fund Owner's Advances in such a fashion so as to adequately insure that the Operating Capital set forth in the Operating Budget as revised is sufficient to support the uninterrupted and efficient ongoing operation of the Riverboat. The written request for any additional Operating Capital shall be submitted by Manager to Owner on a monthly basis based on the interim statements and the Operating Budget as revised. (d) Payment of Expenses. Owner shall pay from the Gross Revenue the following items in the order of priority listed below, subject to the laws of the state of Missouri, on or before their applicable due date: (i) Operating Expenses (including taxes and Management Fee), (ii) emergency expenditures to correct a condition of an emergency nature, including structural repairs, which require immediate repairs to preserve and protect the Riverboat, (iii) required payments to the state of Missouri, and (iv) principal, interest and other payments due the holder of any Institutional Mortgage. In the event that funds are not available for payment of the Operating Expenses in their entirety all state and local taxes shall be paid first from the available funds. Failure to pay the Management Fee in accordance with the time periods set forth in this Agreement shall constitute a default of this Agreement. Section 4.12 SPECIAL EVENTS. Owner shall have the right from time to time to use a portion of the Riverboat to host special events (each, a "Special Event") provided (i) Owner gives Manager at least two (2) weeks prior written notice of the Special Event and (ii) the Special Event does not unreasonably interfere with the efficient operation of the Riverboat. Manager shall have the right to make revisions to the Operating Budget to reflect the impact of such events, subject to Owner's approval. Section 4.13 COOPERATION OF OWNER AND MANAGER. Owner and Manager shall cooperate fully with each other during the Term of this Agreement to facilitate the performance by Manager of Manager's obligations and responsibilities set forth in this Agreement and to procure and maintain all construction and operating permits. Owner shall provide Manager with such information pertaining to the Riverboat necessary to the performance by Manager of its obligations hereunder as may be reasonably and specifically requested by Manager from time to time. Section 4.14 FINANCING MATTERS. (a) If Owner, or any Affiliate of Owner shall, at any time, sell or offer to sell any securities issued by Owner or any Affiliate of Owner through the medium of any prospectus or otherwise and which relates to the Riverboat or its operation, it shall do so only in compliance with all applicable laws, and shall clearly disclose to all purchasers and offerees that, except to the extent of Manager or its Affiliates' interest in Owner, (i) neither Manager nor any of its Affiliates, officers, directors, agents or employees shall in any way be deemed to be an issuer or underwriter of such securities, and (ii) Manager and its Affiliates, officers, directors, agents and employees have not assumed and shall not have any liability arising out of or related to the sale or offer of such securities, including without limitation, any liability or responsibility for any financial statements, projections or other information contained in any prospectus or similar written or oral communication. Manager shall have the right to approve any description of Manager or its Affiliates, or any description of this Agreement or of Owner's relationship with Manager hereunder, which may be contained in any prospectus or other communications, and Owner agrees to furnish copies of all such materials to Manager for such purposes not less than twenty (20) days prior to the delivery thereof to any prospective purchaser or offeree. Owner agrees to indemnify, defend or hold Manager and its Affiliates, officers, directors, agents and employees, free and harmless from any and all liabilities, costs, damages, claims or expenses arising out of or related to the breach of Owner's obligations under this Section 4.14. Manager agrees to reasonably cooperate with Owner in the preparation of such agreements and offerings. (b) Notwithstanding the above restrictions, subject to Manager's right of review set forth in Section 4.14, Owner may represent that the Riverboat shall be managed by Manager and Manager may represent that it manages the Riverboat and both may describe the terms of this Agreement and the physical characteristics of the Riverboat in regulatory filings and public or private offerings. Moreover, nothing in this Section shall preclude the disclosure of (i) already public information, or (ii) audited or unaudited financial statements from the Riverboat required by the terms of this Agreement or (iii) any information or documents required to be disclosed to or filed with the Governmental Authorities, or (iv) the amount of the Management Fees earned in any period. Both parties shall use their best efforts to consult with the other concerning disclosures as to the Riverboat. Owner and Manager shall cooperate with each other in providing financial information concerning the Riverboat and Manager that may be required by any lender or required by any Governmental Authority. (c) In the event that the holder of any Institutional Mortgage requires the collateral assignment of this Agreement as further security for its loan, Manager shall consent to such assignment; provided, however, that such collateral assignment shall contain non-disturbance provisions satisfactory to Manager and provided further that in no event shall Manager be required to accept any reduction or subordination of its Management Fee and Incentive Management Fee or to diminish any right which it may have under this Agreement. Section 4.15 CONFLICT OF INTEREST/NON-COMPETITION. Owner acknowledges that Manager and/or its Affiliates operate other casinos in Missouri and throughout the world and may in the future operate additional casinos in different areas of the world, and that marketing efforts may cross over in the same markets and with respect to the same potential customer base. Manager, in the course of managing the Casino, may refer customers of the Riverboat and other parties to other facilities operated by Affiliates of Manager to utilize gaming, entertainment and other amenities, without payment of any fees to Owner. Owner consents to such activities and agrees that such activities will not constitute a conflict of interest. Owner acknowledges and agrees that Manager may distribute promotional materials for Manager's Affiliates and facilities, including casinos, at the Riverboat. Either Manager or Owner and/or their Affiliates in the future may acquire an interest or operate other casinos, including, without limitation, any similar or competitive riverboat operation in Missouri, so long as such casino is not within the boundaries as shown on the map attached hereto as Exhibit "A". ARTICLE 5. MANAGEMENT FEE Section 5.01 PAYMENTS TO MANAGER. The Management Fee shall be paid monthly. Manager shall deposit the Management Fee into the Management Fee Account for any calendar month in which the Riverboat conducts gaming operations by the twentieth (20th) day of the following month. The Management Fee shall be deemed paid upon deposit in the Management Fee Account. ARTICLE 6. MANAGER'S RIGHT OF FIRST REFUSAL TO MANAGE RIVERBOAT In the event that Owner transfers the Riverboat to conduct a gaming business in a new location or locations other than on the Casino Site, Owner hereby grants to Manager a right of first refusal to manage the gaming operations of the Riverboat at such new location. Should Owner determine to so relocate the Riverboat, Owner shall immediately submit to Manager in writing the terms of the management agreement acceptable to Owner. Owner covenants and agrees that the terms for the management agreement for such relocated Riverboat shall be substantially similar to the terms hereof, with such changes as are necessary to reflect the appropriate laws and regulations governing gaming operations at such new location. The offer or terms submitted hereby shall be accompanied by a written notice giving Manager a first right to manage the relocated Riverboat within the time provided in such offer, but in no event less than thirty (30) days of the date upon which Manager receives from Owner notification of such terms. If Manager elects to exercise its right of first refusal, Manager shall give Owner written notice thereof within thirty (30) days of receipt of the notification from Owner and Manager and Owner shall prepare and execute a management agreement for such relocated Riverboat within sixty (60) days following Owner's receipt of acceptance by Manager. ARTICLE 7. TAXES AND ASSESSMENTS, AND PAYMENTS TO THE RIVERBOAT AUTHORITIES Section 7.01 PAYMENT OF TAXES AND ASSESSMENTS. Owner shall be responsible for the payment when due, if any, of all taxes and assessments, including, without limitation, property taxes, assessments for benefits from public works or improvements, levies, fees, Gaming Taxes, and all other governmental charges, general or special, ordinary or extraordinary, foreseen or unforeseen, together with interest and penalties thereon, which may heretofore or hereafter be levied upon or assessed against the Riverboat. All charges set forth in this Section 7.01 are herein called "Impositions." If any Impositions are levied or assessed against the Riverboat which may be legally paid in installments, Owner shall have the option to pay such Impositions in installments except that each installment thereof, and any interest thereon, must be paid by the final date fixed for the payment thereof. In the event of the enactment, adoption or enforcement by any Governmental Authorities or Riverboat Authorities of any assessment, levy, fee or tax, whether sales, use or otherwise, on or in respect of the Management Fee and charges set forth herein, Owner shall pay such assessment, levy, fee or tax. Section 7.02 EXCEPTIONS. Nothing contained in this Agreement shall be construed to require Owner to pay any estate, inheritance or succession tax, corporate franchise tax or any net income or excess profits tax of Manager. ARTICLE 8. USE AND OCCUPANCY OF THE CASINO Section 8.01 USES. Manager agrees to manage the Riverboat continuously during the Term hereof only for the purpose of legally operating a gaming casino establishment and related ancillary services. Manager and Owner shall not use or allow the Riverboat or any part thereof to be used or occupied for any unlawful purpose or for any dangerous or other trade or business not customarily deemed acceptable to relevant casinos. In no event may Manager or Owner conduct ancillary uses which violate the Missouri Gaming Act. In addition, Manager shall not knowingly permit any unlawful occupation, business or trade to be conducted on the Riverboat or any use to be made of the Casino contrary to any law, ordinance or regulation as aforesaid with respect thereto. Section 8.02 NAME. Manager or its Affiliates (excluding Owner) are the owners of the trademark "Showboat," its logos, trademarks, tradenames, service marks, and any variation or extension of such name (collectively "Trademark"). Manager shall operate the Riverboat under the Trademark, and shall grant to Owner a non-exclusive personal and non-transferable right to use the Trademark in Lemay, Missouri in connection with the operation of the Riverboat, pursuant to a trademark license agreement satisfactory to Manager or its Affiliates. Notwithstanding the foregoing, Owner acknowledges that its use of the Trademark shall not create in Owner's favor any right, title, or interest in or to the Trademark, but all rights of ownership and control of the Trademark shall reside solely in Manager or its Affiliates. ARTICLE 9. MAINTENANCE AND REPAIRS Section 9.01 OWNER'S MAINTENANCE AND REPAIRS. Owner, at its cost, shall maintain, in good condition and repair, the following: (a) The structural parts of the Riverboat; (b) The electrical, plumbing, and sewage systems of the Riverboat; (c) Heating, ventilating, and air conditioning systems servicing the Riverboat. Owner shall have ten (10) days after notice pursuant to Article 22 from Manager to commence to perform its obligations under Section 9.01, except that (i) Owner shall perform its obligations immediately upon receipt of oral notice from Manager if the nature of the problem presents a hazard or emergency; or (ii) Owner shall perform and complete its obligations within twelve (12) hours after receipt of written or oral notice from Manager if the nature of the problem interferes with gaming operations in the Casino. If Owner does not perform its obligations within the time limitations in this Section, Manager may perform the obligations of Owner and have the right to be reimbursed for the sum it actually expends in the performance of Owner's obligations. Any amounts paid by Manager shall be due from Owner on the first (lst) day of the month occurring after any such payment, with interest at the rate of twelve percent (12%) per annum from the date of payment thereof by Manager until repayment thereof by Owner. ARTICLE 10. INSURANCE AND INDEMNITY Section 10.01 OWNER INSURANCE OBLIGATIONS. Owner covenants and agrees that it will at all times stated herein, at its sole cost and expense, of this Agreement, keep the Riverboat insured, with: (a) appropriate marine hull insurance coverage forms to provide coverage for all risks as is traditionally covered by such insurance. The marine hull insurance shall contain full repair and replacement coverage and against all risks as now are or hereafter may be available by extended coverage form or endorsements in an amount not less than one hundred percent (100%) of the full insurable replacement value of the Vessel. Owner shall obtain such marine hull insurance coverage at the time that it obtains possession of the Vessel, and Owner shall maintain such insurance thereafter until the termination of this Agreement. (b) full repair and replacement coverage endorsements, against all risks including, but not limited to, ice, floods and earthquakes, and against loss or damage by such other, further and additional risks as now are or hereafter may be available by standard extended coverage forms or endorsements in an amount sufficient to prevent Manager or Owner from becoming a co-insurer of any loss, but in no event in an amount less than one hundred percent (100%) of the full insurable replacement value of the Riverboat. So long as Owner is not in default under this Agreement, all proceeds of insurance not otherwise applied for the purpose of repairing, replacing or restoring the damage insured against or applied to an Institutional Mortgage shall be paid over to Owner. Owner shall obtain such insurance coverage at the time that it obtains possession of the Riverboat (exclusive of the Vessel), and Owner shall maintain such insurance thereafter until the termination of this Agreement. (c) general comprehensive public liability insurance including Broad Form Liability coverage (including coverage for false arrest, wrongful detention and invasion of privacy, and coverage for elevators, if any, on the Riverboat) against claims for bodily injury, death or property damage occurring on, in or about the Riverboat, the ancillary facilities and the adjoining streets, sidewalks and passageways, such insurance to afford protection, with respect to any one occurrence, of not less than $1,000,000 and no less than $5,000,000 in the aggregate or such higher amount as Owner and Manager may from time to time reasonably agree to be maintained, which insurance shall also cover Owner's liability under any indemnity contained herein, it being understood that the standard of reasonableness shall be that amount of insurance which a prudent owner of a comparable property would maintain. Owner shall also obtain and maintain a $40,000,000 umbrella liability policy in excess of the general comprehensive public liability policy. Owner shall obtain such general comprehensive public liability insurance at the time that Owner employs its first employee, and Owner shall maintain such insurance until the termination of this Agreement. (d) adequate boiler and pressure vessel insurance on all equipment, parts thereof and appurtenances attached or connected to the Riverboat which by reason of their use or existence are capable of bursting, erupting, collapsing or exploding. Owner shall obtain such insurance at the time that it obtains possession of the Vessel, and Owner shall maintain such insurance thereafter until the termination of this Agreement. (e) war-risk insurance as and when such insurance is obtainable from the United States Government or any agency or instrumentality thereof, and a state of war or national or public emergency exists or threatens, in an amount not less than the 90% of the replacement value of the Riverboat. (f) such other insurance as Owner and Manager may from time to time reasonably agree to be maintained or as may be required by lenders of Owner in such amounts and against such insurable hazards which at the time is customary in the case of businesses similarly situated. (g) for the mutual benefit of Owner and Manager, maintain liquor liability insurance in an amount to be determined by Owner, covering Manager and Owner under any liquor liability laws which may currently be in existence or which may hereafter be enacted as they would be applicable to Manager's operations of the Riverboat. Owner shall obtain such insurance on or before the Commencement Date, and Owner shall maintain such insurance until the termination of the Agreement. (h) all required workmen's compensation insurance or equivalent Missouri industrial accident coverage, or coverages required by the federal maritime act (a\k\a Jones Act). Owner shall obtain such insurance at the time that Owner employs its first employee, and Owner shall maintain such insurance until the termination of this Agreement. (i) business interruption resulting from losses covered under policies covering land-based buildings and marine water borne hull will be required in an amount sufficient to protect losses for a period of six (6) months. Owner shall obtain such insurance on or before the Commencement Date, and Owner shall maintain such insurance until the termination of this Agreement. (j) crime insurance which includes fidelity and such other crime coverages as may be desired in the amount of $5,000,000. Owner shall obtain such insurance at the time that Owner employs its first employee, and Owner shall maintain such insurance until the termination of this Agreement. Section 10.02 PARTIES INSURED. The policies with respect to such insurance as described in Section 10.01 shall name Owner and Manager as parties insured thereby and such policies shall require all insurance proceeds except for liability and third party insurance to be paid to a Trustee as designated pursuant to Article 13. Such policies shall also contain, when requested by Owner or Manager, a mortgagee clause or clauses naming the mortgagee or mortgagees involved and/or the holder or such mortgage or mortgages as parties insured thereby (in the form required by such mortgagee or mortgagees) all as their respective interests may appear and with loss payable provisions accordingly. Section 10.03 APPROVED INSURANCE COMPANIES. Insurance procured under this Article 10 shall be placed with reputable, financially sound insurance companies, with a Best guide rating of A-10 admitted in the state of Missouri, acceptable to Owner and Manager, as the parties may mutually agree. Section 10.04 APPROVAL OF INSURANCE COVERAGE. Each year, Owner shall submit to Manager a summary of the insurance coverage maintained by Owner (including deductibles) with respect to the Riverboat and Manager shall have thirty (30) days thereafter to give its comments thereon to Owner. If Owner receives no written comments from Manager within said period, the insurance program shall be deemed approved for that year. Section 10.05 FAILURE TO OBTAIN REQUIRED INSURANCE. In the event Owner shall at any time fail, neglect, or refuse to maintain any of the insurance required under the provisions of this Article 10, then Manager may procure or renew such insurance, and any amounts paid therefor by Manager shall be due from Owner on the first day of the month occurring after any such payment, with interest at the rate of twelve percent (12%) per annum from the date of payment thereof by Manager until repayment thereof to Manager by Owner. Section 10.06 WAIVER OF SUBROGATION. As long as the insurer of a party is willing to include a waiver of subrogation in the policies insuring against the loss or damages referred to in this Article 10 without an extra charge, the parties shall cause the waiver of subrogation to be included in the policies. If an insurer of a party is willing to include a waiver of subrogation in an insurance policy only if an extra charge is paid, the party carrying the insurance shall be required to cause the waiver of subrogation to be included in the policy only if the other party pays the extra charge. Section 10.07 MUTUAL COOPERATION. Owner shall cooperate with Manager to the extent Manager may reasonably require, and Manager shall cooperate with Owner to the extent Owner may reasonably require in connection with the prosecution or defense of any action or proceeding arising out of, or for the collection of any insurance proceeds and will execute and deliver to Owner or Manager, as the case may be, such instruments as may be properly required to facilitate the recovery of any insurance proceeds (including the endorsement by Owner or Manager over to the Trustee of all checks evidencing said insurance proceeds). Section 10.08 DELIVERY OF INSURANCE POLICIES. Owner shall deliver, as applicable, promptly after the execution and delivery of this Agreement the original or duplicate policies or certificates of insurers satisfactory to Manager evidencing all the insurance which is then required to be maintained by Owner hereunder. Owner shall, within thirty (30) days prior to the expiration of any such insurance, deliver to Manager original or duplicate policies or other certificates of the insurers evidencing the renewal of such insurance. Section 10.09 INDEMNIFICATION BY MANAGER. Manager covenants and agrees that it will protect, keep and defend Owner forever harmless and indemnified against and from any penalty or damage or charges imposed for any violation of any laws or ordinances including, but not limited to, gaming statutes and regulations, whether occasioned by the neglect of Manager or those holding under Manager, and that Manager will at all times protect, indemnify and save and keep 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 failure of Manager in any respect to comply with and perform all the requirements and provisions hereof except where any penalty, damage, charges, loss, cost or expense is caused by the sole or negligent or the wanton or willful acts of Owner's directors, officers, employees, agents or stockholders. 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 Owner forever harmless and indemnified against any and all debt, claim, demand, suit or obligation of every kind, character and description which may be asserted, claimed, filed or brought against Owner where such claim arises out of or is asserted in connection with Manager's management of the Casino, including 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 Riverboat. Section 10.10 INDEMNIFICATION BY OWNER. Owner covenants and agrees that it will 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, but not limited to, gaming statutes and regulations, whether occasioned by the neglect of Owner or those holding under Owner, and that Owner will at all times protect, indemnify, defend and save and keep harmless Manager 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 failure of Owner in any respect to comply with and perform all the requirements and provisions hereof except where any penalty, damage, charges, loss, cost or expense is caused by the negligent or the wanton or willful acts of Manager's officers, agents, employees or stockholders. Without limiting the generality of the foregoing, and with the inclusion of the same exceptions as set forth above, Owner covenants and agrees 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 which may be asserted, claimed, filed or brought against Manager where such claim arises out of or is asserted in connection with Owner's ownership of the Riverboat. This indemnity does not apply to loss or damage occasioned by defects in the Riverboat. Section 10.11 SELECTION OF COUNSEL/CONDUCT OF LITIGATION. Defense counsel engaged by Manager or Owner, as indemnitor, shall be reasonably acceptable to Manager and 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. ARTICLE 11. CASUALTY In case of any damage or loss to the Riverboat by reason of fire or otherwise, Manager shall give immediate notice thereof to Owner. If the Riverboat shall at any time be damaged or destroyed by fire or otherwise, Owner shall at its sole option either (i) promptly repair or rebuild same at Owner's expense, so as to make the Riverboat at least equal in value to the Riverboat existing immediately prior to such occurrence and as nearly similar to it in quality and character as shall be practicable and reasonable or (ii) if dockside gaming is permitted under the laws of the state of Missouri, promptly construct a barge in compliance with all regulations of the Riverboat Authorities. Owner shall submit for Manager's approval, which approval Manager shall not unreasonably withhold or delay, complete detailed plans and specifications for such rebuilding or construction. Promptly after receiving Manager's approval of said plans and specifications, Owner shall begin such repairs and rebuilding and shall prosecute the same to completion with diligence, subject, however, to strikes, lockouts, acts of God, embargoes, governmental restrictions, and other foreseeable causes beyond the reasonable control of Owner. Insofar as a certificate of occupancy may be necessary with respect to such repairs or construction, Owner shall obtain a temporary or final certificate of occupancy or similar certificate before the Riverboat shall be occupied by Manager. Such repairs, rebuilding or construction shall be completed free and clear of mechanics' or other liens, in accordance with the building code and all applicable laws, ordinances, regulations or orders of any state, municipal or other public authority affecting the same. ARTICLE 12. TAKING OF THE RIVERBOAT Section 12.01 DEFINITIONS. (a) "Permanent Taking" means the permanent taking (more than one year) of, or permanent damage to, property as a result of the exercise of a power of eminent domain or purchase under the threat of the exercise. (b) "Temporary Taking" means the temporary taking (one year or less) of, or temporary damage to, property as a result of the exercise of a power of eminent domain or purchase under the threat of the exercise. (c) "Taking Date" means the date on which a condemning authority shall have the right of possession of property pursuant to a Permanent Taking or a Temporary Taking. (d) "Award" means the award for, or proceeds of, a taking less all fees and expenses incurred in connection with collecting the award or proceeds including the reasonable fees and disbursements of attorneys, appraisers, and expert witnesses. Section 12.02 ENTIRE TAKING OF THE SUPPORT AREAS. The following shall apply if all or a part of the Riverboat are taken pursuant to a Permanent Taking or a Temporary Taking: (a) Owner shall be entitled to any Award. (b) If all of the Riverboat is taken pursuant to a Permanent Taking, this Agreement shall be terminated as of the Taking Date. (c) If all or such portion of the Riverboat is taken pursuant to a Permanent Taking which renders it uneconomic to continue operation of the Riverboat in Manager's reasonable judgment, Manager shall have the option to terminate this Agreement by giving Owner notice of termination within ten (10) days after Owner gives Manager notice of the Permanent Taking. This Agreement will terminate five (5) days after Manager delivers its written termination notice to Owner. (d) If all or a part of the Riverboat is taken pursuant to a Temporary Taking, Manager shall have the option to terminate this Agreement by giving Owner notice of termination within ten (10) days after Owner gives Manager notice of the Temporary Taking. This Agreement will terminate five (5) days after Manager delivers its written termination notice to Owner. Section 12.03 DUTY TO RESTORE. If part of the Riverboat is taken pursuant to a Permanent Taking and this Agreement is not terminated, then Owner shall restore the Riverboat to an architectural unit as near as possible to its function and condition immediately prior to the Permanent Taking. The restoration shall begin promptly after the Taking Date and shall be prosecuted diligently. If a party shall have an option to terminate with respect to the Permanent Taking, then Owner may delay the beginning of the restoration until the option is waived or until the time within which the option may be exercised expires. ARTICLE 13. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS Section 13.01 TRUSTEE. If the Riverboat is encumbered by an Institutional Mortgage, the "Trustee" shall be the Institutional Mortgagee or a national bank designated by such mortgagee. If the Riverboat is not encumbered by an Mortgage, the "Trustee" shall be a commercial bank which maintains an office in the greater St. Louis metropolitan area and the total assets of which exceed $1 billion, and the Trustee shall be selected by Owner subject to the reasonable approval of Manager. An "Institutional Mortgage" is a Mortgage granted to an Institution. An "Institution" is a bank, insurance company, trust company, savings and loan association, real estate investment trust, pension trust, governmental entity or similar institution. An "Institutional Mortgagee" is the holder of Mortgage of Owner's interest in the Riverboat. Section 13.02 DEPOSITS OF INSURANCE PROCEEDS AND AWARDS. In the event this Agreement is not terminated all insurance proceeds and Awards shall be paid to the Trustee. If this Agreement is terminated, all Insurance Proceeds and Awards shall be paid to Owner and Manager as their interests may apply. All funds paid to the Trustee shall be held by the Trustee, and the Trustee shall disburse them solely in accordance with this Article. Section 13.03 PROCEDURE FOR DISTRIBUTION OF INSURANCE PROCEEDS AND AWARDS. The following shall apply unless this Agreement is terminated and the termination is not nullified. (a) The Trustee shall make payments to Owner or Manager, as appropriate, out of the insurance proceeds or Awards to be applied to the cost of repair or restoration. The payments shall be made as the repair or restoration progresses. (b) The Trustee shall comply with the following requirements which shall be contained in escrow instructions, if required by the Trustee, with respect to the payments: (i) The Trustee shall not make payments more frequently than once each month. (ii) Until the repair or restoration is complete, the Trustee shall make no payment unless the sum of the payment requested and all previous payments shall be less than ninety percent (90%) of the cost of the repair or restoration to date. (iii) The Trustee shall make no payment unless the balance of the insurance proceeds or Awards shall be at least sufficient to complete the repair or restoration. (iv) The Trustee shall make no payment unless it receives a certificate of Owner or Manager, as appropriate, and a certificate of Owner's or Manager's architect or engineer, as appropriate, in accordance with part (c) of this subsection. (v) The Trustee shall receive, prior to any payment, a certificate from the Title Insurance Company stating that there are no liens filed of record. (c) The certificate of Owner or Manager shall be certified as true and correct by an officer of Owner or Manager and shall set forth the following information: (i) The estimated cost of the repair or restoration. (ii) The nature of the work to be done and the materials furnished which form the basis for the requested payments. (iii) That the requested payment does not exceed the reasonable cost of the work and materials. (iv) That none of the work or materials has been made the basis for any previous payment. (v) That, insofar as the work has been completed, the work complies with the requirements of this Agreement, applicable legal requirements, and insurance requirements. (vi) That all contractors, laborers, suppliers and subcontractors that have performed work shall have been paid any amount then payable to them. (d) The architect's or engineer's certificates shall be certified by an architect or engineer familiar with the work. The certificate shall be certified as true and correct to the best of the knowledge, information and belief of the architect or engineer and shall be based upon periodic on-site inspections of, and testing by, the architect or engineer. The architect or engineer selected by one party shall be reasonably satisfactory to the other party. The architect or engineer shall certify that, in the opinion of the architect or engineer, the Trustee shall have complied with the requirements of clauses (ii) and (iii) of part (b) of this subsection; shall verify that the statements set forth in clauses (iii), (iv) and (v) of part (c) of this subsection are true; and shall set forth the information required by clauses (i) and (ii) of part (c) of this subsection. (e) Any balance of insurance proceeds or Awards after the cost of any repair or restoration shall have been paid in full shall be paid to Owner or Manager, as their interests appear, and shall be the sole property of such party. ARTICLE 14. ASSIGNMENT AND SUBLETTING Except as provided in Section 4.14(c), neither Owner or Manager shall assign this Agreement or any interest therein without the prior written consent of the other party, which consent shall not be unreasonably withheld. However, Manager may assign or transfer this Agreement to any Affiliate, provided, that a counterpart original of such assignment is delivered to Owner on or before the effective date of such assignment, and provided further that such Affiliate expressly assumes and agrees to be bound by all of the terms and conditions of this Agreement. ARTICLE 15. AFFIRMATIVE COVENANTS OF MANAGER Manager hereby covenants and agrees that so long as this Agreement remains in effect: Section 15.01 CORPORATE STATUS. Manager shall preserve and maintain its corporate rights, franchises and privileges in Nevada and Missouri. Section 15.02 COMPLIANCE WITH LAWS. Manager shall comply in all material respects with all applicable laws, rules, regulations and orders of all states, counties, and municipalities in which such party conducts business related to the Riverboat, including, without limitation, any laws, rules, regulations, orders and requests for information of the Riverboat Authorities, the Nevada Gaming Authorities, the New Jersey Casino Control Commission, the Louisiana Gaming Division of State Police, and the New South Wales Casino Control Authority. Manager shall also follow applicable federal laws, rules, and regulations. Section 15.03 GAMING APPROVALS. Manager shall use its best efforts to obtain the approval of the Nevada Gaming Authorities, the New Jersey Casino Control Commission, the Louisiana Gaming Division of the State Police, and the New South Wales Casino Control Authority to permit it to conduct gaming operations in the state of Missouri and shall use its best efforts to secure and maintain such approvals necessary for the conduct of gaming operations at the Casino. Section 15.04 CONFIDENTIAL INFORMATION. Manager agrees for itself and its Affiliates, agents, representatives and consultants to hold in the strictest confidence and not to disclose to any person, entity, party, firm or corporation (other than agents or representatives of Manager who are also bound by this section) without the prior express written consent of Owner (except as such disclosures are required in applications or by applicable securities or gaming laws) any of Owner's confidential data, whether related to the Riverboat or to general business matters, which shall come into their possession or knowledge. In addition, Manager agrees that it shall cause all documents, drawings, plans or other materials developed by Owner in connection with the Riverboat to be returned to the Owner in the event of termination of this Agreement and that Manager shall not make use of such information in connection with the Riverboat or any other undertaking by Manager without the prior express written consent of Owner. Section 15.05 GAMING APPLICATIONS. Manager agrees to use its best efforts to expeditiously prepare and file all gaming license applications necessary for it to perform its obligations under this Agreement. ARTICLE 16. AFFIRMATIVE COVENANTS OF OWNER Owner hereby covenants and agrees that so long as this Agreement remains in effect: Section 16.01 CORPORATE STATUS. Owner shall preserve and maintain its corporate rights, franchises and privileges in Missouri, including without limitation its right to own a gaming establishment. Section 16.02 MAINTENANCE OF INSURANCE. Owner shall, in accordance with the provisions of Article 10 of this Agreement, maintain insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as are usually carried by companies engaged in similar business and owning similar properties in the same general area in which Owner operates, and which may be necessary to satisfy the requirements of Owner's lenders, as well as the mutual approvals and agreements of the parties hereto as is specified in Article 10 hereof. Section 16.03 COMPLIANCE WITH LAWS. Owner shall comply in all material respects with all applicable laws, rules, regulations and orders of all states, counties, and municipalities in which such party conducts business related to the Riverboat, including, without limitation, any laws, rules, regulations, orders and requests for information of the Riverboat Authorities, the Nevada Gaming Authorities, the New Jersey Casino Control Commission, the Louisiana Gaming Division of the State Police and the New South Wales Casino Control Authority. Owner shall also follow applicable federal laws, rules, and regulations. In connection with this Agreement, Owner acknowledges that certain casino gaming licenses are currently issued to and held by Manager's Affiliates by the States of Nevada, Louisiana and New Jersey, and the State of New South Wales, Australia, and Manager or its Affiliates may in the future apply for gaming licenses in additional states or foreign countries. The laws of such jurisdictions may require Manager or its Affiliates to disclose private or otherwise confidential information about Owner and its respective principals, lenders and Affiliates. Owner agrees to refrain from all conduct that may negatively affect such licenses or license applications. Owner further agrees that this Agreement shall terminate immediately at Manager's option if any representative, agent or Affiliate of Owner is required to be licensed, qualified or found suitable by Nevada, New Jersey, Louisiana, New South Wales or other gaming authority and is denied such status by such gaming authority; provided, however, that upon the termination of any such agreement, Owner shall be obligated to reimburse Manager immediately for any Management Fees and all other amounts due to Manager under this Agreement. Section 16.04 COOPERATION WITH GAMING AUTHORITIES. Owner shall use its best efforts to cause its officers, directors, employees and stockholders to provide any gaming authority which governs or may govern gaming facilities of Affiliates of Manager with necessary documents and information. Section 16.05 CONFIDENTIAL INFORMATION. Owner agrees for itself and its Affiliates, agents, representatives and consultants to hold in the strictest confidence and not to disclose to any person, entity, party, firm or corporation (other than agents or representatives of Owner who are also bound by this section) without the prior express written consent of Manager (except as such disclosures are required in applications or by applicable securities or gaming laws) any of Manager's confidential data, whether related to Riverboat or to general business matters, which shall come into their possession or knowledge. In addition, Owner agrees that it shall cause all documents, drawings, plans or other materials developed by Manager in connection with the Riverboat to be returned to the Manager in the event of termination of this Agreement and that Owner shall not make use of such information in connection with the Riverboat or any other undertaking by Owner without the prior express written consent of Manager. Section 16.06 COMPLIANCE WITH LOAN COVENANTS. Owner shall comply with and be bound by and shall not breach or default under any of the terms, covenants or provisions of any mortgage, loan, financing or debt covenant applicable to it. Section 16.07 NON-INTERFERENCE. Owner agrees and shall use its best efforts to cause its shareholders, directors, officers, and employees to not interfere with or attempt to influence Casino day-to-day operations (except in accordance with this Agreement). Section 16.08 GAMING APPLICATIONS. Owner agrees to use its best efforts to expeditiously prepare and file all gaming license applications necessary for it to perform its obligations under this Agreement. ARTICLE 17. REPRESENTATIONS AND WARRANTIES Section 17.01 OWNER CORPORATE STATUS. Owner represents and warrants that it is a general partnership duly organized, validly existing and in good standing under the laws of the state of Missouri and qualified to do business in Missouri, that Owner has full power and authority to enter into this Agreement and perform its obligations hereunder, and that the officers of Owner who executed this Agreement on behalf of Owner are in fact officers of Owner and have been duly authorized by Owner to execute this Agreement on its behalf. Futuresouth, Inc., as a general partner of Owner, represents and warrants that it is corporation duly organized, validly existing, and in good standing under the laws of the state of Missouri and is qualified to do business in Missouri, that it has full corporate power and authority to enter into this Agreement and to perform the obligations hereunder, and that the officer who executed this Agreement is in fact an officer of Futuresouth and has been duly authorized by Futuresouth to execute this Agreement on its behalf. Section 17.02 MANAGER CORPORATE STATUS. Manager represents and warrants that it is a corporation duly organized, validly existing and in good standing under the laws of the state of Nevada, and qualified to do business in the State of Missouri, that Manager has full corporate power and authority to enter into this Agreement and perform its obligations hereunder, and that the officers of Manager who executed this Agreement on behalf of Manager are in fact officers of Manager and have been duly authorized by Manager to execute this Agreement on its behalf. Section 17.03 AUTHORIZATION/NO CONFLICT. The execution, delivery and performance by Owner and Manager, as applicable, of this Agreement has been duly authorized by all necessary corporate action (including any necessary stockholder action) on the part of Owner and Manager, as applicable, and no further action or approval is required in order to constitute this Agreement as the valid and binding obligations of Owner and Manager, enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by Owner and Manager, as applicable, does not and will not (a) violate or conflict with any provisions of their respective Articles of incorporation or bylaws, or of any law, rule, regulation of the Riverboat Authorities, or any order, writ, judgment, decree, determination or award presently in effect having applicability to Owner or Manager; (b) result in a breach of any condition or provision of, or constitute a default under, any indenture, loan or credit agreement or any other agreement or instrument to which Owner or Manager is a party or by which Owner or Manager may be bound or affected; or (c) result in, or require, the creation or imposition of any lien, claim, charge or encumbrance of any nature upon or with respect to any of the properties now owned or hereafter acquired by Owner or Manager. Section 17.04 PERMITS/APPROVALS. Owner and Manager possess adequate franchises, licenses, permits, orders and approvals of all federal, state and local governmental or regulatory bodies required for them to carry on their businesses as presently conducted; all of such franchises, licenses, permits, orders and approvals are in full force and effect, and no suspension or cancellation of any of them is threatened; and none of such franchises, licenses, permits, orders or approvals will be adversely affected by the consummation of the transactions contemplated by this Agreement. Section 17.05 ACCURACY OF REPRESENTATIONS. No representation or warranty of Owner or Manager in this Agreement nor any information, exhibit, memorandum, schedule or report furnished by Owner or Manager in connection with this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements of fact contained therein not misleading. Section 17.06 DEVELOPMENT PLANS. Unless Owner is prevented or delayed from disclosing any such report or study by law or by any applicable rules or regulations of governmental agencies or bodies, Owner covenants to make available immediately or at the expiration of the restriction to Manager, or to Manager's authorized agents, any and all reports and feasibility studies related to the development of the Riverboat. Owner shall make such reports and studies available for copying by Manager, at Manager's expense. Unless Manager is prevented or delayed from disclosing any such report or study by law or by any applicable rules or regulations of governmental agencies or bodies, Manager covenants that it shall make available for copying by Owner any report or feasibility studies related to the Casino upon completion of the same upon the request of Owner. Section 17.07 MAINTENANCE OF GAMING AND OTHER LICENSES. Owner and Manager agree to provide the other party with copies of all applications, reports, letters, and other documents filed or provided to the Riverboat Authorities. Both parties agree to use their best efforts to secure and maintain any license needed for the operation of the Casino. Section 17.08 FINANCINGS; GOVERNMENTAL APPROVAL. Owner will use its best efforts to obtain financing and all necessary licenses, permits and approvals from various governmental authorities with respect to the construction of the Riverboat, if applicable. Section 17.09 CONDITION OF RIVERBOAT DURING TERM. During the Term of this Agreement, Owner shall maintain the Riverboat in first-class condition and repair. All areas of the Riverboat shall be adequately illuminated and adequately patrolled by security guards. Section 17.10 UTILITIES. At the time Manager takes possession of the Riverboat, all necessary utilities, including electricity, water, sewerage and gas, will be available. Section 17.11 IMPAIR REPUTATION. Owner will do nothing to embarrass or impair Manager's good name and reputation. Manager will do nothing to embarrass or impair Owner's good name and reputation. ARTICLE 18. ARBITRATION SECTION 18.01 APPOINTMENT OF ARBITRATORS. IF ANY DISPUTE SHALL ARISE OR IF ANY ISSUE LEFT OPEN HEREUNDER CANNOT BE RESOLVED BETWEEN THE PARTIES HERETO, SUCH DISPUTE IS TO BE REFERRED FIRST TO A COMMITTEE OF FOUR PERSONS WHO SHALL MEET IN AN ATTEMPT TO RESOLVE SAID DISPUTE OR OPEN ISSUE. THE COMMITTEE SHALL CONSIST OF TWO PERSONS APPOINTED BY OWNER AND TWO PERSONS APPOINTED BY MANAGER. IF AN AGREEMENT CANNOT BE REACHED TO RESOLVE THE DISPUTE BY THE COMMITTEE, THE DISPUTE OR OPEN ISSUE WILL BE RESOLVED BY BINDING ARBITRATION BEFORE ARBITRATORS HAVING NOT LESS THAN 10 YEARS EXPERIENCE IN THE GAMING INDUSTRY. ANY AWARD OF THE ARBITRATORS MAY BE FILED IN A COURT OF LAW AS A FINAL JUDGMENT. ANY SUCH ARBITRATION SHALL BE IN ACCORDANCE WITH THE RULES AND REGULATIONS ADOPTED BY THE AMERICAN ARBITRATION ASSOCIATION OR AS THE PARTIES OTHERWISE AGREE. EITHER PARTY MAY SERVE UPON THE OTHER PARTY A WRITTEN NOTICE OF THE DEMAND DISPUTE OR APPRAISAL TO BE RESOLVED PURSUANT TO THIS ARTICLE. WITHIN THIRTY (30) DAYS AFTER THE GIVING OF SUCH NOTICE, EACH OF THE PARTIES HERETO SHALL NOMINATE AND APPOINT AN ARBITRATOR (OR APPRAISER, AS THE CASE MAY BE) AND SHALL NOTIFY THE OTHER PARTY IN WRITING OF THE NAME AND ADDRESS OF THE ARBITRATOR SO CHOSEN. UPON THE APPOINTMENT OF THE TWO ARBITRATORS AS HEREINABOVE PROVIDED, SAID TWO ARBITRATORS SHALL FORTHWITH, WITHIN FIFTEEN (15) DAYS AFTER THE APPOINTMENT OF THE SECOND ARBITRATOR, AND BEFORE EXCHANGING VIEWS AS TO THE QUESTION AT ISSUE, APPOINT IN WRITING A THIRD ARBITRATOR ("SELECTED ARBITRATOR") AND GIVE WRITTEN NOTICE OF SUCH APPOINTMENT TO EACH OF THE PARTIES HERETO. IN THE EVENT THAT THE TWO ARBITRATORS SHALL FAIL TO APPOINT OR AGREE UPON THE SELECTED ARBITRATOR WITHIN SAID FIFTEEN (15) DAY PERIOD, THE SELECTED ARBITRATOR SHALL BE SELECTED BY THE PARTIES THEMSELVES IF THEY SO AGREE UPON SUCH SELECTED ARBITRATOR WITHIN A FURTHER PERIOD OF TEN (10) DAYS. IF A SELECTED ARBITRATOR SHALL NOT BE APPOINTED OR AGREED UPON WITHIN THE TIME HEREIN PROVIDED, THEN EITHER PARTY ON BEHALF OF BOTH MAY REQUEST SUCH APPOINTMENT BY THE AMERICAN ARBITRATION ASSOCIATION (OR ITS SUCCESSOR OR SIMILAR ORGANIZATION IF THE AMERICAN ARBITRATION ASSOCIATION IS NO LONGER IN EXISTENCE). OWNER AND MANAGER SHALL SHARE EQUALLY THE COST OF THE SELECTED ARBITRATOR. SAID ARBITRATORS SHALL BE SWORN FAITHFULLY AND FAIRLY TO DETERMINE THE QUESTION AT ISSUE. THE ARBITRATORS SHALL AFFORD TO OWNER AND MANAGER A HEARING AND THE RIGHT TO SUBMIT EVIDENCE, WITH THE PRIVILEGE OF CROSS-EXAMINATION, ON THE QUESTION AT ISSUE, AND SHALL WITH ALL POSSIBLE SPEED MAKE THEIR DETERMINATION IN WRITING AND SHALL GIVE NOTICE TO THE PARTIES HERETO OF SUCH DETERMINATION. THE CONCURRING DETERMINATION OF ANY TWO OF SAID THREE ARBITRATORS SHALL BE BINDING UPON THE PARTIES, OR, IN CASE OF NO TWO OF THE ARBITRATORS SHALL RENDER A CONCURRING DETERMINATION, THEN THE DETERMINATION OF THE SELECTED ARBITRATOR SHALL BE BINDING UPON THE PARTIES HERETO. EACH PARTY SHALL PAY THE FEES OF THE ARBITRATOR APPOINTED BY IT, AND THE FEES OF THE SELECTED ARBITRATOR SHALL BE DIVIDED EQUALLY BETWEEN OWNER AND MANAGER. Section 18.02 INABILITY TO ACT. In the event that an arbitrator appointed as aforesaid shall thereafter die or become unable or unwilling to act, his successor shall be appointed in the same manner provided in this Article for the appointment of the arbitrator so dying or becoming unable or unwilling to act. ARTICLE 19. DEFAULT/STEP-IN RIGHTS Section 19.01 DEFINITION. The occurrence of any one or more of the following events which is not cured within the time permitted shall constitute a default under this Agreement (hereinafter referred to as a "Default" or an "Event of Default") as to the party failing in the performance or effecting the breaching act. Section 19.02 MANAGER'S DEFAULTS. If Manager shall (a) fail to perform or materially comply with any of the covenants, agreements, terms or conditions contained in this Agreement applicable to Manager (other than monetary payments) and such failure shall continue for a period of thirty (30) days after written notice thereof from Owner to Manager specifying in detail the nature of such failure, or, in the case such failure is of a nature that it cannot, with due diligence and good faith, be cured within thirty (30) days, if Manager fails to proceed promptly and with all due diligence and in good faith to cure the same and thereafter to prosecute the curing of such failure to completion with all due diligence within ninety (90) days thereafter, or (b) take or fail to take any action to the extent required of Manager under this Agreement that creates a default under or breach of any Loan Document, any related contract or any requirement of the Riverboat Authorities, unless Manager cures such default or breach prior to the expiration of applicable notice, grace and cure periods, if any; provided, however, that Manager shall only be required to cure any defaults with respect to which Manager has a duty hereunder. If the only result of the failure by Manager to act is a monetary loss to Owner which is not otherwise capable of being cured by Manager, then Manager shall not be in Default if Manager reimburses Owner for such losses within ten (10) Business Days of incurring such loss or otherwise protects Owner against such loss in a manner reasonably acceptable to Owner. Section 19.03 STEP-IN RIGHTS. (a) If Owner funds are available, and Manager fails to pay when due any amount which it is Manager's responsibility to pay pursuant to this Agreement, then Owner, after five (5) Business Days written notice to Manager with respect to any Operating Expense, and with respect to non-Operating Expense with such notice, if any, as may be reasonable under the circumstances (except in the event that Manager has exposure to potential liability in connection with making such payments in which case Owner shall give Manager two (2) days written notice), and without waiving or releasing Manager from any responsibility of Manager hereunder, Owner may (but shall not be required to) pay such amounts (including fines, penalty, interest and late payment fees) and take all such action as may be necessary in respect thereof. Manager shall, following such payments by Owner, promptly reimburse Owner from the Bank Accounts to the extent funds are available the amount which Manager failed to pay when due. In addition, unless Manager has not acted with reasonable diligence in failing to make such payments then, to the extent that Manager's lack of reasonable diligence in this connection has resulted in fines, penalty, interest or late payment fees in excess of Twenty-Five Thousand Dollars ($25,000) in any twelve (12) month period, then Manager shall immediately disburse to Owner from Gross Revenue, following such payments by Owner, such amounts as may be necessary to reimburse Owner for such payments and Manager shall promptly deposit into the appropriate Bank Accounts, from Manager's own funds, the full amount of any fines, penalty, interest or late payment fees paid in connection therewith. (b) If Manager fails to take any action which it is Manager's responsibility under this Agreement to take and the result is to expose the Riverboat to a material loss or Riverboat patrons to a material risk of physical safety, then Owner, upon five (5) days written notice to Manager (except in any emergency in which case Owner shall give Manager such notice, if any, as is reasonable under the circumstances), without saving or releasing Manager from any obligation of Manager hereunder, may (but shall not be required to) take such actions as may be necessary to preserve Owner's assets from such a material loss and/or to protect the Riverboat patrons. Manager shall, following any payments by Owner made with respect to such actions, promptly reimburse Owner from the Bank Accounts, to the extent funds are available, the amount which Owner has expended. In addition, unless Manager has acted with reasonable diligence in failing to take such action then, to the extent that Manager's lack of reasonable diligence in this connection has resulted in fines or late payment fees in excess of Twenty-Five Thousand Dollars ($25,000) in any twelve month period, then Manager shall immediately disburse to Owner from Gross Revenue, following payment of such amounts by Owner, such amounts as are necessary to reimburse Owner for any fines or late payment fees by Owner in connection with taking such action on Manager's behalf and Manager shall also deposit into the appropriate Bank Account, from Manager's own funds, the full amount of such payment made to Owner. Section 19.04 OWNERS DEFAULT. If Owner shall (a) fail to make any monetary payment required under this Agreement (or other agreements between Owner and Manager or Manager's Affiliates), including, but not limited to, debt service, Management Fee or Owner's Advances, on or before the due date recited herein and said failure continues for five (5) Business Days after written notice from Manager specifying such failure, or (b) fail to perform or materially comply with any of the other covenants, agreements, terms or conditions contained in this Agreement (or other agreements between Owner and Manager or Manager's Affiliates) applicable to Owner (other than monetary payments) and such failure shall continue for a period of thirty (30) days after written notice thereof from Manager to Owner specifying in detail the nature of such failure, or, in the case such failure is of a nature that it cannot, with due diligence and good faith, cure within thirty (30) days, if Owner fails to proceed promptly and with all due diligence and in good faith to cure the same and thereafter to prosecute the curing of such failure to completion with all due diligence within ninety (90) days thereafter. Section 19.05 BANKRUPTCY. If either party (i) applies for or consents to the appointment of a receiver, trustee or liquidator of itself or any of its property, (ii) makes a general assignment for the benefit of creditors, (iii) is adjudicated a bankrupt or insolvent, or (iv) files a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors, takes advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation Law, or admits the material allegations of a petition filed against it in any proceedings under any such law. Section 19.06 REORGANIZATION/RECEIVER. If an order, judgment or decree is entered by any court of competent jurisdiction approving a petition seeking reorganization of Manager or Owner, as the case may be, or appointing a receiver, trustee or liquidator of Manager or Owner, as the case may be, or of all or a substantial part of any of the assets of Manager or Owner, as the case may be, and such order, judgment or decree continues unstayed and in effect for a period of sixty (60) days from the date of entry thereof. Section 19.07 DELAYS AND OMISSIONS. No delay or omission as to the exercise of any right or power accruing upon any Event of Default shall impair the non- defaulting party's exercise of any right or power or shall be construed to be a waiver of any Event of Default or acquiescence therein. Section 19.08 DISPUTES IN ARBITRATION. Notwithstanding the provisions of this Article 19, any occurrence which would otherwise constitute an Event of Default hereunder shall not constitute an Event of Default for so long as such dispute is subject to arbitration pursuant to the arbitration provisions of Article 18. ARTICLE 20. TERMINATION Section 20.01 TERMINATION EVENTS. This Agreement shall terminate upon the occurrence of the following: (a) on _________, 199_, in the event that Owner has not completed construction of the Riverboat in accordance with the regulations and specifications required by the Riverboat Authorities; (b) Owner fails to secure all appropriate licenses for itself and any of its employees for whom licenses are required prior to ____________, 1995; (c) Manager fails to secure all appropriate licenses for itself and any of its employees for whom licenses are required prior to ___________, 1995; (d) upon the effective date of passage of legislation making it unlawful to operate a riverboat casino in the state of Missouri or the entry of an order or judgment from a court of appropriate jurisdiction declaring such legislation unconstitutional or invalid under the laws of the state of Missouri (the termination shall be delayed if any court order is duly appealed and its effectiveness is suspended); (e) upon the occurrence of an Event of Default under this Agreement and the time to cure has lapsed; (f) upon Manager's failure to maintain all approvals from any gaming authority permitting Manager or its affiliates to conduct gaming in the state of Missouri; Section 20.02 NOTICE OF TERMINATION. In the event of an occurrence specified in Section 20.01(a)- (f), either Manager or Owner, as appropriate, shall terminate this Agreement by giving five (5) days written notice, and the Term of this Agreement shall expire by limitation at the expiration of said last day specified in the notice as if said date was the date herein originally fixed for the expiration of the Term. Section 20.03 REMEDIES UPON TERMINATION. (a) Prior to Commencing Gaming Operations. In the event that this Agreement is terminated prior to commencing gaming operations and if the termination is not the result of an Event of Default caused by Manager, Owner shall reimburse Manager all Manager Pre-Opening Expenses. (b) After Commencement of Gaming Operations. Owner shall pay to Manager all earned Management Fees plus any unpaid Manager Pre- Opening Expenses. Section 20.04 DELIVERY OF RIVERBOAT. Upon termination of this Agreement for any reason, Manager shall assign and transfer to Owner all of Manager's rights, title, and interest in and to all transferable licenses and permits with respect to the operation of the Riverboat, save and except the name "Showboat" which will and shall remain the property of Manager. Manager shall peacefully vacate the Riverboat. No signs or personalized property bearing the name "Showboat" shall be purchased or used by Owner without prior written arrangements between Owner and Manager, which may need a license from its parent company, Showboat, Inc. Upon surrender, any exterior signs inscribed with the name "Showboat" shall be removed as soon as is practicable, and in any event within fifteen (15) days of the date of termination. Additionally, any personalized property bearing the name "Showboat" (including without limitation, ashtrays, office supplies, linen, glassware, paper goods, promotional items, guest checks, uniforms, carpets, and upholstery) shall also be removed as soon as practicable, and in any event within thirty (30) days of the date of termination. ARTICLE 21. HAZARDOUS MATERIALS Section 21.01 NO HAZARDOUS MATERIALS. Owner represents and warrants to the best of Owner's knowledge that: (i) any handling, removing, transportation, storage, treatment or usage of Hazardous Materials or toxic substances that has occurred at the Casino Site to date 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 at the Casino Site to date; and (iii) the Casino Site is free of asbestos, toxic or Hazardous Materials as of the date that the term of this Agreement commences. Section 21.02 COMPLIANCE WITH LAWS. Owner agrees to comply with all federal, state and local environmental and real estate laws, including the Americans With Disabilities Act relating to Owner's construction, ownership, management and operation of the Riverboat. 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 Riverboat. All expenses incurred in such compliance shall be Operating Expenses. Section 21.03 INDEMNIFICATION. Owner agrees to indemnify, defend and hold Manager and its officers, employees and agents harmless from any claims, judgments, damages, penalties, fines, costs, liabilities (including sums paid in settlements of claims) or loss including reasonable attorneys' fees, consultant fees, and expert fees (consultants and experts to be selected by Manager) which arise during or after the Term as a result of any breach of Owner's representation and warranty contained in Section 21.01 or as a result of Owner's failure to perform its covenant contained in Section 21.02. Without limiting the generality of the foregoing, the indemnification provided by this Section 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 at the Casino Site, or the soil, groundwater or soil vapor on or under the Casino Site, unless the Hazardous Materials are present solely as a result of the actions of Manager, its officers, shareholders, employees or agents. The foregoing indemnity shall survive the expiration or earlier termination of this Agreement. Section 21.04 HAZARDOUS MATERIAL DEFINED. "Hazardous Material," as used in this Agreement, shall be construed in its broadest sense and shall include asbestos, other asbestotic material (which is currently or may be designated in the future as a Hazardous Material), any petroleum base products, pesticides, paints and solvents, polychlorinated biphenyl, lead, cyanide, DDT, acids, ammonium compounds and other chemical products (excluding commercially used cleaning materials in ordinary quantities) and 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 the Riverboat, the Casino Site or any support areas. ARTICLE 22. NOTICES All notices provided for in this Agreement or related to this Agreement, which either party desires to serve on the other, shall be in writing, and any and all notices or other papers or instruments related to this Agreement shall be deemed sufficiently served or delivered on the date of mailing if sent (i) by United States registered or certified mail (return receipt requested), postage prepaid, in an envelope properly sealed, (ii) by a facsimile transmission where written acknowledgment of receipt of such transmission is received, or (iii) by a nationally recognized overnight delivery service provided for receipted delivery, addressed as follows: Owner: Southboat Partnership 3630 S. Geyer Road St. Louis, Missouri 63127 Attention: Dennis P. Long with a copy to: Rick Barry, Esq. 6000 Maryland Avenue St. Louis, Missouri 63105 Manager: Showboat Operating Company 2800 Fremont Street Las Vegas, Nevada 89104 Attention: J. Kell Houssels, III with a copy to: Martha J. Ashcraft, Esq. Kummer Kaempfer Bonner & Renshaw 3800 Howard Hughes Parkway Seventh Floor Las Vegas, Nevada 89109 Either Owner or Manager may change the address or name of addressee applicable to subsequent notices (including copies of said notices as hereinafter provided) or instruments or other papers to be served upon or delivered to the other party, by giving notice to the other party as aforesaid, provided that notice of such change shall not be effective until the fifth (5th) day after mailing or facsimile transmission. ARTICLE 23. MISCELLANEOUS Section 23.01 TIME OF THE ESSENCE. Time is of the essence with respect to all time periods set forth in this Agreement. Section 23.02 HEIRS, SUCCESSORS, ASSIGNS. Except as otherwise provided herein, each provision hereof shall extend to and shall, as the case may require, bind and inure to the benefit of the parties' heirs, executors, administrators, permitted successors, permitted assigns and legal representatives. Owner and Manager understand and agree that, pursuant to that certain letter agreement dated May 1, 1995 by and between Futuresouth, Inc. and Showboat Lemay, Inc., Owner anticipates that it will be restructured as a limited partnership. Owner and Manager agree that such limited partnership is a permitted assignee under this Agreement, and that as of the date upon which such limited partnership agreement is executed, such limited partnership will assume all rights, duties and obligations of Owner under this Management Agreement. Section 23.03 CONSTRUCTION. All of the provisions of this Agreement shall be deemed and construed to be conditions as well as covenants as though in words specifically expressing or importing covenants and conditions for use in each separate provision hereof. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning, and not strictly for or against Owner or Manager. This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing the same to be drafted. Section 23.04 GOVERNING LAW. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Nevada without reference to its choice of law provisions. Section 23.05 SEVERABILITY. Should any portion of this Agreement be declared invalid or unenforceable, then such portion shall be deemed to be severed from this Agreement and shall not affect the remainder thereof. Section 23.06 RELATION OF THE PARTIES. Nothing in this Agreement shall be construed as creating a tenancy, ownership, limited partnership, joint venture, or any other relationship between the parties hereto other than as principal and agent. All debts and liabilities incurred by Manager within the scope of the authority granted and permitted hereunder in the course of its management and operation of the Riverboat shall be the debts and liabilities of Owner only, and Manager shall not be liable for such debts and liabilities except as specifically stated to the contrary herein. Section 23.07 NO BROKER OR FINDER. Each party represents to the other that it has not engaged any finder, broker or agent for whose commission or fee the other party could be liable. Each party covenants and agrees to indemnify and hold the other party free and harmless at all times in respect of any and all liabilities, actions, suits, proceedings, demands, assessments, judgments, costs and expenses, including attorneys fees, arising from, by reason of, or in connection with any fees, commissions or other compensation which shall be alleged to be due to any finder, broker, agent or other similar representative in connection with this transaction, if the person is found to have been engaged by either party or if such services are found to have been provided at the request of either party. Section 23.08 DEFAULT INTEREST RATE. Any sum accruing to Owner or Manager under this Agreement which shall not be paid when due shall bear interest at the rate of twelve percent (12%) per annum from the date such payment becomes due and payable until it is paid in full with said interest. Section 23.09 ATTORNEYS' FEES. Should either party institute an arbitration, action or proceeding to enforce any provisions hereof or for other relief due to an alleged breach of any provision of this Agreement, the prevailing party shall be entitled to receive from the other party all costs of the action or proceeding and reasonable attorneys fees. Section 23.10 ENTIRE AGREEMENT. This Agreement covers in full each and every agreement of every kind or nature whatsoever between the parties hereto concerning this Agreement, and all preliminary negotiations and agreements, whether verbal or written, of whatsoever kind or nature are merged herein. No oral agreement or implied covenant shall be held to vary the provisions hereof, any statute, law or custom to the contrary notwithstanding. Section 23.11 COUNTERPARTS. This Agreement may be executed in two or more counterparts and shall be deemed to have become effective when and only when all parties hereto have executed this Agreement, although it shall not be necessary that any single counterpart be signed by or on behalf of each of the parties hereto, and all such counterparts shall be deemed to constitute but one and the same instrument. Section 23.12 FORCE MAJEURE. Whenever this Agreement requires an act to be performed within a specified time period or to be completed diligently, such periods are subject to "unavoidable delays." Unavoidable delays include delays caused by acts of God, acts of war, civil commotions, riots, strikes, lockouts, acts of government in either its sovereign or contractual capacity, perturbation in telecommunications transmissions, inability to obtain suitable labor or materials, accident, fire, water damages, flood, earthquake, or other natural catastrophes. Section 23.13 NO WARRANTIES. Manager shall use its best efforts to render the services contemplated by this Agreement in good faith to Owner, but hereby explicitly disclaims any and all warranties, express or implied, including but not limited to the success or profitability of the Riverboat. Section 23.14 HEADINGS. Headings or captions have been inserted for convenience of reference only and are not to be construed or considered to be a part hereof and shall not in an way modify, restrict or amend any of the terms or provisions hereof. Section 23.15 WAIVER. The waiver by one party of any default or breach of any of the provisions, covenants or conditions hereof of the part of the other party to be kept and performed shall not be a waiver of any preceding or subsequent breach or any other provisions, covenants or conditions contained herein. THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES. DATED as of the day first above written. "Manager" "Owner" SHOWBOAT OPERATING COMPANY, SOUTHBOAT PARTNERSHIP, a Nevada corporation a Missouri general partnership By: FUTURESOUTH, INC., a Missouri corporation General Partner By: /s/ By: /s/ H. Gregory Nasky Dennis P. Long Its: Secretary Its: President ADMINISTRATIVE SERVICES AGREEMENT This Administrative Services Agreement ("Agreement ), dated as of the 2nd day of May, 1995, between Showboat Operating Company, a Nevada corporation whose principal office is located at 2800 Fremont Street, Las Vegas, Nevada 89104 ("Showboat"), and Southboat Partnership, a Missouri general partnership whose principal office is located at 3630 S. Geyer Road, St. Louis, Missouri 63127 ("Owner"). W I T N E S S E T H: WHEREAS, Showboat and its management are experienced in providing corporate administrative services to riverboat casinos and restaurant operations; and WHEREAS, Owner anticipates applying for a gaming license from the Missouri Gaming Commission ("MGC") to manage and operate a riverboat casino and ancillary facilities (collectively, the "Riverboat') on the Mississippi River in or near Lemay, Missouri; and WHEREAS, Owner has appointed Showboat as the manager and operator of the Riverboat; and WHEREAS, Owner desires to engage Showboat to render certain corporate administrative services to Owner in order for Owner to manage and operate the Riverboat all as more fully described herein; and WHEREAS, Showboat desires to render such services to Owner; and WHEREAS, the parties hereto are desirous of setting forth the terms of compensation for the services to be rendered by Showboat hereunder; and WHEREAS, pursuant to the Riverboat Gambling Act (Missouri 1993), Owner is permitted to enter into an Agreement with Showboat, providing for the payment of a percentage of revenues to be derived from the operation of the Riverboat; and NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties herein contained, the parties agree as follows: ARTICLE 1.0 - SERVICES TO BE PROVIDED 1.1. THE SERVICES. Upon the terms and conditions described herein, Showboat shall provide to Owner the corporate administrative services (the "Services") set forth in Exhibit A, which is attached hereto and made a part hereof. 1.2. CONTINUED OWNER PERFORMANCE. Any Services to be performed by Showboat hereunder shall not be performed as a substitute for Owner performance, but shall assist, support or supplement the routine functions and responsibilities of the employees, officers and managers of Owner. 1.3. SHOWBOAT PERSONNEL. All Showboat personnel engaged to render the Services shall remain the employees of Showboat, and Showboat shall be responsible for their compensation and for withholding federal or state income taxes. The costs and expenses incurred by Showboat for consultants, agents and independent contractors selected and engaged to perform Services for Owner shall be engaged directly by Owner and paid directly by Owner or reimbursed to Showboat upon demand. Any such consultants, agents and independent subcontractors shall separately invoice and account for Services to Owner. To the extent that Showboat itself or any Showboat personnel, other than consultants, agents and independent contractors, must be licensed or approved by the MGC, however, Owner shall bear the expense of obtaining such regulatory approvals and Showboat shall cooperate fully in order to obtain all necessary regulatory approvals. 1.4. SHOWBOAT PERFORMANCE/RESPONSIBILITY. Showboat undertakes to provide the Services hereunder with the same degree of care and diligence it uses in providing such Services for its own operations. In providing the Services hereunder, Showboat shall not be liable to Owner for errors or omissions hereunder except to the extent that such errors and omissions constitute gross negligence or willful misconduct. Under no circumstances shall any of Showboat's employees, officers, agents, directors, or stockholders be liable to Owner for any errors or omissions by Showboat hereunder. ARTICLE 2.0 - PAYMENT OF COMPENSATION 2.1. FEES. Owner shall pay to Showboat fees for the Services rendered hereunder equal to one percent (1%) of Owner's gross gaming revenue net of all gaming taxes. Owner shall pay such fees monthly on or before the twentieth (20th) day of the following month. "Gross gaming revenue" shall mean all revenue from the operation of the Casino. "Gaming taxes" shall mean any tax imposed by the State of Missouri on gross gaming revenue, including, without limitation, any state admissions tax (currently 20% of gross gaming revenue and $2.00 per customer). "Casino" shall mean those areas reserved for the operation of slot machines, table games, electronic games of chance, electronic games of skill and any other legal forms of gaming permitted under applicable law, and ancillary service areas, including reservations and admissions, cage, vault, count room, surveillance room and any other room or areas or activities therein regulated or taxed by the Missouri Gaming Commission by reason of gaming operations. Showboat and owner agree that the fees provided for by this Section 2.1 constitute their good faith determination of the fair market value of such services. 2.2. PARTIAL YEARS. Fees for partial fiscal years and months hereunder shall be prorated 2.3. TAXES. Showboat and Owner agree that in the event any tax or assessment (other than any such tax or assessment on income) is required to be paid as a result of the performance of the Services by Showboat hereunder, Owner shall be solely responsible for the payment of such tax or assessment. 2.4. FISCAL YEAR: BOOKS AND RECORDS. Owner shall keep at its usual place of business books and records relating to gross revenues and the payment to be made hereunder containing such true entries as may be necessary or proper to ascertain the amount of payments to be made to Showboat hereunder. Owner shall produce, during normal business hours, said books and records and make them available for inspection or audit by duly authorized agents of Showboat, shall permit such agents to make copies thereof, and shall give such information as may be necessary or proper to enable the amount of payment due hereunder to be ascertained and verified. ARTICLE 3.0 - TERM AND TERMINATION 3.1. TERM. The term of this Agreement shall begin as of the date hereof and shall continue until Showboat or its affiliates no longer hold an equity position in Owner or its successor. 3.2. FORCE MAJEURE. Neither party shall be liable in any manner for failure or delay of performance of all or any part of this Agreement, directly or indirectly, owing to an act of God, governmental orders or restrictions, strikes or other labor disturbances, riots, embargoes, revolutions, wars (declared or undeclared), sabotage, fires, floods, or any other causes or circumstances beyond the control of the parties. The party suffering such delay or failure shall give prompt notice to the other party and shall exert its best efforts to remove the causes or circumstances of nonperformance with all possible dispatch. If any of the causes or circumstances above continue for more than six (6) months, either party hereto may elect to terminate this Agreement by written notice to the other party. 3.3. ACCRUED PAYMENTS. Termination of the Agreement pursuant to Section 3.2 hereof shall not affect the right of Showboat to any fees accrued hereunder prior to the date of such termination. 3.4. REMEDIES. In the event that either party commits a material default of its obligations hereunder, the nondefaulting party may notify the defaulting party of such default. In the event that such default is not cured within thirty (30) days thereafter, the nondefaulting party shall be entitled to pursue any remedies available to it, including but not limited to, the termination of the Agreement upon notice to the defaulting party. ARTICLE 4.0 - GENERAL PROVISIONS 4.1. OTHER SERVICES. Nothing in this Agreement shall be construed to prohibit Showboat from undertaking to provide additional services to Owner not described in this Agreement or in the exhibits hereto on terms and conditions (including the fees therefore) satisfactory to each of Showboat and Owner. 4.2. INDEPENDENT PARTIES. Nothing in this Agreement shall be construed as creating a partnership or a joint venture between Showboat and Owner, or making either party an agent or employee of the other party, but in all of its operations hereunder Showboat shall be an independent contractor for Owner. No employee of Showboat who renders any service hereunder shall be considered, construed, or deemed to be an employee of Owner as a result thereof. 4.3. INTEGRATION, MODIFICATION AND WAIVER. This Agreement constitutes the entire agreement between Showboat and Owner pertaining to the subject matter hereof and supersedes all prior understandings of the parties. No supplement, modifications or amendment of this Agreement shall be binding upon either Showboat or Owner unless executed in writing by each of them. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 4.4. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the state of Nevada without giving effect to the conflict of laws principles thereof. 4.5 NOTICES. Any notice or other communication required or permitted under this Agreement shall be deemed given when: (a) it is personally delivered; (b) it is transmitted by telecopy, telex, or telegram with confirmation of receipt; (c) the day after it is sent by a nationally recognized overnight courier service; or (d) five (5) days after it is sent by United States mail with postage prepaid, addressed to the respective party at its address set forth in the first paragraph of this Agreement, attention: President if for Showboat or Partner if for Owner. Either party may change the address or telecopy number to which notices or other communications are to be given under this Agreement by furnishing the other party with written notice of such change in accordance with this Section 4.5. 4.6. BINDING EFFECT: ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Neither party may assign this Agreement or any of its rights or obligations under this Agreement without the prior written consent of the other party. Showboat and Owner understand and agree that, pursuant to that certain letter agreement by and between Futuresouth, Inc. and Showboat Lemay, Inc. dated May 1, 1995, it is anticipated that Owner will be restructured as a limited partnership under the laws of the state of Missouri. Showboat and Owner consent and agree that, under the terms and conditions of this provision, such new limited partnership is and shall be a permitted assignee, and that upon the execution of such limited partnership agreement, such limited partnership shall assume automatically all of the rights, duties and obligations of this Agreement. 4.7 HEADINGS. The headings used in this Agreement are for convenience of reference only and are not intended to affect the interpretation of this Agreement. 4.8. SEVERABILITY. If any provision of this Agreement or the application of any provision to any party or circumstance shall, to any extent, be adjudged invalid or unenforceable, the application of the remainder of such provision to such party or circumstance, the application of such provision to other parties or circumstances, and the application of the remainder of this Agreement shall not be affected thereby. Each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 4.9. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 4.10. NO THIRD PARTY BENEFICIARIES. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person or entity, other than the parties hereto, any rights or remedies under or by the reason of the Agreement. 4.11. NO WARRANTIES. Showboat shall use its best efforts to provide the services in good faith to Owner, but disclaims any and all warranties, express or implied, including, but not limited to, the success or profitability of the business conducted by Owner. Nothing contained herein shall be deemed to confer on Showboat the right or ability to manage Owner's business. Management of Owner's business shall solely be the function and responsibility of Owner. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their representatives thereunto duly authorized. SHOWBOAT OPERATING COMPANY, a Nevada corporation By: /s/H. Gregory Nasky H. Gregory Nasky Title: Secretary SOUTHBOAT PARTNERSHIP, a Missouri general partnership By: /s/Dennis P. Long Dennis P. Long Title: President EXHIBIT A SERVICES TO BE PROVIDED Pursuant to the Administrative Services Agreement entered into by the Parties, Owner engages Showboat to render, or cause to be rendered, the following corporate administrative services in connection with Owner's operations. 1. Human Resource services, including: provision of policy development and operating guidelines for standardization of operation philosophy and principles for employee management; and establishment of uniform controls for selection and licensing of key management personnel, compensation and benefits. 2. Accounting and financial services, including: development of standards and procedures for internal audits and supervision; review and evaluation of internal audits; assistance with the development of policies, standards and procedures for accounting and supervision; and, provision of technical accounting advisory services and review of financial statements and other accounting records maintained by Owner. 3. Data processing services, including: development of policies, standards and procedures governing data processing operations: assistance in the acquisition of software programs; coordination of hardware acquisitions; and, review and evaluation of data processing systems and operations. 4. Tax planning and compliance, including: review of federal and state income tax returns; review of estimated tax payments; and assistance in the coordination of Internal Revenue Service and state agency examinations. 5. General administrative services, including: consultation on selection of consultants for strategic planning efforts; assistance in the evaluation and acquisition of insurance policies and establishment of standards and policies related to all insurance-related matters; assistance in the development of standards and policies related to safety programs and supervision of such programs; and such other administrative services as may be appropriate. TRADEMARK LICENSE AGREEMENT THIS TRADEMARK LICENSE AGREEMENT (this "Agreement") made as of May 2, 1995, by and between Showboat, Inc., a Nevada corporation ("Licensor"), and Southboat Partnership, a Missouri general partnership ("Licensee"). RECITALS A. Licensor is the owner of the trademark "Showboat," its logos, trademarks, tradenames, service marks, and any variation or extension of such name ("Trademark"). B. Licensor and Licensee desire that the Licensee be permitted to use the Trademark in connection with the operation of a gaming riverboat (the "Riverboat") to be located on the Mississippi River in or near Lemay, Missouri (the "Territory"). Licensee is the owner of the Riverboat. OPERATIVE PROVISIONS In consideration of the recitals, covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Licensor and Licensee agree as follows: 1. LICENSE. The Licensor grants to the Licensee the non- exclusive, personal and nontransferable right to use the Trademark in the Territory in connection with the operation of the Riverboat. 2. OPERATION OF THE RIVERBOAT. The Licensee shall operate the Riverboat in a first-rate manner, consistent with the quality of other riverboat gaming operations in Missouri, and shall use the Trademark only in connection with the operations of the Riverboat, and the quality of the operations of the Riverboat shall be satisfactory to the Licensor, as determined in its sole discretion. 3. INSPECTION. The Licensee will permit duly authorized representatives of the Licensor to inspect, at all reasonable times, the operations of the Riverboat. 4. USE OF TRADEMARK. Whenever the Licensee uses the Trademark in advertising or in any other manner in connection with the Riverboat, the Licensee shall clearly indicate the Licensor's ownership of the Trademark. The Licensee shall provide the Licensor with samples of all signs, advertising, promotional material, literature, packages and labels prepared by or for the Licensee and intended to be used by Licensee. When using the Trademark under this Agreement, the Licensee undertakes to comply with all laws pertaining to trademarks in force at any time in the Territory. 5. REGISTRATION OF LICENSEE. If the law requires, or if requested by the Licensor or its duly authorized representative, the Licensee shall execute any such documents and to take such action as may be necessary to implement an application to register the Licensee as a Permitted User or to retain, enforce or defend the Trademark. 6. ASSIGNMENT OF LICENSE. The right granted in Paragraph 1 hereof shall not be transferable without the Licensor's prior written consent, which consent may be granted or withheld in Licensor's sole discretion. 7. INDEMNITY. The Licensor assumes no liability to the Licensee or to third parties with respect to the operations of the Riverboat, and the Licensee hereby defends, indemnifies and holds harmless the Licensor against all losses, damages and expenses, including attorneys' fees, incurred as a result of or related to claims of third persons arising out of the operations of the Riverboat. 8. TERM. (a) The term of this Agreement shall begin as of the date hereof and shall continue until Licensor or its affiliates no longer holds an equity position in Licensee or its successor. (b) If the Licensee or any sublicensee makes any assignment of assets or business for the benefit of creditors, or if a trustee or receiver is appointed to administer or conduct its business or affairs, or if it is adjudged in any legal proceeding to be either voluntary or involuntary bankrupt, then all the rights granted herein shall forthwith cease and terminate without prior notice or legal action by the Licensor and without any further obligation or liability to Licensor. (c) Should the Licensee fail to comply with any provision of this Agreement or Licensee's actions or failure to act in any way threaten, jeopardize or harm the Trademark, the Licensor may terminate this Agreement without prior notice or legal action and without any further obligation or liability to Licensor. The Licensor shall have the right to determine unilaterally whether or not the conditions envisioned by this subparagraph exist, and the Licensor's determination shall be final. (d) Notwithstanding anything to the contrary contained herein, Licensor may terminate this Agreement, at any time and for any reason whatsoever, in its sole and absolute discretion, provided that it shall first give the Licensee thirty (30) days prior written notice of the intended termination, with said termination to be effective thirty (30) days from the date of the notice, without any further obligation or liability to Licensor. 9. FEES. Licensee shall pay to Licensor fees for the use of the Trademark equal to two percent (2%) of Licensee's gross gaming revenue net of all gaming taxes. Licensee shall pay such fee monthly on or before the twentieth (20th) day of the following month. "Gross gaming revenue" shall mean all revenue from the operation of the Casino. "Gaming taxes" shall mean any tax imposed by the State of Missouri on gross gaming revenue, including, without limitation, any state admissions tax (currently 20% of gross gaming revenue and $2.00 per customer). "Casino" shall mean those areas of the Riverboat reserved for the operation of slot machines, table games, electronic games of chance, electronic games of skill and any other legal forms of gaming permitted under applicable law, and ancillary service areas, including reservations and admissions, cage, vault, count room, surveillance room and any other room or areas or activities therein regulated or taxed by the Missouri Gaming Commission by reason of gaming operations. Showboat and Randolph agree that the fees provided for by this Section 9 constitute their good faith determination of the fair market value of the use of the Trademark. 10. OWNERSHIP OF TRADEMARK. The Licensee acknowledges the Licensor's exclusive right, title, and interest in and to the Trademark including its trademarks, logos, service marks, and any variation or extensions thereof (collectively, "Showboat Intellectual Property" and will not at any time do or cause to be done any act or thing contesting or in any way impairing or tending to impair any part of such right, title, and interest. In connection with the use of the Trademark, the Licensee shall not in any manner represent that it has any ownership in the Trademark or registration hereof, and the Licensee acknowledges that use of the Trademark shall not create in the Licensee's favor any right, title, or interest in or to the Trademark, but all uses of the Trademark by the Licensee shall inure to the benefit of the Licensor. Upon termination of this Agreement in any manner provided herein, the Licensee will cease and desist from all use of the Trademark in any way (and will deliver up to the Licensor, or its duly authorized representatives, all material and papers upon which the Trademark appears), and the Licensee shall at no time adopt or use, without the Licensor's prior written consent, any word or mark which is likely to be similar to or confusing with the Trademark. 11. NOTICES. Any notices required or permitted to be given under this Agreement shall be deemed sufficiently given if mailed by certified mail, postage prepaid, addressed to the party to be notified at its address shown at the beginning of this Agreement, or at such other address as may be furnished in writing to the notifying party. IN WITNESS WHEREOF this Agreement has been executed as of the day and year first above written. "Licensor" "Licensee" SHOWBOAT, INC., SOUTHBOAT PARTNERSHIP, a Nevada corporation a Missouri general partnership By: FUTURESOUTH, INC. a Missouri corporation Its: General Partner By: /s/H. Gregory Nasky By: /s/Dennis P. Long H. Gregory Nasky Dennis P. Long Its: Secretary Its: President EX-10.03 4 EHIBIT 10.03 LEASE AND DEVELOPMENT AGREEMENT THIS LEASE AND DEVELOPMENT AGREEMENT (the "Lease") is made and entered into as of this 13 day of October, 1995 (the "Effective Date"), by and between the ST. LOUIS COUNTY PORT AUTHORITY, a public body corporate and politic of the State of Missouri ("Landlord"), and SOUTHBOAT LIMITED PARTNERSHIP, a Missouri limited partnership ("Tenant"); R E C I T A L S A. Landlord is the owner, subject to the Exceptions (defined below), of a certain approximately 80 acre parcel of real estate, together with the structures thereon, located in the Lemay area of St. Louis County, Missouri (the "County"), as described on ATTACHMENT A (the "Property"), consisting of a certain approximately 29 acre site depicted diagrammatically on ATTACHMENT B (the "Premises") and an approximately 51 acre site depicted diagrammatically on ATTACHMENT C (the "Adjacent Parcel"). B. Landlord has been created as a public body corporate and politic duly organized and existing pursuant to Chapter 68 of the Revised Statutes of Missouri and is charged with the responsibility of developing the riverfront area of the unincorporated portion of St. Louis County. In connection with such duties and responsibilities, to promote the general welfare, to encourage capital investment, and to increase the volume of commerce within the Lemay area and of the County generally, Landlord solicited the submission of proposals for development of a riverboat and/or barge-based gaming project on the Premises (the "Project"). C. Tenant submitted to Landlord and the St. Louis County Council (the "Council"), a certain Project proposal, which Project proposal was modified and supplemented by subsequent correspondence to Landlord and the Council (together, the "Project Proposal"). D. In order to induce acceptance of the Project Proposal by Landlord and the Council, Tenant agreed to apply to the Missouri Gaming Commission (the "Commission") for one or more licenses, as necessary, to operate the Project (including the Casino, as hereinafter defined) at and from the Premises ("Gaming Licensure"), to pay certain rentals to Landlord in consideration of the opportunity to develop and operate the Project, and to designate the County as the "home dock" for the Project, all as hereinafter set forth. E. In order to further induce Landlord and the Council to approve the Project Proposal, Showboat, Inc., a Nevada corporation ("Guarantor") and parent company of Showboat Lemay, Inc., a Missouri corporation and Tenant's general partner (the "General Partner"), agreed to issue its unconditional guarantees (together, the "Guarantees") of (i) payment of the hereinafter specified minimum rent for 15 years (the "Rent Guarantee") and (ii) timely completion of construction of and payment for all Project improvements and installations (the "Completion Guarantee"). F. In order to promote the economic development of the Lemay area and the County, and in consideration of the Project Proposal, the financial incentives to Landlord, the Guarantees, the special and unique qualifications of the Guarantor in the development and operation elsewhere of gaming projects, and the covenants and promises of the Tenant and the Guarantor under this Lease and the Guarantees, respectively, Landlord approved the Project Proposal, and the Council enacted Ordinance Number 17,593, as amended by Ordinance Number 17,739, in support of the Project Proposal and the execution, delivery and performance of this Lease. NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, Landlord and Tenant agree as follows: 1. EFFECTIVENESS OF LEASE. (a) DEMISE OF PREMISES. This Lease shall be deemed effective as of the Effective Date. Subject to the terms and conditions of this Lease, Landlord hereby demises and leases to Tenant, and Tenant hereby leases and takes from Landlord, the Premises, for the Term (as hereinafter defined). (b) LANDLORD'S OWNERSHIP. Landlord represents and warrants to Tenant that Landlord is the owner of the Premises, subject to the following matters (collectively, the "Exceptions"): (i) covenants, restrictions, easements, liens, encumbrances and any other matters of record affecting the Premises; (ii) present and future federal, state and local zoning and land use laws, ordinances and restrictions affecting the Premises or the use thereof; (iii) any state of facts which an accurate survey or an inspection of the Premises and the Mississippi River would show; (iv) special assessments now or hereafter becoming a lien against the Premises; and (v) general property taxes and assessments for the current and subsequent tax fiscal years affecting the Premises. (c) ESCROW AGREEMENT. On the date hereof, Landlord, Tenant and Guarantor have established an escrow account (the "Escrow") with Boatmen's Trust Company (the "Escrow Agent") pursuant to an agreement dated as of the date hereof by and among Landlord, Tenant, Guarantor and the Escrow Agent (the "Escrow Agreement"). Guarantor has deposited the Guarantees into the Escrow, and, not later than 5 business days after the Effective Date, Tenant shall deposit the $500,000 Acceptance Fee and the $750,000 Security Deposit (described in Section 7) into the Escrow. Such deliveries shall be held in trust by the Escrow Agent in accordance with the Escrow Agreement and the provisions of Sections 2 and 7 hereof. Landlord also acknowledges receipt of a copy of the commitment for Project financing obtained by Tenant in an amount not less than $75 million. 2. TENANT'S DUE DILIGENCE AND PRE-DEVELOPMENT WORK. (a) AS-IS DELIVERY OF PREMISES. Except as expressly provided in this Lease, Landlord makes no representation and provides no warranty to Tenant of any kind whatsoever regarding (i) the existence or nature of any Exceptions, (ii) the condition of the Premises or the Mississippi River (including, without limitation, any environmental matters), (iii) the suitability of the Premises for any aspect of the Project, or (iv) the feasibility of Tenant's development and operation of the Project on, at or from the Premises. Tenant acknowledges receipt from Landlord of the following: (i) an owner's policy of title insurance dated October 9, 1987 relating to the Property and issued by Ticor Title Insurance Company; (ii) a survey dated July 7, 1987 relating to the Property and prepared by Pitzman's & Co. Surveyors and Engineers, and (iii) certain environmental reports and studies conducted in respect of the Property dated January 30, 1981, March 12, 1981, January 1986 and June 1986, respectively, and prepared by Envirodyne Engineers, Inc. Tenant acknowledges that such materials have been provided solely for informational purposes to assist Tenant in Tenant's due diligence, that the same do not constitute representations or warranties by Landlord or the County, and that Tenant shall rely on Tenant's own evaluations, inspections and testing of the Property in determining the suitability of the Premises and the feasibility of the Project. (b) SATISFACTION OF CONDITIONS. Tenant shall have a period of one hundred twenty (120) days following the Effective Date (the "Due Diligence Period") within which to satisfy or waive certain conditions subsequent to the continuing effectiveness of this Lease. Such Conditions relate to the quality of Landlord's title to the Premises (the "Title and Survey Condition"), the rezoning of the Premises required by Tenant (the "Zoning Condition"), Tenant's approval of the environmental suitability of the Premises (the "Environmental Condition"), and Tenant's approval of the scope of certain offsite improvement work which Tenant is required to complete (the "Offsite Work Condition"), all as described in subsections (d) through (g) hereof (collectively, "the "Conditions"). During the Due Diligence Period, Landlord shall make reasonable efforts to locate all documents in its immediate possession relating to the Premises and the Adjacent Parcel and to make same available to Tenant for Tenant's examination (and copying, at Tenant's sole expense), at Landlord's offices during Landlord's regular office hours, subject to the same understandings and disclaimers as govern the delivery of the title policy, survey and environmental reports described in Section 2(a), and subject to the further understanding that Landlord makes no representation or warranty that any documents which are provided Tenant constitute the only documents in Landlord's possession or control relating to the Premises and/or the Adjacent Parcel. Except as provided in subsection (c) below, upon the expiration of the Due Diligence Period, as a condition to the continuing effectiveness of this Lease, and notwithstanding any extension of the Due Diligence Period agreed to by the parties, Tenant shall cause the Acceptance Fee to be released from the Escrow and delivered to Landlord. In the event Tenant fails to direct the Escrow Agent to deliver the Acceptance Fee to Landlord on or before the expiration of the Due Diligence Period, whether or not Tenant has satisfied or waived all or any of the Conditions, this Lease shall be void and of no further force or effect, the Acceptance Fee, Security Deposit and the Guarantees shall be released to Tenant, and neither party shall have any further obligation or liability to the other hereunder; provided, however, that if Tenant shall have withdrawn or abandoned Tenant's application for Gaming Licensure or for any Site Permits (as defined in Section 3(b)), or otherwise abandoned the Project, Landlord shall be entitled to recover the Security Deposit as liquidated damages for such withdrawal or abandonment. (c) TENANT'S ACCESS TO PREMISES. Tenant shall have access to the Premises (and with respect to satisfaction of the Title and Survey Condition under Section 2(d), to the Adjacent Parcel) at any and all times after the Effective Date for the purposes of enabling Tenant to accomplish work desired by Tenant, at Tenant's sole risk, cost and expense, with regard to the satisfaction of the Conditions, including, but not limited to, title work, surveying, environmental testing, evaluation and inspections of the Premises for determining the feasibility of the construction and operation of the Project, which inspections shall include, but shall not be limited to soil tests and subsurface borings (the "Predevelopment Work"). By undertaking whatever inspection, investigation or review concerning the Adjacent Parcel which Tenant deems necessary or appropriate, Tenant assumes no obligation or liability with respect to the Adjacent Parcel other than the direct costs and expenses associated with such inspection, investigation or review of the Title and Survey Condition of the Adjacent Parcel. It is understood and agreed that the environmental inspections to be conducted by Tenant shall include tests for hazardous substances including, but not limited to, oil drums or barrels, or other refuse, underground storage tanks, oil substances, printer's ink, or chemicals in the ground, or on or within the Premises, or within the water, asbestos, and other waste piles on or below the surface of the Premises. In the event Landlord or the County denies Tenant access to the Premises, Tenant shall have the right, by delivery of written notice to Landlord, to advise Landlord that Tenant is extending the Due Diligence Period one day for each day Landlord or the County has denied Tenant access to the Premises. (d) TITLE AND SURVEY CONDITION. On or before 30 days after the Effective Date, Tenant shall obtain, at Tenant's sole risk, cost and expense, copies of all Exceptions appearing in the commitment for a leasehold policy of title insurance issued to Tenant on the Effective Date and a survey of the Premises. In the event Tenant in its discretion objects to any matter contained in the commitment or to any of the Exceptions (including any survey matter or issue raised by such survey and any matter or issue pertaining to the Adjacent Parcel to the extent included or referenced in the commitment or survey), Tenant shall so advise Landlord within 15 days after the expiration of such 30 day period, whereupon Landlord shall have 10 days within which to advise Tenant whether Landlord will cure or remove the matter or Exception objected to by Tenant. If Landlord fails to timely notify Tenant that it will cure or remove the matter or Exception objected to by Tenant, or elects not to do so, Tenant shall have the option, if exercised by delivery of written notice to Landlord not later than 10 days after expiration of Landlord's 10 day response period, to cancel this Lease without further obligation or liability on the part of either party to the other (except that the Escrow Agent shall release the Guarantees, the Security Deposit and the Acceptance Fee to Tenant). All matters and Exceptions which are not objected to, or which are waived, by Tenant shall be deemed "Permitted Exceptions" for all purposes under this Lease. If Tenant fails to cancel this Lease within such 10 day period, Tenant's objection to such Exception or matter shall be deemed waived. (e) ZONING CONDITION. Within 30 days after the Effective Date, Landlord shall apply to the County Planning Commission for rezoning of the Premises to the "C-8" classification, so as to enable Tenant to construct and operate the Project as contemplated by Tenant in the Project Proposal at and from the Premises; provided, however that Landlord shall not be obligated to incur any out-of-pocket or third-party costs and expenses in connection with such application. Tenant shall provide to Landlord such information and documentation as may be necessary and appropriate to enable Landlord to apply for the rezoning. In the event the Premises is not so rezoned (or, if so rezoned, in the event the conditions of such rezoning are not acceptable to Tenant in its discretion) pursuant to County ordinance within 120 days after the Effective Date, Tenant shall have the option, if exercised by delivery of written notice to the other party not later than the expiration of such 120 period, to cancel this Lease without further obligation or liability on the part of either party to the other (except that the Escrow Agent shall release the Guarantees, the Security Deposit and the Acceptance Fee to Tenant). Tenant shall be responsible for providing the County Planning Commission with all information required of Tenant by the Commission. (f) ENVIRONMENTAL CONDITION. On or before 85 days after the Effective Date, Tenant shall conduct, at Tenant's sole risk, cost and expense, such inspections, investigations and evaluations of the Premises as Tenant may require in order to determine whether any hazardous waste, pollutant, toxic pollutant, extremely hazardous substance, toxic substance, infectious waste, solid waste or similar material or substance (collectively, "Hazardous Substances") shall have been released on or from the Premises. In the event Tenant in its discretion determines that Hazardous Substances may impair Tenant's development, construction, use or operation of the Project, create unacceptable risks of liability, or cause Project costs to exceed Tenant's Project budget, Tenant shall so advise Landlord in writing prior to the expiration of such 85 day period, whereupon Landlord shall have 20 days within which to advise Tenant whether Landlord will remediate the condition objected to by Tenant. If Landlord fails to timely notify Tenant that it will remediate the environmental condition objected to by Tenant, or elects not to do so, Tenant shall have the option, if exercised by delivery of written notice to Landlord not later than 15 days after expiration of Landlord's 20 day response period, to cancel this Lease without further obligation or liability on the part of either party to the other (except that the Escrow Agent shall release the Guarantees, the Security Deposit and the Acceptance Fee to Tenant). If Tenant fails to cancel this Lease within such 15 day period, Tenant shall be deemed to have accepted the environmental condition of the Premises, subject only to the provisions of Section 4(g). (g) OFFSITE WORK CONDITION. On or before 85 days after the Effective Date, Tenant shall, at Tenant's sole risk, cost and expense, but with the assistance and full cooperation of Landlord, conduct such inspections, investigations and evaluations of highway, traffic, general access and off-site improvement issues relating to the Premises and access to the Adjacent Parcel (collectively, the "Access Issues"), including without limitation the following issues: (i) whether the bridge to be constructed by Tenant will provide access solely to the Premises or whether it will service the Adjacent Parcel as well; (ii) whether additional road work will be required to provide alternative access to the Adjacent Parcel directly from Hoffmeister Road; and (iii) whether and subject to what requirements access to the Adjacent Parcel at the existing grade location will be continued during and/or after construction of the bridge. In the event Tenant in its discretion determines that such Access Issues may impair Tenant's development, construction, use or operation of the Project, or cause the cost of constructing the Project to exceed Tenant's maximum allowable budget to economically carry out the Project, or create unacceptable risk or liability, Tenant shall so advise Landlord in writing prior to the expiration of such 85 day period, whereupon Landlord shall have 20 days within which to advise Tenant whether Landlord will cure the condition objected to by Tenant. If Landlord fails to timely notify Tenant that it will remediate the Access Issue(s) objected to by Tenant, or elects not to do so, Tenant shall have the option, if exercised by delivery of written notice to Landlord not later than 15 days after expiration of Landlord's 20 day response period, to cancel this Lease without further obligation or liability on the part of either party to the other (except that the Escrow Agent shall release the Guarantees, the Security Deposit and the Acceptance Fee to Tenant). If Tenant fails to cancel this Lease within such 15 day period, Tenant shall be deemed to have accepted all Access Issues. (h) LANDLORD'S OBLIGATIONS. In connection with Tenant's review of matters relating to the Conditions, Landlord agrees to cooperate with Tenant and to use its best efforts to cure any objection raised by Tenant which Landlord, as owner of the Premises, has the ability to cure; provided, however, such "best efforts" shall not be deemed to require Landlord to undertake litigation or to pay monies to third parties or to Tenant. In electing to cure any objection raised by Tenant, Landlord shall advise Tenant concerning the manner and timing of such cure, and Tenant shall have the right to approve or disapprove such matters. Failure of the parties to agree as to the manner or timing of the cure offered by Landlord shall have the same effect as though Landlord had not offered to cure such objection. (i) ACCEPTANCE OF PREMISES. Tenant's satisfaction or waiver of each of the Conditions shall constitute Tenant's "AS IS" acceptance of the Premises, subject only, if applicable, to (i) the occurrence of the Commencement Date, as defined in Section 3(a), (ii) Landlord's full compliance with any commitment made by Landlord to satisfy any objection raised by Tenant, and (iii) any termination of this Lease occurring pursuant to Section 4(g). The date Tenant has accepted or is deemed to have accepted the Premises pursuant to this Section 2(i) shall be referred to herein as the "Acceptance Date." On the Acceptance Date, the $500,000 Acceptance Fee shall be unconditionally and irrevocably released to Landlord by the Escrow Agent, and the Guarantees and Security Deposit shall remain subject to Escrow until released to Landlord or Tenant in accordance with the provisions of Section 3. From and after the Effective Date, Landlord shall not subject the Premises to any liens or encumbrances not expressly permitted by this Lease without the prior written consent of Tenant. 3. TERM OF LEASE. (a) COMMENCEMENT DATE. The term of this Lease (the "Term") shall commence (the "Commencement Date") if at all, at such time as the following have occurred: (i) the Commission commences the investigation of Tenant (the "Investigation") incident to Tenant's application for Gaming Licensure (the "Investigation Date"); and (ii) Tenant has obtained all Site Permits (as defined in Section 3(b)) (the "Site Permit Date"). The Term shall expire on the 99th anniversary of the day prior to the Commencement Date. Each successive 12 month annual period occurring subsequent to the Commencement Date shall be deemed a "Lease Year" for all purposes under the Lease. Landlord and Tenant shall each execute a memorandum prepared by Landlord and reasonably acceptable to Tenant confirming the Commencement Date of this Lease, such memorandum to become an attachment to this Lease. (b) SITE PERMITS AND GAMING LICENSURE. As used in this Lease, the term "Site Permits" shall mean all permits or licenses issued by the U.S. Army Corps of Engineers (the "Corps") or by other governmental bodies to enable Tenant to commence dredging of the Mississippi River, and for site development, grading and excavation work on the Premises, including, without limitation, the Corps' Section 10 and 404 Permits, a flood plain development permit, a metro sewers and highway permit and a site plan approval permit, but excluding any building or construction permits required to enable Tenant to commence or complete the construction of Tenant's Project improvements or to occupy and operate the Project. Tenant shall make application for all Site Permits at the earliest practical opportunity, without regard to the status of the Investigation. Tenant shall use its best efforts to obtain the Site Permits and Gaming Licensure, and Landlord shall fully and actively support, endorse and diligently assist Tenant in such efforts, provided Landlord shall not be obligated to incur any out-of-pocket or third party expenses for Tenant's benefit or pay any monies to Tenant. Tenant agrees to file the application for Gaming Licensure with the Commission as promptly as possible after the Effective Date and in no event later than 30 days after the Effective Date, and to deliver to Landlord a copy of the transmittal correspondence for Tenant's application to the Commission and a copy of each and every material notice delivered to or received from the Commission by Tenant. As used in this subsection (b), a "material notice" shall be any notice substantively bearing upon the availability of Gaming Licensure or the Site Permits or affecting the occurrence of the Commencement Date or Project Opening. Tenant shall not withdraw Tenant's application for any of the Site Permits or for Gaming Licensure prior to any termination of this Lease. (c) EARLY DEFEASANCE OF LEASE. Landlord or Tenant shall have the right to terminate this Lease pursuant to subsection (d) if, for any reason other than an Unavoidable Delay (as defined in Section 30) or a delay caused by Landlord or the County, any of the following conditions occur: (i) notwithstanding Tenant's diligent pursuit of Gaming Licensure, if the Investigation Date has not occurred on or before the expiration of the 14 month period commencing on the Effective Date (the "Investigation Deadline") or Tenant reasonably determines, based on communications with or information received from the Commission staff, that the Commission will not commence the Investigation before the Investigation Deadline; or (ii) the Site Permit Date has not occurred on or before the expiration of the 9 month period commencing on the Investigation Date (the "Site Permit Deadline") or the Corps officially notifies Tenant that it will not permit the construction or operation of the Project as contemplated in this Lease; provided, however, in the event (i) the Investigation Date has timely occurred, (ii) Tenant has obtained all Site Permits other than the Site Permits to be issued by the Corps (or issuance of the remaining Site Permits is contingent solely on issuance of the Corps' Site Permits), and (iii) the Corps has not officially notified Tenant that it will not permit the operation of the Project at the Premises, Tenant shall have the option to extend the Site Permit Deadline for 3 successive periods of 60 days each by delivery of written notice of such election to Landlord not sooner than 30 days prior to, and not later than, the Site Permit Deadline; provided, however, Tenant has made diligent efforts to secure the Site Permits to be issued by the Corps and has cooperated with the Corps by responding in a reasonably timely fashion to requests for information or proposed plan changes from the Corps. (d) TERMINATION NOTICE. Termination of this Lease pursuant to subsection (c) shall be accomplished by delivery of written notice to the non-terminating party of such election on or before the Investigation Deadline or the Site Permit Deadline, as the case may be (a "Termination Notice"); provided, however, that no such Termination Notice shall be effective unless the terminating party shall have sent an initial notice advising the non-terminating party of its intent to terminate this Lease at least 30 days prior to the date of the Termination Notice. Upon the effective date of such termination, the Escrow Agent shall release the Guarantees and the Security Deposit to Tenant unless Tenant shall have withdrawn or abandoned Tenant's application for Gaming Licensure or for any of the Site Permits or otherwise abandoned the Project, in which event, the Security Deposit shall be subject to disposition in accordance with the terms of this Lease, notwithstanding any termination of this Lease. (e) POST-COMMENCEMENT DATE DEFEASANCE. From and after the Commencement Date, this Lease may be terminated solely upon the discovery of Hazardous Substances beneath the surface of the Premises not detected by Tenant during the Due Diligence Period and costing more than $3 million to remediate, or upon the repeal or invalidation of the law permitting gaming in the State of Missouri and consequent cessation of Tenant's business at the Premises, or upon the occurrence of a casualty or condemnation, or an Event of Default, all in accordance with the applicable provisions of Sections 4(g), 11(c), 15, 16 or 25, respectively. 4. PROJECT CONSTRUCTION AND DEVELOPMENT. (a) SUBMISSION AND APPROVAL OF PLANS. Prior to commencement of the Work, Tenant shall submit to Landlord for Landlord's approval, a final site plan, footprints, utility plans, exterior renderings, elevations and offsite improvement plans (together, the "Plans") and a proposed schedule of the Work (the "Work Schedule") for the construction and development of the Project on the Premises (the "Work"), including the riverboat or barge-based gaming facility and related installations (or, if permitted by the Commission, improvements and installations for dockside gaming) at the Premises (together, the "Casino"). Landlord's approval of the Plans shall not be unreasonably withheld or delayed. In all events, Landlord shall approve or disapprove any proposed Plans within 10 business days after Landlord's receipt of same, and any disapproval shall be specific as to the reasons. Tenant shall be given adequate time and opportunity to correct such matters which Landlord has identified as the basis for such disapproval. If Landlord does not approve or disapprove such Plans within 10 business days after Tenant's submission, then such Plans shall be deemed approved for all purposes under this Agreement. Landlord agrees that the Premises shall be subject to any utility easements referenced in the approved Plans and to execute such easement agreements for the benefit of the Project. Landlord's approval of the Plans shall not be deemed to constitute acceptance by Landlord of any liability in connection with the Plans or the Work, such liability and risk being expressly and exclusively borne by Tenant. Landlord shall not be deemed to be acting unreasonably in withholding its consent to the Plans proposed by Tenant if the Plans constitute a material change from the preliminary site plan set forth in ATTACHMENT D; provided, however, that roadway access to the Premises, as depicted on ATTACHMENT D, may be reconfigured by the parties in connection with Tenant's resolution of the Access Issues. The procedures set forth in this Section 4(a) shall apply with respect to any changes to the approved Plans proposed by Tenant. (b) CONSTRUCTION AND OCCUPANCY PERMIT APPLICATIONS. Tenant, at Tenant's sole cost and expense, shall apply for all permits required to enable Tenant to commence and complete the construction of Project improvements (the "Construction Permits") and to occupy and operate the Project (the "Occupancy Permits"), and Tenant shall prepare all engineering and construction documents required to apply for or comply with the terms of any Construction Permit. Landlord shall endorse and support Tenant's Permit applications to the extent the same are materially consistent with the approved Plans; provided Landlord shall not be required to incur any out-of-pocket or third-party costs or expenses in connection therewith. (c) DELIVERY OF PREMISES. The Premises shall be made available to Tenant for commencement of the Work from and after the Commencement Date, provided Tenant has first obtained such Permits (Site Permits or Construction Permits, as the case may be) as are necessary for commencement of the applicable Work, executed and delivered the necessary construction contracts, established the construction disbursing escrow and delivered to Landlord the insurance certificates, contract assignments, consents and bonds provided for in Section 4(e). Prior to commencing any Work on or at the Premises, Tenant, at Tenant's sole risk, cost and expense, shall cause a resubdivision plat and revised legal description of the Premises to be prepared by a licensed Missouri surveyor in accordance with ATTACHMENT B and submitted to Landlord for Landlord's review and approval, which approval shall not be unreasonably withheld. The legal description of the Premises shall become ATTACHMENT E to this Lease. The resubdivision plat shall be sufficient to enable Landlord to cause the Premises to be lawfully subdivided from the Adjacent Parcel and shall be consistent with Tenant's contemplated ingress and egress by the public to the Project and Tenant's access to service roads and work areas as shown on the Project design plans and renderings. Landlord agrees to cooperate fully with Tenant in connection with Tenant's preparation of the legal descriptions and resubdivision plat, but at no out-of-pocket or third-party cost or expense to Landlord, except that Landlord shall bear the cost of any surveying of the Adjacent Parcel required to effect the resubdivision and any other resubdivision costs allocable to the Adjacent Parcel, with any such allocation between Tenant and Landlord to be based on the relative size of the parcels unless the cost in question relates solely to one parcel. (d) COORDINATION AND INSPECTION OF WORK. Landlord shall have the right to inspect and monitor the progress of the Work during regular business hours, on reasonable prior notice to Tenant and without material interference with the Work. Tenant shall advise Landlord as to any material claim pending or threatened by or against Tenant or otherwise involving the Project and of any anticipated delays in Project Opening. Within 30 days after the Effective Date, Tenant and Landlord shall each designate one or more "Project Representatives" who shall provide liaison services between the Tenant and Guarantor and contractors and consultants working on the Project on one hand and Landlord and officials and departments of the County on the other. The Project Representatives shall confer by telephone and fax communication, and shall meet with each other regularly or otherwise on reasonable prior request for the purpose of conveying and obtaining information and approvals required in connection with the Work. Notices provided by Project Representatives shall be sent and received in accordance with the provisions of Section 29 regarding delivery of Notices. (e) THE WORK. After the Commencement Date, Tenant shall proceed with reasonable diligence to obtain all Construction Permits not theretofore obtained by Tenant, to commence and complete the Work in accordance with the Plans and, subject only to Unavoidable Delays and delays caused by Landlord or the County, the Work Schedule, and to obtain all Occupancy Permits and to open the Project (including the Casino) to the public ("Project Opening"). All Work shall be performed by Tenant at the sole risk, cost and expense of Tenant (i) in a first class, workmanlike manner, (ii) free of liens for labor and materials (subject to Tenant's right to contest liens as provided in this Lease), (iii) subject to commercial liability, builder's risk and worker's compensation insurance coverage required under this Lease, (iv) free of all other claims against Landlord or the Project (subject to Tenant's right to contest liens as provided in this Lease), (v) in compliance with the Permits and all applicable laws, regulations, ordinances and codes ("Governmental Requirements"), and (vi) as to the Work performed on the Premises only, (a) subject to fully-funded construction disbursing escrows with properly qualified, licensed and bonded contractors, and (b) pursuant to contracts permitting assignment of Tenant's interest thereunder to the Guarantor and the consent of the contractors to such assignment (collectively, the "Work Requirements"). Tenant shall be responsible for timely delivery to Landlord of all insurance certificates, construction contracts, bonds, construction disbursing escrows, collateral assignments of construction contracts and the contractors' consents thereto. Tenant shall deliver to Landlord a certificate of Substantial Completion of the Work issued by Tenant's architect, and Tenant shall provide evidence of payment of all construction costs. As used herein, "Substantial Completion" shall mean that only insubstantial details of finish construction and installation remain to be performed, and that the Project may nonetheless be opened to the public. Tenant agrees that all punch-list items shall be completed as soon as reasonably practical and in no event later than 180 days after Substantial Completion. Tenant shall deliver to Landlord a certificate of Final Completion issued by Tenant's architect and evidencing the completion of all punch-list items. (f) CONTROL OF WORK. Landlord and Tenant agree, subject to the provisions of the Project Proposal applicable to the employment or engagement of local persons or companies, minorities and women or companies owned by minorities and women, which provisions are hereby incorporated into this Lease by this reference, and subject further to applicable Governmental Requirements, that performance of the Work shall be subject to the following terms and conditions: (i) Tenant shall have the sole and exclusive right to select any architect, construction manager, general contractor and engineer in connection with the design and construction of the Project; (ii) Tenant shall have the sole and exclusive right to select any additional subcontractors, materialmen, suppliers or any other persons or companies in connection with the construction of the Project; and (iii) Tenant shall have the sole and exclusive right to manage, direct, control, coordinate and prosecute the completion of the Project, and Landlord shall cooperate fully in such regard, but at no cost or expense to Landlord. (g) UNDETECTED CONTAMINATION. In the event Tenant, after commencement of the Work and not later than the date of Project Opening, discovers Hazardous Substances beneath the surface of the Premises which were not detected during the Due Diligence Period or, if detected, the extent of which was not fully ascertained by Tenant's "Phase II" work during the Due Diligence Period, and which must be remediated in order to meet applicable Governmental Requirements, and in the event the cost to remediate such Hazardous Substances shall equal or exceed $3 million, Tenant shall have the option, by delivery of written notice to Landlord within 90 days after Tenant's discovery of such Hazardous Substances, accompanied by a written bid of Tenant's contractor confirming such $3 million or greater remediation cost, to terminate this Lease without further obligation or liability to Landlord, such termination to take effect no earlier than the date Tenant shall have (i) paid all costs incurred by Tenant in connection with the Work, (ii) installed warning signs and perimeter fencing to secure access to any area made dangerous by Tenant's excavations, and (iii) surrendered the Premises to Landlord, free and clear of Tenant's construction equipment and materials. Landlord shall not be obligated to refund to Tenant the Acceptance Fee, the Commencement Date Fee (defined in Section 5(a)(i)), or any prepaid Annual Rent, and Landlord's agreement with respect to the cure of any objection raised by Tenant shall be void and of no further force or effect. Tenant shall provide Landlord with copies of all reports, test results and evaluations of Hazardous Substances discovered beneath the Premises. (h) PROJECT OPENING. Upon, and as a condition to, Project Opening, Tenant shall pay the Project Opening Fee described in Section 5(a)(ii). On or before the date of Project Opening, the parties shall execute a memorandum prepared by Landlord and reasonably acceptable to Tenant establishing the Project Opening date (and the date payments of Minimum Rent or Percentage Rent, as the case may be, shall be due under Section 5), which memorandum shall become an attachment to this Lease. 5. RENT. (a) KEY DATE PAYMENTS AND ANNUAL RENT. Tenant shall pay to Landlord, without setoff or deduction, by corporate or cashiers check or by wire transfer as directed by Landlord in immediately available U.S. funds, the following rentals (collectively, "Rent"): (i) $2.5 million on the Commencement Date (the "Commencement Date Fee"); (ii) $2.5 million on the date of Project Opening (the "Project Opening Fee"); and (iii) as annual rent ("Annual Rent"), (A) commencing on the Commencement Date and continuing until the date of Project Opening, $2 million per annum, payable in equal monthly installments, and (B) commencing on the date of Project Opening and continuing until the expiration of the Term, the greater of (a) 4% of Adjusted Gross Receipts ("AGR") ("Percentage Rent") or (b) applicable Minimum Rent. (b) MINIMUM RENT. As used in this Lease, the term "Minimum Rent" shall mean $3 million during the 1st 12 month period occurring after Project Opening, $2.8 million during the 2nd 12 month period occurring after Project Opening, $2.6 million during the 3rd 12 month period occurring after Project Opening, $2.4 million during the 4th 12 month period occurring after Project Opening, $2.2 during the 5th 12 month period occurring after Project Opening, and $2 million commencing on the 5th anniversary of the date of Project Opening and continuing through Lease Year 15. Minimum Rent shall be increased by 10% on the first day of each successive 10th Lease Year occurring during the Term, commencing with Lease Year 16. (c) PAYMENT OF ANNUAL RENT. From the Commencement Date until the date of Project Opening, Annual Rent shall be paid in equal monthly installments, with each installment equal to 1/12th of the applicable Minimum Rent. On the date of Project Opening, Annual Rent shall be paid on a monthly basis as provided in Section 5(a)(iii)(B). In the event the Commencement Date, the date of Project Opening, or the date the Term expires occurs on a date which is not the first day of a month, the relevant monthly installment of Annual Rent shall be prorated per diem, based on the number of days of such month included within the applicable Rent period. Payments of Annual Rent shall be subject to quarterly adjustment as provided in this subsection (c) in the event and to the extent Minimum Rent accruing for such quarterly period is exceeded by Percentage Rent (4% x AGR) accruing for such quarterly period. As used in this Lease, the term "Adjusted Gross Receipts" or "AGR" shall mean the gross receipts from licensed gambling games and devices less winnings paid to wagerers and the 20% tax paid to the State of Missouri pursuant to Section 318.822 of the Revised Missouri Statutes. In the event Percentage Rent exceeds Minimum Rent during any quarter, Tenant shall pay such difference to Landlord, as an adjustment to Minimum Rent, not later than 45 days after the end of each quarter. At the end of each Lease Year, Tenant shall be entitled to a credit against Rent next due to the extent of any overpayments of Percentage Rent made by Tenant during such Lease Year. Tenant shall report AGR to Landlord on a quarterly basis in accordance with the provisions of Section 13. 6. TRIPLE NET OBLIGATION. The Lease shall be what is commonly known as a "Triple Net" Lease, and Tenant shall be responsible for the full and timely performance of all obligations and payment of all costs, charges, fees, expenses and other sums incurred by or for Tenant's benefit in connection with Tenant's ownership, leasing, construction, development, equipping, management, maintenance, repair, replacement, operation or use of the Project or any component thereof, including without limitation all salaries, fees, commissions, rentals, license or permit fees, loan or mortgage payments, utility charges, trash, sewage and waste water disposal charges, fuel charges, insurance premiums and deductibles, and all general real estate, ad valorem, sales, use and other taxes and assessments, special or general, allocable to the Premises, the Project or the leasehold estate of Tenant. All sums other than Rent payable by Tenant hereunder, including without limitation the Acceptance Fee and the amounts due Landlord pursuant to this Section 6 (whether directly or by reimbursement of any sum paid by Landlord to a third party in the cure of a default by Tenant as permitted under this Lease) shall be deemed "Additional Rent" as to which Landlord shall have the same rights and remedies for enforcement of payment and collection as Landlord has in respect of Rent. 7. SECURITY DEPOSIT. Until the occurrence of the Commencement Date and payment of the Acceptance Fee, the Commencement Date Fee, and the first installment of Annual Rent, Landlord and Tenant shall maintain the Escrow established with the Escrow Agent. The Escrow shall secure Landlord against the possibility that Tenant shall withdraw or abandon Tenant's application for Gaming Licensure or for any Site Permits, or otherwise abandon the Project, in which event Landlord shall be entitled to terminate this Lease and, as Landlord's sole remedy, to retain the sum deposited into Escrow as liquidated damages and not as a penalty, the parties not being able to determine Landlord's actual damages prior to the Commencement Date. Not later than 5 business days after the Effective Date, Tenant shall deposit into the Escrow $750,000 or a 6-month (or longer) irrevocable letter of credit in the stated amount of $750,000 issued by a bank or financial institution acceptable to Landlord (the "Security Deposit"), and permitting draws (and deposit into the Escrow of the resulting cash) upon unilateral presentation to the issuer of Landlord's certificate that Tenant has withdrawn or abandoned Tenant's application for Gaming Licensure or for any Site Permits, or otherwise abandoned the Project, or that Tenant has failed to renew or replace the letter of credit within 30 days prior to its stated expiration. Upon delivery to the Escrow Agent of Landlord's certification that Tenant has withdrawn or abandoned Tenant's application for Gaming Licensure or for any Site Permits, or otherwise abandoned the Project, the Escrow Agent shall be authorized and directed to interplead into the St. Louis County Circuit Court for disposition by the Court the cash sum deposited into the Escrow (including cash drawn from the letter of credit), under the terms of the Escrow Agreement and this Lease. Within 5 business days after cancellation of this Lease in accordance with the provisions of Section 2(b) or Section 3(d), or within 5 business days after the occurrence of the Commencement Date, Landlord shall deliver its certificate to the Escrow Agent, and the Escrow Agent shall be authorized and directed, under the terms of the Escrow Agreement, to immediately release to Tenant the cash or letter of credit deposited in the Escrow by Tenant. Upon the Commencement Date and payment of the Acceptance Fee, the Commencement Date Fee and the first installment of Annual Rent, the Security Deposit shall be promptly refunded to Tenant. 8. REPRESENTATIONS AND WARRANTIES. (a) In order to induce Landlord to enter into this Lease, Tenant makes the following representations and warranties to Landlord, all of which representations and warranties shall be deemed restated as of the Commencement Date: (i) Tenant is duly formed and validly existing as a Missouri limited partnership; (ii) the General Partner is duly formed and validly existing as a Nevada corporation; (iii) the execution and delivery of this Lease and the performance by Tenant of Tenant's obligations hereunder have been duly authorized by all requisite corporate and partnership action; (iv) this Lease constitutes the legal, valid and binding obligation of Tenant and is enforceable against Tenant in accordance with its terms; (v) no litigation is pending or, to the best of Tenant's knowledge, threatened against Tenant which, if adversely determined, would likely have a material adverse impact on Tenant or the Project; (vi) Tenant is not a party to, and neither Tenant nor Tenant's properties, real or personal, are subject to, any agreement, order, proceeding, ruling or other matter in conflict with any provision of this Lease or which materially and adversely affects its ability to perform its obligations hereunder; (vii) Tenant is solvent and is not a party to any assignment for the benefit of creditors or bankruptcy proceeding; and (viii) Tenant is not in material default of any contract or agreement to which it is a party which materially and adversely affects Tenant's ability to perform its obligations under this Lease. (b) In order to induce Tenant to enter into this Lease, Landlord makes the following representations and warranties to Tenant, all of which representations and warranties shall be deemed restated as of the Commencement Date: (i) Landlord is a corporate and political body lawfully existing and in good standing under the laws of the State of Missouri and has the power and authority to enter into this Lease, and the execution and delivery of this Lease and the performance by Landlord of Landlord's obligations hereunder have been duly authorized by all requisite governmental action; (ii) this Lease constitutes the legal, valid and binding obligation of Landlord and is enforceable against Landlord in accordance with its terms; (iii) no litigation is pending or, to the best of Landlord's knowledge, threatened against Landlord which, if adversely determined, would likely have a material adverse impact on the Project; (iv) Landlord is solvent and is not a party to any assignment for the benefit of creditors or bankruptcy proceeding; (v) Landlord is not a party to any agreement, order, proceeding, ruling or other matter in conflict with any provision of this Lease; and (vi) Landlord is not in default of any contract or agreement to which it is a party which materially and adversely affects its ability to perform its obligations under this Lease. 9. USE OF PREMISES AND QUIET ENJOYMENT. (a) DESIGNATED USE. Tenant shall use the Premises for the operation of a Casino containing a minimum of 26,000 square feet of Las Vegas style gaming area and for related, supporting infrastructure, including without limitation a parking lot, lighting, signage and such additional installations as are required by Tenant in connection therewith. In addition to the Casino, Tenant may operate on the Premises such restaurants, bars and/or stores, as Tenant may in its discretion determine. (b) ALTERATIONS AND IMPROVEMENTS. Subject to the provisions of Section 9(a), Tenant may from time to time, at Tenant's sole risk, cost and expense, make alterations and improvements, (i) without Landlord's prior written consent, to the interior, non-structural components of the Premises which do not reduce the minimum square footage devoted to Casino gaming, and (ii) with Landlord's prior written consent, which consent shall not be unreasonably withheld or delayed, to the exterior or structural components of the Project; provided, however, that Landlord shall not be required to consent to any reduction in the square footage of the Project devoted to Casino gaming. In the event of a dispute between the parties as to whether Landlord's consent is required or has been unreasonably withheld, the issue shall be submitted to binding arbitration in accordance with the procedures of Section 31. In order to rule in favor of Landlord, the arbitrators must determine that such proposed new construction would be detrimental to the Project and Landlord's realization of the benefits of this Lease. (c) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. During the Term, Tenant shall, at its sole cost and expense, promptly observe and comply with all Governmental Requirements and the requirements of all insurance companies writing policies covering the Casino or the parking areas, streets, sidewalks, vaults, curbs and gutters included within the Project, or the use and occupation or franchises and privileges connected therewith, whether or not such Governmental Requirements or insurance requirements shall necessitate structural changes, improvements, interference with the use and enjoyment of the Project, replacements or repairs, extraordinary as well as ordinary, foreseen or unforeseen. The Casino shall be located within the Project in such a manner so as not to violate any applicable Gaming Licensure requirements of the Commission or any Permits obtained by Tenant. Tenant shall pay all costs, expenses, claims, fines, penalties and damages that may in any manner arise out of or be imposed because of the failure of Tenant to comply with any of the foregoing requirements. (d) PERMITTED CONTESTS. Tenant, after notice to Landlord, may, by appropriate legal proceedings conducted at Tenant's sole expense, contest in good faith the validity or enforcement of any Governmental Requirement and may defer compliance therewith, provided that (i) such noncompliance shall not constitute a crime, (ii) Tenant shall diligently prosecute such contest to final determination by a court, governmental authority, agency, department or other body having final jurisdiction, (iii) the contest conducted by Tenant will not operate to extend the Investigation Deadline or the Permit Deadline, and (iv) the contest conducted by Tenant will not result in the closing of the Project, any foreclosure or forfeiture of Tenant's leasehold estate or the imposition of any charge, fine, lien, penalty or claim against Landlord. Tenant, after notice to Landlord, may, by appropriate legal proceedings conducted at Tenant's sole expense, contest in good faith the validity of any lien for labor or materials imposed against Tenant or the Project, provided that Tenant first discharges such lien from the records of the County by posting of bond or other security reasonably adequate to secure Tenant's performance, and provided further that such contest will not result in the closing of the Project or any foreclosure or forfeiture of Tenant's leasehold estate. (e) QUIET ENJOYMENT. Landlord covenants and agrees that Tenant shall be entitled to lawfully and quietly hold, occupy and enjoy the Premises during the Term without hindrance or interference by Landlord or by any party claiming by, through or under Landlord, in accordance with and subject to the terms and conditions of this Lease. 10. EXCLUSIVITY AND RESTRICTIVE COVENANT. (a) GRANT OF EXCLUSIVITY. To the fullest extent permitted by law, and subject only to the provisions of Section 10(b), Landlord hereby grants to Tenant and its permitted successors and assigns, for a period commencing on the Effective Date and continuing through the 15th Lease Year (the "Exclusive Rights Period"), the exclusive right to operate any type of excursion gaming boat, land based or other type of gaming or gambling facility or facilities on any property which is at any time during the Exclusive Rights Period owned or controlled by Landlord and located south of the River des Peres or, with respect to the development thereof or to uses which may be made thereof by the owner, tenant or occupant, under the administrative jurisdiction of Landlord. Such exclusive rights shall include an obligation on the part of Landlord to not authorize, endorse, support or otherwise assist, directly or indirectly, in connection with issuance by any governmental entity of any license or permit to or for the development or operation of any potentially competing gaming project south of the River des Peres for the duration of the Exclusive Rights Period. (b) CONDITIONS OF GRANT. Landlord's grant to Tenant of exclusivity is subject to the following express conditions: (i) the Casino shall remain in operation after Project Opening; (ii) no Event of Default shall have occurred and be continuing under this Lease on the part of Tenant or on the part of the Guarantor under the Guarantees; (iii) Tenant and Guarantor shall honor the restrictive covenant contained or referenced in Section 10(c); and (iv) Tenant shall not earn more than $200 million in AGR during any Lease Year. (c) RESTRICTIVE COVENANT. Tenant covenants and agrees that during the Exclusive Rights Period, Tenant shall not participate in any manner in the ownership, sponsorship, control, management, operation or use of any riverboat gaming facility along either the Illinois or Missouri banks of the Mississippi River from the southern boundary of the City of St. Louis to the northern boundary of Jefferson County. Tenant acknowledges that the restrictive covenant contained in this Section 10(c) (and issued by the Guarantor under the Rent Guarantee) is reasonable under all of the circumstances. (d) RIGHT OF FIRST REFUSAL. In the event Landlord shall elect to support issuance of a second gaming license south of the River des Peres because Tenant has earned more than $200 Million in AGR during any Lease Year, and provided Tenant and Guarantor are in compliance with the conditions described in clauses (i), (ii) and (iii) of Section 10(b), Landlord shall grant Tenant a 90-day right of first refusal to commit in writing to construct and operate a second gaming project in unincorporated St. Louis County at a mutually acceptable location (and on terms and conditions mutually acceptable to the parties) which, if constructed and opened for operation by Tenant within 24 months after Tenant's election (which 24 month period shall be subject to extension on account of Unavoidable Delays), shall operate, so long as the Tenant and Guarantor are in compliance with respect to clauses (i), (ii) and (iii) above, as the same pertain to both projects, to divest Landlord of the right to implement or to authorize the implementation of any proposal from another prospective tenant, developer or operator of a second gaming facility, whether the proposal in question involves the sale, lease or licensing of property owned or leased by Landlord or Landlord's support before the Commission and the Council with respect to an operation proposed to be located on privately-owned land. Tenant's failure to elect to construct and operate a second gaming project by timely written notice to Landlord shall constitute a waiver of Tenant's right of first refusal, unless Landlord's proposal does not result in a sale or lease of the site in question, in which event Tenant's right of first refusal shall be deemed reinstated. Landlord agrees to lend all reasonable cooperation to Tenant in connection with any timely exercise by Tenant of Tenant's right of first refusal to construct and operate a second gaming project. In the event of a dispute between Landlord and Tenant regarding any aspect of Tenant's specific plans for the construction and operation of a second gaming project or the terms of a lease or other agreement with Landlord with respect to such second gaming project (other than rent, which shall be equal to the then-current Rent payable under this Lease), either party shall have the right to submit such dispute to binding arbitration in accordance with the procedures of Section 31. (e) MEMORANDUM OF RESTRICTIVE COVENANT. The provisions of this Section 10 shall be incorporated into a memorandum prepared and recorded by Landlord against the Adjacent Parcel and any property now or hereafter owned by Landlord and located south of the River des Peres. 11. COVENANT OF CONTINUOUS OPERATION. (a) MAXIMIZATION OF REVENUES. The Project (including the Casino and any barges utilized in connection with the Project, and all structures, parking lots, driveways, landscaping, fencing, lighting and signage), shall be maintained, managed, operated, staffed, serviced, equipped and repaired in a first class manner, in accordance with all Governmental Requirements, insurance requirements and the highest standards of similar projects operating along and from the Mississippi and Missouri Rivers. The Casino shall remain in operation 24 hours a day, 7 days a week, 365 days a year, so as to maximize the opportunity of Landlord to earn Percentage Rent under Section 5(a)(iii), except to the extent limited by applicable Governmental Requirements, Unavoidable Delays, casualty or condemnation or by repairs, replacements or alterations made by Tenant in accordance with the provisions of Section 9. Tenant shall provide a reasonably adequate complement of properly trained and equipped security personnel for the Project at all times. (b) PARTICULAR OPERATIONS. The Project and all Project signage shall be fully illuminated at all times during which the Project is open. Subject to applicable laws, Tenant shall have the right to erect or affix such signs and banners as Tenant may require in its discretion for directional, informational, promotional or advertising purposes upon windows, doors and walls (interior and exterior) of Project structures and otherwise on or about the Project. All signs and banners shall be in good taste and generally consistent with the themes and aesthetics of the Project. (c) ILLEGALITY OF GAMING OPERATIONS. Notwithstanding the foregoing provisions of this Section 11, in the event casino gaming shall become illegal in the State of Missouri by virtue of legislative action taken by the Missouri General Assembly, popular referendum or otherwise, and in the further event that the Casino is closed for a period of 30 consecutive days due to such legal impediment, then either party shall have the right to cancel this Lease by delivery of written notice of such election to the other party at any time prior to the date casino gaming again becomes legal in the State of Missouri. For so long as the Project remains closed due to such legal impediment, Tenant's obligation to operate the Project and to pay Rent shall be suspended. Landlord or Tenant shall have the right but not the obligation to contest the validity of any legal impediment to the operation of the Project arising under this subsection (c), and in the event either party elects to contest such impediment, the other party shall lend all non-financial assistance reasonably required by the contesting party; provided, however, Tenant shall not be obligated to participate in or assist Landlord in connection with such contest if the Project is closed for 30 days due to such legal impediment and either party elects to cancel this Lease as provided in this subsection (c). 12. ASSIGNMENT AND SUBLETTING. (a) LANDLORD'S CONSENT GENERALLY. No assignment or subletting (including licensing) shall be allowed without the prior written consent of Landlord, which consent shall not be unreasonably withheld. In no event shall any assignment or subletting operate to release Tenant from any liability under the Lease or to release Guarantor from any liability under the Guarantee or constitute permission for any further subletting or assignment. Consent to any one proposed assignment or sublease shall not be deemed consent to further proposed assignments or subleases. A corporate or partnership transaction involving Tenant or the General Partner, including without limitation a merger or sale or other transfer of the stock or partnership interests in Tenant or the General Partner, which results in a change of control of the Tenant or the General Partner, shall constitute an assignment requiring Landlord's prior written consent, unless the transaction involves the assignment of this Lease to the Guarantor or to any corporation, partnership or limited liability company controlling or controlled by the Guarantor and meeting the Stated Criteria (as defined in Section 12(b)). The assignment or pledge of the assets of the Project as collateral for financing purposes shall not be considered an assignment pursuant to this Section 12 but shall be governed by the provisions of Section 19. Landlord's consent shall not be required in connection with the subletting or licensing of portions of the Project for bar, restaurant, retail or entertainment purposes which are incidental to the operation of the Casino and which do not reduce the floor space dedicated to Casino gaming under Section 9; provided that no such subletting or licensing shall operate to relieve Tenant of any liability under this Lease. (b) PROCEDURES FOR ASSIGNMENT AND SUBLETTING. In the event Tenant desires to assign its interest in this Lease or to sublet the use of all or any portion of the Project, Tenant shall deliver notice of the proposed transaction to Landlord, together with detailed information regarding the financial condition and operating history of the proposed assignee or subtenant (including any operator) and the terms of the proposed assignment or subletting. Within 30 days after receipt of the foregoing information, and subject to the provisions of subsection (a) of this Section 12, Landlord shall accept or reject Tenant's proposal. Landlord's rejection shall be based upon (i) the failure of the proposed assignee or subtenant to meet any of the "Stated Criteria" as hereinafter defined, or (ii) the occurrence of an Event of Default, and Landlord shall specifically state the grounds for Landlord's rejection. If Landlord shall fail to respond to Tenant within 30 days after receipt of Tenant's proposal, Landlord shall be deemed to have accepted such proposal. In the event Tenant shall object to Landlord's rejection of Tenant's proposal, Tenant's sole remedy shall be to commence arbitration proceedings in accordance with the provisions of Section 31. The arbitrators shall either approve or disapprove the proposed assignment or sublease based on compliance with the Stated Criteria and shall make no other award or determination. Tenant hereby indemnifies and holds Landlord harmless from and against any loss, cost, damage, claim, demand or expense (including attorneys' fees and expenses) incurred by Landlord in connection with any action brought by or for the benefit of the proposed assignee or subtenant or seeking relief other than arbitration as provided herein. In the event an assignment is approved by Landlord or through arbitration, the assignee shall be subject to all of the provisions of this Lease. (c) STATED CRITERIA. With respect to any assignee or subtenant (or the general partner, if the assignee or subtenant is a partnership), the following shall constitute the Stated Criteria for approving any proposed assignee of Tenant's interest in this Lease or any proposed subtenant or operator of the Project: (i) a net worth at least equal to that of the Guarantor (whether or not the Guarantees remain in effect); (ii) a sufficient casino gaming operating history or reputation in the industry or community in the reasonable judgment of Landlord; and (iii) a gaming license to operate the Project. Tenant agrees that Landlord shall not be deemed unreasonable in rejecting a proposed assignee or subtenant on any of the above- stated grounds. (d) CONSIDERATION AND EXPENSES. In connection with any assignment of this Lease or any sublease or licensing involving Casino operations (as opposed to ancillary uses of the Project), and whether or not Landlord's consent is required, Tenant shall pay to Landlord in cash 25% of the "Gain" realized by Tenant (whether or not the Gain is deferred) from such assignment, sublease or license, determined in accordance with the requirements of the U.S. Internal Revenue Code. In the event no Gain is realized, Tenant shall nonetheless pay to Landlord, as and when received by Tenant, 25% of the total value of all consideration realized by Tenant for or incident to any assignment, sublease or license involving Casino operations in excess of the Annual Rent payable under this Lease, after deducting Tenant's reasonable attorneys' fees and real estate commissions incurred to effect such assignment, sublease or license. Prior to the effective date of any assignment, sublease or licensing involving Casino operations, Tenant shall provide Landlord with a statement of a nationally recognized accounting firm certifying the Gain, if any, to be reported by Tenant in connection with such assignment, sublease or licensing. Tenant shall pay all reasonable attorneys' fees and expenses of Landlord in connection with the review and approval of any such request and of the documentation implementing same upon approval by Landlord. 13. REPORTING COVENANTS. Tenant shall report each month in writing to Landlord the progress of the Gaming Licensure and Permit application process, the progress of construction, and, after Project Opening, on a quarterly basis, AGR realized by Tenant. Tenant also shall provide Landlord with such other information regarding the development and operation of the Project as Landlord may reasonably request, including the status of Tenant's obligations under the Lease. All reports of AGR shall be certified as to accuracy and completeness by an officer of Tenant. In addition, copies of annual audit statements shall be provided to Landlord by Tenant, and Landlord shall have the right, at Landlord's sole cost and expense, except as hereinafter provided, to conduct an audit of the books and records of Tenant, not more frequently than once during any Lease Year, in order to verify the accuracy of AGR reported by Tenant and Tenant's compliance with the various operating and reporting covenants contained in this Lease. Tenant shall maintain Tenant's books and records in support of Tenant's computations and reporting of AGR in accordance with generally accepted principles of accounting consistently applied. Tenant's books and records shall be retained in the St. Louis metropolitan area, available for inspection and audit by Landlord during regular business hours on reasonable prior notice to Tenant and without material interruption of Tenant's business. In the event Landlord's audit or any audit conducted by the Commission discloses that AGR has been under-reported such that Landlord is entitled to receive an additional payment of Annual Rent, Tenant shall promptly make payment to Landlord of the entire sum due Landlord. In the event the amount due exceeds 5% of the amount paid by Tenant, Tenant also shall pay Landlord's expenses in conducting such audit. Upon Landlord's request, Tenant also shall provide Landlord with a copy of each financial statement, report and filing issued by or on its behalf and provided to any regulatory body, including, without limitation, the Missouri Gaming Commission, the Securities and Exchange Commission and other authorities, agencies and commissions having jurisdiction over Tenant's operations. Tenant shall promptly report to Landlord any notice received by it from any governmental authority or in respect of any proceedings at law or in equity to which Tenant is a party alleging violation of any Governmental Requirements by Tenant, and Tenant shall provide to Landlord such information as Landlord may request in connection therewith. Upon Landlord's request, Tenant shall present to Landlord on an annual basis the Coast Guard certificate of inspection obtained for the Casino. Tenant hereby irrevocably designates St. Louis County as the "home dock" for the Project during the Term for all purposes under Section 313.822 of the Revised Missouri Statutes, and Tenant agrees to confirm the status of the County as the "home dock" for the Project as and when requested to do so by Landlord or the Commission. 14. INSURANCE. (a) TYPES OF INSURANCE. Throughout the Term, Tenant shall maintain in full force and effect the following insurance coverage: (i) commercial liability insurance on an "occurrence basis" against claims for "personal injury" including, without limitation, bodily injury, death or property damage occurring on, in or about the Project or in connection with any other operations of Tenant related to the Project (such as, by way of example, off- site bus or shuttle service), such insurance to afford immediate minimum protection of $5 million combined single limit/per occurrence and $10 million aggregate, and, (a) with respect to the Project exclusive of any boat hull, a deductible not greater than $75,000, and, (b) with respect to any boat hull, a deductible not greater than 1% of the value of the boat; (ii) property insurance against loss or damage to the Project (including the Casino) by fire and other risks covered by insurance of the type now known as "fire and extended coverage" in an amount equal to the replacement value of the Casino and remainder of the Project and with a deductible not greater than $75,000 from the loss payable for any casualty; (iii) protection and indemnity insurance including collision liability covering collisions with all fixed or floating objects with a minimum limit of $5 million per occurrence and a deductible not greater than $75,000; (iv) worker's compensation insurance in full compliance with all applicable state and federal laws and regulations, including a specific endorsement covering liability for Federal Longshoremen's and Harbor Workers' Compensation Act; (v) employers liability insurance in the minimum amounts of $1 million per individual claim, not to exceed $100 million in the aggregate, covering injury or death to any employee which may be outside of or in addition to liability under any worker's compensation statutory coverage; (vi) excess or umbrella insurance providing a minimum of $10 million in excess of underlying limits and coverage provided by commercial general liability, protection and indemnity and employer's liability policies; and (vii) personal property insurance covering Tenant's trade fixtures, equipment, goods and inventory in an amount not less than 95% replacement value. (b) QUALITY OF COVERAGE. All such policies shall be issued by insurance companies licensed to do business in the State of Missouri and approved by Landlord as to form and as to surety and reserving the right of recovery by the Landlord in the event of damage to its property and issued in the name of Tenant and naming Landlord as additional insured, as its interest may appear. Included in the property and maritime policies shall be coverage providing for the removal of any Casino when damaged or sunk from any cause whatsoever and this clause shall be expressed as a specific warranty by the insurance company regardless of cause. In addition, one or more of the policies shall include special dram shop, vehicular and maritime operations endorsements and a contractual liability endorsement covering the indemnification agreements of Tenant contained in this Lease. Policy certificates shall be delivered to Landlord on the Effective Date and shall state that the coverage afforded thereby shall not be modified or canceled without 60 days' prior written notice to Landlord, delivered by registered mail. Provided no Event of Default has occurred and is continuing, all loss proceeds shall be made available to Tenant to restore and repair the Project (including the Casino) as provided in Section 15. Permitted deductibles may be increased by an amount equal to any increased inflation in the value of U. S. currency. (c) RENEWAL OF COVERAGE. Certificates of insurance with reasonably satisfactory evidence of payment of the premium thereof, shall be delivered to Landlord on or before the Commencement Date or date of Project Opening, as appropriate, and upon renewals of such policies, not less than 30 days after renewal. Not less than 60 days prior to the expiration of any such coverage, Tenant will provide evidence to Landlord of continuing insurability by means of letters from qualified carriers confirming intent to renew or provide the required coverage. If Tenant at any time fails or refuses to procure or maintain the required amount of insurance, then the Landlord may, and without notice to Tenant, obtain same for and on behalf of Tenant and charge the cost thereof to Tenant, such charge to be due and payable upon demand and to constitute Additional Rent hereunder. (d) WAIVER OF SUBROGATION AND RIGHT OF RECOVERY. Tenant, and all parties claiming under or through Tenant, hereby expressly release and discharge Landlord and the County from any claim or liability, whether based on negligence or any reason whatsoever, for any personal injury or property damage. All insurance policies of Tenant shall contain an endorsement containing an express waiver of any right of subrogation by the insurance company against Landlord and the County. (e) ADDITIONAL INSURANCE. Tenant shall obtain such other insurance in such amounts as may from time to time be reasonably required by the Landlord against other insurable hazards, and the Landlord may require the amount of any policy of insurance Tenant is required to maintain pursuant to the provisions of this Lease to be increased. Tenant shall not carry separate or additional insurance concurrent in form or contributing in the event of any loss or damage with any insurance required to be obtained by Tenant under this Lease, if the effect of such insurance would be to reduce the protection or payment to be made under insurance required hereunder. In the event Tenant objects to any increased or additional coverage required by Landlord, the issue shall be submitted to binding arbitration in accordance with the provisions of Section 31 hereof. 15. DAMAGE AND DESTRUCTION. (a) CASUALTY TERMINATION. If, at any time during the last 10 years of the Term, the Project is damaged by any cause or casualty in an amount exceeding 15% of the then replacement cost of the Project, Tenant shall have the right to terminate this Lease by written notice to Landlord within 60 days of the happening of the casualty causing such damage or destruction. In such event, Landlord shall receive from the insurance proceeds the lesser of (a) the then present value of the Minimum Rent payable to Landlord for the remainder of the Term plus the amount equal to the cost of rebuilding all damaged or destroyed land-based facilities, or (b) 100% of the insurance proceeds. Any funds remaining following the distribution of the insurance proceeds paid to Landlord pursuant to the previous sentence shall be paid to Tenant. Upon any termination of the Lease under this provision, Tenant shall surrender possession of the Premises within 90 days after notice of termination, whereupon each of the parties shall be released thereby from any further obligations to the other except for items which have theretofore accrued and are then unpaid, and such termination shall be deemed to relate back to the date of damage or destruction; provided, however, that if the Project or any part thereof shall be kept open for business after the date of damage and prior to the surrender of possession of the Premises, the termination date shall be the date upon which Tenant shall discontinue the conduct of its business on the Premises. In the event of any termination pursuant to this Section 15(a), and upon surrender of the Premises to Landlord, Landlord shall refund to Tenant any unearned portion of Annual Rent prepaid by Tenant. In addition, in the event Landlord relets the Premises to another lessee, Landlord shall reimburse Tenant for the prepaid Minimum Rent paid by Tenant due to the termination of this Lease pursuant to this Section 15(a) from the rent paid by such lessee. (b) CASUALTY RECONSTRUCTION. In the event of damage or destruction occurring to the Project (including the Casino) other than as described in subsection (a) above, Tenant shall repair and rebuild the Project (including the Casino), and restore the Project to full operation with reasonable diligence; Tenant shall direct, control, coordinate and approve all such repairs, reconstruction and restoration contemplated by this provision and shall have the right to select any architects, engineers and contractors for such repairs, reconstruction or restoration. All loss proceeds shall be made available to Tenant and shall be applied to effect such repair, reconstruction or restoration of the Project. No component of Annual Rent or Additional Rent shall abate as a result of any such damage or destruction, it being understood and agreed that Tenant shall maintain such business interruption insurance as Tenant may require in order to assure Tenant of the ability to continue to meet Tenant's financial obligations under this Lease. 16. CONDEMNATION. (a) DEFINITIONS. Whenever used in this section, the following words shall have the following respective definitions and meanings: (i) "condemnation" or "condemnation proceedings" - any action or proceeding brought by competent authority for the purpose of the taking of the fee of the Premises, the Project or any part thereof, as a result of the exercise of the power of eminent domain, including a voluntary sale to such authority either under threat of or in lieu of condemnation or while such action or proceedings is pending; (ii) "taking" - the event of vesting of title to the fee of the Premises, or the Project or any part thereof, in the competent authority pursuant to condemnation; (iii) "vesting date" - the date of the taking. (b) DEFENSE OF TAKING. Landlord, immediately upon obtaining knowledge of the institution of any proceedings for the condemnation of the Premises or any part thereof, shall notify Tenant of the pendency of such proceedings. Landlord shall then, if requested by Tenant, file or defend its rights thereunder and prosecute the same with due diligence to its final disposition. Tenant may, but shall not be required to, participate in any such proceedings and Landlord from time to time will deliver to Tenant all instruments requested by it to permit such participation. In the event Tenant chooses to participate in any such proceedings, Landlord may be the nominal party in such proceedings, but Tenant shall be entitled to control and direct the same and to be represented therein by counsel of its choice, at Tenant's cost. Landlord covenants and agrees that it will use its best efforts and take all actions necessary and appropriate to cause the County not to exercise its powers of eminent domain with regard to the Premises, the Project or any part thereof, and otherwise to assure to the greatest extent possible that neither the Premises, the Project nor any part thereof, shall be condemned during the Term. (c) TOTAL TAKING. In the case of a taking of all of the Premises and the Project, this Lease shall terminate as of the vesting date and the Rent under this Lease shall be apportioned to the date of termination, and upon surrender of the Premises to Landlord, Landlord shall refund to Tenant any unearned portion of Annual Rent prepaid by Tenant. (d) PARTIAL TAKING - TERMINATION OR ARBITRATION. In the case of a taking of less than all of the Premises and Project (other than for a temporary use) Landlord and Tenant mutually shall determine within a reasonable time after the vesting date whether the remainder thereof can economically and feasibly be used by Tenant. If Landlord and Tenant cannot mutually agree upon such matter with 90 days after the vesting date, it shall be determined by binding arbitration pursuant to the provisions of Section 31. If it is determined by mutual agreement or by arbitration that the remaining Premises and Project cannot economically and feasibly be used by Tenant, Tenant may terminate this Lease on not less than 10 days nor more than 30 days notice to Landlord to such effect, provided that such notice is given within 30 days after such determination, and the Rent shall be apportioned to the date of termination. If Tenant does not elect to terminate this Lease within the period aforementioned, it shall continue in full force and effect with respect to the remaining portion of the Premises. If this Lease shall terminate pursuant to this provision, the award for the Project shall be apportioned and paid, to the extent available, in the following order of priority: (i) Landlord and Tenant first shall be entitled to their reasonable expenses and charges including, without limitation, reasonable attorneys' fees incurred in connection with the taking; (ii) Landlord shall be entitled to the value of the fee exclusive of the value of this Lease; and (iii) Tenant shall be entitled to the balance of the award. If the court in which the condemnation proceedings are brought fails or refuses to apportion its award between Landlord and Tenant, and if Landlord and Tenant cannot agree upon the allocation defined in the above order of priority, such values, allocation and apportionment shall be determined by binding arbitration under the provisions of this Lease. The provisions of this section also shall apply in the case of a partial taking where the this Lease is terminated pursuant to the provisions hereof. (e) PARTIAL TAKING - RECONSTRUCTION. In the case of a partial taking where the Tenant does not elect to terminate this Lease pursuant to the provisions set forth above, Tenant shall commence and proceed with reasonable diligence to repair and reconstruct the remaining improvements to a complete, economically usable, architectural unit or units, including, without limitation, temporary repairs, changes and installations required to accommodate space subtenants and all other work and replacements and additions of furniture and furnishings incidental to and appropriate in connection with all of the foregoing (all such repair, reconstruction, replacements and additions and work being referred to in this section as "restoration"); and the total award of the condemnation proceedings, including the award for the Project shall be apportioned and paid to the extent available in the following order of priority: (i) Landlord and Tenant first shall be entitled to their reasonable expenses and charges including, without limitation, reasonable attorneys' fees incurred in connection with the taking; (ii) Tenant shall be entitled to an amount equal to the cost of restoration to the extent contemplated by this section, such sums shall be turned over to Tenant to be held in trust for the purpose of paying for the cost of restoration; (iii) Landlord shall be entitled to the value of the fee exclusive of the value of this Lease; (iv) Tenant next shall be entitled to the value of its leasehold estate under this Lease, the value of the Project, the value of the furniture, fixtures and equipment of the Project and the balance of the award. (f) TEMPORARY TAKING. In the event of a taking of all or any portion of the Premises and the Project for temporary use, the foregoing provisions of this Section 16 shall be inapplicable thereto. This Lease shall remain in full force and effect and Tenant alone shall be entitled to make claim for, recover and retain any award recoverable in respect of such temporary use, so long as Rent is first paid from such award. If any portion of the award for such temporary use is intended to cover the cost of restoring the Premises and the Project to the condition they were in prior to such temporary use, such portion of the award shall be paid to Tenant to cover the cost of such restoration and repair. 17. ADJACENT PARCEL. (a) DEVELOPMENT PARAMETERS. Tenant and its affiliates shall be permitted to submit proposals to Landlord for the development of all or portions of the Adjacent Parcel. The Adjacent Parcel may be developed by Landlord and/or other parties for light industrial, commercial, retail, entertainment and/or recreational uses. Structures of any size or height, such as warehouses, distribution centers, manufacturing facilities, hotels, shopping centers, entertainment, sporting or recreational facilities, parking lots or garages, communications towers, and docking facilities, may be constructed and operated on the Adjacent Parcel. Landlord covenants that no use may be made of the Adjacent Parcel which shall constitute a nuisance or hindrance to the Project, detract materially from the aesthetic appeal of the Project, generate excessive industrial noise or noxious industrial or chemical odors, or materially impair access to the Project. Neither the volume nor type of traffic, including heavy truck traffic, on the Adjacent Parcel, including any resulting noise or omissions, nor any signage or illumination located on the Adjacent Parcel, shall be deemed to constitute a nuisance, impairment or detraction. That portion of the Adjacent Parcel which is within the 50' by 550' zone along the northern perimeter boundary of the Premises identified on ATTACHMENT D shall constitute a "Buffer Zone" between any development located on the Adjacent Parcel and the Premises. Only green space or landscaping shall be located within the Buffer Zone. Tenant shall have a non-exclusive license, at Tenant's sole risk, cost and expense, at Tenant's option, but without obligation, to enter upon the Buffer Zone for the sole purpose of performing, maintaining, repairing and replacing landscaping on the Buffer Zone should Tenant so desire. Notwithstanding the foregoing provisions of this Section 17(a), the parties acknowledge and agree that a reconfiguration of the roadway providing access to the Premises and/or the Adjacent Parcel, if and as agreed to by the parties in connection with a resolution of pertinent Access Issues, may entail access to the Adjacent Parcel via the bridge to be constructed by Tenant or via the circular roadway depicted on ATTACHMENT D. (b) ENFORCEMENT. A restrictive covenant consistent with the requirements of Section 17(a) shall be recorded by Landlord against the Adjacent Parcel, and such restrictive covenant shall be prior and paramount to any mortgage, deed of trust or other encumbrance against the Adjacent Parcel. Landlord shall have the right but not the obligation to enforce compliance with such covenant to the extent the real estate in question has been sold or transferred to a third party, but Tenant, its successors and assigns, shall be designated in the covenant as intended beneficiaries thereof with full right to institute action, legal and equitable, for any violation thereof. To the extent Landlord retains ownership of the real estate in question and the violation complained of is committed by a tenant or occupant of the real estate, Landlord shall use its best efforts to enforce Landlord's rights under the covenant by appropriate legal action, including seeking appellate relief, if necessary. (c) EXISTING LEASE. In the event of a conflict between any provision of this Section 17 and any existing provision of that certain Lease between Landlord, as successor to NL Industries, Inc., and The Kiesel Company, as Tenant, dated as of June 2, 1987, the provisions of the latter such lease shall control. In the event the operations of the Kiesel Company, its successors, assigns or subtenants, on or from the Kiesel Company premises, are interfering with, or will likely interfere with, Tenant's development or operation of the Project, in the reasonable judgment of Tenant, after written notice to Landlord, and provided other measures taken by Landlord and the Kiesel Company to obviate the interference or potential interference are either unavailable or prove insufficient, Landlord agrees to cancel the Kiesel Company lease at the earliest permissible date. 18. NON-DISTURBANCE AND ATTORNMENT. Landlord shall have the right to obtain a mortgage secured by Landlord's interest in the Premises and/or this Lease; provided, however, that this Lease, including all of the rights of Tenant under or pursuant to this Lease, shall be paramount to, and shall not be subject or subordinate to, any mortgage, deed of trust or other security interest instrument ("Mortgage") that may now or hereafter affect Tenant's interest in the Premises. Any Mortgage shall contain, as required terms, the express acknowledgment that Tenant shall not be liable for the payment of the sum secured by such Mortgage, nor for any expenses in connection with the same. Neither such Mortgage nor any instrument collateral thereto shall contain any covenant or other obligation on Tenant's part to pay such debt, or any part thereof, or to take any affirmative action of any kind whatsoever; provided, however, that Tenant shall remain liable under this Lease notwithstanding any foreclosure of Landlord's interest in the Premises or any transfer of title to the Premises, and provided further that Tenant shall agree to attorn to such transferee. Such Mortgage shall expressly provide that the Mortgagee shall not seek any money judgment against Tenant related to any Mortgage obligation of Landlord. Each Mortgagee shall agree to a non-disturbance and attornment agreement which will require the Mortgagee to recognize that this Lease is superior to Mortgagee's Mortgage, (ii) that Tenant shall be entitled to use and occupy the Premises and the Project in accordance with the terms of this Lease, (iii) that Tenant shall be entitled to all of its rights under this Lease, (iv) that insurance and condemnation awards and proceeds shall be disbursed as provided in this Lease, and (v) Tenant's possession of the Premises and the Project shall not be disturbed by Mortgagee or by any person whose rights are acquired through foreclosure proceedings or through a deed in lieu of foreclosure except as may be expressly provided in this Lease, and any subsequent transferee of such rights shall be so bound provided no Event of Default occurs and is continuing under this Lease. The non- disturbance and attornment agreement may require (x) that as a condition to the making of any amendment or modification to this Lease Landlord receive the prior written consent of such Mortgagee, (y) that such Mortgagee shall receive notice of any default claimed by or through Tenant against Landlord, and (z) that such Mortgagee shall have the same right to cure such default as is provided the holder of any Leasehold Mortgage obtained by Tenant. Tenant shall within 10 days after receipt from Landlord execute and deliver to Landlord and Landlord's Mortgagee such estoppels and attornment agreements as may be required in connection with any proposed financing or refinancing involving the Premises and/or the Adjacent Parcel, provided the terms and conditions of such estoppels or attornment agreements are consistent with the provisions of this Section 18 and the same do not constitute a modification of this Lease. 19. LEASEHOLD MORTGAGES. (a) RIGHT TO LEASEHOLD MORTGAGE. Tenant shall have the right to mortgage and to refinance this Lease and Tenant's leasehold estate and any improvements thereon, including but not limited to the Project, ("Leasehold Mortgage") at any time, and from time to time, on any terms Tenant may deem desirable and to assign this Lease and any existing and future subleases, license agreements and concession agreements, and the rentals and fees payable to Tenant thereunder to the holder of such mortgage ("Leasehold Mortgagee"), as additional collateral security for the indebtedness secured by the Leasehold Mortgage. In connection therewith, Landlord agrees to timely execute and deliver an estoppel certificate, a non-disturbance agreement, and such other documents in reasonably satisfactory form as shall be requested by any Leasehold Mortgagee, so long as such certificates, agreements or other documents are not inconsistent with this Lease. Any Leasehold Mortgage shall be subject and subordinate to Landlord's rights under this Lease and its fee interest in the Premises, except as otherwise provided herein. (b) TERMS OF LEASEHOLD MORTGAGE. If Tenant shall have executed and delivered a Leasehold Mortgage or Mortgages and the Leasehold Mortgagee shall have notified Landlord in writing to such effect giving its name and address: (i) Landlord concurrently shall serve upon such Leasehold Mortgagee a copy of each notice, consent, approval, request or demand given to Tenant under this Lease including, without limitation, any notice, consent, approval, request or demand under this Lease. No such notice to Tenant shall be deemed to have been given nor shall be effective unless copies thereof are thus served upon the Leasehold Mortgagee at such address and in the manner provided pursuant to the Notice provisions hereof. (ii) Subject to the provisions set forth below, such Leasehold Mortgagee shall have the right, for a period of 30 days more than is given to Tenant, to remedy or cause to be remedied any default which is the basis of a notice; and Landlord shall accept performance by such Leasehold Mortgagee as performance by Tenant. In the event that Tenant has contested an event of default, such Leasehold Mortgagee shall be given a 20 day period after the date of a final decision affirming the contested default within which to cure such default on behalf of Tenant. (iii) In the case of default by Tenant under this Lease which is susceptible of being cured only when such Leasehold Mortgagee has obtained possession of the Premises and the Project, other than a default in the payment of Rent or Additional Rent, Landlord shall take no action to effect a termination of this Lease by service of a notice or otherwise without first giving to such Leasehold Mortgagee a reasonable period of time (not to exceed 6 months) within which diligently to obtain possession of the Premises and the Project (including possession by a receiver) and to cure such default and/or diligently to institute and complete foreclosure proceedings or otherwise acquire Tenant's leasehold estate under this Lease and to cure such defaults. (iv) Upon acquisition of Tenant's interest in this Lease by the Leasehold Mortgagee, or by any purchaser of this Lease pursuant to any foreclosure proceeding instituted by the Leasehold Mortgagee, Landlord's right to serve a notice of election to end the Term based upon the occurrence of any default (other than non-payment of Rent or Additional Rent, or non- compliance with the provisions of Sections 9, 10, 12, 14, 15 or 20) which cannot with the exercise of due diligence be remedied by such Leasehold Mortgagee or purchaser shall be deemed waived. (v) If, prior to any foreclosure sale brought by a Leasehold Mortgagee, or if prior to the date upon which Tenant's interest in this Lease shall have been otherwise acquired by Leasehold Mortgagee or other purchaser, the default in respect of which Landlord shall have given the notice shall have been remedied and possession of the Premises and the Project restored to Tenant, the obligation of the Leasehold Mortgagee to assume this Lease shall be null and void and of no further effect. (vi) Notwithstanding anything contained in this Section 19 to the contrary, if for any reason this Lease shall terminate prior to the expiration of the Term, Landlord shall give written notice thereof to the Leasehold Mortgagee. Subject to the curing of any Event of Default and the payment of all Rent and Additional Rent owed Landlord by the Tenant, and provided such cure occurs not later than 60 days after Landlord's termination of this Lease, Landlord shall enter into a new lease for the Premises and the Project with the Leasehold Mortgagee or with any person, firm, corporation or entity designated by the Leasehold Mortgagee for the remainder of the Term, subject to approval by Landlord, which approval shall not be unreasonably withheld or delayed as provided in clause (vii) below, commencing as of the date of such termination, at the Rent and upon the same terms, covenants and conditions contained in this Lease (except those which by their terms are no longer applicable). Such new lease shall have priority equal to this Lease. Concurrently with the execution and delivery of such new lease, Landlord shall turn over and/or assign to the new tenant all of its right, title and interest in and to moneys (including insurance proceeds) if any, then held by or subsequently paid to Landlord, which Tenant would have been entitled to receive but for such termination. (vii) Landlord shall have no obligation (i) to waive Landlord's lien rights (it being understood and agreed that Landlord shall be required only to subordinate such lien rights to the security interests of the Leasehold Mortgagee) or (ii) to agree to any modification of any express term, covenant or provision of this Lease, including, without limitation, the disposition of the proceeds of a condemnation or casualty contrary to the provisions of this Lease. Landlord's refusal to accept any proffered successor tenant or operator of the Project shall be deemed reasonable to the extent such party fails to meet any of the Stated Criteria. Tenant shall require any Mortgagee to provide Landlord with notice of any default under the terms of any loan agreements, mortgages or promissory notes entered or provided to the Mortgagee. In no event shall Landlord be required to forbear in the exercise of any remedies available to Landlord against the Guarantor upon the occurrence of an Event of Default by Tenant. In the event Landlord shall refuse to approve a successor to Tenant proffered by the Leasehold Mortgagee, the sole remedy available to the Leasehold Mortgagee shall be to commence arbitration proceedings in accordance with the provisions of Section 31. The arbitrators shall either approve or disapprove the proposed successor based on compliance with the Stated Criteria and shall make no other award or determination. 20. INDEMNIFICATION. (a) INDEMNITY GENERALLY. Tenant shall defend, pay, indemnify and hold harmless Landlord and its agents, employees, servants and representatives (together, the "Indemnified Parties") from and against any and all claims, demands, injuries, damages, fines, penalties, lawsuits, actions, proceedings, orders, decrees, judgments or liability of any kind or nature by or in favor of anyone whomsoever and from and against any and all costs and expenses incurred by any of the Indemnified Parties, including reasonable attorneys' fees and expenses, resulting or arising from or in connection with (i) any accident, bodily injury, death, personal injury of any kind, or property damage arising directly or indirectly, out of or from or on account of any occurrence in, upon, at, or about the Project; (ii) any accident, bodily injury, death, personal injury or property damage arising, directly or indirectly, out of or in connection with Tenant's operation of gaming activities or the Casino; (iii) any use, occupancy, non-use, or condition of the Project; and (iv) any failure on the part of the Tenant to perform or comply with any of the terms, covenants and conditions of this Lease. (b) DEFENSE. In case any action, suit or proceeding is brought against any of the Indemnified Parties by reason of any occurrence described in clauses (i) through (iv), Tenant or Tenant's insurer, upon the request of Landlord, will, at no expense to Landlord or the Indemnified Party, resist and defend such action, suit or proceeding or cause same to be resisted and defended by counsel reasonably acceptable to Landlord. The Indemnified Party shall have the right, at its discretion, to retain its own counsel and be reimbursed by Tenant for all reasonable attorneys' fees and costs incurred in the defense of any action. The obligations of Tenant under this Section shall survive the termination of this Lease. (c) ENVIRONMENTAL INDEMNITY AND RELEASE. In addition to the foregoing, Tenant agrees to indemnify and hold harmless the Indemnified Parties and to defend them against any lawsuitsor claims for any liability, injuries, damages, penalties or fines (including reasonable attorneys' fees and expenses) arising from or relating to the disposal, discharge, release or spilling into or onto the air, water, soil, sewer system or similar media of any Hazardous Substance which disposal, discharge, release or spill, whether accidental or intentional, occurs on, within or from the Project (including the Casino, wherever located) during the Term. Tenant agrees that Landlord shall have no liability or obligation of any kind to Tenant on account of any Hazardous Substances released on or from the Premises and covenants not to bring any action, claim or demand against Landlord on account thereof; provided, however, that such covenant to not sue Landlord shall not apply to any release or migration of any Hazardous Substance onto the Premises from the Adjacent Parcel which is caused by Landlord or any tenant or occupant of the Adjacent Parcel, their respective employees, contractors or agents, and which first occurs during any period of Landlord's ownership after the Effective Date. (d) SURVIVAL OF INDEMNITY. The provisions of this Section 20 shall survive any termination of this Lease. 21. RIGHT OF ENTRY. Landlord and its authorized agents and employees shall, upon reasonable notice and during all reasonable business hours, have the right to enter upon the Project to examine same; provided, however, that any such entry shall not interfere with Tenant's use or the operation of the Project, and provided further that Tenant shall have the right to have a representative or employee of Tenant accompany any such inspection by Landlord. Landlord shall have the right from time to time to inspect the Premises and to conduct tests and evaluations to confirm whether Hazardous Substances have been released on or from the Project in violation of applicable Governmental Requirements. Such tests shall be conducted at Landlord's sole risk, cost and expense, except that if it is determined that Tenant shall have violated the provisions of Section 20 relating to the release of Hazardous Substances, then Tenant shall, in addition to performing such remediation as may be required, pay to Landlord all costs incurred by Landlord in connection with such tests and evaluations, and such additional tests and evaluations as Landlord may conduct to confirm satisfactory completion of Tenant's remediation work. 22. LIMITATION OF CLAIMS. Landlord shall not be responsible for any damage or loss to the Casino or the Project, its furnishings, fixtures, equipment or other goods thereon due to any cause whatsoever, including, but not limited to, theft, vandalism, public disorder, fire, weather, collisions, floating or underwater hazards, electrolysis, tie-up or boat defects. Additionally, Landlord shall not be responsible for any damage or injury to Tenant's patrons, wherever located, arising from any source, and Tenant shall perform all acts necessary to provide for the safety of its patrons while on the Premises or in the Casino. Upon any sale of the Premises by Landlord, Landlord shall be released from all obligations and liabilities accruing under this Lease prior to the effective date of such sale, provided the transferee shall expressly assume and agree to perform for the benefit of Tenant all obligations of Landlord under this Lease accruing after the effective date of such transfer. 23. ATTORNEYS' FEES AND EXPENSES. Except as otherwise expressly provided in this Lease, each party shall pay its own attorneys' fees and expenses in connection with any matter arising under this Lease. 24. LATE PAYMENTS. Late payments shall be subject to a 3% penalty and interest on late payments shall accrue from the date of delinquency until paid at the rate of 2% in excess of the from time to time publicly announced prime rate of interest of The Boatmen's National Bank of St. Louis. 25. DEFAULT AND REMEDIES. (a) TENANT'S DEFAULT. It shall be an Event of Default if any one or more of the events described in the following clauses (i) through (ix) shall occur and be continuing after expiration of the applicable notice and cure period provided for in such clause or otherwise provided for in subsection (b): (i) if default be made in the punctual payment of any Rent payable to Landlord hereunder, when and as the same shall become due and payable, and such default shall continue for a period of ten (10) days after written notice to Tenant (except that Landlord shall not be required to deliver notice of non-payment of Rent on more than two occasions during any Lease Year), or if default be made in the punctual payment of any Additional Rent payable hereunder, when and as the same shall become due and payable, and such default shall continue for a period of thirty (30) days after written notice to Tenant; (ii) if this Lease be mortgaged byTenant except as provided in Section 19, or if this Lease be assigned or the Project (including the Casino) or any part thereof be sublet, except as provided in Section 12; (iii) if Tenant shall abandon the Work or the Project, or if Tenant shall fail to continuously or fully operate the Project after Project Opening as required under Section 11; (iv) if Tenant shall fail to timelyfile its application for Gaming Licensure, or if Tenant shall withdraw or effectively abandon such application prior to termination of this Lease in accordance with its terms or, after first obtaining Gaming Licensure, if Tenant for any reason ceases to be licensed to conduct a gaming operation at the Project pursuant to the laws of the state of Missouri; (v) if Tenant shall fail to observe, perform or comply with any of the terms, covenants and conditions in this Lease other than those specified in subsections (i) through (iv) above, within 30 days after notice from Landlord specifying the nature of such default; (vi) if Tenant or the Guarantor shall file a voluntary petition in bankruptcy or shall be adjudicated bankrupt or insolvent or shall file any petition or answer seeking any reorganization, readjustment, liquidation, dissolution or similar relief under any bankruptcy or insolvency statute or law of the United States or any State, or shall seek or consent to or acquiesce in the appointment of any bankruptcy or insolvency trustee, receiver or liquidator of tenant, the Guarantor or of all or any substantial part of its properties or the Project; (vii) if within 60 days after the commencement of any involuntary proceeding against Tenant or the Guarantor seeking reorganization, readjustment, liquidation, dissolution or similar relief under any bankruptcy or insolvency statute or law, Tenant or the Guarantor fails to secure a dismissal and discharge thereof; (viii) if Guarantor shall be in default under either of the Guarantees, and such default shall remain uncured beyond the period provided for the cure thereof, if any; (ix) if Tenant or the Guarantor shall make a material misrepresentation in any representation or warranty provided to Landlord under this Lease or in any report provided to Landlord pursuant to Section 13 (b) CURE OR REMEDIES. No Event of Default shall be deemed to have occurred under clauses (ii) through (ix) unless Tenant or the Guarantor, as the case may be, shall fail to cure such default within 30 days after delivery by Landlord of written notice of such default to Tenant, unless the same cannot be cured within 30 days, in which event an Event of Default shall not be deemed to have occurred if Tenant commences the cure of such default within 30 days and thereafter diligently pursues such cure to completion. Upon an Event of Default, Landlord, at its option, may at any time thereafter declare this Lease and all rights of Tenant under this Lease as expired and terminated and Tenant shall remain liable as hereinafter provided. (c) SURRENDER OF PREMISES. Upon any such expiration or termination of this Lease, Tenant shall quit and peacefully surrender the Project to Landlord, and Landlord, upon any such expiration or termination, may without further notice enter upon and re-enter the Project and possess and repossess itself thereof, by force, summary proceedings, ejectment or otherwise, and may dispossess Tenant and remove Tenant and all persons and property from the Project. (d) RELETTING OF PREMISES. If this Lease shall expire or be terminated, or if the Project or any part thereof shall be abandoned by Tenant, or shall become vacant during the Term, Landlord may in its own name, or as agent for Tenant if this Lease not be terminated, enter into possession of and relet the Project or any part thereof for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the Term) and on such conditions as Landlord, in its discretion, may determine and may collect and receive the rents therefor. (e) DIRECT DAMAGES. No event of expiration or termination of this Lease, abandonment or vacancy, shall relieve Tenant of its liability and obligations under this Lease, whether or not the Project shall be relet. In any such event Tenant shall pay Landlord the Rent and all Additional Rent required to be paid hereunder by Tenant up to the time of such event. Thereafter: (i) In the event of termination of the Lease, Tenant, until the date which is the first to occur of (a) the expiration of the Term or (b) the expiration of the 15th Lease Year subsequent to the date of termination, shall be liable to Landlord as damages for Tenant's default, the equivalent of the amount of the Rent and Additional Rent which would be payable under this Lease by Tenant if this Lease were still in effect, less the net proceeds of any reletting effected pursuant to the provisions hereof, after deducting all of Landlord's expenses in connection with such reletting, including without limitation, all repossession costs, brokerage and management commissions, operating expenses, legal expenses, reasonable attorneys' fees, alterations costs, and expenses of preparation of such reletting. The amount of Additional Rent due in the event of expiration or termination of this Lease shall be equal to the Additional Rent paid to Landlord in the year prior to the year of termination divided into twelve equal monthly installments. Tenant shall pay such damages (herein called "deficiency") to the Landlord on the days on which the net Rent would have been payable under this Lease if this Lease were still in effect, and the Landlord shall be entitled to recover from Tenant each deficiency as the same shall arise. (ii) At any time after the expiration or termination of this Lease, in lieu of collecting any further deficiencies as aforesaid, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand, an amount equal to the difference between the Rent which would have accrued to Landlord under this Lease from the date of termination to the date which is the first to occur of (a) the expiration of the Term or (b) the expiration of the 15th Lease Year subsequent to the date of termination, and the then fair and reasonable rental value of the Premises for the same period as provided in Section 25(f). Tenant shall remain liable for any deficiencies not previously recovered by Landlord. (f) VALUE OF PREMISES. If the Premises or any part thereof be relet by Landlord for the unexpired Term, or any part thereof, the amount of rent reserved upon such reletting shall be deemed the fair and reasonable rental value for the part or the whole of the Premises so relet during the term of the reletting. Landlord agrees to make reasonable efforts to mitigate its damages by listing the Premises with a licensed real estate broker for reletting on terms and conditions acceptable to Landlord, but Landlord shall have no obligation to relet the Premises to any particular tenant or for any particular use, including, without limitation, casino gaming. (g) ADDITIONAL DAMAGES. If this Lease be terminated, or if the Project is abandoned or becomes vacant, and whether or not the Project be relet, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord, in addition to any damages becoming due under this Section 25, the following: an amount equal to all expenses, if any, including reasonable attorneys' fees, incurred by Landlord in recovering possession of the Project (whether or not litigation be commenced in aid thereof), repairing any damage to the Project, and all reasonable costs and charges for the care of said Project while vacant, which damages shall be due and payable by Tenant to Landlord at such time or times as such expenses are incurred by Landlord. Tenant hereby expressly waives, as far as permitted by law, the service of any notice of intention to re-enter provided for in any statute, and except as is herein otherwise provided Tenant, for and on behalf of itself and all persons claiming through or under Tenant (including any leasehold mortgagee or other creditor), also waives any and all right of redemption or re- entry or repossession in case Tenant shall be dispossessed by a judgment or by warrant of any court or judge or in case of re- entry or repossession by Landlord or in case of any expiration or termination of this Lease except as expressly provided in this Lease. The terms "enter," "re-enter," "entry" or "re-entry" as used in this Lease are not restricted to their technical legal meanings. (h) WAIVER OF AUTOMATIC STAY. In view of the public interest in the integrity of the gaming process and the involvement of the County and Landlord in the Project, in the event of any voluntary or involuntary petition in bankruptcy involving Tenant or Guarantor, Tenant and Guarantor hereby waive, to the fullest extent permitted by law, any right they may have to object to the waiver of vacation of the automatic stay in all respects as to the rights of Landlord under the Lease and the Guarantees. (i) WAIVER OF JURY TRIAL. Tenant hereby waives all right to trial by jury in any action or proceeding hereafter instituted by Landlord against Tenant with respect to this Lease or the Project. Tenant agrees not to interpose any counterclaim of any nature or description in any such action or proceeding unless it is a compulsory counterclaim. (j) ADDITIONAL REMEDIES. In the event of any breach by Tenant of any of the agreements, terms, covenants or conditions contained in this Lease, Landlord shall have the right to invoke any right and remedy allowed at law or in equity including the right to seek specific performance of Tenant's obligations under this Lease and to enjoin violations of this Lease by Tenant. (k) LANDLORD'S DEFAULT. It shall be an event of default on the part of Landlord (a "Landlord Default") if any one or more of the events described in the following clauses (i) through (iii) shall occur and be continuing after expiration of the applicable notice and cure period provided for in such clause: (i) Landlord shall fail to make any payment which Landlord agrees to make to or for the benefit of Tenant pursuant to Section 2 or to otherwise cure on a timely basis any objection raised by Tenant under Section 2 which Landlord has theretofore agreed in writing to cure, after 30 days prior written notice to Landlord; (ii) Landlord shall make a material misrepresentation in any representation or warranty provided to Tenant under Section 8(b) of this Lease, and such misrepresentation shall materially and adversely affect any right or benefit available to Tenant under this Lease; or (iii) Landlord shall breach any express covenant of Landlord under this Lease and shall fail to cure such breach within 30 days after notice from Tenant specifying the nature of such breach, unless the same cannot be cured within 30 days, in which event Landlord shall not be deemed in default provided Tenant commences the cure of such default within 30 days and thereafter diligently pursues such cure to completion. If a Landlord Default shall occur, Tenant shall have the right to pursue any remedy available to Tenant at law or in equity on account of such Landlord Default; provided, however, in no event shall Tenant be entitled to (i) withhold, deduct or offset Rent or Additional Rent, (ii) vacate or abandon the Project or close the Casino (except pursuant to any express right of vacation or closure granted Tenant under this Lease), (iii) seek or recover consequential damages (such as for lost profits) from Landlord, (iv) seek or recover damages or equitable relief in violation of the provisions of Sections 20(c) or Section 22, or (v) terminate this Lease (except pursuant to any express right of termination granted Tenant under this Lease). Tenant hereby waives and releases each of the claims specified in clauses (i) through (v) hereof. In all events, any recovery of monetary damages by Tenant shall be limited solely to the interest of Landlord in the Premises, which shall include the Rentals and avails thereof. 26. REMEDIES CUMULATIVE. Each right and remedy provided for in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Landlord or Tenant or any one or more of the rights or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by Landlord or Tenant of any or all other rights or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise. 27. SURRENDER OF PREMISES. Upon the expiration or termination of this Lease, Tenant agrees to quit and surrender the Premises, clean and free of any and all hazardous or toxic substances, hazardous wastes, infectious wastes, solid waste, pollutants and contaminants which were released, spilled or discharged into or on the Project during the Tenant's tenancy and in the same condition and repair as on the date of execution hereof, and Tenant shall remove the Casino and, at the discretion of Landlord, any other improvements, fixtures or structures installed or located within the Premises or any public right of way at Tenant's sole cost and expense and without expense to Landlord. If Tenant shall fail to remove any of Tenant's property within 30 days after the receipt of notice of termination or expiration of this Lease, Tenant's property shall, at the option of Landlord, either be deemed abandoned and become the exclusive property of Landlord, or Landlord shall have the right to remove Tenant's property at the expense of Tenant, without further notice to or demand upon Tenant and hold Tenant responsible for any and all charges and expenses incurred by Landlord therefor. If the Premises is not surrendered as and when aforesaid, Tenant shall indemnify Tenant against all loss or liability resulting from the delay of Tenant in so surrendering the same including without limitation, any claims made by any succeeding occupant founded on such delay. Tenant's obligations under this Section shall survive the expiration or sooner termination of the Term. 28. CURE OF TENANT'S DEFAULT. If Tenant shall fail to make any payment or perform any act required hereunder to be made or performed by Tenant then Landlord may, but shall be not be obligated to, make such payment or perform such act with the same effect as if made or performed by Tenant. Entry by Landlord upon the Project for such purpose shall not waive or release Tenant from any default or obligation hereunder. Tenant shall reimburse Landlord for all sums paid and all costs incurred by Landlord in performing the obligations of Tenant hereunder, including attorneys' fees, upon Landlord's demand therefor which shall be Additional Rent hereunder. 29. NOTICES. All notices, demands, request or other communications ("notices") required or permitted by this Lease shall be in writing and shall be deemed to be received when actually received by any person at the intended address if personally served or if sent by courier or telex, whether actually received or not, twenty-four (24) hours after the date and time of delivery to a nationally recognized courier, addressed as follows: To Landlord: St. Louis County Port Authority Economic Council of St. Louis County 121 South Meramec, Suite 900 Clayton, Missouri 63105 Attention: Director of Real Estate Copies to: Economic Council of St. Louis County 121 South Meramec, Suite 900 Clayton, Missouri 63105 Attention: General Counsel St. Louis County 41 South Central Clayton, Missouri 63105 Attention: County Counselor If to Tenant: Showboat Development Company 3720 Howard Hughes Parkway Las Vegas, Nevada 89109 Copies to: Kummer Kaempfer Bonner & Renshaw 3800 Howard Hughes Parkway Seventh Floor Las Vegas, Nevada 89109 Attention: John N. Brewer Either party may, in substitution of the foregoing, designate a different address and addresses within the continental United States for purposes of this section by written notice delivered to the other party in the manner prescribed, at least ten (10) days in advance of the date upon which such change of address is to be effective. Any notices relating to maintenance shall be given to those parties locally responsible as hereinafter designated by the parties upon completion of the anticipated improvements. 30. UNAVOIDABLE DELAY. As used in this Lease, the term "Unavoidable Delay" shall mean any delay if and to the extent caused by a fire, flood, tornado, earthquake, severe inclement weather or other Act of God, strike, lockout or other labor dispute, unavailability of essential materials, war, insurrection or civil disorder. In no event shall lack of funds, Tenant's failure to comply with Tenant's contractual obligations or changes in the economy or marketplace constitute a basis for asserting an Unavoidable Delay. 31. ARBITRATION OF CERTAIN DISPUTES. (a) ARBITRATION OF SPECIFIC DISPUTES. In the event of a dispute between the parties pursuant to Sections 9, 10, 12, 14, 16 or 19, the issue requiring resolution may be submitted by either party to expedited arbitration in accordance with the following procedures: (b) ARBITRATION PROCEDURES. Arbitration shall be commenced by written notice thereof from the party seeking arbitration to the other party. Not later than 10 days after delivery of such notice, each party shall select an independent arbitrator who shall be an attorney licensed to practice law in any state and practicing law for not less than 20 years. Not later than 20 days after their selection, the two arbitrators shall jointly select a third arbitrator having the same qualifications as themselves. The arbitration panel shall meet and determine the rules for submission and hearing of evidence and so advise Landlord and Tenant not later than 10 days after their selection. The panel shall convene and conduct a hearing according to the rules established by them and shall render a written decision which shall be binding on the parties not later than 60 days after the date the third arbitrator has been selected. The decision of the arbitration panel shall be final and binding on the parties. Each party shall bear the fees and expenses of its own arbitrator and shall share equally in the payment of the fees and expenses of the third arbitrator. 32. ESTOPPELS. Each party acknowledges that from time to time the other party may request, for the benefit of third parties, information relating to the effectiveness of this Lease and the Guarantees, whether this Lease or the Guarantees have been modified or amended, the status of payments of Rent and Additional Rent due hereunder, whether an Event of Default or a Landlord Default has occurred and is continuing, and other information reasonably and customarily required by lenders, accountants and other parties having an interest in the Project, or in Landlord, Tenant or Guarantor and their respective operations. Each party agrees to respond in writing to any request it may receive from the other party within 10 days after its receipt of such request, and to provide all such requested information. 33. RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be deemed to constitute or be construed or implied to create the relationship of principal and agent, partnership, joint venture or any other relationship between the parties hereto, other than the relationship of the landlord and tenant. The term "Landlord" as used in this Lease means only the owner of the current interest of Landlord in the Premises or, as the case may be, the successor thereto from time to time. 34. NO BROKER. Tenant covenants, warrants and represents to Landlord that there was no broker instrumental in consummating this Lease and that no conversations or prior negotiations were had by Tenant with any broker concerning the renting of the Premises. Tenant agrees to indemnify and hold the Landlord harmless against and from all liabilities, including reasonable attorneys' fees, arising from any claims for brokerage commissions or finders' fees resulting from or arising out of any conversations or negotiations had by Tenant directly with any broker. 35. CONFLICT OF INTEREST. The parties agree to abide by all Governmental Requirements relating to conflict of interest. Additionally, but not in limitation of the foregoing, no member, officer, commissioner or employee of Landlord or any branch of County government who has any power of review or approval of any of the undertakings herein, shall participate in any decisions relating thereto which affect his/her personal interests or the interests of any corporation or partnership in which he or she is directly or indirectly interested. No member, official or employee of Landlord shall have any personal interest direct or indirect, in this Lease, nor participate in any decisions relating thereto which affect his or her personal interests or the interests of any corporation or partnership in which he or she is directly or indirectly interested. In the construction and/or operation of the Project, Tenant shall not knowingly, after due inquiry, employ or contract with any person if a member of his or her immediate family is a member, officer, commissioner or employee of Landlord or any branch of County government in an administrative capacity, by which is meant those who have selection, hiring, supervisory or operational responsibility for the work to be performed pursuant to this Lease. For the purposes of this section, "immediate family" includes: wife, husband, son, daughter, mother, father, brother, sister, brother- in-law, sister-in-law, father-in-law, mother-in-law, aunt, uncle, niece, nephew, step-parent and stepchild. 36. ENTIRE LEASE. This Lease sets forth the entire agreement between the parties. There are no understandings, agreements, statements, promises, or representations or warranties, express or implied, in respect of the Property, the Project or this Lease which are not specified herein. This Lease shall not be modified, amended or supplemented except by a writing subscribed to by the party to be charged, nor may this Lease be canceled by Tenant or the Project surrendered except in accordance with the express provisions of this Lease. 37. SURVIVAL OF COVENANTS. All representations, warranties and indemnities set forth in this Lease shall survive the execution hereof. 38. BINDING EFFECT. This Lease binds the parties hereto and inures to the benefit of their respective heirs, personal representatives, successors or assigns. 39. TIME OF THE ESSENCE. Time is of the essence with respect to the performance of this Lease and each and every provision contained herein. 40. VENUE. If and in the event of a dispute arising hereunder, venue shall be vested in the Circuit Court of St. Louis County, State of Missouri. Tenant acknowledges that it has negotiated this Lease in the County, and has made numerous business contacts and entered into agreements relating to real estate and other matters sufficient to confer jurisdiction of the courts of St. Louis County, State of Missouri. 41. AUTHORIZATION AND CAPACITY. The parties hereto represent to each other that each has the full right, power and authority to enter into this Lease and to fully perform its obligations. The persons executing this Lease warrant and represent that each has the authority to execute in the capacity stated and to bind the parties hereto. 42. THIRD-PARTY BENEFICIARIES. Landlord and Tenant are the only parties to this Lease and the only parties capable of or entitled to the enforcement of its provisions. Each party confirms that no other parties are intended to be third party beneficiaries of any covenant or provision of this Lease. Notwithstanding the foregoing provisions of this Section 42, Tenant acknowledges and agrees that the County shall be an intended third party beneficiary of Tenant's designation of the County as the "home dock" for the Project under Section 13. 43. SEVERABILITY. In the event any provision of this Lease is rendered void or unenforceable by a court of competent jurisdiction, the remaining provisions of this Lease shall be construed so as to constitute a complete agreement, and this Lease, as so reformed, shall remain in full force and effect. 44. NON-WAIVER PROVISION. Failure by either party hereto,at any time, to require the performance by the other of any term of this Lease, shall not in any way effect the right of either party to enforce such terms, nor shall any waiver by either party of any term hereof be taken or held to be a waiver of any other provision of this Lease. No waiver of any term or provision of this Lease shall be effective unless the same is in writing, signed by the parties hereto. 45. GOVERNING LAW. This Lease is entered into in the State of Missouri and shall be construed, enforced and governed, as to both validity and performance, in accordance with the laws of the State of Missouri and all of the rights and obligations of the parties hereunder shall be determined in pursuant to the laws of the State of Missouri. 46. RECORDING OF LEASE. From and after the Commencement Date, either party may, at its own expense, cause a memorandum of this Lease, approved by the other party, to be recorded in the Office of the Recorder of Deeds for the County of St. Louis. 47. ATTACHMENTS. All exhibits attached to this Lease are incorporated herein and made part hereof by reference. 48. HEADINGS. The captions, headings and arrangements in this Lease are for convenience only and do not in any way define, limit or modify the terms or provisions hereof. 49. NUMBER AND GENDER OF WORDS. Whenever the singular number is used in this Lease, the same shall include the plural where appropriate and words of any gender shall include the other gender where appropriate. 50. BUSINESS DAYS. Except as provided in Section 11, whenever it is provided in this Lease that an event shall occur on a day which is a Saturday, Sunday or legal holiday in the State of Missouri, such event shall occur instead on the next business day. 51. MULTIPLE COUNTERPARTS. This Lease may be executed in a number of identical counterparts and if so executed, each such counterpart is deemed an original for all purposes, and all such counterparts shall collectively constitute one Lease. IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as the date first above written. THIS LEASE CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES LANDLORD: ST. LOUIS COUNTY PORT AUTHORITY By:__/s/__________________ Name: Sheila Sweeney Title: Chairman APPROVED AS TO FORM _/s/____________________ General Counsel, Economic Council of St. Louis County TENANT: SOUTHBOAT LIMITED PARTNERSHIP By: SHOWBOAT LEMAY, INC. By:_/s/_________________________ Name: Title: ATTACHMENT A Legal Description of the Property ATTACHMENT B Legal Description of the Premises ATTACHMENT B-2 Diagram of the Premises ATTACHMENT C-1 Diagram of the Premises and Adjacent Parcel ATTACHMENT C-2 Diagram of the Parcel ATTACHMENT D Preliminary Site Plan EX-10.04 5 EXHIBIT 10.04 ESCROW AGREEMENT THIS ESCROW AGREEMENT (the "Agreement") is made, entered into, and effective as of this 13 day of October, 1995 (the "Effective Date"), by and between the ST. LOUIS COUNTY PORT AUTHORITY, a public body corporate and politic of the State of Missouri ("Landlord"), SOUTHBOAT LIMITED PARTNERSHIP, a Missouri limited partnership ("Tenant"), SHOWBOAT, INC., a Nevada corporation ("Guarantor") and parent company of Showboat Lemay, Inc, a Missouri corporation and Tenant's general partner, and BOATMEN'S TRUST COMPANY, a Missouri corporation (the "Escrow Agent"); WITNESSETH, THAT: WHEREAS, Landlord and Tenant have entered into a certain Lease and Development Agreement dated as of the date hereof (the "Lease"), a copy of which is attached hereto as EXHIBIT A; and WHEREAS, terms defined in the Lease and used herein shall have the same meaning herein as so defined; and WHEREAS, the Lease provides as follows: (a) the parties shall establish an Escrow with Boatmen's Trust Company as Escrow Agent; (b) Tenant shall deposit into the Escrow the $500,000 Acceptance Fee and the $750,000 Security Deposit, and Guarantor shall deposit into the Escrow the Rent Guarantee and the Completion Guaranty; (c) not later than 120 days after the Effective Date, Tenant shall direct Escrow Agent to release the Acceptance Fee to Landlord or Tenant shall cancel the Lease; (d) upon termination of the Lease due to the failure of any of the Conditions during the Due Diligence Period, the Acceptance Fee and the Security Deposit shall be released to Tenant and the Guarantees shall be released to Guarantor; (e) upon the occurrence of the Commencement Date, the Guarantees shall be released to Landlord and the Security Deposit shall be returned to Tenant; (f) in the event that prior to the Commencement Date Tenant shall withdraw or abandon Tenant's application for Gaming Licensure or for any Site Permits, or otherwise abandon the Project, Landlord, as Landlord's sole remedy, shall retain the Security Deposit as liquidated damages and not as a penalty, the parties not being able to determine Landlord's actual damages prior to the Commencement Date; and WHEREAS, Escrow Agent has agreed to serve as Escrow Agent under the Lease in accordance with the terms of this Agreement; NOW THEREFORE, for and in consideration of the premises and mutual covenants and agreements of the parties contained herein, Landlord, Tenant, Guarantor and Escrow Agent hereby agree as follows: 1. APPOINTMENT OF ESCROW AGENT. Landlord, Tenant and Guarantor hereby appoint Escrow Agent to serve as Escrow Agent in accordance with the provisions of the Lease and this Escrow Agreement, and Escrow Agent hereby accepts such appointment and agrees to hold in trust, administer, and dispose of the Tenant's and Guarantor's deliveries in accordance with this Escrow Agreement. Escrow Agent acknowledges receipt from Tenant of its $1,000 fee for service as Escrow Agent during the first twelve (12) months of this Agreement; Escrow Agent's fee for services rendered during each subsequent twelve (12) month period or portion thereof this Agreement remains in effect, if any, shall be borne by Tenant but shall not exceed $1,000 for each such subsequent twelve (12) month period or portion thereof. 2. ESTABLISHMENT OF ESCROW. Landlord and Tenant shall maintain the Escrow established with Escrow Agent until the Commencement Date or such earlier date as Tenant cancels the Lease pursuant to Section 2(b) or 3(d). In the event Tenant cancels the Lease pursuant to Section 2(b) or 3(d) thereof, Tenant shall deliver written notice of such election to Landlord and Escrow Agent. 3. ESCROW DEPOSITS. Tenant agrees to deposit into Escrow, not later than 5 business days after the Effective Date, the $500,000 cash Acceptance Fee and the $750,000 Security Deposit in cash or in the form of a 6-month (or longer) irrevocable letter of credit in the stated amount of $750,000 issued by a bank or financial institution acceptable to Landlord permitting draws by the Escrow Agent (and deposit into the Escrow of the resulting cash) upon unilateral presentation to the issuer by the Escrow Agent of Landlord's certificate of abandonment pursuant to Section 6 hereof. Tenant may substitute in place of any cash deposit it may have made a letter of credit meeting the requirements of the initial letter of credit. Funds shall be deposited into the Escrow Account by wire transfer to Boatmen's National Bank of St. Louis, ABA No. 081000032, for credit to Boatmen's Trust Company, Account Number 100700004888, for credit to Southboat Escrow. Escrow Agent agrees to acknowledge receipt and custody of the Rent Guarantee and Completion Guarantee of Guarantor when delivered to Escrow Agent by Guarantor or Landlord. 4. RELEASE OF ESCROW TO TENANT. Within 5 business days after cancellation of the Lease in accordance with the provisions of Section 2(b) or Section 3(d) thereof, or within 5 business days after the occurrence of the Commencement Date, Landlord shall deliver its certificate to Escrow Agent, and Escrow Agent shall be authorized and directed, under the terms of this Escrow Agreement, to immediately release (i) to Tenant the cash or letter of credit deposited in the Escrow by Tenant, and (ii) to Guarantor, the Guarantees. 5. RELEASE OF ACCEPTANCE FEE TO LANDLORD. In the event the Lease is not timely cancelled by Tenant pursuant to Section 2(b) thereof, Tenant shall direct the Escrow Agent in writing to release the Acceptance Fee from the Escrow and deliver it to Landlord. In the event Tenant fails to direct Escrow Agent to deliver the Acceptance Fee to Landlord on or before the expiration of the Due Diligence Period, whether or not Tenant has satisfied or waived all or any of the Conditions, the Lease shall be void and of no further force or effect, and Landlord shall deliver written notice to the Escrow Agent to release the Acceptance Fee and the Security Deposit to Tenant, and to release the Guarantees to Guarantor, and no party shall have any further obligation or liability to the other under the Lease; provided, however, that if Tenant shall have withdrawn or abandoned Tenant's application for Gaming Licensure or for any Site Permits or otherwise abandoned the Project, Landlord shall be entitled to recover the Security Deposit as liquidated damages for such withdrawal or abandonment, as provided in Section 6. 6. RELEASE OF SECURITY DEPOSIT TO LANDLORD. If Land lorddelivers a certificate to Escrow Agent and to Tenant stating thatTenant has with drawn or abandoned Tenant's application for Gaming Licensure or for any Site Permits, or otherwise abandoned the Project, or that Tenant has failed to renew or replace any letterof credit deposited in the Escrow within 30 days prior to its stated expiration date, Escrow Agent shall draw down any letterof credit deposited with Escrow Agent and place the funds received pursuant to such draw into the Escrow for disposition by the parties in accordance with the provisions hereof. UnlessTenant shall contest the validity or propriety of Landlord'snotice by delivery of written notice to Escrow Agent within 10days after Escrow Agent's receipt of instructions to release theSecurity Deposit to Landlord, Escrow Agent shall be deemedauthorized and directed to deliver the Security Deposit toLandlord, to deliver all other funds to Tenant, and theGuarantees to Guarantor. If Tenant shall timely contestLandlord's notice, as provided in this Section 6, Escrow Agentshall deposit the funds and documents held by it into the clerkof the St. Louis County Circuit Court for disposition by theCourt in accordance with the provisions of Section 16 hereof. 7. INVESTMENT OF FUNDS. All funds held on deposit by the Escrow Agent shall be invested as directed in writing by Tenant in any securities of or guaranteed by the U.S. Government or any instrumentality thereof, including without limitation money market funds investing in U. S. Government obligations (the "Permitted Investments"), and all interest earned thereon shall belong and be paid to Tenant, quarterly or monthly, notwithstanding any contrary disposition of the funds held in Escrow. 8. NO IMPLIED DUTIES. The duties of Escrow Agent shall be as expressed under this Agreement and Escrow Agent shall have no implied duties. The permissive right or power to take any action shall not be construed as a duty to take action under any circumstances and Escrow Agent shall not be liable except in the event of its gross negligence or willful misconduct. 9. NO RISK OF ESCROW AGENT'S FUNDS. Escrow Agent shall not be obligated to risk its own funds in the administration of the account and shall have a lien against any funds, securities or other property in its possession or control (the "Escrow Account") for its fees, expenses and advancements. Escrow Agent need not take any action under the Agreement which may involve it in any expense or liability until indemnified to its satisfaction for any expense or liability it reasonably believes it may incur. 10. NO RECITALS BY ESCROW AGENT. Any recitals contained in the Agreement shall be deemed to be those of the principals and not those of Escrow Agent. 11. NO SURETY. Unless specifically required by the Agreement, Escrow Agent shall not be required to give any bond or surety or report to any Court despite any statute, custom or rule to the contrary. 12. NOTICES. Any notice to or demand shall be given by being deposited, certified mail, postage prepaid, in the United States mail, addressed (until another address is filed in writing) to each of the parties as follows: To Escrow Agent: Boatmen's Trust Company 510 Locust Street St. Louis, Missouri 63101 Attention: Corporate Trust Department To Guarantor: Showboat, Inc. 2800 Fremont Street Las Vegas, Nevada 89104 Attention: H. Gregory Nasky To Tenant: Showboat Development Company 3720 Howard Hughes Parkway Las Vegas, Nevada 89109 With a copy to: Kummer Kaempfer Bonner Renshaw Seventh Floor 3800 Howard Hughes Parkway Las Vegas, Nevada 89109 Attention: John N. Brewer To Landlord: St. Louis County Port Authority Economic Council of St. Louis County 121 South Meramec, Suite 900 Clayton, Missouri 63105 Attention: Director of Real Estate With a copy to: Economic Council of St. Louis County 121 South Meramec, Suite 900 Clayton, Missouri 63105 Attention: General Counsel St. Louis County 41 South Central Clayton, Missouri 63105 Attention: County Counselor 13. ACTION ON INSTRUCTIONS. Escrow Agent shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram, or other paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. 14. USE OF AGENTS OR RECEIVERS. Escrow Agent may execute any of the duties under the Agreement by or through agents or receivers. 15. RESIGNATION OF ESCROW AGENT. Escrow Agent may at any time resign from the position created in the Agreement by giving thirty (30) days written notice by registered or certified mail to the parties to the Agreement and such resignation shall take effect at the end of such thirty days or upon earlier appointment of a successor. 16. INTERPLEADER. In the event Escrow Agent becomes involved in litigation by reason hereof, it is hereby authorized to deposit with the clerk of the court in which the litigation is pending any and all funds, securities, or other property held by it pursuant hereto, less its fees, expenses and advances, and thereupon shall stand fully relieved and discharged of any further duties hereunder. Also, in the event Escrow Agent is threatened with litigation by reason hereof, it is hereby authorized to implead all interested parties in any court of competent jurisdiction and to deposit with the clerk of such court any such funds, securities, or other property held by it pursuant hereto, less its fees, expenses and advances, and thereupon shall stand fully relieved and discharged of any further duties hereunder. 17. ENGAGEMENT OF COUNSEL. Escrow Agent may engage legal counsel, who may not be counsel for any party to the Agreement, and shall not be liable for any act or omission taken or suffered pursuant to the opinion of such counsel. The fees and expenses of such counsel shall be deemed to be a proper expense for which Escrow Agent will have a lien against the Escrow Account. 18. DUTIES LIMITED TO AGREEMENT. Unless specifically required by the terms of the Agreement, Escrow Agent need not take notice of or enforce any other document or relationship, including, without limiting the generality of the foregoing, any contract, settlement, arrangement, plan, assignment, pledge, release, decree or the like, but its duties shall be solely as set out in the Agreement. 19. INDEMNIFICATION OF ESCROW AGENT. The parties to the Agreement (other than Escrow Agent) hereby agree, jointly and severally, to indemnify and save harmless the Trust company from and against any loss, liability or expense reasonably incurred, without negligence or bad faith on its part, arising out of or in connection with the Agreement, including the expense of defending itself against any claim or liability in the premises. This indemnity agreement shall survive the termination of the Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as the date first above written. LANDLORD: ST. LOUIS COUNTY PORT AUTHORITY By:_/s/_______________________ Name: Title: APPROVED AS TO FORM _/s/_________________________ General Counsel, Economic Council of St. Louis County TENANT: SOUTHBOAT LIMITED PARTNERSHIP By: SHOWBOAT LEMAY, INC. By:_/s/___________________________ Name: H. Gregory Nasky Title: Secretary GUARANTOR: SHOWBOAT, INC. By:_/s/__________________________ Name: H. Gregory Nasky Title: Secretary ESCROW AGENT: BOATMEN'S TRUST COMPANY By:_/s/_______________________ Name: Title: EX-10.05 6 EXHIBIT 10.05 GUARANTEE OF MINIMUM RENT FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, and to induce the ST. LOUIS COUNTY PORT AUTHORITY, a public body corporate and politic of the State of Missouri ("Landlord") to enter into that certain Lease and Development Agreement dated as of the date hereof (the "Lease") with Southboat Limited Partnership, a Missouri limited partnership ("Tenant"), SHOWBOAT, INC., a Nevada corporation ("Guarantor"), having its principal place of business at 2800 Freemont Street, Las Vegas, Nevada 89104, does hereby unconditionally covenant and agree with Landlord, its successors and assigns, as follows: 1. Terms defined in the Lease and used in this Guarantee of Minimum Rent (the "Rent Guarantee") shall have the same meaning herein as so defined. 2. If an Event of Default shall occur under Section 25(a)(i) of the Lease at any time during the Guarantee Period (as hereinafter defined) due to the failure of Tenant to pay, within ten (10) days after notice of nonpayment (unless notice shall no longer be required pursuant to such subsection), any component or installment of Minimum Rent, or if the Lease shall be terminated at any time during the Guarantee Period due to an Event of Default, then Guarantor will well and truly immediately pay Landlord on demand, in cash, the full sum of unpaid Minimum Rent due Landlord under the Lease for the remainder of the Guarantee Period, not to exceed the total amount of all Minimum Rent allocable to the Guarantee Period (the "Guaranteed Amount"). As used in this Rent Guarantee, the term "Guarantee Period" shall mean that period commencing on the Commencement Date and ending on the last day of the 15th Lease Year occurring after the Commencement Date. Notwithstanding the first sentence of this Section 2, in lieu of paying to Landlord in one lump sum the entire Guaranteed Amount, Guarantor may elect to pay to Landlord the Minimum Rent as and when the same would have otherwise been due under the Lease through the remainder of the Guarantee Period had the Lease not been terminated or had an Event of Default under Section 25(a)(i) not occurred; provided, however, that in order to avail itself of such payment option, Guarantor shall deliver to Landlord, in addition to all accrued but unpaid sums of Minimum Rent, if any, an irrevocable letter of credit in the stated amount of $2 million issued by a national bank or financial institution acceptable to Landlord in Landlord's discretion and unconditionally permitting Landlord to draw the entire stated amount of the letter of credit upon presentation to the issuer of Landlord's certificate stating that Guarantor has failed (a) to make timely payment, as and when due, of any installment of Minimum Rent, or (b) to renew or replace the letter of credit not later than 30 days prior to the expiration of the term thereof. In addition, in the event Landlord becomes entitled to draw down the letter of credit provided by Guarantor, or in the event an Event of Default under this Guarantee shall occur, Guarantor's option to make installment payments of Minimum Rent shall be null and void, and Guarantor shall immediately pay to Landlord, on demand, in cash, the full sum of the Guaranteed Amount due but unpaid. 3. This Rent Guarantee constitutes an absolute and unconditional guarantee of payment of Minimum Rent during the Guarantee Period. It shall be enforceable against Guarantor, its successors and assigns, without the necessity for any suit or proceedings by Landlord against Tenant, its successors and assigns, and without the necessity of any notice of acceptance of this Rent Guarantee. In addition, Guarantor further waives any right Guarantor may have to seek a reduction in, or a credit against payment of, the Guaranteed Amount, or any portion thereof, for any reason other than payment of the Guaranteed Amount or refusal to lease to a successor tenant meeting all of the Stated Criteria (as defined in the Lease), including without limitation any claim based on the failure of Landlord (a) to mitigate its damages except as required in the Lease or in accepting a tenant meeting all of the Stated Criteria, (b) to obtain a new tenant, licensee or operator to replace or succeed Tenant other than a tenant meeting all of the Stated Criteria, or (c) to realize fair market value rentals or any other income from the leasing, licensing or operation of the Premises; provided, however, that the Guaranteed Amount shall be reduced by an amount equal to any rent or license or operating fees actually received by Landlord during the Guarantee Period from any new tenant, licensee or operator of the Premises procured by Landlord, after deduction of (i) any Rent and Additional Rent accrued under the Lease but unpaid to Landlord, and (ii) Landlord's reasonable expenses incurred in the enforcement of Tenant's obligations under the Lease and Guarantor's obligations under this Rent Guarantee, and in reletting or licensing the use of the Premises, including, without limitation reasonable brokerage fees and commissions and reasonable attorneys' fees and expenses. 4. Guarantor agrees that the validity of this Rent Guarantee and the obligations of Guarantor shall in no way be terminated, affected or impaired by reason of the assertion or the failure or delay to assert by Landlord against Tenant, or Tenant's successors and assigns, any of the rights or remedies reserved to Landlord pursuant to the provisions of the Lease. The single or partial exercise of any right, power or privilege under this Rent Guarantee shall not preclude any other or the further exercise thereof or the exercise of any other right, power or privilege by Landlord. 5. Failure of Guarantor to honor any demand for payment under this Rent Guarantee within ten (10) days after notice thereof by Landlord (which notice shall not be required more than twice during any twelve month period) and to make immediate payment of any sums due hereunder, or the breach by Guarantor of any representation or warranty of Guarantor hereunder, shall constitute an Event of Default hereunder. 6. This Rent Guarantee shall not be affected and the liability of the Guarantor shall not be extinguished or diminished by Landlord's receipt, application or release of security given for the performance and observation of the covenants and conditions in the Lease to be performed or observed by Tenant, its successors and assigns, including any sums paid by Guarantor under the Guarantee of Completion issued by Guarantor to Landlord on the date hereof (the "Completion Guarantee"), by the cessation from any cause whatsoever of the liability of Tenant, its successors and assigns, by reason of sums paid or payable to Landlord from the proceeds of any insurance policy or condemnation award (unless the Lease is terminated incident to condemnation), or by any extensions, renewals, amendments, indulgences, modifications, transfers or assignments in whole or in part of the Lease, whether or not notice thereof is given to Guarantor. 7. Guarantor agrees that the liability of Guarantor is co-extensive with that of Tenant and also joint and several. 8. Landlord's acceptance of a note or collateral of Tenant shall not constitute the full cash payment required herein. This Rent Guarantee is given in addition to all other guarantees which may pertain to Tenant's indebtedness, and is not subordinate to any other guarantees. Landlord's rights under all guarantees, including this Rent Guarantee, shall be cumulative and independently enforceable. It shall not be a condition to the enforcement of this Guarantee that any other guarantees or collateral be resorted to by Landlord. Any such collateral or guarantee, including the Completion Guarantee, may be applied by Landlord in satisfaction of any obligation or liability of Tenant under the Lease without thereby impairing, reducing, diminishing or otherwise modifying the obligations of Guarantor under this Rent Guarantee. 9. In order to induce Landlord to enter into the Lease, Guarantor makes the following representations and warranties to Landlord, all of which representations and warranties shall be deemed restated as of the Commencement Date: (a) Guarantor is duly formed and validly existing as a Nevada corporation; (b) the execution and delivery of this Rent Guarantee and the performance by Guarantor of Guarantor's obligations hereunder have been duly authorized by all requisite corporate action; (c) this Rent Guarantee constitutes the legal, valid and binding obligation of Guarantor and is enforceable against Guarantor in accordance with its terms; (d) no litigation or regulatory proceedings are pending or, to the best of Guarantor's knowledge, threatened against Guarantor which, if adversely determined, would likely have a material adverse impact on Guarantor or on this Rent Guarantee; (e) Guarantor is not a party to, and neither Guarantor nor Guarantor's properties, real or personal, are subject to, any agreement, order, proceeding, ruling or other matter in conflict with any provision of this Rent Guarantee or which materially and adversely affects its ability to perform its obligations hereunder; (f) Guarantor is solvent and is not a party to any assignment for the benefit of creditors or bankruptcy proceeding; and (g) Guarantor is not in material default of any contract or agreement to which it is a party which materially and adversely affects Guarantor's ability to perform its obligations under this Rent Guarantee. 10. Guarantor agrees that it will, at any time and from time to time, within ten (10) business days following written request by Landlord, execute, acknowledge and deliver to Landlord a statement certifying that this Rent Guarantee is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating such modifications). Guarantor agrees that such certificate may be relied on by third parties. Should Landlord be obligated byany bankruptcy or other law in connection with any bankruptcyproceeding of Tenant or Guarantor to repay to Tenant or toGuarantor or to any trustee, receiver or other representative orany of them, any amounts previously paid to Landlord, itssuccessors and assigns, this Rent Guarantee shall be reinstatedin the amount of such repayments. 11. As a further inducement to Landlord to make and enter into the Lease and in consideration thereof, Landlord and Guarantor covenant and agree that in any action or proceeding brought on, under or by virtue of this Rent Guarantee, Landlord and Guarantor shall and do hereby waive trial by jury. Without regard to principles of conflicts of laws, the validity, interpretation, performance and enforcement of this Rent Guarantee shall be governed by and construed in accordance with the laws of the State of Missouri, and Guarantor hereby consents to jurisdiction and venue in the United States District Court for the Eastern District of Missouri, St. Louis, Missouri, wherein Landlord at its election may bring an action for the enforcement of this Rent Guarantee. If Landlord commences an action in either of such courts, Guarantor hereby agrees that it will submit to the personal jurisdiction of such court and will not attempt to have such action dismissed, abated or transferred on the ground of FORUM NON CONVENIENS. 12. Guarantor covenants and agrees that for so long as the restrictive covenant described in Section 12 of the Lease shall remain in effect as against Tenant, Guarantor shall not participate in any manner in the ownership, sponsorship, control, management, operation or use of any riverboat gaming facility along either the Illinois or Missouri banks of the Mississippi River from the southern boundary of the City of St. Louis to the northern boundary of Jefferson County, Missouri. Guarantor acknowledges that the restrictive covenant contained in this Section 12 (and made by the Tenant under the Lease) is reasonable under all of the circumstances. The provisions of this Section 12 shall survive any termination of this Rent Guarantee. 13. Guarantor covenants and agrees to pay interest to Landlord on any and all sums due Landlord hereunder which remain unpaid for more than five (5) days after delivery of Landlord's demand for payment, commencing on the date such payment is due, at the rate of two percent (2%) in excess of the from time to time publicly announced corporate base rate of interest of The Boatmen's National Bank of St. Louis. 14. If any provision or application of this Rent Guarantee is invalid, unenforceable or illegal for any reason, the parties agree that such invalid, unenforceable or illegal provision or application shall be deemed modified to the extent, but only to the extent, required to make such portion or application enforceable, and that no such modification shall be deemed to affect the remainder of this Rent Guarantee. 15. Unless otherwise indicated differently, all notices, payments, requests, reports, information or demands which any party hereto may desire or may be required to give to any other party hereunder, shall be in writing and shall be personally delivered or sent by telegram, telex, telecopier or first-class certified or registered United States mail, postage prepaid, return receipt requested, and sent to the party at its address appearing below or such other address as party shall hereafter inform the other party hereto by written notice given as aforesaid: If to Guarantor: Showboat, Inc. 2800 Fremont Street Las Vegas, Nevada 89104 Attention: H. Gregory Nasky With a copy to: Kummer Kaempfer Bonner Renshaw Seventh Floor 3800 Howard Hughes Parkway Las Vegas, Nevada 89109 Attention: John N. Brewer If to Landlord: St. Louis County Port Authority Economic Council of St. Louis County 121 South Meramec, Suite 900 Clayton, Missouri 63105 Attention: Director of Real Estate With copies to: Economic Council of St. Louis County 121 South Meramec, Suite 900 Clayton, Missouri 63105 Attention: General Counsel St. Louis County 41 South Central Clayton, Missouri 63105 Attention: County Counselor All notices, payments, requests, reports, information or demands so given shall be deemed effective upon receipt, or if mailed, upon receipt or the expiration of the third day following the date of mailing, whichever occurs first, except that any notice of change in address shall be effective only upon receipt by the party to whom said notice is addressed. IN WITNESS WHEREOF, Guarantor has executed this Rent Guarantee this 13 day of October 1995. SHOWBOAT, INC. By:__/s/_______________________ Name: H. Gregory Nasky Title: Secretary EX-10.06 7 EXHIBIT 10.06 GUARANTEE OF COMPLETION This GUARANTEE OF COMPLETION ("Completion Guarantee") is made this 13 day of October, in favor of the St. Louis County Port Authority, a public body corporate and politic of the State of Missouri ("Landlord"). WHEREAS, Southboat Limited Partnership, a Missouri limited partnership ("Tenant") has entered into a Lease and Development Agreement with Landlord dated the date hereof (the "Lease"); WHEREAS, terms defined in the Lease and used herein shall have the same meaning herein as so defined; WHEREAS, Guarantor is the parent company of Showboat Lemay, Inc., a Nevada corporation, the general partner of Tenant; WHEREAS, under certain circumstances, which are specifically set forth herein and in the Lease, Guarantor has agreed to assure the completion of the Project; NOW, THEREFORE, in consideration of the foregoing, and for such good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Guarantor and Landlord covenant and agree as follows: 1. The terms used in the Lease shall have the same meaning herein, unless otherwise defined. 2. If Tenant shall abandon the Project after the commencement of the Work for a period of more than thirty (30) days after receipt of notice from Landlord concerning same, then Guarantor unconditionally agrees to complete, or to cause the completion of, the Project. 3. Guarantor agrees to indemnify and hold Landlord harmless from and against any and all losses, costs, claims, damages, liabilities and expenses, including but not limited to reasonable attorneys' fees, which Landlord sustains by reason of Guarantor's failure to cause completion of the Project. Landlord will notify Guarantor in writing of any legal proceeding brought against Landlord for which Landlord will seek indemnification and Guarantor shall have the right to intervene in any such proceeding. 4. Guarantor hereby agrees that in the event of the failure of Guarantor to complete the Project, Landlord shall be entitled to enforce the obligations of Guarantor hereunder upon thirty (30) days prior written notice to Guarantor. Upon the failure of Guarantor to comply with its covenants contained herein, Landlord may, without waiving or releasing Guarantor from its obligations hereunder, and without prejudice to any other right or remedy of Landlord, perform such covenant or agreement in respect of which there shall be a default hereunder and in that regard pay such money as may be required. Any such monies paid by Landlord, as aforesaid, together with interest thereon at at the rate of two percent (2%) in excess of the from time to time publicly announced corporate base rate of interest of The Boatmen's National Bank of St. Louis, shall be due and payable by Guarantor to Landlord upon demand. 5. No delay on the part of Landlord in exercising Landlord's rights, powers and privileges or partial or single exercise thereof under this Completion Guarantee shall operate as a waiver of any such rights, powers or privileges. No waiver of any of its rights, powers of privileges hereunder, and no modifications of amendment of this Completion Guarantee, shall be deemed to be made by Landlord unless the same shall be in writing, duly signed on behalf of Landlord, by a duly authorized officer, and each such waiver, if any, shall apply only with respect to the specific instance involved, and shall in no way impair the rights of Landlord or the obligations of Guarantor to Landlord in any other respect at any other time. 6. All rights, powers, privileges and remedies afforded to Landlord by reason of this Completion Guarantee are separate and cumulative rights, powers, privileges and remedies and no one such right, power, privilege and remedy whether or not exercised by Landlord shall be deemed to exclude any of the other rights, powers, privileges and remedies available to Landlord nor prejudice the availability of any other legal or equitable remedy which Landlord may have under the Lease or in the Project. 7. This Completion Guarantee shall be construed and interpreted in accordance with, and all disputes hereunder and thereunder shall be governed by, the laws of the State of Missouri. Landlord may bring any action or proceeding to enforce or arising out of this Completion Guarantee in any court of competent jurisdiction. Any action or proceeding brought by the Guarantor arising out of this Completion Guarantee shall be brought solely in in the United States District Court for the Eastern District of Missouri. If Landlord commences an action in either of such courts, Guarantor hereby agrees that it will submit to the personal jurisdiction of such court and will not attempt to have such action dismissed, abated or transferred on the ground of FORUM NON CONVENIENS. 8. This Completion Guarantee shall not be affected and the liability of the Guarantor shall not be extinguished or diminished by Landlord's receipt, application or release of security given for the performance and observation of the covenants and conditions in the Lease to be performed or observed by Tenant, its successors and assigns, including any sums paid by Guarantor under the Guarantee of Minimum Rent issued by Guarantor to Landlord on the date hereof (the "Rent Guarantee"), by the cessation from any cause whatsoever of the liability of Tenant, its successors and assigns, by reason of sums paid or payable to Landlord from the proceeds of any insurance policy or condemnation award (except in the event of termination of the Lease incident to condemnation), or by any extensions, renewals, amendments, indulgences, modifications, transfers or assignments in whole or in part of the Lease, whether or not notice thereof is given to Guarantor. 9. All of the terms, covenants, warranties and conditions contained in this Completion Guarantee shall be binding upon and inure to the sole and exclusive benefit of the parties hereto and their respective heirs, executors and administrators, successors and assigns. 10. This Completion Guarantee shall terminate only at such time as the Project is finally and fully completed pursuant to the Plans and all obligations of Tenant in respect of the completion of the Work and of Guarantor hereunder have been fully paid or met to the reasonable satisfaction of Landlord. 11. This Completion Guarantee contains the entire understanding between the Guarantor and Landlord and supersedes any prior understandings or agreements between them whether written or oral. There are no representations, agreements, arrangements or understandings (whether oral or written), between or among the parties hereto relating to the subject matter hereof which are not fully expressed herein. This Completion Guarantee may not be amended without the written consent of each party hereto. 12. Unless otherwise indicated differently, all notices, payments, requests, reports, information or demands which any party hereto may desire or may be required to give to any other party hereunder, shall be in writing and shall be personally delivered or sent by telegram, telex, telecopier or first-class certified or registered United States mail, postage prepaid, return receipt requested, and sent to the party at its address appearing below or such other address as party shall hereafter inform the other party hereto by written notice given as aforesaid: If to Guarantor: Showboat, Inc. 2800 Fremont Street Las Vegas, Nevada 89104 Attention: H. Gregory Nasky With a copy to: Kummer Kaempfer Bonner Renshaw Seventh Floor 3800 Howard Hughes Parkway Las Vegas, Nevada 89109 Attention: John N. Brewer If to Landlord: St. Louis County Port Authority Economic Council of St. Louis County 121 South Meramec, Suite 900 Clayton, Missouri 63105 Attention: Director of Real Estate With copies to: Economic Council of St. Louis County 121 South Meramec, Suite 900 Clayton, Missouri 63105 Attention: General Counsel St. Louis County 41 South Central Clayton, Missouri 63105 Attention: County Counselor All notices, payments, requests, reports, information or demands so given shall be deemed effective upon receipt, or if mailed, upon receipt or the expiration of the third day following the date of mailing, whichever occurs first, except that any notice of change in address shall be effective only upon receipt by the party to whom said notice is addressed. IN WITNESS WHEREOF, the Guarantor and Landlord have caused this Completion Guarantee to be executed by its duly authorized signatories as of the day and year first above written. GUARANTOR: LANDLORD: SHOWBOAT, INC., a ST. LOUIS COUNTY PORT AUTHORITY Nevada corporation By:_/s/______________ By:_/s/_____________________ H. Gregory Nasky Secretary -----END PRIVACY-ENHANCED MESSAGE-----