EXHIBIT 10.17
GROUND LEASE
AGREEMENT
This Ground Lease Agreement
(the “Agreement”), is made and entered into by and
between Dakota\Blackhawk, LLC , a Colorado limited liability
company (hereinafter referred to as “Lessor”) and
Jacobs Entertainment, Inc. , a Delaware corporation
and/or assigns (hereinafter referred to as “Lessee”)
(sometimes Lessor and Lessee are referred to singularly as a
“Party” and collectively as the
“Parties”).
P R E M I S E S:
WHEREAS , Lessor and Lessee are the Parties to that
certain “Option Purchase Agreement” dated
September 12, 2005, 2005 (the “Option Agreement”),
a copy of which is attached hereto as
Exhibit “A” and incorporated herein by
reference as if fully copied and set forth at length;
WHEREAS , attached to the Option Agreement, as an
exhibit, is that certain “Real Estate Sales Contract”
(the “Real Estate Contract”) which is to be executed by
Lessor and Lessee pursuant to the terms of the Option Agreement, an
unsigned copy of which is attached hereto as
Exhibit “B” and incorporated herein by
reference as if fully copied and set forth at length;
WHEREAS , Lessor is the owner of that certain tract of
real property (hereinafter referred to as the
“Property”), as more particularly described on
Exhibit “C” attached hereto and
incorporated herein by reference as if fully copied and set forth
at length; and
WHEREAS , pursuant to the Option Agreement, Lessor
desires to lease to Lessee and Lessee desires to lease from Lessor
the Property upon the terms and conditions herein
provided.
A G R E E M E N T:
NOW, THEREFORE
, in consideration of the foregoing
premises, the mutual covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency
of which are acknowledged and confirmed, the Parties agree to the
lease of the Property upon the following terms and
conditions:
1.
PROPERTY
. Lessor hereby leases to Lessee and Lessee
hereby leases from Lessor the Property.
2.
TERM
. The term of this Agreement
(“Term”) shall begin on the date hereof and end on the
date the Option Agreement terminates or, if the Option thereunder
is exercised and the Real Estate Contract is signed, on the
termination or Closing of the Real Estate Contract.
3.
RENT
. Lessee agrees to pay to Lessor as rent
due under this Agreement the sum of $1.00, at Lessor’s
address described in Section 13 , below.
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4.
USE OF PROPERTY
. Lessee may use the Property for any and
all lawful purposes including all inspection, testing and
examination purposes as described in the Option Agreement and the
Real Estate Contract. Lessee shall not use the Property in
any manner that violates any statute applicable thereto or for any
illegal purpose. Lessee shall have the right to erect fencing
of Lessee’s discretion (with locked gates) surrounding the
perimeter of the Property in order to limit access to the Property
(subject to the rights of Lessor set out in this Agreement).
Lessor shall not erect any other improvement on the Property
without the written consent of Lessor which may be withheld in
Lessor’s sole discretion. If Lessee does not obtain
title to the Property, Lessee shall remove the fence and any other
permitted improvements at Lessee’s expense at the end of the
Term of the Lease.
5.
CONDITION OF
PROPERTY . Lessee accepts the Property in its
present condition and state of repair.
6.
INSPECTIONS
. Lessor may enter upon the Property at all
reasonable times upon forty-eight (48) hours prior written notice
to Lessee to inspect the condition of the Property.
7.
REPAIRS AND
MAINTENANCE . At the end of the Term, Lessee shall bear
all expenses of restoring the Property to its prior condition
subject to and in accordance with the terms of the Option Agreement
and the Real Estate Contract.
8.
ASSIGNMENT
. Lessee may assign its rights under this
Agreement at any time during the Term without the prior written
consent of Lessor, provided such assignment is effected as part of
an assignment of contract rights pursuant to the terms of the
Option Agreement and/or Real Estate Contract.
9.
DEFAULT AND
REMEDIES . Should Lessee default in the payment of rent as
and when due and not correct same within five (5) days after
receipt of written notice from Lessor to Lessee, Lessor may declare
this Agreement, and all rights and interest created by it, to be
terminated.
10.
WARRANTY OF
TITLE . Lessor hereby represents and warrants that it is
the owner of the Property and has the express actual authority to
execute this Agreement. Lessor covenants and agrees that as
long as Lessee pays the rent as provided in this Agreement and
observes and keeps the covenants, conditions, and terms of this
Agreement, Lessee shall lawfully and quietly hold, occupy, and
enjoy the Property during the Term.
11.
NOTICES
. All notices, demands, requests, and other
communications under this Agreement shall be in writing or
electronic format and shall be deemed properly served and delivered
when: (a) delivered by hand to the Party to whose attention it
is directed; or (b) posted, if sent by registered or certified
mail, return receipt requested, postage pre-paid addressed; or
(c) actually received by the addressee thereof, after being
sent by overnight delivery (such as Federal Express); or
(d) sent to the addressee by confirmed telecopier, facsimile,
electronic transmission (email) or similar transmission, as follows
(or at such changed address as the Parties may from time to time
specify in writing):
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If to Lessor:
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Dakota/Blackhawk, LLC
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1700 Kylie Drive,
Suite 240
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Longmont, Colorado 80501
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Attn: Wendell Pickett and Roger
Pomainville
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303-772-8348
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303-772-8565 (facsimile)
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With A Required Copy To:
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Christopher C.
O’Dell
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O’Dell & Fell,
LLC
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1600 Jackson Street
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Suite 250
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Golden, Colorado 80401
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(303) 436-9200
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(303) 436-9700
(facsimile)
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If to Lessee:
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Jacobs
Entertainment, Inc.
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240 Main Street
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Black Hawk,
Colorado 80224
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Attention: Stephen R. Roark,
President
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(303) 582-1117
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(303) 582-0239
(facsimile)
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With A Required Copy To:
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Jones & Keller,
P.C.
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1625 Broadway, 16 th
Floor
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Denver, Colorado 80202
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Attention:
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Samuel E. Wing, Esq.
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R. Steven
Jones, Esq.
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(303) 573-1600
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(303) 893-6506
(facsimile)
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12.
EXPENSES.
Lessee shall not be
responsible for any expenses associated with the ownership,
operation and/or possession of the Property except for the
maintenance of casualty and liability insurance (in such amounts
and coverage scope as Lessee may elect, in its sole discretion),
maintenance of commercial general liability coverage (including
contractual coverage and a waiver of subrogation) with limits of no
less that $3,000,000 and snow removal, litter removal and weed
cutting as required by the City of Blackhawk. Lessor shall be
responsible for all other costs and expense associated with the
ownership, operation and/or possession of the Property including
but not limited to property taxes, assessments, insurance and
utilities. Lessee hereby indemnifies, holds harmless and agrees to
defend Lessor of and from any and all claims, demands, liabilities,
actions, costs, expenses or causes of action, including,
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but not limited to, attorneys’
fees and costs, arising our of or related to the use or possession
of the Property by Lessee under this Lease except when caused
solely by Lessor or its agents’ or employees’:
(a) negligence; (b) willful misconduct; or
(c) breach of this Lease.
13.
NO PARTNERSHIP
. The relationship between Lessor and
Lessee at all times shall remain solely that of lessor and lessee
and not be deemed a partnership or a joint venture.
14.
EXHIBITS
. The first page of all exhibits to
this Agreement shall bear the initials of each party hereto, and
when so initialed, shall be conclusively deemed to be an
Exhibit hereto, whether or not physically attached to this
Agreement.
15.
ENTIRE
AGREEMENT . With the exception of
Section 33 of the Option Agreement, this Agreement
contains the entire understanding between the Parties hereto
concerning the lease of the Property.
16.
ADVICE OF
COUNSEL . Each of the Parties hereto represent that
they have the advice and counsel of their own attorneys and that no
representation or statement made by any other party has influenced
them in executing or induced them to execute this
Agreement.
17.
FURTHER ACTS
. Each Party hereto agrees to perform any
and all such further and additional acts and execute and deliver
any and all such further and additional instruments and documents
as may be reasonably necessary in order to carry out the provisions
and effectuate the intent of this Agreement.
18.
MODIFICATION
. Any modification of this Agreement shall
be in writing and agreed to by all Parties.
19.
AUTHORITY
. Each Party hereto represents and warrants
that it has full authority to execute the Agreement and bind to the
Agreement its respective partners, trustees, beneficiaries,
remaindermen, directors, officers, employees, agents, advisors,
attorneys, successors, assigns and personal
representatives.
20.
SEVERABILITY
. If any provision hereof is held to be
illegal, invalid, or unenforceable under present or future laws
effective during the Term, such provisions shall be duly severable;
this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part
hereof; and the remaining provisions hereof shall remain in full
force and effect and shall not be affected by the severance of the
illegal, invalid, or unenforceable provision or
provisions.
21.
GOVERNING LAW AND
VENUE .
This Agreement shall be
governed by and construed in accordance with the laws of the State
of Colorado. The terms of this Agreement shall be
specifically performable in Gilpin County, Colorado.
22.
BREACH
. Should any party breach any part of this
Agreement, and litigation ensue, the Parties agree that the
prevailing party shall be entitled to its reasonable
attorneys’ fees and costs in prosecuting or defending its
claims.
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23.
BENEFIT
. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their successors, assigns, legal
representatives, heirs and legatees.
24.
PARAGRAPH
HEADINGS . All paragraph headings set forth in this
Agreement are for purposes of identification and are intended for
convenience only, and shall not control or affect the meaning,
construction or effect of this Agreement or any provision
hereof.
25.
COUNTERPART EXECUTION
. This Agreement may be executed in
multiple counterparts, each of which shall be fully effective as an
original, for which together shall constitute only one
(1) instrument.
26.
MEMORANDUM OF
LEASE . Lessee
shall have the right to file a “Memorandum of Lease”
with the Office of the Clerk and Recorder or other appropriate
public record custodian having jurisdictional authority over the
Property in the State of Colorado as to the existence of this
Lease.
IN WITNESS WHEREOF
, the Parties hereunto set their
hands and seals as of the date above first stated.
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LESSOR:
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DAKOTA/BLACKHAWK, LLC,
a Colorado limited liability company
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By:
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/s/ Roger Pomanville
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Roger Pomanville, Manager
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By:
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/s/ Wendell Gene Pickett
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Wendell Gene Pickett,
Manager
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LESSEE:
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JACOBS ENTERTAINMENT, INC.,
a Delaware corporation
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And/Or Assigns
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By:
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/s/ Stephen R. Roark
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Printed Name: Stephen R.
Roark
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Title: President/Chief
Financial Officer
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5
EXHIBIT “A”
OPTION PURCHASE
AGREEMENT
This Option Purchase Agreement
(“Agreement”) is entered into this
day of
September 2005 to be effective on the Effective Date (defined
in Section 19 , below) by and between
Dakota\Blackhawk, LLC , a Colorado limited liability company
(hereafter collectively, the “Dakota Group”) and
Jacobs Entertainment, Inc. , a Delaware corporation
and/or assigns (hereafter “JEI”) (sometimes Dakota
Group and JEI are referred to singularly as a “Party”
and collectively as the “Parties”).
RECITALS
:
WHEREAS, Dakota Group is the owner
of approximately 2.2258 acres of undeveloped land situated in
Gilpin County, Colorado, (containing 96,956 square feet), the legal
description of which is attached hereto as
Exhibit “A” and incorporated herein by
reference as if set out word for word (the
“Property”);
WHEREAS, 40,788 square feet of the
Property is situated in the Gaming District of Gilpin County,
Colorado as established by The Colorado Limited Gaming Act, C.R.S.
12-47.1-105 and the ordinances adopted by the City of Black Hawk,
Colorado;
WHEREAS, JEI desires to purchase
from Dakota Group an exclusive, non-revocable option to acquire the
Property (the “Option”);
NOW, THEREFORE, in consideration of
the mutual covenants contained herein and other good and valuable
consideration (including the consideration paid pursuant to
Section 25 , below) the receipt and sufficiency of same
is hereby acknowledged and confirmed by the Parties, it is mutually
agreed by the Parties as follows:
AGREEMENT
1.
Grant of Exclusive
Option. For
the consideration expressed in Sections 3 and 25
below, Dakota Group hereby grants to JEI the exclusive,
non-revocable right and option (the “Option”) to
purchase the Property at the price of $13,000,000.00 (the
“Purchase Price”) under and pursuant to the terms set
forth in that certain “Real Estate Sales Contract”
attached hereto as Exhibit “B” and
incorporated herein by reference as if set out word for word (the
“Real Estate Sales Contract”).
2.
Initial Option
Period . The Option shall commence on the
Effective Date and continue until 11:59 p.m. on the date which
is one (1) calendar year from the Effective Date (the
“Initial Option Period”), unless same is extended
pursuant to the provisions of Section 4 ,
below.
3.
Consideration
. The Option is granted in partial
consideration of: (a) the payment by JEI to Escrow Agent
(defined in Section 5 , below) for the conditional
benefit of Dakota Group of the sum of $250,000.00, on or before the
Effective Date (the “Initial Deposit”) and (b) the
payment to Dakota Group of the sum of $250,000.00, no later than
the date which is one hundred eighty
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(180) calendar days from the
Effective Date (collectively, the amounts identified in
Section 3(a) and (b) above, the
“Initial Option Fee”). JEI shall also pay to
Dakota Group of the sum of $100.00 pursuant to
Section 25 , below (the “Independent Agreement
Consideration”). The Initial Deposit shall be deposited
by the Escrow Agent in an interest bearing account of JEI’s
election and all interest accruing thereon shall belong to
JEI. All references in this Agreement to the
“Total Option Fee” shall include: (i) the Initial
Option Fee; (ii) any Extension Fee paid pursuant to
Section 4 , below; and (iii) all interest amounts
accruing on the Initial Option Fee and the Extension
Fee.
4.
Extension Right
. Notwithstanding anything in this
Agreement to the contrary, JEI, at its sole election, shall have
the right to extend the Initial Option Period (the “Extension
Right”), for an additional time period of one
(1) calendar year (the “Extension Period”) upon
the payment by JEI of the additional sum of $500,000.00 to Dakota
Group (the “Extension Fee”). The Extension Period shall
be computed by excluding the expiration date of the Initial Option
Period and counting the last day of the Extension Period (expiring
at 11:59 p.m., local time). JEI shall have the option to
exercise the Extension Right at any time prior to the expiration of
the Initial Option Period.
5.
Escrow Agent
. The term “Escrow Agent” as
used in this Agreement shall mean Gilpin Title, LLC of Golden,
Colorado. The Escrow Agent shall hold the Initial Deposit
pursuant to the terms of this Agreement.
6.
Exercise of
Option .
(a)
Exercise Notice
. JEI may exercise the Option
at any time during the Initial Option Period or the Extension
Period (if the Extension Right is exercised) by delivery of a
written or electronic notice to Dakota Group as to such election
(the “Exercise Notice”). Within ten
(10) days of the delivery of the Exercise Notice to Dakota
Group, Dakota Group and JEI shall execute the Real Estate Sales
Contract and cause a fully executed original of same to be
delivered to Escrow Agent (and a fully executed copy of same shall
be delivered to each Party). Delivery of the Exercise Notice
shall be effected in accordance with the notice provisions of
Section 22 , below. If JEI fails to execute the
Real Estate Sales Contract within the ten (10) days provided
and if either the Initial Option Period or the Extension Period (if
the Extension Right is exercised) has run, then the Option shall be
deemed waived and JEI shall no longer have the right to purchase
the Property.
(b)
Exercise Condition
. JEI may not exercise this
Option if it is in default for failure to pay the Initial Option
Fee when due or for failure to pay the Extension Fee when due and
same has not been cured within ten (10) days after receipt of
written notice from Dakota Group that any such amount has not been
received.
(c)
Release of Option Fees Upon
Exercise of Option . Escrow Agent shall release to the
Dakota Group, on demand (without the necessity of the consent of
JEI),the Initial Option Fee upon the first to occur of:
(i) the exercise of the Option pursuant to this Agreement or
(ii) upon the expiration of the 60 th day from the
Effective Date, in the event JEI has not elected to terminate this
Agreement pursuant to Sections 9 and 14 , below).
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7.
Application To Purchase
Price .
If the Option is
exercised pursuant to this Agreement, then fifty percent (50%) of
the Initial Option Fee and fifty percent (50%) of the Extension Fee
(if paid), shall be applied to the Purchase Price at the Closing of
the Real Estate Sales Contract (and otherwise administered pursuant
to the terms of such instrument).
8.
Recording of
Options . JEI shall have the right to file a
“Memorandum of Option” with the Office of the Clerk and
Recorder or other appropriate public record custodian having
jurisdictional authority over the Property in the State of Colorado
as to the existence of this Option or any extension of same.
The form of Memorandum of Option which JEI is authorized to file of
record is attached hereto as Exhibit “C”
and incorporated herein by reference as if set out word for
word.
9.
Inspection Period; Inspection
Rights .
(a)
Inspection Rights
. During the term of this
Agreement, JEI shall have the right to conduct an inspection and
examination of the Property (the “Inspection
Period”). During the Inspection Period, JEI, or
JEI’s authorized agents or representatives, shall be entitled
(and permitted) to enter upon the Property for the purpose of
inspecting, examining and making tests upon and/or conducting an
evaluation of the Property (including, but not limited to, those
inspections described in Section 10 ,
below).
(b)
Termination Right
. If JEI, in JEI’s sole
discretion, is dissatisfied with the results of JEI’s
inspection of the Property (for any reason or no reason), JEI may,
by written or electronic notice delivered to Dakota Group or Escrow
Agent prior to the expiration of the 60 th day from the
Effective Date (the “Refund Inspection Period”),
terminate this Agreement and upon such event, the Initial Deposit,
as well as all interest accrued thereon, shall be returned to JEI
(by Escrow Agent) on demand (without the necessity of the consent
of Dakota Group), and neither Dakota Group nor JEI shall have any
further obligations hereunder except as provided in
Section 9(d) . If JEI does not terminate this Agreement
by delivery of such notice prior to the expiration of the Refund
Inspection Period, JEI’s shall still have the right to
terminate this Agreement during the Inspection Period but shall not
be entitled to receive a refund of the Total Option Fee, except as
set out in Section 9 (c), below.
(c)
Refund Right Beyond Refund
Inspection Period .
Notwithstanding anything herein to the contrary, JEI shall be
entitled to receive a refund of the Total Option Fee under the
following conditions:
(i)
the refusal by Dakota Group to close
under the Real Estate Sales Contract upon the proper exercise of
the Option by JEI; or
(ii)
the failure or inability of Dakota
Group to deliver fee simple title to the Property, free and clear
of all mortgages, liens, claims, encumbrances, easements,
encroachments and judgments as provided in the Deed to be delivered
at Closing and as otherwise required pursuant to the Real Estate
Sales Contract; or
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(iii)
pursuant to
Section 5.1(c) of the Real Estate Sales
Contract.
(d)
Indemnity Obligation
. In the event JEI fails to
consummate the closing of the purchase of the Property (other than
for Dakota Group’s breach of this Agreement), JEI agrees to
indemnify and hold Dakota Group harmless from all costs and
expenses actually paid by Dakota Group (supported by verified
evidence of same) which arise from damages to the Real Property in
connection with JEI’s inspection of the Property. JEI
agrees to indemnify and hold Dakota Group harmless from damages
arising out of injuries sustained by third parties in connection
with JEI’s inspection of the Property. The obligations of JEI
under this Section 9 (d) shall survive the
termination of this Agreement for a period of three
(3) months.
10.
Environmental
Inspection . The inspection and examination of the
Property in relation to the environmental condition of the Property
shall be governed by the following:
(a)
Examination Authority
. JEI shall have the right to
conduct a “Phase I”, “Phase II” and/or a
“Phase III” environmental site assessment (collectively
or singularly as the context requires, the “Environmental
Survey”) of the Property., If an Environmental
Survey is conducted, then JEI shall cause a copy of the written
report setting forth the findings obtained in that Environmental
Survey to be delivered to Dakota Group.
(b)
Remediation/Termination . If, as a result of the Environmental
Survey, or by any other means, JEI or Dakota Group becomes aware of
the existence of Hazardous Substances (as hereinafter defined in
Section 10(c) , below), or other environmental
contamination, on or within the Property, then JEI shall have the
right to terminate this Agreement. If JEI terminates this Agreement
prior to the expiration of the Refund Inspection Period pursuant to
this Section 10 , then the Total Option Fee shall be
returned to JEI on demand (without the necessity of the consent of
Dakota Group) and the Parties shall have no further obligations
under this Agreement, except for those obligations that expressly
survive termination of this Agreement.
(c)
“ Hazardous Substances
.” For purposes of this Agreement, the term
“Hazardous
Substances” shall mean and
include all hazardous and toxic substances, waste or other
materials, any pollutants or contaminants as defined in
Section 101 (14) of the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C.
Section 9301 (14) (including, without limitation, asbestos and
raw materials which include hazardous constituents), or other
similar substances, or materials which are included under or
regulated by any local, state, or federal law, rule, or regulation
pertaining to environmental regulation, contamination or clean-up,
including, without limitation, “CERCLA”,
“RCRA”, or state superlien or environmental clean-up
statutes, as may be amended, (all such laws, rules and
regulations being referred to collectively as “Environmental
Laws”).
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11.
Document
Inspection .
(a)
Dakota Group
Obligation . To
facilitate JEI’s inspection of the Property, Dakota Group
shall provide to JEI, at Dakota Group’s sole cost and
expense, within three (3) days of the Effective Date, the
following:
(i)
True, correct and complete copies of
all leases relating to the Property, if any, and any amendments
thereto. Additionally, Dakota Group will provide JEI access
to Dakota Group’s records regarding expense and income items
in order to enable JEI to complete an audit of such
leases;
(ii)
A true, correct and complete
schedule (the “Operating Schedule”) reflecting,
with respect to the Property, for the twelve (12) month period
preceding the month of execution of this Agreement (including any
interim reports): (i) all operating expenses and capital
expenditures of the Property; and (ii) the aggregate rent
collected from tenants of the Property during such period, if
any;
(iii)
A true, correct and complete
inventory of all personal property located upon the
Property;
(iv)
A true, correct and complete copy of
all service and other agreements, as well as any amendments
thereto, pertaining to the Prop
