Exhibit 10.1

 

CREDIT AGREEMENT

 

among

 

SANDS REGENT, INC.,

 

LAST CHANCE, INC.,

 

ZANTE, INC.,

 

PLANTATION INVESTMENTS, INC (dba “Rail City”),

 

DAYTON GAMING, INC.

 

THE LENDERS NAMED HEREIN,

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Administrative Agent, L/C Issuer and Swing Line Lender

 

Dated as of September 1, 2005

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TABLE OF CONTENTS

 

          PAGE

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ARTICLE I.

   DEFINITIONS, ASSUMPTION AND INTERPRETATION    1

1.01.

   Definitions    1

1.02.

   GAAP    35

1.03.

   Headings    35

1.04.

   Plural Terms    35

1.05.

   Time    35

1.06.

   Governing Law    35

1.07.

   Construction    36

1.08.

   Entire Agreement    36

1.09.

   Calculation of Interest and Fees    36

1.10.

   References    36

1.11.

   Other Interpretive Provisions    37

1.12.

   Rounding    37

1.13.

   Joint and Several    37

1.14.

   Borrowing Agent as Agent for the Borrowers    37

ARTICLE II.

   CREDIT FACILITIES    37

2.01.

   Revolving Loan Facility    37

2.02.

   Term Loan Facility    41

2.03.

   Letters of Credit    44

2.04.

   Swing Line    52

2.05.

   Amount Limitations, Commitment Reductions, Etc.    55

2.06.

   Fees    56

2.07.

   Prepayments    56

2.08.

   Other Payment Terms    60

2.09.

   Loan Accounts; Notes    61

2.10.

   Loan Funding    62

2.11.

   Pro Rata Treatment    64

2.12.

   Change of Circumstances    65

2.13.

   Taxes on Payments    67

2.14.

   Funding Loss Indemnification    69

 

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TABLE OF CONTENTS

(continued)

 

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2.15.

  

Security

   70

2.16.

  

Replacement of the Lenders

   71

2.17.

  

Lending Offices; Mitigation Obligations

   72

ARTICLE III.

  

CONDITIONS PRECEDENT

   72

3.01.

  

Conditions Precedent to Effectiveness of Amendment and Restatement

   72

3.02.

  

Conditions Precedent to each Credit Event

   79

3.03.

  

Post Closing Items

   79

ARTICLE IV.

  

REPRESENTATIONS AND WARRANTIES

   80

4.01.

  

Representations and Warranties

   80

ARTICLE V.

  

COVENANTS

   89

5.01.

  

Affirmative Covenants

   89

5.02.

  

Negative Covenants

   95

5.03.

  

Financial Covenants

   100

ARTICLE VI.

  

DEFAULT

   101

6.01.

  

Events of Default

   101

6.02.

  

Remedies

   103

ARTICLE VII.

  

THE ADMINISTRATIVE AGENT AND RELATIONS AMONG THE LENDERS

   104

7.01.

  

Appointment, Powers and Immunities

   104

7.02.

  

Reliance by the Administrative Agent

   105

7.03.

  

Defaults

   105

7.04.

  

Indemnification

   105

7.05.

  

Non-Reliance

   106

7.06.

  

Resignation or Removal of the Administrative Agent

   106

7.07.

  

Collateral Matters

   107

7.08.

  

The Administrative Agent in its Individual Capacity

   107

7.09.

  

Release of Collateral

   107

ARTICLE VIII.

  

MISCELLANEOUS

   108

8.01.

  

Notices

   108

8.02.

  

Expenses

   110

 

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TABLE OF CONTENTS

(continued)

 

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8.03.

  

Indemnification

   110

8.04.

  

Waivers; Amendments

   111

8.05.

  

Successors and Assigns

   113

8.06.

  

Setoff by Lenders

   116

8.07.

  

No Third Party Rights

   117

8.08.

  

Partial Invalidity

   117

8.09.

  

Jury Trial

   117

8.10.

  

Confidentiality

   117

8.11.

  

Counterparts

   118

8.12.

  

Consent to Jurisdiction

   118

8.13.

  

Relationship of Parties

   118

8.14.

  

Time

   119

8.15.

  

Waiver of Punitive Damages

   119

8.16.

  

Arbitration

   119

8.17.

  

Application of Gaming Laws

   121

8.18.

  

USA Patriot Act Notification

   122

8.19.

  

Waivers and Agreements of the Borrowers

   122

8.20.

  

Effectiveness of Restatement

   124

8.21.

  

Adjustments of Proportionate Shares

   124

 

SCHEDULE I THE LENDERS

   1

SCHEDULE II FUNDING DATE

   1

SCHEDULE 4.01(f) ENVIRONMENTAL EXCEPTIONS

   1

SCHEDULE 4.01(g) LITIGATION

   1

SCHEDULE 4.01(h) A LAST CHANCE REAL PROPERTY

   1

SCHEDULE 4.01(h) B ZANTE REAL PROPERTY

   1

SCHEDULE 4.01(h) C RAIL CITY REAL PROPERTY

   1

SCHEDULE 4.01(h) D DEPOT CASINO REAL PROPERTY

   1

SCHEDULE 4.01(h) E RED HAWK REAL PROPERTY

   1

SCHEDULE 4.01(i) OTHER CONTINGENT OBLIGATIONS

   1

 

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TABLE OF CONTENTS

(continued)

 

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SCHEDULE 4.01(j) A LAST CHANCE PERMITTED EXCEPTIONS

   1

SCHEDULE 4.01(j) B ZANTE PERMITTED EXCEPTIONS

   1

SCHEDULE 4.01(j) C RAIL CITY PERMITTED EXCEPTIONS

   1

SCHEDULE 4.01(j) D DEPOT CASINO PERMITTED EXCEPTIONS

   1

SCHEDULE 4.01(j) E RED HAWK PERMITTED EXCEPTIONS

   1

SCHEDULE 4.01(k) EQUITY INTERESTS

   1

SCHEDULE 4.01(m) EMPLOYEE BENEFIT PLANS

   1

SCHEDULE 4.01(o) INTELLECTUAL PROPERTY

   1

SCHEDULE 4.01(r) SUBSIDIARIES

   1

SCHEDULE 4.01(y) INSURANCE

   1

SCHEDULE 4.01(z) AGREEMENTS WITH AFFILIATES

   1

SCHEDULE 5.01(g) PRINCIPAL PLACE OF BUSINESS; CHIEF EXECUTIVE OFFICE

   1

SCHEDULE 5.02(a) EXISTING INDEBTEDNESS

   1

SCHEDULE 5.02(b) EXISTING LIENS

   1

SCHEDULE 5.02(e) EXISTING INVESTMENTS

   1

EXHIBIT A NOTICE OF REVOLVING LOAN BORROWING

   A-1

EXHIBIT B NOTICE OF REVOLVING LOAN CONVERSION

   B-1

EXHIBIT C NOTICE OF REVOLVING LOAN INTEREST PERIOD SELECTION

   C-1

EXHIBIT D NOTICE OF TERM LOAN BORROWING

   D-1

EXHIBIT E NOTICE OF TERM LOAN CONVERSION

   E-1

EXHIBIT F NOTICE OF TERM LOAN INTEREST PERIOD SELECTION

   F-1

EXHIBIT G NOTICE OF SWING LOAN BORROWING

   G-1

EXHIBIT H REVOLVING LOAN NOTE

   H-1

EXHIBIT I TERM LOAN NOTE

   I-1

EXHIBIT J SWING LOAN NOTE

   J-1

EXHIBIT K ASSIGNMENT AGREEMENT

   K-1

EXHIBIT L FORM OF COMPLIANCE CERTIFICATE

   L-1

 

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OHS Draft

08/29/05

 

FIRST AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September 1, 2005,
is entered into by and among: (1) THE SANDS REGENT, a Nevada corporation
(“Sands”), LAST CHANCE, INC., a Nevada corporation (“Last Chance”), ZANTE, INC.,
a Nevada corporation (“Zante”), PLANTATION INVESTMENTS, INC., a Nevada
corporation, dba “Rail City” (“Rail City”) and DAYTON GAMING, INC., a Nevada
corporation (“Dayton Gaming”) and, together with Zante, Last Chance, Rail City
and Sands, each a “Borrower” and collectively, the “Borrowers”); (2) each of the
financial institutions from time to time listed in Schedule I hereto, as
amended, restated, supplemented or otherwise modified from time to time
(collectively, the “Lenders”); and (3) WELLS FARGO BANK, NATIONAL ASSOCIATION, a
national banking association (“Wells Fargo”, as administrative agent for the
Lenders (in such capacity, the “Administrative Agent”) as sole lead arranger, as
L/C Issuer and as Swing Line Lender.

 

RECITALS

 

A. The Borrowers have previously entered into the Existing Credit Agreement (as
defined herein) pursuant to which the Administrative Agent and the lenders party
thereto made available to the Borrowers a revolving credit facility of up to
$22,000,000 and a term loan facility in the amount of $20,000,000.

 

B. The Borrowers have requested an increase in the credit facilities in order
to, among other things, finance the acquisition of the Depot Casino Assets (as
defined herein) and the Red Hawk Assets (as defined herein), from the Depot Red
Hawk Sellers (as defined herein), in accordance with the terms and conditions of
the Depot Red Hawk Purchase Agreement (as defined herein).

 

C. The Lenders are willing, on the terms and subject to the conditions set forth
herein, to provide such increase in the credit facilities and make such other
modifications to the Existing Credit Agreement as more particularly set forth
herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the above Recitals and the mutual covenants
herein contained, the parties hereto hereby agree, effective as of the Funding
Date upon the satisfaction of the conditions set forth in Section 3.01 hereof,
as follows:

 

ARTICLE I. DEFINITIONS, ASSUMPTION AND INTERPRETATION.

 

1.01. Definitions. Unless otherwise indicated in this Agreement or any other
Credit Document, each term set forth below, when used in this Agreement or any
other Credit Document, shall have the respective meaning given to that term
below or in the provision of this Agreement or other document, instrument or
agreement referenced below.

 

“Acquisition” shall mean the acquisition by Dayton Gaming of substantially all
of the assets of Depot Casino and Red Hawk.

 

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“Acquisition Date” shall mean the date on which the Acquisition occurs, which
date shall also be the Funding Date and which shall occur no later than
September 1, 2005.

 

“Administrative Agent” shall have the meaning given to that term in clause (3)
of the introductory paragraph hereof.

 

“Affiliate” shall mean, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially or as a trustee,
guardian or other fiduciary, five percent (5%) or more of any class of Equity
Securities of such Person, (b) each Person that controls, is controlled by or is
under common control with such Person or any Affiliate of such Person or (c)
each of such Person’s officers, directors, joint venturers and partners;
provided, however, that in no case shall the Administrative Agent or any Lender
be deemed to be an Affiliate of any Loan Party for purposes of this Agreement.
For the purpose of this definition, “control” of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise.

 

“Agreement” shall mean this Credit Agreement, as the same may be amended,
restated, supplemented or modified from time to time.

 

“Applicable Lending Office” shall mean, with respect to any Lender, (a) in the
case of its Base Rate Loans and Base Rate Portions, its Domestic Lending Office,
and (b) in the case of its LIBOR Loans and LIBOR Portions, its Euro-Dollar
Lending Office.

 

“Applicable Margin” shall mean, subject to Section 2.08(c), with respect to each
Loan (and with respect to the calculation of Letter of Credit fees pursuant to
Section 2.03(i)), the per annum margin which is determined pursuant to the
Pricing Grid and added to the Base Rate or LIBOR Rate, as the case may be, for
such Loan. The Applicable Margin shall be determined as provided in the Pricing
Grid and may change for each fiscal quarter.

 

“Assignee Lender” shall have the meaning given to that term in Section 8.05(c).

 

“Assignment” shall have the meaning given to that term in Section 8.05(c).

 

“Assignment Agreement” shall have the meaning given to that term in Section
8.05(c).

 

“Assignment Effective Date” shall have, with respect to each Assignment
Agreement, the meaning set forth therein.

 

“Assignor Lender” shall have the meaning given to that term in Section 8.05(c).

 

“Base Rate” shall mean, on any day, the greater of (a) the Prime Rate in effect
on such date and (b) the Federal Funds Rate for such day plus one-half percent
(0.50%).

 

“Base Rate Loan” shall mean, at any time, a Revolving Loan which then bears
interest as provided in clause (i) of Section 2.01(c).

 

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“Base Rate Portion” shall mean, at any time, a Portion of the Term Loan which
then bears interest at a rate specified in clause (i) of Section 2.02(c).

 

“Belding” means David Belding, an individual.

 

“Belding Subordinated Indebtedness” shall have the meaning given to that term in
Section 5.02(a).

 

“Borrower” and “Borrowers” shall have the meaning given to such terms in clause
(1) of the introductory paragraph hereof.

 

“Borrowing” shall mean a Revolving Loan Borrowing, the Term Loan Borrowing or a
Swing Line Borrowing, as the context may require.

 

“Borrowing Agent” shall mean Sands, in such capacity.

 

“Business Day” shall mean any day on which (a) commercial banks are not
authorized or required to close in San Francisco, California and (b) if such
Business Day is related to a LIBOR Loan or a LIBOR Portion, dealings in Dollar
deposits are carried out in the London interbank market.

 

“CPLTD” shall mean California Prospectors, Ltd., a Nevada limited liability
company.

 

“Capital Adequacy Requirement” shall have the meaning given to that term in
Section 2.12(d).

 

“Capital Asset” shall mean, with respect to any Person, any tangible fixed or
capital asset owned or leased (in the case of a Capital Lease) by such Person,
or any expense incurred by such Person that is required by GAAP to be classified
and accounted for as a non-current asset on such Person’s balance sheet, and the
amount of such asset shall be determined in accordance with GAAP.

 

“Capital Expenditures” shall mean, with respect to any Person and any period,
all amounts expended by such Person during such period to acquire or to
construct Capital Assets (including renewals, improvements and replacements, but
excluding repairs in the ordinary course) computed in accordance with GAAP
(including all amounts paid or accrued on Capital Leases and other Indebtedness
incurred or assumed to acquire Capital Assets).

 

“Capital Leases” shall mean any and all lease obligations that, in accordance
with GAAP, are required to be capitalized on the books of a lessee.

 

“Cash Collateralize” shall mean to pledge and deposit with or deliver to the
Administrative Agent, for its own benefit and the benefit of the L/C Issuer and
the Lenders, as collateral for the Obligations, cash or deposit account balances
in an amount equal to the L/C Obligations pursuant to documentation in form and
substance satisfactory to the Administrative Agent and the L/C Issuer (which
documents are hereby consented to by the Lenders). Derivatives of such term
shall have a corresponding meaning.

 

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“Cash Equivalents” shall mean:

 

(a) Direct obligations of, or obligations the principal and interest on which
are unconditionally guaranteed by, the United States of America or obligations
of any agency of the United States of America to the extent such obligations are
backed by the full faith and credit of the United States of America, in each
case maturing within one year from the date of acquisition thereof;

 

(b) Certificates of deposit maturing within one year from the date of
acquisition thereof issued by a commercial bank or trust company organized under
the laws of the United States of America or a state thereof or that is a Lender,
provided that (i) such deposits are denominated in Dollars, (ii) such bank or
trust company has capital, surplus and undivided profits of not less than
$100,000,000 and (iii) such bank or trust company has certificates of deposit or
other debt obligations rated at least A-1 (or its equivalent) by Standard and
Poor’s Ratings Group or P-1 (or its equivalent) by Moody’s Investors Service,
Inc.;

 

(c) Open market commercial paper maturing within 270 days from the date of
acquisition thereof issued by a corporation organized under the laws of the
United States of America or a state thereof, provided such commercial paper is
rated at least A-1 (or its equivalent) by Standard and Poor’s Ratings Group or
P-1 (or its equivalent) by Moody’s Investors Service, Inc.; and

 

(d) Any repurchase agreement entered into with a commercial bank or trust
company organized under the laws of the United States of America or a state
thereof or that is a Lender; provided that (i) such bank or trust company has
capital, surplus and undivided profits of not less than $100,000,000, (ii) such
bank or trust company has certificates of deposit or other debt obligations
rated at least A-1 (or its equivalent) by Standard and Poor’s Ratings Group or
P-1 (or its equivalent) by Moody’s Investors Service, Inc., (iii) the repurchase
obligations of such bank or trust company under such repurchase agreement are
fully secured by a perfected security interest in a security or instrument of
the type described in clause (a), (b) or (c) above and (iv) such security or
instrument so securing the repurchase obligations has a fair market value at the
time such repurchase agreement is entered into of not less than 100% of such
repurchase obligations.

 

“Change of Control” shall mean shall mean the occurrence of any of the
following: (a) any reorganization, merger or consolidation of any Borrower with
one or more Persons (other than a Borrower) where such Borrower is not the
surviving corporation ; (b) any reorganization, merger or consolidation of any
Borrower with one or more Persons (other than a Borrower) where such Borrower is
the surviving corporation and the shareholders of such Borrower immediately
prior to such transaction do not own greater than fifty percent (50%) of the
issued and outstanding common stock of such Borrower immediately after such
transaction; (c) Sands shall fail to own directly or indirectly 100% of all
other Borrowers’ common stock; (d) the acquisition at any time by any Person
other than Pete Cladianos, Jr, Pete Cladianos III or Deborah Lundgren (including
a group, within the meaning of Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder (“Section 13(d)”)) of “beneficial
ownership” (within the meaning of Section 13(d)) in excess of thirty percent
(30%) of the total voting power of the voting Equity Securities of Sands; (e)
either of Ferenc Szony or Rob

 

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Medeiros ceases to be actively involved in the management of the Borrowers to
the same extent of his/her involvement as of the Funding Date; provided,
however, it shall not be deemed a Change of Control so long as within 180 days
of such cessation, such Person is replaced by a Person acceptable to the
Required Lenders in their reasonable discretion or (f) if a majority of the
board of directors of Sands shall no longer be composed of individuals (i) who
were members of said board on the date hereof, (ii) whose election or nomination
to said board was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
said board, or (iii) whose election or nomination to said board was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of said board.

 

“Change of Law” shall have the meaning given to that term in Section 2.12(b).

 

“Collateral” shall mean all real and personal property of each Loan Party in
which the Administrative Agent or any Lender has a Lien to secure the
Obligations or any Guaranty.

 

“Collateral Certificate” shall mean a Collateral Certificate in form and
substance satisfactory to the Administrative Agent.

 

“Commercial Letter of Credit” means any documentary letter of credit issued by
the L/C Issuer either under this Agreement or as originally issued, in either
case as the same may be supplemented, modified, amended, extended, restated or
supplanted.

 

“Commitment Fee Percentage” shall mean, with respect to the Revolving Loan
Commitments at any time, the per annum percentage which is used to calculate
Commitment Fees for such Revolving Loan Commitments. The Commitment Fee
Percentage shall be determined as provided in the Pricing Grid and may change
for each fiscal quarter.

 

“Commitment Fees” shall have the meaning given to that term in Section 2.06(b).

 

“Commitments” shall mean, collectively, the Revolving Loan Commitments and the
Term Loan Commitments.

 

“Compliance Certificate” shall have the meaning given to that term in Section
5.01(a)(iii).

 

“Contingent Obligation” shall mean, with respect to any Person, (a) any Guaranty
Obligation of that Person; and (b) any direct or indirect obligation or
liability, contingent or otherwise, of that Person (i) in respect of any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments, (ii) as a partner or
joint venturer in any partnership or joint venture, (iii) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, (iv) any unfunded pension liability or (v) in respect to
any Rate Contract that is not entered into in connection with a bona fide
hedging operation that provides offsetting benefits to such Person. The amount
of any Contingent Obligation shall (subject, in

 

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the case of Guaranty Obligations, to the last sentence of the definition of
“Guaranty Obligation”) be deemed equal to the maximum reasonably anticipated
liability in respect thereof, and shall, with respect to item (b)(iv) of this
definition be marked to market on a current basis.

 

“Contractual Obligation” of any Person shall mean, any indenture, note, lease,
loan agreement, security, deed of trust, mortgage, security agreement, guaranty,
instrument, contract, agreement or other form of contractual obligation or
undertaking to which such Person is a party or by which such Person or any of
its Property is bound.

 

“Control Agreement” a control agreement among a Borrower or a Guarantor, a
depository bank or securities intermediary, as the case may be, and the
Administrative Agent, substantially in form as shall be acceptable to the
Administrative Agent.

 

“Credit Documents” shall mean and include this Agreement, the Notes, each
Guaranty, the Security Documents, each Letter of Credit Application, each Notice
of Borrowing, each Notice of Interest Period Selection, all Lender Rate
Contracts, the Collateral Certificate, each Notice of Conversion, the Fee
Letter, all other documents, instruments and agreements signed by or on behalf
of any Loan Party and delivered to the Administrative Agent or any Lender
pursuant to Section 3.01 and all other documents, instruments and agreements
signed by or on behalf of any Loan Party and delivered by any Loan Party to the
Administrative Agent or any Lender in connection with this Agreement or any
other Credit Document on or after the date of this Agreement, including any
amendments, consents or waivers, as the same may be amended, restated,
supplemented or modified from time to time.

 

“Credit Event” shall mean the making of any Loan (including a Swing Line Loan)
or the making of an L/C Credit Extension.

 

“Date of Acceleration” shall mean the earlier of (i) the termination of the
Revolving Loan Commitments and (ii) the declaration of all or a portion of the
outstanding Revolving Loans or Term Loans to be immediately due and payable
without presentment, demand, protest or any other notice of any kind (or
automatic acceleration thereof, as the case may be).

 

“Dayton Gaming” shall have the meaning given to that term in the preamble
hereof.

 

“Debtor Relief Laws” shall mean the Bankruptcy Code of the United States of
America, and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws or Governmental Rules from time to time in effect affecting
the rights of creditors generally.

 

“Depot Casino” shall mean Dayton Depot, a Nevada corporation.

 

“Depot Casino Assets” shall mean all of the assets which are utilized by Depot
Casino to operate the Depot Casino Business including the Depot Casino Real
Property.

 

“Depot Casino Assignment” shall mean an assignment, in a form and substance
satisfactory to Administrative Agent, to be executed by Dayton Gaming, as a
condition precedent to the initial Credit Event, and to be recorded in the
Official Records of Lyon County, Nevada, whereby Dayton Gaming presently assigns
to Administrative Agent in consideration of the credit

 

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facilities to be provided hereunder (reserving a revocable license to retain use
and enjoy): (a) all of its right, title and interest under all leases and other
occupancy agreements which it has entered into with respect to the Depot Casino
Real Property; (b) all of its right, title and interest under all leases and
purchase contracts relating to equipment utilized in connection with the Depot
Casino Real Property; (c) all of its right, title and interest in and to all
permits, licenses and contracts relating to the Depot Casino Real Property,
except Gaming Licenses and except for those permits, licenses and contracts
which are unassignable, and (d) all rents, issues, profits, revenues and income
from Depot Casino Real Property and from any business activity conducted
thereon; as such assignment may be amended, modified, extended, renewed,
restated, substituted or replaced from time to time.

 

“Depot Casino Business” shall mean the non restricted gaming business which is
operated at the Depot Casino Real Property by Depot Casino under the trade name
of “Depot Casino”.

 

“Depot Casino Deed of Trust” shall mean a deed of trust and security agreement
with assignment of rents, in a form and substance satisfactory to the
Administrative Agent, to be recorded in the Official Records of Lyon County,
Nevada, encumbering: (i) all of Dayton Gaming’s right, title and interest in the
Depot Casino Real Property; and (ii) all personal property associated with the
Depot Casino Real Property; all as security for Borrowers’ payment and
performance under this Agreement and under the other Credit Documents; as such
deed of trust may be amended, modified, extended, renewed, restated, substituted
or replaced from time to time.

 

“Depot Casino Permitted Exceptions” shall mean a collective reference to: (i)
those exceptions to Dayton Gaming’s title in the Depot Casino Real Property
which are set forth on Schedule 4.01(j)D; and (ii) such other items which are
acceptable to Administrative Agent in its sole discretion (provided that the
Administrative Agent shall give prompt notice to the Lenders of such items that
the Administrative Agent has approved).

 

“Depot Casino Real Property” shall mean the real property which is described by
Schedule 4.01(h)D.

 

“Depot Red Hawk Purchase Agreement” shall mean that certain Asset Purchase
Agreement dated February 25, 2005, as amended by that certain First Amendment to
Asset Purchase Agreement dated March 15, 2005 between the Depot Red Hawk
Sellers, as sellers, and Dayton Gaming as purchaser pursuant to which, among
other things, the Depot Red Hawk Sellers agreed, in their respective capacities,
to: (i) sell the Depot Casino Assets and the Red Hawk Assets to Dayton Gaming;
and (ii) grant the RV Park Option to Dayton Gaming.

 

“Depot Red Hawk Sellers” shall mean: (i) Depot Casino as the owner of the Depot
Casino Assets other than the Depot Casino Real Property; (ii) Red Hawk as the
owner of the Red Hawk Assets other than the Red Hawk Real Property; (iii) Cletus
F. Wandler and Georgette Wandler as Co-Trustees of the Wandler Family Trust as
the owners of the Depot Casino Real Property; (iv) Cletus F. Wandler and
Georgette Wandler, as owners of the fee interest in the Red Hawk Fee Parcels and
as lessee of the Red Hawk NDOT Parcel under the Red Hawk NDOT Lease; and (v)
Stags Leap Partners, LLC, as owner of the RV Park Option Property.

 

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“Deeds of Trust” shall mean, collectively, the Last Chance Deed of Trust, the
Zante Deed of Trust, the Rail City Deed of Trust, the Depot Casino Deed of Trust
and the Red Hawk Deed of Trust.

 

“Default” shall mean an Event of Default or any event or circumstance not yet
constituting an Event of Default which, with the giving of any notice or the
lapse of any period of time or both, would become an Event of Default.

 

“Default Rate” shall have the meaning given to that term in Section 2.08(c).

 

“Defaulting Lender” shall mean a Lender which has failed to fund its portion of
any Borrowing which it is required to fund under this Agreement and has
continued in such failure for three (3) Business Days after written notice from
the Administrative Agent or, if the Administrative Agent fails to send such
notice, from a Borrower.

 

“Designated Person” shall mean any Person who (i) is named on the list of
Specially Designated Nationals or Blocked Persons maintained by the U.S.
Department of the Treasury’s Office of Foreign Assets Control and/or any other
similar lists maintained by the U.S. Department of the Treasury’s Office of
Foreign Assets Control pursuant to authorizing statute, executive order or
regulation, (ii) (A) is a Person whose property or interest in property is
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 (the “Executive Order”) or any related legislation or any
other similar executive order(s) or (B) engages in any dealings or transactions
prohibited by Section 2 of the Executive Order or is otherwise associated with
any such Person in any manner violative of Section 2 of the Executive Order or
(iii)(X) is an agency of the government of a country, (Y) an organization
controlled by a country, or (Z) a Person resident in a country that is subject
to a sanctions program identified on the list maintained by the U.S. Department
of the Treasury’s Office of Foreign Assets Control, or as otherwise published
from time to time, as such program may be applicable to such agency,
organization or Person.

 

“Distributions” shall mean dividends (in cash, Property or obligations) on, or
other payments or distributions on account of, or the setting apart of money for
a sinking or other analogous fund for, or the purchase, redemption, retirement
or other acquisition of, any Equity Securities of any Loan Party or of any
warrants, options or other rights to acquire the same (or to make any payments
to any Person, such as “phantom stock” payments, where the amount is calculated
with reference to the fair market or equity value of any Loan Party), but
excluding dividends payable solely in shares of common stock of any Loan Party.

 

“Dollars” and “$” shall mean the lawful currency of the United States of America
and, in relation to any payment under this Agreement, same day or immediately
available funds.

 

“Domestic Lending Office” shall mean, with respect to any Lender, (a) initially,
its office designated as such in Schedule I (or, in the case of any Lender which
becomes a Lender by an assignment pursuant to Section 8.05(c), its office
designated as such in the applicable Assignment Agreement) and (b) subsequently,
such other office or offices as such Lender may designate to the Administrative
Agent as the office at which such Lender’s Base Rate Loans and Base Rate
Portions will thereafter be maintained and for the account of which all payments
of

 

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principal of, and interest on, such Lender’s Base Rate Loans and Base Rate
Portions will thereafter be made.

 

“Domestic Subsidiary” shall mean each direct or indirect Subsidiary of a
Borrower which is organized under the laws of the United States of America or
any state thereof.

 

“EBITDA” shall mean, with respect to the Loan Parties determined on a
consolidated basis, for any period, Net Income for such period plus, without
duplication, and to the extent deducted in determining such Net Income for such
period, the sum of the following for such period: (i) cash Interest Expense for
such period, (ii) income tax expense for such period, (iii) depreciation and
amortization for such period, (iv) extraordinary or non-recurring charges for
such period, (v) the aggregate amount of non-cash charges during such period,
and (vi) for the four quarters following such charges, charges relating to the
execution and delivery of this Agreement and the Acquisition, and minus, without
duplication, and to the extent added in determining such Net Income for such
period, the aggregate amount of extraordinary or non-recurring gains during such
period. Pro forma credit shall be given for acquired companies’ EBITDA or the
identifiable EBITDA of identifiable business units and divisions acquired
calculated in a similar fashion (so long as such acquisition was permitted by
this Agreement) as if owned on the first day of the applicable period; companies
(or identifiable business units or divisions) sold, transferred or otherwise
disposed of during any period will be treated as if not owned during the entire
applicable period.

 

“Effective Amount” shall mean (i) with respect to Revolving Loans, Term Loans
and Swing Line Loans on any date, the aggregate outstanding principal amount
thereof after giving effect to any borrowings and prepayments or repayments of
Revolving Loans, Term Loans and Swing Line Loans, as the case may be, occurring
on such date; and (ii) with respect to any L/C Obligations on any date, the
amount of such L/C Obligations on such date after giving effect to any L/C
Credit Extension occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of Credit or any
reductions in the maximum amount available for drawing under Letters of Credit
taking effect on such date.

 

“Eligible Assignee” shall mean a Person which is (a) to the extent required
under applicable Gaming Laws, registered or licensed with, approved or found
suitable by, or not disapproved, denied a license or approval or found
unsuitable by (whichever may be required under applicable Gaming Laws), any
applicable Governmental Authorities, (b) a commercial bank organized under the
laws of the United States of America, or any state thereof, and having a
combined capital and surplus of at least $100,000,000, (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the “OECD”), or a
political subdivision of any such country, and having a combined capital and
surplus of at least $100,000,000; provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of the OECD, or (d) a Person that is primarily
engaged in the business of commercial banking or lending and that is (i) a
Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a
Subsidiary, or (iii) a Person of which a Lender is a Subsidiary.

 

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“Employee Benefit Plan” shall mean any employee benefit plan within the meaning
of section 3(3) of ERISA maintained or contributed to by a Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.

 

“Environmental Damages” shall mean all claims, judgments, damages, losses,
penalties, liabilities (including strict liability), costs and expenses,
including costs of investigation, remediation, defense, settlement and
attorneys’ fees and consultants’ fees, that are incurred at any time (a) as a
result of the existence of any Hazardous Material upon, about or beneath any
real property owned, leased or operated by the Loan Parties or migrating or
threatening to migrate to or from any such real property, (b) arising from any
investigation, proceeding or remediation of any location at which the Loan
Parties or any predecessors are alleged to have directly or indirectly disposed
of Hazardous Materials or (c) arising in any manner whatsoever out of any
violation of Environmental Laws by any Loan Party or with respect to any real
property owned by any Loan Party.

 

“Environmental Laws” shall mean the Clean Air Act, 42 U.S.C. Section 7401 et
seq.; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.;
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et
seq.; the Comprehensive Environment Response, Compensation and Liability Act of
1980 (including the Superfund Amendments and Reauthorization Act of 1986,
“CERCLA”), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
Section 651; the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, 30 U.S.C.
Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et
seq.; and all other Governmental Rules relating to environmental, health, safety
and land use matters, including all Governmental Rules pertaining to the
reporting, licensing, permitting, transportation, storage, disposal,
investigation or remediation of emissions, discharges, releases, or threatened
releases of Hazardous Materials into the air, surface water, groundwater, or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation or handling of Hazardous Materials.

 

“Equity Securities” of any Person shall mean (a) all common stock, preferred
stock, participations, shares, partnership interests, limited liability company
interests or other equity interests in and of such Person (regardless of how
designated and whether or not voting or non-voting) and (b) all warrants,
options and other rights to acquire any of the foregoing.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

 

“ERISA Affiliate” shall mean any Person that is treated as a single employer
with a Borrower under section 414(b) or (c) of the IRC.

 

“ERISA Event” shall mean (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension Plan
subject to section 4063 of ERISA during a plan year in which it was a
“substantial employer” (as defined in section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under section
4062(e) of ERISA which could reasonably be expected to give rise to any
liability with respect to such withdrawal; (c) a complete or partial withdrawal
by a Borrower or any ERISA

 

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Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Pension Plan or Multiemployer Plan amendment as a termination
under sections 4041 or 4041A of ERISA, or the commencement of proceedings to
terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which
could reasonably be expected to constitute grounds under section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under section
4007 of ERISA, upon a Borrower or any ERISA Affiliate.

 

“Euro-Dollar Lending Office” shall mean, with respect to any Lender, (a)
initially, its office designated as such in Schedule I (or, in the case of any
Lender which becomes a Lender by an assignment pursuant to Section 8.05(c), its
office designated as such in the applicable Assignment Agreement) and (b)
subsequently, such other office or offices as such Lender may designate to the
Administrative Agent as the office at which such Lender’s LIBOR Loans and LIBOR
Portions will thereafter be maintained and for the account of which all payments
of principal of, and interest on, such Lender’s LIBOR Loans and LIBOR Portions
will thereafter be made.

 

“Event of Default” shall have the meaning given to that term in Section 6.01.

 

“Evergreen Letter of Credit” shall have the meaning given to that term in
Section 2.03(b).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934.

 

“Existing Credit Agreement” shall mean that certain Credit Agreement, dated as
of April 2, 2004, among the Borrowers, the lenders party thereto and Wells Fargo
Bank, National Association as administrative agent, l/c issuer and swing line
lender.

 

“Existing Last Chance Deed of Trust” shall mean the Deed of Trust, Fixture
Filing and Security Agreement with Assignment of Rents (Gold Ranch), duplicate
originals of which were executed under date of May 3, 2004, by Last Chance and
by CPLTD, as trustors and debtors, in favor of the Administrative Agent, as
beneficiary, one of which was recorded in the Official Records of Washoe County,
Nevada on May 3, 2004 as Document No. 3032158, and one of which was recorded in
the Official Records of Sierra County, California on May 4, 2004 as Document No.
2004140410, in order to encumber: (i) all of Last Chance’s and CPLTD’s right,
title and interest in the Last Chance Real Property under the Last Chance
Prospector Documents, and all other interests of Last Chance and CPLTD in the
Last Chance Real Property; and (ii) all personal property associated with the
Last Chance Real Property; all for the purpose, among other things, of securing
Borrowers’ payment and performance under the credit facilities provided by the
Existing Credit Agreement.

 

“Existing Rail City Deed of Trust” shall mean that certain Deed of Trust,
Fixture Filing and Security Agreement with Assignment of Rents (Rail City)
executed under date of May 3, 2004, by Rail City, as trustor and debtor, in
favor of the Administrative Agent, as beneficiary, and recorded in the Official
Records of Washoe County, Nevada on May 3, 2004 as Document No. 3032161, in
order to encumber, among other things: (i) all of Rail City’s right, title and

 

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interest in the Rail City Real Property including the licensee’s interest in the
Rail City NDOT Parcel under the Rail City Parking License Documents; and (ii)
all personal property associated with the Rail City Real Property; all for the
purpose, among other things, of securing Borrowers’ payment and performance
under the Credit Facilities provided by the Existing Credit Agreement.

 

“Existing Title Insurance Policy” shall mean that certain ALTA Lenders Policy of
Title Insurance dated as of May 3, 2004 and issued to the Administrative Agent
by First American Title Insurance Company under Policy Number 801-2107950-RB,
pursuant to which the lien and priority of the Existing Last Chance Deed of
Trust, the Existing Rail City Deed of Trust and the Existing Zante Deed of Trust
were all insured in accordance with the terms and conditions set forth therein.

 

“Existing Zante Deed of Trust” shall mean that certain Deed of Trust, Fixture
Filing and Security Agreement with Assignment of Rents (Zante) executed under
date of May 3, 2004, by Zante, as trustor and debtor, in favor of the
Administrative Agent, as beneficiary, and recorded in the Official Records of
Washoe County, Nevada on May 3, 2004 as Document No. 3032156, in order to
encumber, among other things: (i) all of Zante’s right, title and interest in
the Zante Real Property; and (ii) all personal property associated with the
Zante Real Property; all for the purpose, among other things, of securing
Borrowers’ payment and performance under the Credit Facilities provided by the
Existing Credit Agreement.

 

“Federal Funds Rate” shall mean, for any day, the rate per annum (rounded
upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day;
provided, that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (b) if no such rate
is so published on such next succeeding Business Day, the Federal Funds Rate for
such day shall be the average rate charged to Wells Fargo on such day on such
transactions as determined by the Administrative Agent.

 

“Federal Reserve Board” shall mean the Board of Governors of the Federal Reserve
System.

 

“Fee Letter” shall mean the letter agreement dated as of October 3, 2003, among
Sands and Wells Fargo, as amended on December 23, 2003, regarding certain fees
payable by the Borrowers to the Administrative Agent and the Lenders as
expressly indicated therein.

 

“Financial Statements” shall mean, with respect to any accounting period for any
Person, statements of income, retained earnings and cash flows of such Person
for such period, and a balance sheet of such Person as of the end of such
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audited financial statements, all prepared in
reasonable detail and in accordance with GAAP.

 

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“First Amendment to Last Chance Deed of Trust” shall mean that certain First
Amendment to Deed of Trust, Fixture Filing and Security Agreement with
Assignment of Rents which is to be executed in duplicate by Last Chance, CPLTD
and the Administrative Agent, on or before the Funding Date, and is to be
recorded in the Official Records of Washoe County, Nevada, and in the Official
Records of Sierra County, California, concurrently, or substantially
concurrently, with the Funding Date for the purpose of amending the Existing
Last Chance Deed of Trust in order to provide, among other things, for the
Existing Last Chance Deed of Trust to reflect the Borrowers’ entry into this
Agreement and the amendment and restatement provided herein and to confirm that
the Existing Last Chance Deed of Trust, as amended thereby, secures payment and
performance under the credit facilities provided by this Agreement.

 

“First Amendment to Rail City Deed of Trust” shall mean that certain First
Amendment to Deed of Trust, Fixture Filing and Security Agreement with
Assignment of Rents (Rail City) which is to be executed by Rail City and by the
Administrative Agent, on or before the Funding Date, and is to be recorded in
the Official Records of Washoe County, Nevada concurrently, or substantially
concurrently, with the Funding Date for the purpose of amending the Existing
Rail City Deed of Trust in order to provide, among other things, for the
Existing Rail City Deed of Trust to reflect the Borrowers’ entry into this
Agreement and the amendment and restatement provided herein and to confirm that
the Existing Rail City Deed of Trust, as amended thereby, secures payment and
performance under the credit facilities provided by this Agreement.

 

“First Amendment to Zante Deed of Trust” shall mean that certain First Amendment
to Deed of Trust, Fixture Filing and Security Agreement with Assignment of Rents
(Zante) which is to be executed by Zante and by the Administrative Agent, on or
before the Funding Date, and is to be recorded in the Official Records of Washoe
County, Nevada concurrently, or substantially concurrently, with the Funding
Date for the purpose of amending the Existing Zante Deed of Trust in order to
provide, among other things, for the Existing Zante Deed of Trust to reflect the
Borrowers’ entry into this Agreement and the amendment and restatement provided
herein and to confirm that the Existing Zante Deed of Trust, as amended thereby,
secures payment and performance under the credit facilities provided by this
Agreement.

 

“Fixed Charge Coverage Ratio” shall mean, as of the last day of any fiscal
quarter, (a) EBITDA for the period of four consecutive fiscal quarters ending on
such date minus the sum of, without duplication, (i) the aggregate amount of all
Maintenance Capital Expenditures made during such period (net of the aggregate
principal amount of all Indebtedness incurred or otherwise assumed by the Loan
Parties to the extent expressly permitted by this Agreement, determined on a
consolidated basis in accordance with GAAP, during such period to finance such
Maintenance Capital Expenditures and excluding any Permitted Acquisition to the
extent treated as a Capital Expenditure under GAAP), (ii) cash taxes for such
period and (iii) Distributions made during such period, divided by (b) Fixed
Charges for such period.

 

“Fixed Charges” shall mean, for any period, the sum for the Loan Parties
(determined on a consolidated basis without duplication in accordance with
GAAP), of the following items: (a) cash Interest Expense for such period, (b)
scheduled payments of principal on Indebtedness and/or the repayment of any
Permitted Subordinated Indebtedness during such period and (c) the portion of
payments, other than optional payments, made under Capital Leases that should be

 

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treated as payment of principal in accordance with GAAP, to the extent actually
paid during such period.

 

“Foreign Plan” shall mean any defined benefit plan as defined in section 3(35)
of ERISA maintained by a Borrower or any Subsidiary which is mandated or
governed by any Governmental Rule of any Governmental Authority other than the
United States.

 

“Funding Date” shall have the meaning given to that term in Section 3.01, it
being agreed upon by the Borrowers and the Lenders that, upon determination of
the actual Funding Date, the Administrative Agent shall insert Schedule II
hereto, which schedule shall contain such actual Funding Date.

 

“GAAP” shall mean generally accepted accounting principles and practices as in
effect in the United States of America from time to time, consistently applied.

 

“Gaming Authorities” shall mean, collectively, (a) the Nevada Gaming Commission,
(b) the Nevada State Gaming Control Board and (c) any other Governmental
Authorities that holds regulatory, licensing or permit authority over gambling,
gaming or casino activities conducted by the Borrowers and their Subsidiaries.

 

“Gaming Facility” shall mean any casino and all other Property owned by a Loan
Party which is ancillary thereto or used in connection therewith.

 

“Gaming Laws” shall mean all statutes, rules, regulations, ordinances, codes,
administrative or judicial orders or decrees or other laws pursuant to which any
Gaming Authority or other Governmental Authority possesses regulatory, licensing
or permit authority over gambling or gaming activities conducted by any Loan
Party within its jurisdiction.

 

“Gaming License” shall mean, collectively, any and all Governmental
Authorizations (i) necessary to enable any Loan Party to engage in the casino,
gambling or gaming business or otherwise continue to conduct its business as it
is conducted on the Funding Date, or (ii) required by any Governmental Authority
or under any Gaming Law.

 

“Governmental Authority” shall mean any domestic or foreign national, state or
local government, any political subdivision thereof, any department, agency,
authority or bureau of any of the foregoing, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the Federal Deposit Insurance Corporation,
the Federal Reserve Board, the Comptroller of the Currency, any central bank or
any comparable authority.

 

“Governmental Authorization” shall mean any permit, license, registration,
approval, finding of suitability, authorization, plan, directive, order,
consent, exemption, waiver, consent order or consent decree of or from, or
notice to, action by or filing with, any Governmental Authority.

 

“Governmental Charges” shall mean, with respect to any Person, all levies,
assessments, fees, claims or other charges imposed by any Governmental Authority
upon such Person or any of its property or otherwise payable by such Person.

 

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“Governmental Rule” shall mean any law, rule, regulation, ordinance, order, code
interpretation, judgment, decree, directive, Governmental Authorization
guidelines, policy or similar form of decision of any Governmental Authority.

 

“Guarantor” shall mean CPLTD, and each other direct or indirect Subsidiary of a
Borrower (other than any Subsidiary which is a Borrower) which becomes a party
to the Guaranty.

 

“Guarantor Security Agreement” shall mean that certain Amended and Restated
Guarantor Security Agreement, dated as of the date hereof, among the Guarantor
and the Administrative Agent.

 

“Guaranty” shall mean the Amended and Restated Guaranty Agreement, dated as of
the date hereof, among the Guarantors and the Administrative Agent, delivered by
the Borrowers pursuant to Section 5.01(i).

 

“Guaranty Obligation” shall mean, with respect to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the “primary obligations”) of
another Person (the “primary obligor”), including any obligation of that Person,
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the beneficiary of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof. The amount of any Guaranty
Obligation shall be deemed equal to the stated or determinable amount of the
primary obligation in respect of which such Guaranty Obligation is made or, if
not stated or if indeterminable, the maximum liability in respect thereof.

 

“Hazardous Materials” shall mean all pollutants, contaminants and other
materials, hazardous or toxic substances and wastes, including petroleum and
petroleum products and byproducts, radioactive materials, asbestos, and
polychlorinated biphenyls and any other materials that are classified or
regulated as “hazardous,” “toxic” or similar descriptions under any applicable
Environmental Law.

 

“Honor Date” shall have the meaning given to that term in Section 2.03(c)(i).

 

“ICC” shall have the meaning given to that term in Section 2.03(h).

 

“Indebtedness” of any Person shall mean, without duplication:

 

(a) All obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments and all other obligations of such Person for borrowed
money (including obligations to repurchase receivables and other assets sold
with recourse);

 

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(b) All obligations of such Person for the deferred purchase price of property
or services (including obligations under letters of credit and other credit
facilities which secure or finance such purchase price) except for trade
accounts payable not more than sixty (60) days past due;

 

(c) All obligations of such Person under conditional sale or other title
retention agreements with respect to property acquired by such Person (to the
extent of the value of such property if the rights and remedies of the seller or
the lender under such agreement in the event of default are limited solely to
repossession or sale of such property);

 

(d) All obligations of such Person as lessee under or with respect to Capital
Leases;

 

(e) All obligations of such Person, contingent or otherwise, under or with
respect to Surety Instruments;

 

(f) All net obligations of such Person, contingent or otherwise, under or with
respect to Rate Contracts;

 

(g) All obligations arising in connection with the issuance of any Letters of
Credit;

 

(h) All Guaranty Obligations of such Person with respect to the obligations of
other Persons of the types described in clauses (a) - (g) above and all other
Contingent Obligations (including unfunded pension liability) of such Person;
and

 

(i) All obligations of other Persons of the types described in clauses (a) - (h)
above to the extent secured by (or for which any holder of such obligations has
an existing right, contingent or otherwise, to be secured by) any Lien in any
property (including accounts and contract rights) of such Person, even though
such Person has not assumed or become liable for the payment of such
obligations.

 

“Intellectual Property Security Agreement” shall mean that certain Amended and
Restated Security Agreement (Intellectual Property), dated as of the date
hereof, among the Borrowers and the Administrative Agent.

 

“Interest Expense” shall mean, for any period, the sum, for the Loan Parties
(calculated without regard to any limitations on the payment thereof and
including amortization of Indebtedness discount and deferred financing costs,
capitalized interest, interest paid in kind, commitment fees and letter of
credit fees), determined on a consolidated basis without duplication in
accordance with GAAP, of the following: (a) all interest, fees, charges and
related expenses allocable to such period to any Person in connection with
Indebtedness or the deferred purchase price of assets that is treated as
interest in accordance with GAAP (net of interest income for such period), (b)
the portion of rent actually allocable to such period under Capital Leases that
should be treated as interest in accordance with GAAP, and (c) the net amounts
payable (or minus the net amounts receivable) under Rate Contracts accrued
during such period (whether or not actually paid or received during such
period). For purposes of the foregoing,

 

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interest expense shall be determined after giving effect to any net payments
made or received with respect to Rate Contracts.

 

“Interest Period” shall mean, with respect to any LIBOR Loan or LIBOR Portion,
the time periods selected by the Borrowing Agent pursuant to Section 2.01(b),
Section 2.01(d), Section 2.02(b) or Section 2.02(d) which commences on the first
day of such Loan or Portion or the effective date of any conversion and ends on
the last day of such time period, and thereafter, each subsequent time period
selected by the Borrowing Agent pursuant to Section 2.01(e) or Section 2.02(e)
which commences on the last day of the immediately preceding time period and
ends on the last day of that time period.

 

“Investment” of any Person shall mean any loan or advance of funds by such
Person to any other Person (other than advances to employees of such Person for
moving and travel expenses, drawing accounts and similar expenditures in the
ordinary course of business), any purchase or other acquisition of any Equity
Securities or Indebtedness of any other Person, any capital contribution by such
Person to or any other investment by such Person in any other Person (including
any Guaranty Obligations of such Person and any indebtedness of such Person of
the type described in clause (h) of the definition of “Indebtedness” on behalf
of any other Person); provided, however, that Investments shall not include (a)
accounts receivable or other indebtedness owed by customers of such Person which
are current assets and arose from sales of inventory in the ordinary course of
such Person’s business (except as otherwise set forth in this Agreement with
respect to accounts receivable or other indebtedness owing from one Loan Party
to another Loan Party), or (b) prepaid expenses of such Person incurred and
prepaid in the ordinary course of business.

 

“IRC” shall mean the Internal Revenue Code of 1986.

 

“Joint Venture” shall mean a joint venture, limited liability company,
corporation, partnership or other entity (other than a Subsidiary) in which a
Borrower or a Subsidiary of a Borrower and one or more other Persons who are not
Subsidiaries of a Borrower have ownership interests. “Joint Venture” shall
include any direct or indirect Subsidiary of a Borrower which Subsidiary is not
wholly owned, either directly or indirectly, by a Borrower.

 

“Last Chance Assignment” shall mean that certain Assignment of Entitlements,
Contracts, Rents and Revenues (Last Chance), duplicate originals of which were
executed under date of May 3, 2004 by Last Chance and by CPLTD, one of which was
recorded in the Official Records of Washoe County, Nevada, on May 3, 2004 as
Document No. 3032159 and one of which was recorded in the Official Records of
Sierra County, California on May 4, 2004 as Document No. 2004140411, all
pursuant to which, Last Chance and CPLTD presently assigned to the
Administrative Agent (reserving a revocable license to retain use and enjoy):
(a) all of their right, title and interest under all leases and other occupancy
agreements which they had entered into with respect to the Last Chance Real
Property; (b) all of their right, title and interest under all leases and
purchase contracts relating to equipment utilized in connection with the Last
Chance Real Property; (c) all of their right, title and interest in and to all
permits, licenses and contracts relating to the Last Chance Real Property,
except Gaming Licenses and except for those permits, licenses and contracts
which are unassignable, and (d) all rents, issues, profits, revenues and income
from the Last Chance Real Property and from any business activity

 

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conducted thereon; all in consideration of the credit facilities provided by the
Existing Credit Agreement and in consideration of all modifications to such
credit facilities (including the modifications provided for hereby); as such
assignment may be amended, modified, extended, renewed, restated, substituted or
replaced from time to time.

 

“Last Chance Deed of Trust” shall mean the Existing Last Chance Deed of Trust,
as amended by the First Amendment to Last Chance Deed of Trust, and as it may be
further renewed, extended, amended, restated, replaced, substituted or otherwise
modified from time to time.

 

“Last Chance Estoppel Documents” shall mean a collective reference to: (i) that
certain Estoppel Certificate (Prospector/Target/Stremmel/RV Resort, LLC),
executed by Prospector, Target, Stremmel Capital and RV Resort, LLC, a Nevada
limited liability company under date of May 3, 2004 and recorded in the Official
Records of Washoe County, Nevada on May 3, 2004 as Document No. 3032160; and
(ii) that certain Estoppel Certificate (Stremmel) executed by Last Chance, Peter
Stremmel and Steve Stremmel under date of May 3, 2004; in each case, as parties
to the Last Chance Prospector Documents pursuant to which they certified and
represented to the Administrative Agent that: (i) the Last Chance Prospector
Documents represented the entire agreement between the parties thereto with
respect to the Last Chance Real Property and the Last Chance Water and Sewer
Entitlements; (ii) the Last Chance Prospector Documents have not been modified,
supplemented or amended except as described therein; (iii) to their best
knowledge, there were no defaults, by any parties to the Last Chance Prospector
Documents, then existing under any terms of the Last Chance Prospector
Documents; and (iv) they consented to encumbrance of Last Chance’s interest
under the Last Chance Prospector Documents with the applicable Security
Documents.

 

“Last Chance Lottery Property” shall mean that portion of the Last Chance Real
Property which is described as Parcels 4 and 6 on Schedule 4.01(h)A.]

 

“Last Chance Permitted Exceptions” shall mean a collective reference to: (i)
those exceptions to Last Chance’s and CPTLD’s title in the Last Chance Real
Property which are set forth on Schedule 4.01(j) A; and (ii) such other items
which are acceptable to Administrative Agent in its sole discretion.

 

“Last Chance Prospector Documents” shall mean a collective reference to that
certain Asset Purchase Agreement between Prospector and Last Chance dated
December 27, 2001 and the Integrated Agreements which are referred to therein,
which Integrated Agreements include, without limitation: (i) a management
agreement providing for Last Chance to manage the Last Chance RV Park; (ii)
various leases granting leasehold interests to Last Chance or CPTLD in the
remaining Last Chance Real Property; (iii) various options to purchase the Last
Chance Real Property, wherein Last Chance is the optionee; and (iv) the Last
Chance Water and Sewer Agreement.

 

“Last Chance RV Park” shall mean that portion of the Last Chance Real Property
which is described as Parcels 5 and 7 on Schedule 4.01(h)A.

 

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“Last Chance Real Property” shall mean the real property which is described by
Schedule 4.01(h)A.

 

“Last Chance Water and Sewer Agreement” shall mean that certain Water and Sewer
Service Agreement between Prospector, Target, Stremmel Capital and Last Chance
dated December 27, 2001 pursuant to which, among other things: (i) Prospector,
Target and Stremmel Capital agree to provide water and sewer service to Last
Chance (the “Last Chance Real Property”), on a first priority basis; and (ii)
Last Chance is granted a right of first refusal with respect to certain assets
which are owned by Prospector, Target and Stremmel Capital and which are to be
utilized in providing the water and sewer service that is contemplated
thereunder.

 

“Last Chance Water and Sewer Entitlements” shall mean a collective reference to:
(i) Last Chance’s entitlement to water and sewer service to be provided by
Prospector, Target and Stremmel Capital pursuant to the Last Chance Water and
Sewer Agreement; and (ii) all other rights and interests to which Last Chance is
entitled under the Last Chance Water and Sewer Agreement.

 

“L/C Advance” shall mean, with respect to each Lender, such Lender’s funding of
any L/C Borrowing in accordance with its Revolving Proportionate Share.

 

“L/C Borrowing” shall mean an extension of credit resulting from a drawing under
any Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Revolving Loan Borrowing.

 

“L/C Credit Extension” shall mean, with respect to any Letter of Credit, the
issuance thereof, the amendment thereof, the extension of the expiry date
thereof, or the renewal or increase of the amount thereof.

 

“L/C Issuer” shall mean Wells Fargo (or Trade Bank, as agent for Wells Fargo) in
its capacity as issuer of Letters of Credit hereunder, or any successor issuer
of Letters of Credit hereunder.

 

“L/C Obligations” shall mean, as at any date of determination, the aggregate
undrawn face amount of all outstanding Letters of Credit plus the aggregate of
all Unreimbursed Amounts, including all L/C Borrowings.

 

“Lender Rate Contract(s)” shall mean one or more Rate Contracts with respect to
the Indebtedness evidenced by this Agreement between a Borrower or the Borrowers
and one or more of the Lenders (or an Affiliate of a Lender, whether or not such
Lender subsequently ceases to be a “Lender” hereunder for any reason), on terms
acceptable to such Borrower or the Borrowers and such Lender or Lenders (or
Affiliate(s)). Each Lender Rate Contract shall be a Credit Document and shall be
secured by the Liens created by the Security Documents to the extent set forth
in Section 2.15(a).

 

“Lenders” shall have the meaning given to that term in clause (2) of the
introductory paragraph hereof and includes the L/C Issuer and the Swing Line
Lender (unless the context otherwise requires).

 

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“Letter of Credit” shall mean any letter of credit issued hereunder. A Letter of
Credit may be a Commercial Letter of Credit or a Standby Letter of Credit.

 

“Letter of Credit Application” shall mean an application and agreement
(including any master letter of credit agreement) for the issuance or amendment
of a letter of credit in the form from time to time in use by the L/C Issuer.

 

“Letter of Credit Expiration Date” shall mean the day that is ten days prior to
the Revolving Loan Maturity Date (or, if such day is not a Business Day, the
next preceding Business Day).

 

“Letter of Credit Sublimit” shall mean an amount equal to the lesser of the
Total Revolving Loan Commitment and $5,000,000. The Letter of Credit Sublimit is
part of, and not in addition to, the Total Revolving Loan Commitment.

 

“Leverage Ratio” shall mean, as of any date of determination, the ratio of (a)
Total Funded Debt on such date to (b) EBITDA for the four fiscal quarter period
ending on the last day of the most recently completed fiscal quarter.

 

“LIBOR Loan” shall mean, at any time, a Revolving Loan which then bears interest
as provided in clause (ii) of Section 2.01(c).

 

“LIBOR Portion” shall mean, at any time, a Portion of the Term Loan Borrowing or
a Term Loan, as the case may be, which then bears interest at a rate specified
in clause (ii) of Section 2.02(c).

 

“LIBOR Rate” shall mean, with respect to any Interest Period for the LIBOR Loans
in any Revolving Loan Borrowing consisting of LIBOR Loans or any LIBOR Portion
of the Term Loan, a rate per annum equal to the quotient (rounded upward if
necessary to the nearest 1/16 of one percent) of (a) the rate per annum
appearing on the Telerate Page 3750 (or such other display screen as may replace
Page 3750 on Telerate Access Service or any successor publication) on the second
Business Day prior to the first day of such Interest Period at or about 11:00
a.m. (London time) (or as soon thereafter as practicable) (for delivery on the
first day of such Interest Period) for a term comparable to such Interest
Period, divided by (b) one minus the Reserve Requirement for such Loans or
Portion in effect from time to time. If for any reason rates are not available
as provided in clause (a) of the preceding sentence, the rate to be used in
clause (a) shall be, at the Administrative Agent’s discretion (in each case
rounded upward if necessary to the nearest 1/16 of one percent), (i) the rate
per annum at which Dollar deposits are offered to the Administrative Agent in
the London interbank eurodollar currency market or (ii) the rate at which Dollar
deposits are offered to the Administrative Agent in, or by the Administrative
Agent to major banks in, any offshore interbank eurodollar market selected by
the Administrative Agent, in each case on the second Business Day prior to the
commencement of such Interest Period at or about 11:00 a.m. (for delivery on the
first day of such Interest Period) for a term comparable to such Interest Period
and in an amount approximately equal to the amount of the Loan or Portion to be
made or funded by the Administrative Agent, as part of such Borrower. The LIBOR
Rate shall be adjusted automatically as to all LIBOR Loans and

 

-20-

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LIBOR Portions then outstanding as of the effective date of any change in the
Reserve Requirement.

 

“License Revocation” shall mean the loss, revocation, failure to renew or
suspension of, or the appointment of any receiver, supervisor or similar
official with respect to, any Gaming License issued by any Gaming Authority
covering any Gaming Facility.

 

“Lien” shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, charge or other encumbrance in, of, or on such property
or the income therefrom, including the interest of a vendor or lessor under a
conditional sale agreement, Capital Lease or other title retention agreement, or
any agreement to provide any of the foregoing, and the filing of any financing
statement or similar instrument under the Uniform Commercial Code or comparable
law of any jurisdiction.

 

“Loan” shall mean a Revolving Loan, Term Loan or a Swing Line Loan.

 

“Loan Account” shall have the meaning given to that term in Section 2.09(a).

 

“Loan Parties” shall mean, collectively, the Borrowers and all Subsidiaries of a
Borrower.

 

“Maintenance Capital Expenditures” shall mean any Capital Expenditure for the
maintenance, repair, restoration or refurbishment of the Gaming Facilities owned
by any Loan Party on the date hereof or by Dayton Gaming on the Acquisition
Date, but not any Capital Expenditure which adds to or further improves such
Property.

 

“manifest error” shall mean, in the case of a certificate and any related
supporting materials, an error that is obvious from the face of such certificate
and such supporting material (or in the case of any other materials or
documents, an error that is obvious from the face of such material or document).

 

“Margin Stock” shall have the meaning given to that term in Regulation U issued
by the Federal Reserve Board.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, assets, operations, condition (financial or otherwise), operating
performance, prospects or liabilities of a Borrower individually or the Loan
Parties taken as a whole; (b) the ability of a Borrower to pay or perform the
Obligations in accordance with the terms of this Agreement and the other Credit
Documents or the ability of the Guarantors, collectively, to pay or perform any
portion of their obligations in accordance with the terms of the Guaranty; (c)
the rights and remedies of the Administrative Agent or any Lender under this
Agreement or the other Credit Documents; (d) the validity or enforceability of
the Lender’s security interest in the Collateral or the perfection or priority
of such security interests, (e) the validity or enforceability of any of the
Credit Documents or (f) the use, occupancy or operation of the Gaming Facilities
taken as a whole.

 

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“Material Documents” shall mean the articles of incorporation, certificate of
incorporation, by-laws, and other organizational documents of the Borrowers and
the Guarantors.

 

“Maturity” or “maturity” shall mean, with respect to any Loan, interest, fee or
other amount payable by the Borrowers under this Agreement or the other Credit
Documents, the date such Loan, interest, fee or other amount becomes due,
whether upon the stated maturity or due date, upon acceleration or otherwise.

 

“Multiemployer Plan” shall mean any multiemployer plan within the meaning of
section 3(37) of ERISA maintained or contributed to by a Borrower or any ERISA
Affiliate.

 

“NDOT” shall mean the State of Nevada acting by and through its Department of
Transportation.

 

“Negative Pledge” shall mean a Contractual Obligation which contains a covenant
binding on a Borrower or any Subsidiary of a Borrower which prohibits Liens on
any of its Property, other than (a) any such covenant contained in a Contractual
Obligation granting or relating to a particular Permitted Lien which affects
only the Property that is the subject of such Permitted Lien, (b) any such
covenant that does not apply to Liens securing the Obligations, (c) any
encumbrance or restriction that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a lease,
license or other contract or the assignment, encumbrance or hypothecation of
such lease, license or other contract (but such encumbrance or restriction shall
not affect the Liens created under the Security Documents to the extent
permitted by such lease, license or contract, the UCC or other applicable Law),
(d) any restriction related solely to the assets subject to a sale or other
disposition permitted pursuant hereto imposed pursuant to an agreement entered
into in connection with a sale or other disposition permitted pursuant hereto
pending the closing of such sale or other disposition, (e) any restriction
contained in the agreements governing any Indebtedness permitted pursuant to
Section 5.02(a) so long as such restriction does not affect or restrict in any
way the Liens created under the Security Documents or the ability of a Borrower
or any of a Borrower’s Subsidiaries to create any Liens in favor of the
Administrative Agent or the Lenders in the future.

 

“Net Condemnation Proceeds” shall mean an amount equal to: (a) any cash payments
or proceeds received by a Loan Party or the Administrative Agent as a result of
any condemnation or other taking or temporary or permanent requisition of any
Property of a Loan Party, any interest therein or right appurtenant thereto, or
any change of grade affecting such Property, as the result of the exercise of
any right of condemnation or eminent domain by a Governmental Authority
(including a transfer to a Governmental Authority in lieu or anticipation of a
condemnation), minus (b) (i) any actual and reasonable costs incurred by a Loan
Party in connection with any such condemnation or taking (including reasonable
fees and expenses of counsel), and (ii) provisions for all taxes payable as a
result of such condemnation, without regard to the consolidated results of
operations of the Loan Parties, taken as a whole.

 

“Net Income” shall mean with respect to any fiscal period, the net income of the
Loan Parties for such period determined on a consolidated basis in accordance
with GAAP, consistently applied.

 

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“Net Insurance Proceeds” shall mean an amount equal to: (a) any cash payments or
proceeds received by a Loan Party under any casualty insurance policy in respect
of a covered loss thereunder with respect to any Property, minus (b) (i) any
actual and reasonable costs incurred by a Loan Party in connection with the
adjustment or settlement of any claims of a Loan Party in respect thereof
(including reasonable fees and expenses of counsel), and (ii) provisions for all
taxes payable as a result of such event without regard to the consolidated
results of operations of Loan Parties, taken as a whole.

 

“Net Proceeds” shall mean:

 

(a) With respect to any sale of any asset or property by any Person (or as a
result of any loss, destruction, damage or other casualty of or to, or any
condemnation, eminent domain or other similar proceedings, in respect of, any
assets or property), the aggregate consideration received by such Person from
such sale less the sum of (i) the actual amount of the reasonable fees and
commissions payable to Persons other than such Person or any Affiliate of such
Person, the reasonable legal expenses, taxes and other costs and expenses
directly related to such sale that are to be paid by such Person and (ii) the
amount of any Indebtedness (other than the Obligations) which is secured by such
asset and is required to be repaid or prepaid by such Person as a result of such
sale; and

 

(b) With respect to any issuance or incurrence of any Indebtedness by any
Person, the aggregate consideration received by such Person from such issuance
or incurrence less the sum of the actual amount of the reasonable fees and
commissions payable to Persons other than such Person or any Affiliate of such
Person, the reasonable legal expenses and the other reasonable costs and
expenses directly related to such issuance or incurrence that are to be paid by
such Person; and

 

(c) With respect to any issuance of Equity Securities by any Person, the
aggregate consideration received by such Person from such issuance less the sum
of the actual amount of the reasonable fees and commissions payable to Persons
other than such Person or any Affiliate of such Person, the reasonable legal
expenses and the other reasonable costs and expenses directly related to such
issuance that are to be paid by such Person; provided, however, that for the
purpose of this clause (c), an issuance of Equity Securities by a Loan Party
shall not include any of the following: (i) any capital contribution from any
Loan Party in the form of Equity Securities or any issuance or sale of Equity
Securities by any Subsidiary of a Borrower to a Borrower or any Subsidiary of a
Borrower; (ii) any sale or issuance by any Loan Party to directors, officers or
employees of such Loan Party or any other Loan Party of Equity Securities
including in the form of warrants, options or similar rights to acquire any
other Equity Securities of such Loan Party in connection with any stock option
or other employee benefit plan or as part of executive compensation, in each
case, in the ordinary course of business or any sale or issuance of Equity
Securities upon the exercise of any such warrants, options or similar rights;
and (iii) the issuance by any Loan Party of Equity Securities in the ordinary
course of business in connection with the formation of Subsidiaries pursuant to
transactions otherwise permitted pursuant to Section 5.02(d).

 

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“Net Worth” shall mean, as at any date of determination, total stockholders’
equity of the Loan Parties on such date (exclusive of any treasury stock)
(determined on a consolidated basis without duplication in accordance with
GAAP).

 

“Nonrenewal Notice Date” shall have the meaning given to that term in Section
2.03(b)(iii).

 

“Note” shall mean a Revolving Loan Note, a Term Loan Note or a Swing Line Note.

 

“Notice of Borrowing” shall mean a Notice of Revolving Loan Borrowing, the
Notice of Term Loan Borrowing or a Notice of Swing Line Borrowing.

 

“Notice of Conversion” shall mean a Notice of Revolving Loan Conversion or
Notice of Term Loan Conversion.

 

“Notice of Interest Period Selection” shall mean a Notice of Revolving Loan
Interest Period Selection or Notice of Term Loan Interest Period Selection.

 

“Notice of Revolving Loan Borrowing” shall have the meaning given to that term
in Section 2.01(b).

 

“Notice of Revolving Loan Conversion” shall have the meaning given to that term
in Section 2.01(d).

 

“Notice of Revolving Loan Interest Period Selection” shall have the meaning
given to that term in Section 2.01(e).

 

“Notice of Swing Line Borrowing” shall mean a notice of a Swing Line Borrowing
pursuant to Section 2.04(b), which, if in writing, shall be substantially in the
form of Exhibit G.

 

“Notice of Term Loan Borrowing” shall have the meaning given to that term in
Section 2.02(b).

 

“Notice of Term Loan Conversion” shall have the meaning given to that term in
Section 2.02(d).

 

“Notice of Term Loan Interest Period Selection” shall have the meaning given to
that term in Section 2.02(e).

 

“Obligations” shall mean and include all loans, advances, debts, liabilities and
obligations, howsoever arising, owed or owing by the Borrowers to the
Administrative Agent or any Lender of every kind and description (whether or not
evidenced by any note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising pursuant to the terms of this Agreement or any of
the other Credit Documents, including all interest (including interest that
accrues after the commencement of any bankruptcy or other insolvency proceeding
by or against a Borrower or the Borrowers), fees, charges, expenses, attorneys’
fees and accountants’ fees chargeable to and payable by the Borrowers hereunder
and thereunder.

 

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“Participant” shall have the meaning given to that term in Section 8.05(b).

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation.

 

“Pension Plan” shall mean any Employee Benefit Plan” that is subject to Title IV
of ERISA and is sponsored or maintained by any Loan Party or any ERISA Affiliate
or to which any Loan Party or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.

 

“Permitted Acquisition” shall mean any acquisition permitted under Section
5.02(d).

 

“Permitted Indebtedness” shall have the meaning given to that term in Section
5.02(a).

 

“Permitted Liens” shall have the meaning given to that term in Section 5.02(b).

 

“Permitted Subordinated Indebtedness” shall mean the Belding Subordinated
Indebtedness.

 

“Person” shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company, an unincorporated
association, a limited liability company, a Joint Venture, a trust or other
entity or a Governmental Authority.

 

“Pledge Agreement” shall mean that certain Amended and Restated Pledge
Agreement, dated as of the date hereof, among the Borrowers and the
Administrative Agent.

 

“Portion” shall mean a portion of the principal amount of the Term Loan.

 

“Pricing Grid” shall mean:

 

Pricing Grid

(rates are expressed in basis points per annum)

 

Tier

--------------------------------------------------------------------------------

  Leverage Ratio of the
Borrowers and their
Subsidiaries

--------------------------------------------------------------------------------

 

Applicable

Margin for

LIBOR

Loans

(bps)

--------------------------------------------------------------------------------

 

Applicable

Margin for

Base Rate

Loans

(bps)

--------------------------------------------------------------------------------

 

Commitment

Fee (bps)

--------------------------------------------------------------------------------

1   < 1.75   175.0   25.00   30.0 2   < 2.00 ³ 1.75   225.0   75.00   35.0 3   <
2.50 ³ 2.00   275.0   125.00   37.5 4   < 3.00 ³ 2.50   325.0   175.0   50.0 5  
³ 3.00   350.0   200.0   50.0

 

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Any increase or decrease in the Applicable Margin or Commitment Fee Percentage
resulting from a change in the Leverage Ratio shall become effective as of the
first day of the fiscal quarter of the Borrowers immediately following the date
a Compliance Certificate is delivered pursuant to Section 5.01(a); provided,
however, that if no Compliance Certificate is delivered during a fiscal quarter
when due in accordance with such Section, then Tier 5 shall apply as of the
first day of such following fiscal quarter. Notwithstanding anything to the
contrary set forth herein or in the definitions of Applicable Margin or
Commitment Fee Percentage, (I) the Applicable Margin in effect (a) from and
after the Funding Date through and including the date six months after the
Funding Date shall be determined based upon the Tier of the Pricing Grid
corresponding to the Leverage Ratio of the Borrowers at the end of the most
recently ended fiscal quarter prior to the Funding Date (to be determined on a
pro forma basis based upon the assumption that the Acquisition shall have taken
place prior to such date) as evidenced by a certificate delivered to the
Administrative Agent and (b) from and after the day after the date six months
after the Funding Date through and including the last day of the fiscal quarter
during which such date occurs shall be determined by the most recently delivered
Compliance Certificate, and (II) the Commitment Fee Percentage in effect (a)
from and after the Funding Date through and including the date six months after
the Funding Date shall be based upon the same Tier used to calculate the
Applicable Margin in clause (I)(a) above and (b) from and after the day after
the date six months after the Funding Date through and including the last day of
the fiscal quarter during which such date occurs shall be determined by the most
recently delivered Compliance Certificate.

 

“Prime Rate” shall mean, at any time, the per annum rate of interest most
recently announced within Wells Fargo at its principal office in San Francisco,
California as its Prime Rate, with the understanding that Wells Fargo’s Prime
Rate is one of its base rates and serves as the basis upon which effective rates
of interest are calculated for those loans making reference thereto, and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as Wells Fargo may designate. Any change in the Base
Rate resulting from a change in the Prime Rate shall become effective on the
Business Day on which each change in the Prime Rate occurs.

 

“Property” shall mean any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

 

“Proportionate Share” shall mean a Revolving Proportionate Share or a Term
Proportionate Share, as the context may require.

 

“Prospector” shall mean Prospector Gaming Enterprises, Inc., a Nevada
corporation.

 

“Rail City” shall mean Plantation Investments, Inc., a Nevada corporation, dba
“Rail City”.

 

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“Rail City Assignment” shall mean that certain Assignment of Entitlements,
Contracts, Rents and Revenues (Rail City) which was executed by Rail City, under
date of May 3, 2004 and recorded in the Official Records of Washoe County,
Nevada, on May 3, 2004 as Document No. 3032162 whereby Rail City presently
assigned to the Administrative Agent (reserving a revocable license to retain
use and enjoy): (a) all of its right, title and interest under all leases and
other occupancy agreements which it has entered into with respect to the Rail
City Real Property; (b) all of its right, title and interest under all leases
and purchase contracts relating to equipment utilized in connection with the
Rail City Real Property; (c) all of its right, title and interest in and to all
permits, licenses and contracts relating to the Rail City Real Property, except
Gaming Licenses and except for those permits, licenses and contracts which are
unassignable, and (d) all rents, issues, profits, revenues and income from the
Rail City Real Property and from any business activity conducted thereon; all in
consideration of the credit facilities provided by the Existing Credit Agreement
and in consideration of all modifications to such credit facilities (including
the modifications provided for hereby); as such assignment may be amended,
modified, extended, renewed, restated, substituted or replaced from time to
time.

 

“Rail City Deed of Trust” shall mean the Existing Rail City Deed of Trust, as
amended by the First Amendment to Rail City Deed of Trust, and as it may be
further renewed, extended, amended, restated, replaced, substituted or otherwise
modified from time to time.

 

“Rail City NDOT Parcel” shall mean that portion of the Rail City Real Property
which is described as Parcel 7 on Schedule 4.01(h)C.

 

“Rail City Parking License Documents” shall mean a collective reference to:
Chapter 180, Statutes of Nevada, 1973; Lease Agreement dated May 24, 1974, by
and between the State of Nevada and the City of Sparks, recorded July 16, 1974,
as Instrument No. 333955, Official Records, Washoe County, Nevada; License
executed by and between the Cit of Sparks, a municipal corporation and Sage
Investment Corporation, a Nevada corporation, and John P. Richards, recorded
December 19, 1973 in Book 785, page 308 as Document No. 411965; Assignment of
License by Richards-Schnack Development Corporation, a Nevada corporation, and
William D. Schnack to Plantation Investments, Inc., dated March 21, 1990, in
Book 3057, page 0220, as Document 1390322, Official Records, Washoe County,
Nevada.

 

“Rail City Permitted Exceptions” shall mean a collective reference to: (i) those
exceptions to Rail City’s title in the Rail City Real Property which are set
forth on Schedule 4.01(j) C; and (ii) such other items which are acceptable to
Administrative Agent in its sole discretion.

 

“Rail City Real Property” shall mean the real property which is described by
Schedule 4.01(h)C.

 

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“Rate Contract” shall mean any agreement with respect to any swap, cap, collar,
hedge, forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions.

 

“Real Property Assignments” shall mean a collective reference to the Last Chance
Assignment, the Zante Assignment, the Rail City Assignment, the Depot Casino
Assignment and the Red Hawk Assignment.

 

“Red Hawk” shall mean Redhawk Ventures, LLC, a Nevada limited liability company.

 

“Red Hawk Assets” shall mean all of the assets which are utilized by Red Hawk to
operate the Red Hawk Casino Business including the Red Hawk Real Property.

 

“Red Hawk Assignment” shall mean an assignment, in a form and substance
acceptable to the Administrative Agent, to be executed by Dayton Gaming, as a
condition precedent to the initial Credit Event, and to be recorded in the
Official Records of Lyon County, Nevada, whereby Dayton Gaming presently assigns
to the Administrative Agent in consideration of the credit facilities to be
provided hereunder (reserving a revocable license to retain use and enjoy): (a)
all of its right, title and interest under all leases and other occupancy
agreements which it has entered into with respect to the Red Hawk Real Property;
(b) all of its right, title and interest under all leases and purchase contracts
relating to equipment utilized in connection with the Red Hawk Real Property;
(c) all of its right, title and interest in and to all permits, licenses and
contracts relating to the Red Hawk Real Property, except Gaming Licenses and
except for those permits, licenses and contracts which are unassignable, and (d)
all rents, issues, profits, revenues and income from Red Hawk Real Property and
from any business activity conducted thereon; as such assignment may be amended,
modified, extended, renewed, restated, substituted or replaced from time to
time.

 

“Red Hawk Casino Business” shall mean the sports bar business which is operated
at the Red Hawk Real Property by Red Hawk under the trade name of “Redhawk
Sports Bar”.

 

“Red Hawk Deed of Trust” shall mean a deed of trust and security agreement with
assignment of rents, in a form and substance satisfactory to the Administrative
Agent, to be recorded in the Official Records of Lyon County, Nevada,
encumbering: (i) all of Dayton Gaming’s right, title and interest in the Red
Hawk Real Property; and (ii) all personal property associated with the Red Hawk
Real Property; all as security for the Borrowers’ payment and performance under
this Agreement, and under the other Credit Documents; as such deed of trust may
be amended, modified, extended, renewed, restated, substituted or replaced from
time to time.

 

“Red Hawk Fee Parcels” shall mean that portion of the Red Hawk Real Property
which is described as Parcels 1 and 2 on Schedule 4.01(h)E.

 

“Red Hawk NDOT Consent” shall mean an instrument executed by NDOT and Dayton
Gaming, in a form and substance acceptable to Administrative Agent, pursuant to
which, among

 

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other things, NDOT consents to encumbrance of Dayton Gaming’s interest as lessee
under the Red Hawk NDOT Lease with the lien of the Red Hawk Deed of Trust.

 

“Red Hawk NDOT Lease” shall mean a lease of the Red Hawk NDOT Parcel between
NDOT, as lessor, and Dayton Gaming, as lessee, which shall become effective
concurrently, or substantially concurrently, with the closing date under the
Depot Red Hawk Purchase Agreement.

 

“Red Hawk NDOT Parcel” shall mean that portion of the Red Hawk Real Property
which is situated within the U.S. Highway 50 right of way and is described as
Parcel 3 on Schedule 4.01(h)E.

 

“Red Hawk Permitted Exceptions” shall mean a collective reference to: (i) those
exceptions to Dayton Gaming’s title in the Red Hawk Real Property which are set
forth on Schedule 4.01(j)E; and (ii) such other items which are acceptable to
Administrative Agent in its sole discretion.

 

“Red Hawk Real Property” shall mean the real property which is described by
Schedule 4.01(h)E.

 

“Register” shall have the meaning given to that term in Section 8.05(d).

 

“Reportable Event” shall have the meaning given to that term in Title IV of
ERISA and applicable regulations thereunder.

 

“Required Lenders” shall mean (a) prior to the Funding Date, two or more Lenders
(if there is more than one Lender at such time) whose Proportionate Shares then
equal or exceed fifty-one percent (51.0%) of the Total Commitment and (b) from
and after the Funding Date (i) prior to the Date of Acceleration, two or more
Lenders (if there is more than one Lender at such time) Lenders whose
Proportionate Shares then equal or exceed fifty-one percent (51.0%) of the sum
of the Revolving Loan Commitments at such time and the outstanding amount of
Term Loans at such time and (ii) from and after the Date of Acceleration, two or
more Lenders (if there is more than one Lender at such time) Lenders whose
Proportionate Shares then exceed fifty-one percent (51.0%) of the sum of all
Loans and L/C Obligations outstanding at such time, except, in each case, at any
time any Lender is a Defaulting Lender. In each case, at any time any Lender is
a Defaulting Lender, all Defaulting Lenders shall be excluded in determining
“Required Lenders”, and “Required Lenders” shall mean non-Defaulting Lenders
otherwise meeting the criteria set forth in this definition.

 

“Requirement of Law” applicable to any Person shall mean (a) the Articles or
Certificate of Incorporation and By-laws or other organizational or governing
documents of such Person, (b) any Governmental Rule applicable to such Person,
(c) any license, permit, approval or other authorization granted by any
Governmental Authority to or for the benefit of such Person or (d) any judgment,
decision or determination of any Governmental Authority or arbitrator, in each

 

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case applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.

 

“Reserve Requirement” shall mean, with respect to any day in an Interest Period
for a LIBOR Loan or LIBOR Portion, the aggregate of the maximum of the reserve
requirement rates (expressed as a decimal) in effect on such day for
eurocurrency funding (currently referred to as “Eurocurrency liabilities” in
Regulation D of the Federal Reserve Board) maintained by a member bank of the
Federal Reserve System. As used herein, the term “reserve requirement” shall
include any basic, supplemental or emergency reserve requirements imposed on any
Lender by any Governmental Authority.

 

“Responsible Officer” shall mean with respect to a Loan Party, the chief
executive officer, president, chief financial officer, vice president, finance
or treasurer of such Loan Party. Any document delivered hereunder that is signed
by a Responsible Officer of a Loan Party and any request or other communication
conveyed telephonically or otherwise by a Responsible Officer (or any Person
reasonably believed by the Administrative Agent to be a Responsible Officer)
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer (or such Person reasonably believed by the
Administrative Agent to be a Responsible Officer) shall be conclusively presumed
to have acted on behalf of such Loan Party.

 

“Revolving Loan” shall have the meaning given to that term in Section 2.01(a).
When used in this Agreement, the term “Revolving Loan” shall not include Swing
Line Loans.

 

“Revolving Loan Borrowing” shall mean a borrowing by the Borrowers consisting of
the Revolving Loans made by each of the Lenders to the Borrowers on the same
date and of the same Type pursuant to a single Notice of Revolving Loan
Borrowing.

 

“Revolving Loan Commitment” shall mean, with respect to each Lender, the Dollar
amount set forth under the caption “Revolving Loan Commitment” opposite such
Lender’s name on Part A of Schedule I, or, if changed, such Dollar amount as may
be set forth for such Lender in the Register.

 

“Revolving Loan Maturity Date” shall mean the fifth anniversary of the Funding
Date.

 

“Revolving Loan Note” shall have the meaning given to that term in Section
2.09(b).

 

“Revolving Proportionate Share” shall mean:

 

(a) With respect to any Lender at any time prior to the Date of Acceleration,
the ratio (expressed as a percentage rounded to the eighth digit to the right of
the decimal point)

 

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of (i) such Lender’s Revolving Loan Commitment at such time to (ii) the Total
Revolving Loan Commitment at such time; and

 

(b) With respect to any Lender at any time on and after the Date of
Acceleration, the ratio (expressed as a percentage rounded to the eighth digit
to the right of the decimal point) of (i) the sum of (A) the aggregate Effective
Amount of such Lender’s Revolving Loans, (B) such Lender’s Proportionate Share
of the Effective Amount of all L/C Obligations, and (C) such Lender’s
Proportionate Share of the aggregate Effective Amount of all Swing Line Loans to
(ii) the sum of (A) the aggregate Effective Amount of all Revolving Loans and
Swing Line Loans and (B) the Effective Amount of all L/C Obligations.

 

The initial Revolving Proportionate Share of each Lender is set forth under the
caption “Revolving Proportionate Share” opposite such Lender’s name on Part A of
Schedule I.

 

“RV Park Option” shall mean the option granted to Dayton Gaming under the Dayton
Red Hawk Purchase Agreement pursuant to which Dayton Gaming is entitled to
purchase the RV Park Option Property from Stags Leap Partners, LLC in the event
that the contemplated recreational vehicle park has not been constructed thereon
and opened for business within 2 years after the closing date under the Depot
Red Hawk Purchase Agreement, all as more particularly set forth therein.

 

“RV Park Option Property” shall mean that parcel of real property designated as
Lyon County Assessor’s Parcel No. 06-022-18 which is owned by Stags Leap
Partners, LLC, and with respect to which, Stags Leap Partners, LLC has received
the necessary governmental approvals to construct a recreational vehicle park
thereon.

 

“Sale and Leaseback” means, with respect to any Person, the sale of Property
owned by such Person (the “Seller”) to another Person (the “Buyer”), together
with the substantially concurrent leasing of such Property by the Buyer to the
Seller.

 

“Security Agreement” shall mean that certain Amended and Restated Security
Agreement, dated as of the date hereof, among the Borrowers and the
Administrative Agent.

 

“Security Documents” shall mean and include the Security Agreement, the
Guarantor Security Agreement, the Intellectual Property Security Agreement, any
Control Agreements, the Deeds of Trust, each pledge agreement or security
agreement delivered in accordance with Section 5.01(i) and all other
instruments, agreements, certificates, opinions and documents (including Uniform
Commercial Code financing statements and fixture filings and landlord waivers)
delivered to the Administrative Agent or any Lender in connection with any
Collateral or to secure the Obligations or the obligation of a Guarantor under
the Guaranty.

 

“Solvent” shall mean, with respect to any Person on any date, that on such date
(a) the fair value of the Property of such Person is greater than the fair value
of the liabilities (including contingent, subordinated, matured and unliquidated
liabilities) of such Person, (b) the present fair saleable value of the assets
of such Person is greater than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such

 

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Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature and (d) such Person is not engaged in or about to engage in business or
transactions for which such Person’s Property would constitute an unreasonably
small capital.

 

“Standby Letter of Credit” means any of the standby letters of credit issued by
the L/C Issuer under this Agreement, either as originally issued or as the same
may be supplemented, modified, amended, extended, restated or supplanted.

 

“Stremmel Capital” shall mean Stremmel Capital Group, Ltd., a Nevada limited
liability company.

 

“Stremmel Group” shall mean a collective reference to Prospector, Target,
Stremmel Capital and Gold Ranch RV Resort LLC, a Nevada limited liability
company.

 

“Subordinated Indebtedness” shall mean all Indebtedness of any Borrower owing to
any Person, including the Permitted Subordinated Indebtedness, which is
subordinate in right of payment to Obligations.

 

“Subsidiary” of any Person shall mean (a) any corporation of which the required
percentage of the issued and outstanding Equity Securities having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person’s other Subsidiaries, (b) any partnership, joint venture,
limited liability company or other association of which the required percentage
of the equity interests having the power to vote, direct or control the
management of such partnership, joint venture or other association is at the
time owned and controlled by such Person, by such Person and one or more of the
other Subsidiaries or by one or more of such Person’s other Subsidiaries or (c)
any other Person included in the Financial Statements of such Person on a
consolidated basis. Unless otherwise indicated in this Agreement, “Subsidiary”
shall mean a Subsidiary of a Borrower.

 

“Surety Instruments” shall mean all letters of credit (including standby and
commercial), banker’s acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.

 

“Swing Line” shall mean the revolving credit facility made available by the
Swing Line Lender pursuant to Section 2.04.

 

“Swing Line Borrowing” shall mean a borrowing of a Swing Line Loan.

 

“Swing Line Lender” shall mean Wells Fargo in its capacity as provider of Swing
Line Loans, or any successor swing line lender hereunder.

 

“Swing Line Loan” shall mean the meaning specified in Section 2.04(a).

 

“Swing Line Note” shall have the meaning given to that term in Section 2.09(d).

 

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“Swing Line Sublimit” shall mean an amount equal to the lesser of (a) $2,000,000
and (b) the Total Revolving Loan Commitment. The Swing Line Sublimit is part of,
and not in addition to, the Total Revolving Loan Commitment.

 

“Target” shall mean Target Investments LLC, a Nevada limited liability company.

 

“Taxes” shall have the meaning given to such term in Section 2.13(a).

 

“Term Loan” shall have the meaning given to that term in Section 2.02(a).

 

“Term Loan Borrowing” shall mean the borrowing by the Borrowers consisting of
the Term Loans made by each of the Lenders on the Funding Date.

 

“Term Loan Commitment” shall mean, with respect to each Lender, the Dollar
amount set forth under the caption “Term Loan Commitment” opposite such Lender’s
name on Part A of Schedule I, or, if changed, such Dollar amount as may be set
forth for such Lender in the Register.

 

“Term Loan Installment Date” shall have the meaning given to that term in
Section 2.02(f).

 

“Term Loan Maturity Date” shall mean June 30, 2010.

 

“Term Loan Note” shall have the meaning given to that term in Section 2.09(c).

 

“Term Proportionate Share” shall mean:

 

(a) With respect to any Lender at any time prior to the Funding Date, the ratio
(expressed as a percentage rounded to the eighth digit to the right of the
decimal point) of (i) such Lender’s Term Loan Commitment at such time to (ii)
the Total Term Loan Commitment at such time.

 

(b) With respect to any Lender at any time after the Funding Date, the ratio
(expressed as a percentage rounded to the eighth digit to the right of the
decimal point) of (i) the Effective Amount of such Lender’s Term Loan
outstanding at such time to (ii) the Effective Amount of all Term Loans
outstanding at such time.

 

The initial Term Proportionate Share of each Lender is set forth under the
caption “Term Proportionate Share” opposite such Lender’s name on Schedule I.

 

“Termination Value” means, in respect of any one or more Rate Contracts, after
taking into account the effect of any legally enforceable netting agreement
relating to such Rate Contracts, (a) for any date on or after the date such Rate
Contracts have been closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date prior to the date
referenced in clause (a) the amount(s) determined as the mark-to-market value(s)
for such Rate Contracts, as determined by the Administrative Agent based upon
the average of at least three mid-market or other readily available quotations
provided by any recognized dealer in such Rate Contracts which may include any
Lender.

 

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“Total Funded Debt” shall mean all of the Loan Parties’ consolidated
Indebtedness; provided that the term “Total Funded Debt” shall not include
Indebtedness under clause (f) of the definition of Indebtedness until such time
as a termination event or unwind event occurs under any Rate Contract provided
for under clause (f) of such definition.

 

“Total Revolving Loan Commitment” shall mean, at any time, Twenty-Five Million
Dollars ($25,000,000) or, if such amount is reduced pursuant to Section 2.05(a)
or (b), the amount to which so reduced and in effect at such time.

 

“Total Term Loan Commitment” shall mean, at any time, Twenty-Two Million Dollars
($22,000,000) or, if such amount is reduced pursuant to Section 2.05(a) or (b),
the amount to which so reduced and in effect at such time.

 

“Trade Bank” shall mean Wells Fargo HSBC Trade Bank, N.A.

 

“Type” shall mean, with respect to any Loan, Borrowing or Portion at any time,
the classification of such Loan, Borrowing or Portion by the type of interest
rate it then bears, whether an interest rate based upon the Base Rate or the
LIBOR Rate.

 

“UCC” shall have the meaning given to such term in the Security Agreement.

 

“UCP” has the meaning set forth in Section 2.03(h).

 

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities (based on the assumptions used to fund such Pension Plan) over the
current value of that Pension Plan’s assets, for the applicable plan year.

 

“Unreimbursed Amount” has the meaning set forth in Section 2.03(c)(i).

 

“Unused Commitment” shall mean, at any time, (a) the Total Revolving Loan
Commitment at such time minus (b) the sum of the Effective Amount of all
Revolving Loans and the Effective Amount of all L/C Obligations and Swing Line
Loans outstanding at such time. For the avoidance of doubt, Swing Line Loans
shall be counted as Revolving Loans for purposes of determining the amount of
Unused Commitment.

 

“Wells Fargo” shall have the meaning given to that term in clause (3) of the
introductory paragraph hereof.

 

“Zante Assignment” shall mean that certain Assignment of Entitlements,
Contracts, Rents and Revenues (Zante) which was executed by Zante, under date of
May 3, 2004 and recorded in the Official Records of Washoe County, Nevada, on
May 3, 2004 as Document No. 3032157 whereby Zante presently assigned to the
Administrative Agent (reserving a revocable license to retain use and enjoy):
(a) all of its right, title and interest under all leases and other occupancy
agreements which it has entered into with respect to the Zante Real Property;
(b) all of its right title and interest under all leases and purchase contracts
relating to equipment utilized in connection with the Zante Real Property; (c)
all of its right, title and interest in and to all permits, licenses and
contracts relating to the Zante Real Property, except Gaming Licenses and except
for those permits, licenses and contracts which are unassignable, and (d) all
rents, issues, profits,

 

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revenues and income from the Zante Real Property and from any business activity
conducted thereon; all in consideration of the credit facilities provided by the
Existing Credit Agreement and in consideration of all modifications to such
credit facilities (including the modifications provided for hereby); as such
assignment may be amended, modified, extended, renewed, restated, substituted or
replaced from time to time.

 

“Zante Deed of Trust” shall mean the Existing Zante Deed of Trust, as amended by
the First Amendment to Zante Deed of Trust, and as it may be further renewed,
extended, amended, restated, replaced, substituted or otherwise modified from
time to time.

 

“Zante Permitted Exceptions” shall mean a collective reference to: (i) those
exceptions to Zante’s title in the Zante Real Property which are set forth on
Schedule 4.01(j) B; and (ii) such other items which are acceptable to
Administrative Agent in its sole discretion.

 

“Zante Real Property” shall mean the real property which is described by
Schedule 4.01(h)B.

 

1.02. GAAP. Unless otherwise indicated in this Agreement or any other Credit
Document, all accounting terms used in this Agreement or any other Credit
Document shall be construed, and all accounting and financial computations
hereunder or thereunder shall be computed, in accordance with GAAP, applied in a
manner consistent with the principles used in the preparation of the Financial
Statements used in Section 4.01(i). If GAAP changes during the term of this
Agreement such that any covenants contained herein would then be calculated in a
different manner or with different components, other than changes in GAAP that
require items to be included in the definition of Indebtedness that were not so
required before such change, the Borrowers, the Lenders and the Administrative
Agent agree to negotiate in good faith to amend this Agreement in such respects
as are necessary to conform those covenants as criteria for evaluating the
Borrowers’ financial condition to substantially the same criteria as were
effective prior to such change in GAAP; provided, however, that, until the
Borrowers, the Lenders and the Administrative Agent so amend this Agreement, all
such covenants shall be calculated in accordance with GAAP as in effect
immediately prior to such change.

 

1.03. Headings. The table of contents, captions and section headings appearing
in this Agreement are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.

 

1.04. Plural Terms. All terms defined in this Agreement or any other Credit
Document in the singular form shall have comparable meanings when used in the
plural form and vice versa.

 

1.05. Time. All references in this Agreement and each of the other Credit
Documents to a time of day shall mean San Francisco, California time, unless
otherwise indicated.

 

1.06. Governing Law. Unless otherwise expressly provided in any Credit Document,
this Agreement and each of the other Credit Documents shall be governed by and
construed in accordance with the laws of the State of Nevada without reference
to conflicts of law rules. The scope of the foregoing governing law provision is
intended to be all-encompassing of any and all disputes that may be brought in
any court or any mediation or arbitration proceeding and that

 

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relate to the subject matter of the Credit Documents, including contract claims,
tort claims, breach of duty claims and all other common law and statutory
claims.

 

1.07. Construction. This Agreement is the result of negotiations among, and has
been reviewed by, the Borrowers, the Lenders, the Administrative Agent and their
respective counsel. Accordingly, this Agreement shall be deemed to be the
product of all parties hereto, and no ambiguity shall be construed in favor of
or against the Borrowers, any Lender or the Administrative Agent.

 

1.08. Entire Agreement. Effective as of the Funding Date, this Agreement and
each of the other Credit Documents, taken together, constitute and contain the
entire agreement of the Borrowers, the Lenders and the Administrative Agent and
supersede any and all prior agreements, negotiations, correspondence,
understandings and communications among the parties, whether written or oral,
respecting the subject matter hereof including the commitment letter dated as of
April 1, 2005, between Sands and Wells Fargo but excluding the Fee Letter. In
the event that the Funding Date fails to occur by September 1, 2005 or such
later date as agreed to by the Borrowers and the Administrative Agent (with the
consent of the Required Lenders), this Agreement and the other Credit Documents
shall be null and void, and the Existing Agreement, together with all documents,
instruments and agreements executed in connection therewith, shall remain in
effect unaffected by this Agreement.

 

1.09. Calculation of Interest and Fees. All calculations of interest and fees
under this Agreement and the other Credit Documents for any period (a) shall
include the first day of such period and exclude the last day of such period and
(b) shall be calculated on the basis of a year of 360 days for actual days
elapsed, except that during any period any Loan or Portion bears interest based
upon the Prime Rate, such interest shall be calculated on the basis of a year of
365 or 366 days, as appropriate, for actual days elapsed.

 

1.10. References.

 

(a) References in this Agreement to “Recitals,” “Sections,” “Paragraphs,”
“Exhibits” and “Schedules” are to recitals, sections, paragraphs, exhibits and
schedules herein and hereto unless otherwise indicated.

 

(b) References in this Agreement or any other Credit Document to any document,
instrument or agreement (i) shall include all exhibits, schedules and other
attachments hereto or thereto, (ii) shall include all documents, instruments or
agreements issued or executed in replacement thereof if such replacement is
permitted hereby or thereby, and (iii) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended, modified and
supplemented from time to time and in effect at any given time if such
amendment, modification or supplement is permitted hereby or thereby.

 

(c) References in this Agreement or any other Credit Document to any
Governmental Rule (i) shall include any successor Governmental Rule, (ii) shall
include all rules and regulations promulgated under such Governmental Rule (or
any successor Governmental Rule), and (iii) shall mean such Governmental Rule
(or successor Governmental Rule) and such

 

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rules and regulations, as amended, modified, codified or reenacted from time to
time and in effect at any given time.

 

(d) References in this Agreement or any other Credit Document to any Person in a
particular capacity (i) shall include any successors to and permitted assigns of
such Person in that capacity and (ii) shall exclude such Person individually or
in any other capacity.

 

1.11. Other Interpretive Provisions. The words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement or any other
Credit Document shall refer to this Agreement or such other Credit Document, as
the case may be, as a whole and not to any particular provision of this
Agreement or such other Credit Document, as the case may be. The words “include”
and “including” and words of similar import when used in this Agreement or any
other Credit Document shall not be construed to be limiting or exclusive. In the
event of any inconsistency between the terms of this Agreement and the terms of
any other Credit Document, the terms of this Agreement shall govern.

 

1.12. Rounding. Any financial ratios required to be maintained by the Borrowers
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed in this Agreement and rounding
the result up or down to the nearest number (with a round-up if there is no
nearest number) to the number of places by which such ratio is expressed in this
Agreement.

 

1.13. Joint and Several. All of the parties hereto agree that all of the
Borrowers shall be obligated for all of the Obligations on a joint and several
basis, notwithstanding which such party may have directly received the proceeds
of any particular Loan or the benefit of a particular Letter of Credit. The
Borrowers each acknowledge and agree that, for purposes of the Credit Documents,
the Borrowers constitute a single integrated financial enterprise and that each
receives a benefit from the availability of credit under this Agreement to the
Borrowers. The Borrowers confirm that the disbursement of Loan proceeds to a
joint account of the Borrowers maintained by all of the Borrowers constitute
Loans to the Borrowers.

 

1.14. Borrowing Agent as Agent for the Borrowers. The Borrowers hereby
irrevocably appoint the Borrowing Agent as their agent for giving and receiving
notices and taking other actions under the Credit Documents on their behalf and
agree to be bound and obligated in respect of any such notice or action as if
the Borrowers had given or received such notice or taken such action themselves.

 

ARTICLE II. CREDIT FACILITIES.

 

2.01. Revolving Loan Facility.

 

(a) Revolving Loan Availability. Subject to Section 8.21 hereof, on the terms
and subject to the conditions of this Agreement, each Lender severally agrees to
lend to the Borrowers from time to time during the period beginning on the
Funding Date up to, but not including the Revolving Loan Maturity Date, such
loans in Dollars as the Borrowers may request under this Section 2.01
(individually, a “Revolving Loan”); provided, however, that (i) the sum of (A)
the Effective Amount of all Revolving Loans made by such Lender at any time

 

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outstanding and (B) such Lender’s Revolving Proportionate Share of the Effective
Amount of all L/C Obligations and all Swing Line Loans at such time outstanding
shall not exceed such Lender’s Revolving Loan Commitment at such time and (ii)
the sum of (A) the Effective Amount of all Revolving Loans made by all the
Lenders at any time outstanding and (B) the Effective Amount of all L/C
Obligations and Swing Line Loans at such time outstanding shall not exceed the
Total Revolving Loan Commitment at such time. Subject to Section 8.21 hereof,
all Revolving Loans shall be made on a pro rata basis by the Lenders in
accordance with their respective Revolving Proportionate Shares, with each
Revolving Loan Borrowing to be comprised of a Revolving Loan by each Lender
equal to such Lender’s Revolving Proportionate Share of such Revolving Loan
Borrowing. Except as otherwise provided herein, the Borrowers may borrow, repay
and reborrow Revolving Loans until the Revolving Loan Maturity Date.

 

(b) Notice of Revolving Loan Borrowing. The Borrowers shall request each
Revolving Loan Borrowing by delivering to the Administrative Agent an
irrevocable written notice (which may be delivered by facsimile) substantially
in the form of Exhibit A (a “Notice of Revolving Loan Borrowing”), duly executed
by a Responsible Officer of such Borrowing Agent and appropriately completed,
which specifies, among other things:

 

(i) The principal amount of the requested Revolving Loan Borrowing, which shall
be in the amount of (A) $100,000 or an integral multiple of $100,000 in excess
thereof in the case of a Borrowing consisting of Base Rate Loans; or (B)
$500,000 or an integral multiple of $100,000 in excess thereof in the case of a
Borrowing consisting of LIBOR Loans;

 

(ii) Whether the requested Revolving Loan Borrowing is to consist of Base Rate
Loans or LIBOR Loans;

 

(iii) If the requested Revolving Loan Borrowing is to consist of LIBOR Loans,
the initial Interest Periods selected by such Borrowing Agent for such LIBOR
Loans in accordance with Section 2.01(e); and

 

(iv) The date of the requested Revolving Loan Borrowing, which shall be a
Business Day.

 

The Borrowers shall give each Notice of Revolving Loan Borrowing to the
Administrative Agent not later than 9:00 a.m. at least three (3) Business Days
before the date of the requested Revolving Loan Borrowing in the case of a
Revolving Loan Borrowing consisting of LIBOR Loans and not later than 9:00 a.m.
at least one (1) Business Day before the date of the requested Revolving Loan
Borrowing in the case of a Revolving Loan Borrowing consisting of Base Rate
Loans. Each Notice of Revolving Loan Borrowing shall be duly executed by a
Responsible Officer of the Borrowing Agent and delivered to the Administrative
Agent at the office or facsimile number and during the hours specified in
Section 8.01. The Administrative Agent shall promptly notify each Lender of the
contents of each Notice of Revolving Loan Borrowing and of the amount and Type
of (and, if applicable, the Interest Period for) the Revolving Loan to be made
by such Lender as part of the requested Revolving Loan Borrowing.

 

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(c) Revolving Loan Interest Rates. Subject to Section 2.08(c), the Borrowers
shall pay interest on the unpaid principal amount of each Revolving Loan from
the date of such Revolving Loan until paid in full, at one of the following
rates per annum:

 

(i) During such periods as such Revolving Loan is a Base Rate Loan, at a rate
per annum equal to the Base Rate plus the Applicable Margin therefor, such rate
to change from time to time as the Applicable Margin or Base Rate shall change;
and

 

(ii) During such periods as such Revolving Loan is a LIBOR Loan, at a rate per
annum equal at all times during each Interest Period for such LIBOR Loan to the
LIBOR Rate for such Interest Period plus the Applicable Margin therefor, such
rate to change from time to time during such Interest Period as the Applicable
Margin or LIBOR Rate shall change.

 

All Revolving Loans in each Revolving Loan Borrowing shall, at any given time
prior to maturity, bear interest at one, and only one, of the above rates. The
number of Revolving Loan Borrowings consisting of LIBOR Loans shall not exceed
four (4) at any time.

 

(d) Conversion of Revolving Loans. Subject to Section 2.14, the Borrowers may
convert any Revolving Loan Borrowing from one Type of Revolving Loan Borrowing
to the other Type; provided, however, that no Base Rate Loan may be converted
into a LIBOR Loan after the occurrence and during the continuance of an Event of
Default and provided, further, that any conversion of a LIBOR Loan on any day
other than the last day of the Interest Period therefor shall be subject to the
payments required under Section 2.14. The Borrowers shall request such a
conversion by an irrevocable written notice (which may be delivered by
facsimile) to the Administrative Agent substantially in the form of Exhibit B (a
“Notice of Revolving Loan Conversion”), duly executed by a Responsible Officer
of the Borrowing Agent and appropriately completed, which specifies, among other
things:

 

(i) The Revolving Loan Borrowing which is to be converted;

 

(ii) The Type of Revolving Loan Borrowing into which such Revolving Loan
Borrowing is to be converted;

 

(iii) If such Revolving Loan Borrowing is to be converted into a Revolving Loan
Borrowing consisting of LIBOR Loans, the initial Interest Period selected by the
Borrowing Agent for such LIBOR Loans in accordance with Section 2.01(e); and

 

(iv) The date of the requested conversion, which shall be a Business Day.

 

The Borrowers shall give each Notice of Revolving Loan Conversion to the
Administrative Agent not later than 9:00 a.m. at least three (3) Business Days
before the date of the requested conversion. Each Notice of Revolving Loan
Conversion shall be delivered at the office or to the facsimile number and
during the hours specified in Section 8.01. The Administrative Agent shall
promptly notify each Lender of the contents of each Notice of Revolving Loan
Conversion.

 

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(e) LIBOR Loan Interest Periods.

 

(i) The initial and each subsequent Interest Period selected by the Borrowers
for a Revolving Loan Borrowing consisting of LIBOR Loans shall be one (1), two
(2), three (3) or six (6) months; provided, however, that (A) any Interest
Period which would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless such next Business Day falls
in another calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day; (B) any Interest Period which begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; (C) no Interest
Period shall end after the Revolving Loan Maturity Date; and (D) no LIBOR Loan
shall be continued for an additional Interest Period after the occurrence and
during the continuance of an Event of Default.

 

(ii) The Borrowers shall notify the Administrative Agent by an irrevocable
written notice (which may be delivered by facsimile) substantially in the form
of Exhibit C (a “Notice of Revolving Loan Interest Period Selection”), duly
executed by a Responsible Officer of the Borrowing Agent and appropriately
completed not later than 9:00 a.m. at least three (3) Business Days prior to the
last day of each Interest Period for a Revolving Loan Borrowing consisting of
LIBOR Loans of the Interest Period selected by the Borrowers for the next
succeeding Interest Period for such LIBOR Loans; provided, however, that no
LIBOR Loan shall be continued for an additional Interest Period after the
occurrence and during the continuance of an Event of Default. Each Notice of
Revolving Loan Interest Period Selection shall be given to the office or the
facsimile number and during the hours specified in Section 8.01. If (A) the
Borrowers fail to notify the Administrative Agent of the next Interest Period
for a Revolving Loan Borrowing consisting of LIBOR Loans in accordance with this
Section 2.01(e) or (B) an Event of Default has occurred and is continuing on the
last date of an Interest Period for any LIBOR Loan, such LIBOR Loan(s) shall
automatically convert to Base Rate Loan(s) on the last day of the current
Interest Period therefor. The Administrative Agent shall promptly notify each
Lender of the contents of each Notice of Revolving Loan Interest Period
Selection.

 

(f) Scheduled Revolving Loan Payments. The Borrowers shall repay the principal
amount of all then-outstanding Revolving Loans on the Revolving Loan Maturity
Date. The Borrowers shall pay accrued interest on the unpaid principal amount of
each Revolving Loan in arrears (i) in the case of a Base Rate Loan, on the last
Business Day of each fiscal quarter, (ii) in the case of a LIBOR Loan, on the
last day of each Interest Period applicable to such Revolving Loan (and, if any
such Interest Period is longer than three (3) months, every three (3) months
after the first day of such Interest Period); (iii) in the case of a LIBOR Loan,
on the date of conversion of any Revolving Loan Borrowing from one Type of
Revolving Loan Borrowing to the other Type of Revolving Loan Borrowing; (iv) in
the case of all Revolving Loans following the occurrence and during the
continuance of an Event of Default, on demand, and (v) in the case of all
Revolving Loans, upon prepayment (to the extent thereof) and at maturity. All
interest that is not paid when due shall be due upon demand.

 

(g) Purpose. The Borrowers shall use the proceeds of the Revolving Loans (i) to
finance the Acquisition, (ii) to pay fees and expenses incurred in connection
with the transactions contemplated by this Agreement and (iii) to provide for
working capital and general corporate purposes of the Borrowers and their
Subsidiaries. No part of the proceeds of any Loan

 

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or any Letter of Credit shall be used, whether directly or indirectly, to
purchase, acquire or carry any Margin Stock or for any purpose that entails a
violation of any of the regulations of the Federal Reserve Board, including
Regulations T, U and X.

 

2.02. Term Loan Facility.

 

(a) Term Loan Availability. Subject to Section 8.21 hereof, on the terms and
subject to the conditions set forth in this Agreement, each Lender severally
agrees to lend to the Borrowers in a single advance on the Funding Date, a loan
in Dollars under this Section 2.02 in the amount of such Lender’s Term Loan
Commitment (individually, a “Term Loan”); provided, however, that (i) the
principal amount of the Term Loan made by such Lender shall not exceed such
Lender’s Term Loan Commitment on the Funding Date and (ii) the aggregate
principal amount of all Term Loans made by all Lenders shall not exceed the
Total Term Loan Commitment on the Funding Date. The Term Loans shall be made on
a pro rata basis by the Lenders in accordance with their respective Term
Proportionate Shares, with the Term Loan Borrowing to be comprised of a Term
Loan by each Lender equal to such Lender’s Term Proportionate Share of the Term
Loan Borrowing. The Borrowers may not reborrow the principal amount of a Term
Loan after repayment or prepayment thereof.

 

(b) Notice of Term Loan Borrowing. The Borrowers shall request the Term Loan
Borrowing by delivering to the Administrative Agent an irrevocable written
notice (which may be delivered by facsimile) substantially in the form of
Exhibit D (a “Notice of Term Loan Borrowing”), duly executed by a Responsible
Officer the Borrowing Agent and appropriately completed, which specifies, among
other things:

 

(i) (A) The principal Portion of the Term Loan which is to be a Base Rate
Portion and (B) the principal Portion(s) of the Term Loan which is (are) to be a
LIBOR Portion(s);

 

(ii) If any Portion of the Term Loan is initially to be a LIBOR Portion, the
initial Interest Period selected by the Borrowers for each such Portion in
accordance with Section 2.02(e); and

 

(iii) The date of the Term Loan Borrowing, which shall be the Funding Date.

 

The Borrowers shall give the Notice of Term Loan Borrowing to the Administrative
Agent not later than 9:00 a.m. at least three (3) Business Days before the
Funding Date if any Portion of the applicable Term Loan is initially to be a
LIBOR Portion and not later than 9:00 a.m. at least one (1) Business Day before
the Funding Date if the only Portion of the applicable Term Loan is initially to
be a Base Rate Portion. The Notice of Term Loan Borrowing shall be duly executed
by a Responsible Officer of the Borrowing Agent and delivered (which delivery
may be by facsimile) to the Administrative Agent at the office or facsimile
number and during the hours specified in Section 8.01. The Administrative Agent
shall promptly notify each Lender of the contents of the Notice of Term Loan
Borrowing.

 

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(c) Term Loan Interest Rates. Subject to Section 2.08(c), the Borrowers shall
pay interest on the unpaid principal amount of the Term Loan from the date of
the Term Loan until paid in full, at the following rates per annum:

 

(i) During such periods as any Portion of the Term Loan is a Base Rate Portion,
at a rate per annum on such Portion equal to the Base Rate plus the Applicable
Margin therefor, such rate to change from time to time as the Applicable Margin
or Base Rate shall change; and

 

(ii) During such periods as any Portion of the Term Loan is a LIBOR Portion, at
a rate per annum on such Portion equal at all times during each Interest Period
for such Portion to the LIBOR Rate for such Interest Period plus the Applicable
Margin therefor, such rate to change from time to time as the Applicable Margin
or LIBOR Rate shall change.

 

Each Base Rate Portion of the Term Loan shall be in a minimum amount of $100,000
or an integral multiple of $100,000 in excess thereof and each LIBOR Portion of
the Term Loan shall be in a minimum amount of $500,000 or an integral multiple
of $100,000 in excess thereof (except to the extent that any lesser Portion
results from a mandatory prepayment of the Term Loans pursuant to Section
2.07(c)). The number of LIBOR Portions of the Term Loan Borrowing shall not
exceed four (4) at any time.

 

(d) Conversion of Term Loan Portions. Subject to Section 2.14, the Borrowers may
convert any Portion of the Term Loan from one Type of Portion to another Type;
provided, however, that any conversion of a LIBOR Portion into a Base Rate
Portion shall be made on, and only on, the last day of an Interest Period for
such LIBOR Portion and no Base Rate Portion may be converted into a LIBOR
Portion after the occurrence and during the continuance of an Event of Default.
The Borrowers shall request a conversion by delivering to the Administrative
Agent an irrevocable written notice (which may be delivered by facsimile)
substantially in the form of Exhibit E (each a “Notice of Term Loan
Conversion”), duly executed by a Responsible Officer of the Borrowing Agent and
appropriately completed, which specifies, among other things:

 

(i) The Portion of the Term Loan which is to be converted;

 

(ii) The amount and Type of each Portion of the Term Loan into which it is to be
converted;

 

(iii) If any Portion of the Term Loan is to be converted into a LIBOR Portion,
the initial Interest Period selected by the Borrowers for such Portion in
accordance with Section 2.02(e); and

 

(iv) The date of the requested conversion, which shall be a Business Day.

 

The Borrowers shall give each Notice of Term Loan Conversion to the
Administrative Agent not later than 9:00 a.m. at least three (3) Business Days
before the date of the requested conversion. Each Notice of Term Loan Conversion
shall be delivered to the Administrative Agent at the office or to the facsimile
number and during the hours specified in Section 8.01. The

 

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Administrative Agent shall promptly notify each Lender of the contents of each
Notice of Term Loan Conversion.

 

(e) LIBOR Portion Interest Periods.

 

(i) The initial and each subsequent Interest Period selected by the Borrowers
for a LIBOR Portion of the Term Loan shall be one (1), two (2), three (3), or
six (6) months; provided, however, that (A) any Interest Period which would
otherwise end on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such next Business Day falls in another calendar
month, in which case such Interest Period shall end on the immediately preceding
Business Day; (B) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; (C) no Interest Period shall end after a Term
Loan Installment Date unless, after giving effect to such Interest Period, the
aggregate principal amount of the Base Rate Portion and all LIBOR Portions
having Interest Periods ending on or prior to such Term Loan Installment Date
equals or exceeds the principal payment due on such Term Loan Installment Date;
(D) no Interest Period shall end after the Term Loan Maturity Date; and (E) no
LIBOR Portion of the Term Loan shall be continued for an additional Interest
Period after the occurrence and during the continuance of an Event of Default.

 

(ii) The Borrowers shall notify the Administrative Agent by an irrevocable
written notice substantially (which may be delivered by facsimile) in the form
of Exhibit F (a “Notice of Term Loan Interest Period Selection”), duly executed
by a Responsible Officer of the Borrowing Agent and appropriately completed, not
later than 9:00 a.m. at least three (3) Business Days prior to the last day of
each Interest Period for a LIBOR Portion of the Term Loan of the Interest Period
selected by the Borrowers for the next succeeding Interest Period for such
Portion. Each Notice of Term Loan Interest Period Selection shall be given to
the office or the facsimile number and during the hours specified in Section
8.01. If the Borrowers shall fail to notify the Administrative Agent of the next
Interest Period for a LIBOR Portion of the Term Loan in accordance with this
Section 2.02(e), such Portion shall automatically convert to a Base Rate Portion
on the last day of the current Interest Period therefor.

 

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(f) Scheduled Term Loan Payments. The Borrowers shall repay the principal amount
of the Term Loans in installments, payable on the last Business Day in each
March, June, September and December, commencing with the first such date after
the Funding Date (each such date, a “Term Loan Installment Date”), which
installments shall be in the following amounts:

 

Term Loan Installment Date

--------------------------------------------------------------------------------

  

Principal Amount Due

--------------------------------------------------------------------------------

Quarter ending September 30, 2005 through quarter ending June 30, 2006

   $825,000

Quarter ending September 30, 2006 through quarter ending June 30, 2007

   $962,500

Quarter ending September 30, 2007 through quarter ending June 30, 2008

   $1,100,000

Quarter ending September 30, 2008 through quarter ending June 30, 2009

   $1,237,500

Quarter ending September 30, 2009 through quarter ending March 31, 2010

   $1,375,000

Term Loan Maturity Date

   Remaining outstanding principal amount of Term Loans, if any

 

; provided, however, that the principal payment due on the Term Loan Maturity
Date shall be in the amount necessary to pay all remaining unpaid principal on
the Term Loan. The Borrowers shall pay accrued interest on the unpaid principal
amount of each Term Loan in arrears (i) in the case of a Base Rate Portion, on
the last Business Day in each fiscal quarter, (ii) in the case of a LIBOR
Portion, on the last day of each Interest Period (and if any such Interest
Period is equal to or longer than three (3) months, every three (3) months after
the first day of such Interest Period); (iii) in the case of a LIBOR Portion, on
the date of conversion of such Portion from one Type of Term Loan to the other
Type of Term Loan; (iv) in the case of the Term Loan following the occurrence
and during the continuance of an Event of Default, on demand, and (v) upon
prepayment (to the extent thereof) and at maturity. All interest that is not
paid when due shall be due upon demand.

 

(g) Purpose. The Borrowers shall use the proceeds of the Term Loans in excess of
the Term Loans outstanding immediately prior to the Funding Date (i) to finance
the Acquisition and (ii) to pay fees and expenses incurred in connection with
the transactions contemplated by this Agreement.

 

2.03. Letters of Credit.

 

(a) The Letter of Credit Commitment.

 

(i) On the terms and subject to the conditions set forth herein, (A) the L/C
Issuer agrees, in reliance upon the agreements of the other Lenders set forth in
this Section 2.03, (1) from time to time on any Business Day during the period
from the Funding Date until the Letter of Credit Expiration Date, to issue
Letters of Credit in Dollars for the account of a Borrower, and to amend or, in
the case of Standby Letters of Credit, renew Letters of Credit previously issued
by it, in accordance with subsection (b) below, and (2) to honor drafts under
the Letters of Credit; and (B) the Lenders severally agree to participate in
Letters of Credit issued for the account of a Borrower; provided that the L/C
Issuer shall not be obligated to make any L/C Credit Extension with respect to
any Letter of Credit, and no Lender shall be obligated to participate in any
Letter of Credit if (x) as of the date of such L/C Credit Extension, the sum of
(I) the Effective Amount of all outstanding Revolving Loans made by such Lender
at the time of

 

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such L/C Credit Extension and (II) such Lender’s Revolving Proportionate Share
of the Effective Amount of all L/C Obligations and all Swing Line Loans at such
time outstanding exceeds or would exceed such Lender’s Revolving Loan Commitment
then in effect, (y) as of the date of such L/C Credit Extension, the sum of (I)
the Effective Amount of all outstanding Revolving Loans made by all the Lenders
at the time of such L/C Credit Extension and (II) the Effective Amount of all
L/C Obligations and Swing Line Loans at such time outstanding exceeds or would
exceed the Total Revolving Loan Commitment then in effect or (z) as of the date
of such L/C Credit Extension, the Effective Amount of the aggregate L/C
Obligations would exceed the Letter of Credit Sublimit. Within the foregoing
limits, and on the terms and subject to the conditions hereof, the Borrowers’
ability to obtain Letters of Credit shall be fully revolving, and accordingly
the Borrowers may, during the foregoing period, obtain Letters of Credit to
replace Letters of Credit that have expired or that have been drawn upon and
reimbursed.

 

(ii) Notwithstanding the L/C Issuer’s agreements in Section 2.03(a), the L/C
Issuer shall be under no obligation to issue any Letter of Credit if:

 

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing
such Letter of Credit, or any Requirement of Law applicable to the L/C Issuer or
any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or
request that the L/C Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C
Issuer with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise compensated hereunder)
not in effect on the Funding Date, or shall impose upon the L/C Issuer any
unreimbursed loss, cost or expense which was not applicable on the Funding Date
and which the L/C Issuer in good faith deems material to it;

 

(B) subject to Section 2.03(b)(iii), (1) in the case of any Standby Letter of
Credit, the expiry date of such requested Letter of Credit would occur more than
twelve months after the date of issuance or last renewal or (2) in the case of
any Commercial Letter of Credit, the expiry date of such requested Letter of
Credit would occur more than 180 days after the date of issuance or last
renewal, in either case unless the Required Lenders have approved such expiry
date;

 

(C) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such
expiry date;

 

(D) the issuance of such Letter of Credit would violate one or more policies of
the L/C Issuer or the terms and conditions of the applicable Letter of Credit
Application;

 

(E) such Letter of Credit is in violation of the UCP or other applicable
Governmental Rule; or

 

(F) such Letter of Credit is in a face amount less than $100,000 (or the Dollar
equivalent thereof on the date of issuance), in the case of a commercial Letter
of

 

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Credit, or $100,000 (or the Dollar equivalent thereof on the date of issuance),
in the case of any other type of Letter of Credit.

 

(iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit
if (A) the L/C Issuer would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

(b) Procedures for Issuance and Amendment of Letters of Credit; Evergreen
Letters of Credit.

 

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrowers delivered to the L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Borrowing
Agent. Such L/C Application must be received by the L/C Issuer and the
Administrative Agent not later than 9:00 a.m., at least two Business Days (or
such later date and time as the L/C Issuer may agree in a particular instance in
its sole discretion) prior to the proposed issuance date or date of amendment,
as the case may be. In the case of a request for an initial issuance of a Letter
of Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested
Letter of Credit (which date shall be a Business Day); (B) the amount thereof;
(C) the currency in which such Letter of Credit is to be issued; (D) the expiry
date thereof; (E) the name and address of the beneficiary thereof; (F) the
documents to be presented by such beneficiary in case of any drawing thereunder;
(G) the full text of any certificate to be presented by such beneficiary in case
of any drawing thereunder, (H) the account party thereunder, and (I) such other
matters as the L/C Issuer may require. In the case of a request for an amendment
of any outstanding Letter of Credit, such Letter of Credit Application shall
specify in form and detail satisfactory to the L/C Issuer (A) the Letter of
Credit to be amended; (B) the proposed date of amendment thereof (which date
shall be a Business Day); (C) the nature of the proposed amendment; and (D) such
other matters as the L/C Issuer may require.

 

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the Borrowers and, if not, the L/C Issuer will provide the Administrative
Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from
the Administrative Agent that the requested issuance or amendment is permitted
in accordance with the terms hereof, then, subject to the terms and conditions
hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit
for the account of the applicable Borrower or enter into the applicable
amendment, as the case may be, in each case in accordance with the L/C Issuer’s
usual and customary business practices.

 

Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the L/C Issuer a participation in such Letter of Credit in an amount equal to
the product of such Lender’s Revolving Proportionate Share times the amount of
such Letter of Credit. The Administrative Agent shall promptly notify each
Lender upon the issuance of a Letter of Credit.

 

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(iii) If the Borrowers so request in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Letter of Credit that has automatic renewal provisions (each, an
“Evergreen Letter of Credit”); provided that any such Evergreen Letter of Credit
must permit the L/C Issuer to prevent any such renewal at least once in each
twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
(the “Nonrenewal Notice Date”) in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued. Unless otherwise directed by
the L/C Issuer, no Borrower shall be required to make a specific request to the
L/C Issuer for any such renewal. Once an Evergreen Letter of Credit has been
issued, the Lenders shall be deemed to have authorized (but may not require) the
L/C Issuer to permit the renewal of such Letter of Credit at any time to a date
not later than the Letter of Credit Expiration Date; provided, however, that the
L/C Issuer shall not permit any such renewal if it has received notice (which
may be by telephone or in writing) on or before the Business Day immediately
preceding the Nonrenewal Notice Date from the Administrative Agent that the
Required Lenders have elected not to permit such renewal. Notwithstanding
anything to the contrary contained herein, the L/C Issuer shall have no
obligation to permit the renewal of any Evergreen Letter of Credit at any time.

 

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the Borrowers and the
Administrative Agent a true and complete copy of such Letter of Credit or
amendment.

 

(c) Drawings and Reimbursements; Funding of Participations.

 

(i) Upon any drawing under any Letter of Credit, the L/C Issuer shall promptly
notify the Borrowers and the Administrative Agent of the amount to be paid by
the L/C Issuer as a result of such drawing and the date on which payment is to
be made by the L/C Issuer to the beneficiary of such Letter of Credit in respect
of such drawing. Not later than 9:00 a.m., on the date of any payment by the L/C
Issuer under a Letter of Credit (each such date, an “Honor Date”), the Borrowers
shall reimburse the L/C Issuer through the Administrative Agent in an amount
equal to the amount of such drawing. If the Borrowers fail to so reimburse the
L/C Issuer by such time, the Administrative Agent shall promptly notify each
Lender of the Honor Date, the amount of the unreimbursed drawing (the
“Unreimbursed Amount”), and such Lender’s Revolving Proportionate Share thereof.
In such event, the Borrowers shall be deemed to have requested a Revolving Loan
Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount
equal to the Unreimbursed Amount, without regard to the minimum and multiples
specified in Section 2.01 for the principal amount of Base Rate Loans, but
subject to the amount of the unutilized portion of the Total Revolving Loan
Commitment and the conditions set forth in Section 3.02 (other than the delivery
of a Notice of Revolving Loan Borrowing). Any notice given by the L/C Issuer or
the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by
telephone if immediately confirmed in writing; provided, that the lack of such
an immediate confirmation shall not affect the conclusiveness or binding effect
of such notice.

 

(ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any
notice pursuant to Section 2.03(c)(i) make funds available to the Administrative
Agent for

 

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the account of the L/C Issuer at the Administrative Agent’s office in an amount
equal to its Revolving Proportionate Share of the Unreimbursed Amount not later
than 1:00 p.m. on the Business Day specified in such notice by the
Administrative Agent, whereupon, subject to the provisions of Section
2.03(c)(iii), each Lender that so makes funds available shall be deemed to have
made a Base Rate Loan to the Borrowers in such amount. The Administrative Agent
shall remit the funds so received to the L/C Issuer.

 

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Revolving Loan Borrowing because the conditions set forth in Section 3.02 cannot
be satisfied or for any other reason, the Borrowers shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the rate
applicable to Revolving Loans upon the occurrence and during the continuance of
an Event of Default. In such event, each Lender’s payment to the Administrative
Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.03.

 

(iv) Until each Lender funds its Revolving Loan or L/C Advance pursuant to this
Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any
Letter of Credit, interest in respect of such Lender’s Revolving Proportionate
Share of such amount shall be solely for the account of the L/C Issuer.

 

(v) Each Lender’s obligation to make Revolving Loans or L/C Advances to
reimburse the L/C Issuer for, or participate in, amounts drawn under Letters of
Credit, as contemplated by this Section 2.03(c), shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
set-off, counterclaim, recoupment, defense or other right which such Lender may
have against the L/C Issuer, the Borrowers or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default or Event of Default,
or (C) any other occurrence, event or condition, whether or not similar to any
of the foregoing. Any such reimbursement shall not relieve or otherwise impair
the obligation of the Borrowers to reimburse the L/C Issuer for the amount of
any payment made by the L/C Issuer under any Letter of Credit, together with
interest as provided herein.

 

(vi) If any Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Section 2.03(c) by the time specified in
Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such
Lender (acting through the Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the L/C Issuer at a rate
per annum equal to the Federal Funds Rate from time to time in effect. A
certificate of the L/C Issuer submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (vi)
shall be conclusive absent manifest error.

 

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(d) Repayment of Participations.

 

(i) At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.03(c), if the Administrative Agent
receives for the account of the L/C Issuer any payment related to such Letter of
Credit (whether directly from the Borrowers or otherwise, including proceeds of
Cash Collateral applied thereto by the Administrative Agent), or any payment of
interest thereon, the Administrative Agent will distribute to such Lender its
Revolving Proportionate Share thereof in the same funds as those received by the
Administrative Agent.

 

(ii) If any payment received by the Administrative Agent for the account of the
L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned, each
Lender shall pay to the Administrative Agent for the account of the L/C Issuer
its Revolving Proportionate Share thereof on demand of the Administrative Agent,
plus interest thereon from the date of such demand to the date such amount is
returned by such Lender, at a rate per annum equal to the Federal Funds Rate
from time to time in effect.

 

(e) Obligations Absolute. The obligation of the Borrowers to reimburse the L/C
Issuer for each drawing under each Letter of Credit, and to repay each L/C
Borrowing and each drawing under a Letter of Credit that is refinanced by a
Borrowing of Revolving Loans, shall be absolute, unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement and
the other Credit Documents under all circumstances, including the following:

 

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;

 

(ii) any change in the time, manner or place of payment of, or in any other term
of, all or any of the obligations of the Borrowers in respect of any Letter of
Credit or any other amendment or waiver of, or any consent to departure from,
all or any of the Credit Documents;

 

(iii) the existence of any claim, counterclaim, set-off, defense or other right
that a Borrower or any Subsidiary of a Borrower may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), the L/C Issuer or
any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

 

(iv) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

 

(v) any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to any Person

 

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purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under any Debtor Relief
Law; or

 

(vi) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrowers.

 

The Borrowers shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrowers’ instructions or other irregularity, the
Borrowers will immediately notify the L/C Issuer. The Borrowers shall be
conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.

 

(f) Role of L/C Issuer. Each of the Borrowers and the Lenders agrees that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. Neither the Administrative
Agent nor the L/C Issuer nor any of their respective affiliates, directors,
officers, employees, agents or advisors nor any of the correspondents,
participants or assignees of the L/C Issuer shall be liable to any Lender for
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Lenders or the Required Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Letter of Credit Application. The Borrowers hereby assume all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude the Borrowers’ pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. Neither the Administrative Agent nor the L/C Issuer nor any of their
respective affiliates, directors, officers, employees, agents or advisors nor
any of the correspondents, participants or assignees of the L/C Issuer shall be
liable or responsible for any of the matters described in clauses (i) through
(v) of Section 2.03(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrowers may have a claim against the L/C Issuer,
and the L/C Issuer may be liable to the Borrowers, to the extent, but only to
the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrowers which the Borrowers prove were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing, the L/C Issuer may accept documents that appear on their face
to be in substantial compliance with the terms of a Letter of Credit, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

 

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(g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing or (ii) if, as of the
Letter of Credit Expiration Date, any Letter of Credit may for any reason remain
outstanding and partially or wholly undrawn, the Borrowers shall immediately
Cash Collateralize the Obligations in an amount equal to 107% of the then
Effective Amount of the L/C Obligations. The Borrowers hereby grant the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a Lien
on all such cash and deposit account balances described in the definition of
“Cash Collateralize” as security for the Obligations. Cash collateral shall be
maintained in blocked, non-interest bearing deposit accounts at Wells Fargo or
other institutions satisfactory to it which accounts, in any case, are subject
to Control Agreements pursuant to which the Lenders have “control” as such term
is used in the UCC, sufficient to perfect a security interest in such cash
collateral. The Lien held by the Administrative Agent in such cash collateral to
secure the Obligations shall be released upon the satisfaction of each of the
following conditions: (a) no Letters of Credit shall be outstanding, (b) all L/C
Obligations shall have been repaid in full and (c) no Default shall have
occurred and be continuing.

 

(h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the L/C
Issuer and the Borrowers when a Letter of Credit is issued, (i) the rules of the
“International Standby Practices 1998” published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each Standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits
(the “UCP”), as most recently published by the International Chamber of Commerce
(the “ICC”) at the time of issuance (including the ICC decision published by the
Commission on Banking Technique and Practice on April 6, 1998 regarding the
European single currency (euro)) shall apply to each Commercial Letter of
Credit.

 

(i) Letter of Credit Fees. The Borrowers agree to pay the following Letter of
Credit fees:

 

(i) With respect to each Commercial Letter of Credit, concurrently with the
issuance of each such Commercial Letter of Credit, to the Administrative Agent
for the account of each Lender in accordance with its Revolving Proportionate
Share, a one-time non-refundable Commercial Letter of Credit fee equal to 1/4 of
1% of the stated amount of such Commercial Letter of Credit; provided, however,
that the applicable Commercial Letter of Credit fee payable in connection with
the issuance of any Commercial Letter of Credit shall be no less than $250. Such
fee, when due, shall be fully earned and when paid, shall be non-refundable.

 

(ii) With respect to each Standby Letter of Credit, to the Administrative Agent
for the account of each Lender in accordance with its Revolving Proportionate
Share, a Standby Letter of Credit fee for each such Standby Letter of Credit for
the period from the date of issuance of such Standby Letter of Credit until the
expiry thereof, at a per annum rate equal to the Applicable Margin for LIBOR
Loans (plus an additional 2% if an Event of Default has occurred and is
continuing) applicable from time to time during such period multiplied by the
actual daily maximum amount available to be drawn under such Standby Letter of
Credit. Such fee for each Standby Letter of Credit shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December, commencing

 

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with the first such date to occur after the issuance of such Standby Letter of
Credit and on the Letter of Credit Expiration Date. Each such fee, when due,
shall be fully earned, and when paid, shall be non-refundable. If there is any
change in the Applicable Margin for LIBOR Loans during any quarter, the
Applicable Margin used for the calculation of the Letter of Credit Fee shall be
the Applicable Margin for LIBOR Loans on each day during such quarter.

 

(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The Borrowers shall pay directly to the L/C Issuer for its own account a
fronting fee in an amount with respect to each Letter of Credit (whether standby
or commercial) equal to the greater of $250 and 1/4 of 1% of the amount of such
Letter of Credit, due and payable upon each L/C Credit Extension with respect to
such Letter of Credit and such fee shall be payable in Dollars; provided, that
in the case of an increase in the amount of a Letter of Credit after the
issuance thereof, such fronting fee shall be payable only on the increased
amount thereof. In addition, the Borrowers shall pay directly to the L/C Issuer
for its own account the customary issuance, presentation, amendment, negotiation
and other processing fees, and other standard costs and charges, of the L/C
Issuer relating to letters of credit as from time to time in effect. Such fees
and charges are due and payable on demand and once paid, are nonrefundable.

 

(k) Conflict with Letter of Credit Application. In the event of any conflict
between the terms hereof and the terms of any Letter of Credit Application, the
terms hereof shall control.

 

(l) Trade Bank as L/C Issuer. The parties hereto acknowledge and agree that, at
its option, Wells Fargo, as L/C Issuer may arrange for Letters of Credit to be
issued by Trade Bank as agent for Wells Fargo. All parties hereto understand and
agree that to the extent any Letters of Credit are issued by Trade Bank as agent
for Wells Fargo, (i) Trade Bank is agent only to Wells Fargo and not to the
Borrowers and has no obligations to the Borrowers, (ii) the Letters of Credit
issued by Trade Bank will be deemed Letters of Credit issued by the L/C Issuer
for all purposes hereunder and (iii) any of the obligations performed or rights
exercised pursuant to or in connection with the issuance of any Letter of Credit
by Trade Bank shall be deemed obligations performed or rights exercised by Wells
Fargo as L/C Issuer. To the extent that the L/C Issuer is required to provide
any notices to, or take any other actions for the benefit of, the Administrative
Agent hereunder, with respect to any Letter of Credit issued by Trade Bank, no
such notice or action shall be required.

 

2.04. Swing Line.

 

(a) The Swing Line. On the terms and subject to the conditions set forth herein,
the Swing Line Lender agrees to make loans (each such loan, a “Swing Line Loan”)
in Dollars to the Borrowers from time to time on any Business Day during the
period from the Funding Date to the date ten days prior to the Revolving Loan
Maturity Date in an aggregate amount not to exceed at any time outstanding the
amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line
Loans, when aggregated with the Effective Amount of Revolving Loans of the Swing
Line Lender in its capacity as a Lender of Revolving Loans, may exceed the
amount of such Lender’s Revolving Loan Commitment; provided, however, that after
giving effect to any Swing Line Loan, (i) the aggregate Effective Amount of all
Revolving Loans, Swing Line Loans and L/C Obligations shall not exceed the Total

 

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Revolving Loan Commitment at such time, and (ii) the aggregate Effective Amount
of the Revolving Loans of any Lender (other than the Swing Line Lender), plus
such Lender’s Revolving Proportionate Share of the Effective Amount of all L/C
Obligations, plus such Lender’s Revolving Proportionate Share of the Effective
Amount of all Swing Line Loans shall not exceed such Lender’s Revolving Loan
Commitment, and provided, further, that the Swing Line Lender shall not make any
Swing Line Loan to refinance an outstanding Swing Line Loan. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
Borrowers may borrow under this Section 2.04, prepay under Section 2.07, and
reborrow under this Section 2.04. Each Swing Line Loan shall be a Base Rate
Loan. Immediately upon the making of a Swing Line Loan, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Swing Line Lender a risk participation in such Swing Line Loan in an amount
equal to the product of such Lender’s Revolving Proportionate Share times the
amount of such Swing Line Loan.

 

(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the
Borrowers’ irrevocable notice to the Swing Line Lender and the Administrative
Agent, which may be given by telephone. Each such notice must be received by the
Swing Line Lender and the Administrative Agent not later than 12:00 noon, on the
requested borrowing date, and shall specify (i) the amount to be borrowed, which
amount shall be a minimum amount of $100,000 or an integral multiple of $100,000
in excess thereof and (ii) the requested borrowing date, which shall be a
Business Day. Each such telephonic notice must be confirmed promptly by delivery
to the Swing Line Lender and the Administrative Agent of a written Notice of
Swing Line Borrowing, appropriately completed and signed by a Responsible
Officer of the Borrowing Agent, which notice may be delivered by facsimile.
Promptly after receipt by the Swing Line Lender of any telephonic Notice of
Swing Line Borrowing, the Swing Line Lender will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has also
received such Notice of Swing Line Borrowing and, if not, the Swing Line Lender
will notify the Administrative Agent (by telephone or in writing) of the
contents thereof. Unless the Swing Line Lender has received notice (by telephone
or in writing) from the Administrative Agent (including at the request of any
Lender) prior to 2:00 p.m., on the date of the proposed Swing Line Borrowing (A)
directing the Swing Line Lender not to make such Swing Line Loan as a result of
the limitations set forth in the first proviso to the first sentence of Section
2.04(a), or (B) that one or more of the applicable conditions specified in
Section 3.02 is not then satisfied, then, subject to the terms and conditions
hereof, the Swing Line Lender will, not later than 4:00 p.m., on the borrowing
date specified in such Notice of Swing Line Borrowing, make the amount of its
Swing Line Loan available to the Borrowers at its office by crediting the
account of the Borrowers on the books of the Swing Line Lender in immediately
available funds.

 

(c) Refinancing of Swing Line Loans.

 

(i) The Swing Line Lender at any time in its sole and absolute discretion may
request, on behalf of the Borrowers (which hereby irrevocably requests the Swing
Line Lender to act on its behalf) under this subsection (c), that each Lender
make a Base Rate Loan in an amount equal to such Lender’s Revolving
Proportionate Share of the amount of Swing Line Loans then outstanding. Such
request shall be made in accordance with the requirements of Section 2.01,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the Total

 

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Revolving Loan Commitment and the conditions set forth in Section 3.02. The
Swing Line Lender shall furnish the Borrowers with a copy of the applicable
Revolving Loan Notice promptly after delivering such notice to the
Administrative Agent. Each Lender shall make an amount equal to its Revolving
Proportionate Share of the amount specified in such Revolving Loan Notice
available to the Administrative Agent in immediately available funds for the
account of the Swing Line Lender at the Administrative Agent’s Office not later
than 12:00 noon, on the day specified in such Revolving Loan Notice, whereupon,
subject to Section 2.04(c)(ii), each Lender that so makes funds available shall
be deemed to have made a Base Rate Loan to the Borrowers in such amount. The
Administrative Agent shall remit the funds so received to the Swing Line Lender.

 

(ii) If for any reason any Revolving Loan Borrowing cannot be requested in
accordance with Section 2.04(c)(i) or any Swing Line Loan cannot be refinanced
by such a Revolving Loan Borrowing, the Revolving Loan Notice submitted by the
Swing Line Lender shall be deemed to be a request by the Swing Line Lender that
each of the Lenders fund its participation in the relevant Swing Line Loan and
each Lender’s payment to the Administrative Agent for the account of the Swing
Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of
such participation.

 

(iii) If any Lender fails to make available to the Administrative Agent for the
account of the Swing Line Lender any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.04(c) by the time
specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to
recover from such Lender (acting through the Administrative Agent), on demand,
such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the Swing
Line Lender at a rate per annum equal to the Federal Funds Rate from time to
time in effect. A certificate of the Swing Line Lender submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (iii) shall be conclusive absent manifest error.

 

(iv) Each Lender’s obligation to make Revolving Loans or to purchase and fund
participations in Swing Line Loans pursuant to this Section 2.04(c) shall be
absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, the Borrowers or any
other Person for any reason whatsoever, (B) the occurrence or continuance of a
Default or Event of Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing. Any such purchase of
participations shall not relieve or otherwise impair the obligation of the
Borrowers to repay Swing Line Loans, together with interest as provided herein.

 

(d) Repayment of Participations.

 

(i) At any time after any Lender has purchased and funded a participation in a
Swing Line Loan, if the Swing Line Lender receives any payment on account of
such Swing Line Loan, the Swing Line Lender will distribute to such Lender its
Revolving Proportionate Share of such payment (appropriately adjusted, in the
case of interest payments, to

 

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reflect the period of time during which such Lender’s participation was
outstanding and funded) in the same funds as those received by the Swing Line
Lender.

 

(ii) If any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender, each Lender shall pay to the Swing Line Lender its Revolving
Proportionate Share thereof on demand of the Administrative Agent, plus interest
thereon from the date of such demand to the date such amount is returned, at a
rate per annum equal to the Federal Funds Rate. The Administrative Agent will
make such demand upon the request of the Swing Line Lender.

 

(e) Interest for Account of Swing Line Lender. Subject to Section 2.08(c), each
Swing Line Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate
plus the Applicable Margin for Base Rate Loans. The Swing Line Lender shall be
responsible for invoicing the Borrowers for interest on the Swing Line Loans.
Until each Lender funds its Base Rate Loan or participation pursuant to this
Section 2.04 to refinance such Lender’s Revolving Proportionate Share of any
Swing Line Loan, interest in respect of such Revolving Proportionate Share shall
be solely for the account of the Swing Line Lender. The Borrowers shall pay
accrued interest on the unpaid principal amount of each Swing Line Loan upon
prepayment (to the extent thereof), on the last Business Day of each fiscal
quarter and at maturity.

 

(f) Payments Directly to Swing Line Lender. The Borrowers shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to the Swing Line Lender.

 

2.05. Amount Limitations, Commitment Reductions, Etc.

 

(a) Total Revolving Loan Commitment. The Effective Amount of all Revolving
Loans, L/C Obligations and Swing Line Loans outstanding at any time shall not
exceed the Total Revolving Loan Commitment at such time.

 

(b) Optional Reduction or Cancellation of Commitments. The Borrowers may, upon
three (3) Business Days written notice to the Administrative Agent (each a
“Reduction Notice”), duly executed and delivered by a Responsible Officer of the
Borrowing Agent, permanently reduce the Total Revolving Loan Commitment by the
amount of $500,000 or an integral multiple of $100,000 in excess thereof or
cancel the Total Revolving Loan Commitment in its entirety; provided, however,
that:

 

(i) The Borrowers may not reduce the Total Revolving Loan Commitment prior to
the Revolving Loan Maturity Date, if, after giving effect to such reduction, the
Effective Amount of all Revolving Loans, L/C Obligations and Swing Line Loans
then outstanding would exceed the Total Revolving Loan Commitment; and

 

(ii) The Borrowers may not cancel the Total Revolving Loan Commitment prior to
the Revolving Loan Maturity Date, if, after giving effect to such cancellation,
any Revolving Loan would then remain outstanding.

 

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Any Reduction Notice shall be irrevocable; provided that any Reduction Notice
may state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrowers (by
written notice to the Administrative Agent on or prior to the specified
effective date previously provided in the applicable Reduction Notice) if such
condition is not satisfied.

 

(c) Mandatory Reduction or Termination of Commitments.

 

(i) The Total Revolving Loan Commitment shall be automatically and permanently
reduced by an amount equal to the maximum amount that would be required to be
applied as a mandatory prepayment of the Swing Line Loans and the Revolving
Loans pursuant to Section 2.07(c)(iii), (iv), (v) or (vi) (without regard to the
actual usage of such Commitment), such reduction to be effective on the date of
the required prepayment.

 

(ii) The Total Revolving Loan Commitment shall be automatically and permanently
reduced to zero on the Revolving Loan Maturity Date.

 

(iii) The Total Term Loan Commitment shall automatically and permanently reduced
to zero at the close of business on the Funding Date.

 

(d) Effect of Commitment Reductions. From the effective date of any reduction of
the Total Revolving Loan Commitment, the Commitment Fees payable pursuant to
Section 2.06(b) shall be computed on the basis of the Total Revolving Loan
Commitment as so reduced. Once reduced or cancelled, the Total Revolving Loan
Commitment may not be increased or reinstated without the prior written consent
of all Lenders. Any reduction of the Total Revolving Loan Commitment pursuant to
Section 2.05(a) shall be applied ratably to reduce each Lender’s Revolving Loan
Commitment in accordance with clause (i) of Section 2.11(a).

 

2.06. Fees.

 

(a) Administrative Agent’s Fee and Arrangement Fee. The Borrowers shall pay to
the Administrative Agent, for its own account, the agent’s fees and the
arrangement fee, and such other compensation in the amounts and at the times set
forth in the Fee Letter.

 

(b) Commitment Fees. The Borrowers shall pay to the Administrative Agent, for
the ratable benefit of the Lenders as provided in clause (v) of Section 2.11(a),
commitment fees (collectively, the “Commitment Fees”) equal to the Commitment
Fee Percentage of the daily average Unused Commitment for the period beginning
on the date of this Agreement and ending on the Revolving Loan Maturity Date.
The Borrowers shall pay the Commitment Fees in arrears on the last Business Day
in each March, June, September and December (commencing on the first such date
after the Funding Date) and on the Revolving Loan Maturity Date (or if the Total
Revolving Commitment is cancelled on a date prior to the Revolving Loan Maturity
Date, on such prior date).

 

2.07. Prepayments.

 

(a) Terms of All Prepayments. Upon the prepayment of any Loan (whether such
prepayment is an optional prepayment under Section 2.07(b), a mandatory
prepayment

 

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required by Section 2.07(c) or a mandatory prepayment required by any other
provision of this Agreement or the other Credit Documents, including a
prepayment upon acceleration), the Borrowers shall pay (i) to the Administrative
Agent for the account of the Lender that made such Loan all accrued interest and
fees to the date of such prepayment on the amount prepaid and (ii) to such
Lender if such prepayment is the prepayment of a LIBOR Loan or of a LIBOR
Portion on a day other than the last day of an Interest Period for such LIBOR
Loan or such LIBOR Portion, all amounts payable to such Lender pursuant to
Section 2.14.

 

(b) Optional Prepayments.

 

(i) At their option, the Borrowers may, without premium or penalty but subject
to Section 2.14 in the case of LIBOR Loans and LIBOR Portions, upon one (1)
Business Day’s notice from the Borrowing Agent to the Administrative Agent in
the case of Base Rate Loans or Base Rate Portions or three (3) Business Days’
notice from the Borrowing Agent to the Administrative Agent in the case of LIBOR
Loans or LIBOR Portions, prepay the Base Rate Loans or Base Rate Portions in any
Borrowing and all accrued but unpaid interest thereon in part, in a minimum
principal amount of $100,000 or an integral multiple of $100,000 in excess
thereof, or in whole and prepay the LIBOR Loans or LIBOR Portions in any
Borrowing and all accrued but unpaid interest thereon in part, in a minimum
principal amount of $500,000 or an integral multiple of $100,000 in excess
thereof, or in whole. Each such notice shall specify the date and amount of such
prepayment and whether such prepayment relates to Swing Line Loans, Revolving
Loans or Term Loans; provided that if such prepayment is on any day other than
on the last day of the Interest Period applicable to such LIBOR Loan, the
Borrowers shall be subject to the payments required by Section 2.14. If such
notice is given by the Borrowing Agent, the Borrowers shall make such prepayment
and the payment amount specified in such notice shall be due and payable on the
date specified therein. All prepayments under this Section 2.07(b) which are
applied to reduce the principal amount of the Term Loans shall be applied first
to the accrued but unpaid interest on and fees in connection with, and then any
principal of the Term Loans until paid in full (in the manner set forth in
Section 2.07(d)).

 

(ii) At their option, the Borrowers may, upon notice by a Responsible Officer of
the Borrowing Agent to the Swing Line Lender (with a copy to the Administrative
Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in
whole or in part without premium or penalty; provided, that (A) such notice must
be received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the date of the prepayment, and (B) any such prepayment shall be in
a minimum principal amount of $100,000 or an integral multiple of $100,000 in
excess thereof. Each such notice shall specify the date and amount of such
prepayment. If such notice is given by the Borrowing Agent, the Borrowers shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein.

 

(c) Mandatory Prepayments. The Borrowers shall prepay the Loans as follows:

 

(i) If, at any time, the Effective Amount of all Revolving Loans, Swing Line
Loans and L/C Obligations then outstanding exceeds the Total Revolving Loan
Commitment at such time, the Borrowers shall immediately (A) prepay the Swing
Line Loans to

 

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the extent Swing Line Loans in a sufficient amount are then outstanding, (B)
then prepay the Revolving Loans to the extent Revolving Loans in a sufficient
amount are then outstanding and (C) otherwise, Cash Collateralize the
Obligations in an amount equal to the then Effective Amount of the L/C
Obligations, in an aggregate principal amount equal to such excess.

 

(ii) The Borrowers shall repay each Swing Line Loan on the earlier to occur of
(A) the date ten Business Days after such Loan is made and (B) Revolving Loan
Maturity Date.

 

(iii) If, during any calendar year, any Loan Party sells or otherwise disposes
of any assets (other than sales permitted under Sections 5.02(c)), the Borrowers
shall, immediately after the completion of each sale or other disposition,
prepay the outstanding Term Loans and the other Obligations in the manner set
forth in Section 2.07(d), in an aggregate principal amount equal to one hundred
percent (100%) of the Net Proceeds from such sale or other disposition;
provided, however, that if such sale or other disposition occurs prior to the
time when the Term Loans have been loaned to the Borrowers, such sale or other
disposition shall result in an automatic and permanent reduction of the Term
Loan Commitment in an amount equal to the amount that would otherwise have been
required to be prepaid pursuant to this Section had such Term Loans been
outstanding at such time. Notwithstanding the foregoing, the Borrowers shall not
be required to make a prepayment pursuant to this clause (iii) with respect to
any sale (a “Relevant Sale”) if the Borrowing Agent advises the Administrative
Agent in writing at the time the Net Proceeds from such Relevant Sale are
received that the Borrowers intend to reinvest all or any portion of such Net
Proceeds in replacement assets to the extent (A) such Net Proceeds are in fact
committed to be reinvested by the Borrowers pursuant to a purchase contract
providing for the acquisition of such replacement assets that is executed by one
or more Borrower and the related seller within 90 days from the date of such
Relevant Sale and (B) the acquisition of such replacement assets occurs within
180 days from the date on which such purchase contract is so executed and
delivered. If, at any time after the occurrence of a Relevant Sale and prior to
the acquisition of the related replacement assets, the 90 or 180-day period
provided in clause (A) or (B) of the preceding sentence shall elapse without
execution of the related purchase contract (in the case of clause (A)) or the
occurrence of the related acquisition (in the case of clause (B)) or a Default
shall occur, then the Borrowers shall immediately prepay the Loans in the amount
and in the manner described in the first sentence of this clause (iii).

 

(iv) If, at any time after the Funding Date, any Loan Party issues or incurs any
Indebtedness for borrowed money, including Indebtedness evidenced by notes,
bonds, debentures or other similar instruments but excluding Permitted
Indebtedness, the Borrowers shall, immediately after such issuance or
incurrence, prepay the outstanding Term Loans and the other Obligations in the
manner set forth in Section 2.07(d), in an aggregate principal amount equal to
one hundred percent (100%) of the Net Proceeds of such Indebtedness; provided,
however, that if such issuance or incurrence occurs prior to the time when the
Term Loans have been loaned to the Borrowers, such issuance or incurrence shall
result in an automatic and permanent reduction of the Term Loan Commitment in an
amount equal to the amount that would otherwise have been required to be prepaid
pursuant to this Section had such Term Loans been outstanding at such time.

 

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(v) If, at any time, any Loan Party issues or sells any Equity Securities
resulting in Net Proceeds, the Borrowers shall, immediately after such issuance
or sale, prepay the outstanding Term Loans and the other Obligations in the
manner set forth in Section 2.07(d), in an aggregate principal amount equal to
fifty percent (50%) of the Net Proceeds of such Equity Securities; provided,
however, that if such issuance or sale occurs prior to the time when the Term
Loans have been loaned to the Borrowers, such issuance or sale shall result in
an automatic and permanent reduction of the Term Loan Commitment in an amount
equal to the amount that would otherwise have been required to be prepaid
pursuant to this Section had such Term Loans been outstanding at such time; and
provided, further, however, that if some or all of the proceeds of such issuance
or sale of Equity Securities are used to prepay all or a portion of the
Permitted Subordinated Indebtedness (to the extent permitted hereunder), the
amount used to prepay such Permitted Subordinated Indebtedness shall not be
included in the calculation of any mandatory prepayment required pursuant to
this Section 2.07(c)(v).

 

No later than three (3) Business Days following (x) the date of receipt by a
Loan Party or the Administrative Agent of any Net Insurance Proceeds or Net
Condemnation Proceeds, or (y) if applicable, the end of the 180th day period
described in the proviso below), the Borrowers shall prepay the outstanding Term
Loans and the other Obligations in the manner set forth in Section 2.07(d) in an
aggregate principal amount equal to one hundred percent (100%) of the aggregate
amount of the sum of such Net Insurance Proceeds and Net Condemnation Proceeds
in such fiscal year (excluding any amounts used to repair, restore or replace
assets in accordance with the immediately following proviso); provided, however,
that, so long as no Event of Default shall have occurred and be continuing, the
Borrowers shall not be obligated to make a prepayment under this clause (v) (and
the Administrative Agent shall make available to the Borrowers such Net
Insurance Proceeds and Net Condemnation Proceeds) if and to the extent that: (A)
the Borrowers advise the Administrative Agent in writing at the time they or the
Administrative Agent receive such proceeds that they or another Loan Party
intend to repair, restore or replace the assets from which such Net Insurance
Proceeds or Net Condemnation Proceeds derived and demonstrates to the reasonable
satisfaction of the Administrative Agent that they have sufficient moneys
available (inclusive of such proceeds) after taking into account projected cash
flow needs to complete such repair, restoration or replacement, and do so within
180 days of receipt thereof, (it being understood that, except as provided in
subparagraph (B) of this Section 2.07(c)(v), any Net Insurance Proceeds or Net
Condemnation Proceeds retained by the Borrowers but not actually expended within
such time period to repair, restore or replace the assets from which such Net
Insurance Proceeds or Net Condemnation Proceeds derived shall at that time
immediately be used to prepay the Loans); or (B) the Net Condemnation Proceeds
are derived from the settlement of and/or the entry of a final judgment in, the
condemnation action instituted by the City of Reno against Zante (Case No.
CV03-01903 in the Second Judicial District Court of the State of Nevada In and
For the County of Washoe) in conjunction with the City’s ReTRAC Project.

 

(vi) The Borrowers shall deliver to the Administrative Agent, at the time of
each prepayment required under this Section 2.07(c), (A) a certificate signed by
a Responsible Officer of the Borrowing Agent setting forth in reasonable detail
the calculation of the amount of such prepayment and (B) to the extent
practicable, at least three days prior written notice of such prepayment. Each
notice of prepayment shall specify the prepayment date and the Type and
principal amount of each Loan (or portion thereof) to be prepaid. In the event
that the

 

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Borrowers shall subsequently determine that the actual amount was greater than
the amount set forth in such certificate, the Borrowers shall promptly make an
additional prepayment of the Loans (and/or, if applicable, the Revolving Loan
Commitments shall be permanently reduced) in an amount equal to the amount of
such excess, and the Borrowers shall concurrently therewith deliver to the
Administrative Agent a certificate signed by a Responsible Officer of the
Borrowing Agent demonstrating the derivation of the additional amount resulting
in such excess.

 

(d) Application of Term Loan Prepayments. Subject to Section 2.08(d), all
prepayments of the Term Loans shall be applied as follows: first, to reduce the
principal amount payable by the Borrowers on the most remote scheduled Term Loan
Installment Date and all accrued but unpaid interest thereon until such
scheduled payment (and unpaid interest) is reduced to zero and second, to reduce
the aggregate principal amount payable by the Borrowers on the then remaining
Term Loan Installment Dates in the inverse order of their due dates. If after
giving effect to such application of a prepayment, the Term Loans have been paid
in full, any unapplied portion thereof shall be applied as follows: (A) to
prepay the Swing Line Loans to the extent Swing Line Loans are then outstanding,
(B) then to prepay the Revolving Loans to the extent Revolving Loans are then
outstanding and (C) otherwise, to Cash Collateralize the Obligations in an
amount equal to 107% of the then Effective Amount of the L/C Obligations;
provided, however, that with respect to prepayments required under Section
2.07(c)(v)(B) only, the Borrowers are not obligated to prepay the Swing Line
Loans, the Revolving Loans or to Cash Collateralize the L/C Obligations with the
portion of such prepayment not yet paid at a time when the Term Loans have been
paid in full. Without modifying the order of application of prepayments set
forth in the preceding sentence, all such prepayments shall, to the extent
possible, be first applied to prepay Base Rate Loans and Base Rate Portions and
then if any funds remain, to prepay LIBOR Loans and LIBOR Portions.

 

2.08. Other Payment Terms.

 

(a) Place and Manner. All payments to be made by the Borrowers under this
Agreement or any other Credit Document shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. The Borrowers
shall make all payments due to each Lender or the Administrative Agent under
this Agreement or any other Credit Document by payments to the Administrative
Agent at the Administrative Agent’s office located at the address specified in
Section 8.01, with each payment due to a Lender to be for the account of such
Lender and such Lender’s Applicable Lending Office. The Borrowers shall make all
payments under this Agreement or any other Credit Document in lawful money of
the United States and in same day or immediately available funds not later than
11:00 a.m. on the date due. The Administrative Agent shall promptly disburse to
each Lender each payment received by the Administrative Agent for the account of
such Lender.

 

(b) Date. Whenever any payment due hereunder shall fall due on a day other than
a Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall be included in the computation of interest or
fees, as the case may be.

 

(c) Default Rate. On and after the occurrence of an Event of Default, until the
time when such Event of Default shall have been cured or waived by the Required
Lenders or all

 

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the Lenders (as required by this Agreement), the Borrowers shall pay interest on
the aggregate, outstanding principal amount of all Obligations hereunder at a
per annum rate equal to the otherwise applicable interest rate plus two percent
(2.00%) or, if no such per annum rate is applicable to any such Obligations, at
a per annum rate equal to the Base Rate, plus the Applicable Margin for Base
Rate Loans (the “Default Rate”) payable on demand. Overdue interest shall itself
bear interest at the Default Rate, and shall be compounded with the principal
Obligations daily, to the fullest extent permitted by applicable Laws.

 

(d) Application of Payments. All payments hereunder shall be applied first to
unpaid fees, costs and expenses then due and payable under this Agreement or the
other Credit Documents, second to accrued interest then due and payable under
this Agreement or the other Credit Documents and finally to reduce the principal
amount of outstanding Loans and L/C Borrowings.

 

(e) Failure to Pay the Administrative Agent. Unless the Administrative Agent
shall have received notice from the Borrowing Agent at least one (1) Business
Day prior to the date on which any payment is due to the Lenders hereunder that
the Borrowers will not make such payment in full, the Administrative Agent shall
be entitled to assume that the Borrowers have made or will make such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such assumption, cause to be paid to the Lenders on such due
date an amount equal to the amount then due such Lenders. If and to the extent
the Borrowers shall not have so made such payment in full to the Administrative
Agent, each such Lender shall repay to the Administrative Agent forthwith on
demand such amount distributed to such Lender and not paid by the Borrowers,
together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Administrative Agent, at a per annum rate equal to (i) the Federal Funds Rate
for the first three (3) days and (ii) the rate applicable to Base Rate Loans
thereafter. A certificate of the Administrative Agent submitted to any Lender
with respect to any amount owing by such Lender under this Section 2.08(e) shall
be conclusive absent manifest error.

 

2.09. Loan Accounts; Notes.

 

(a) Loan Accounts. The obligation of the Borrowers to repay the Loans made to it
by each Lender and to pay interest thereon at the rates provided herein shall be
evidenced by an account or accounts maintained by such Lender on its books
(individually, a “Loan Account”), except that any Lender may request that its
Loans be evidenced by a note or notes pursuant to Section 2.09(b) and Section
2.09(c). Each Lender shall record in its Loan Accounts (i) the date and amount
of each Loan made by such Lender, (ii) the interest rates applicable to each
such Loan and each Portion thereof and the effective dates of all changes
thereto, (iii) the Interest Period for each LIBOR Loan and LIBOR Portion, (iv)
the date and amount of each principal and interest payment on each Loan and
Portion and (v) such other information as such Lender may determine is necessary
for the computation of principal and interest payable to it by the Borrowers
hereunder; provided, however, that any failure by a Lender to make, or any error
by any Lender in making, any such notation shall not affect the Borrowers’
Obligations. The Loan Accounts shall be conclusive absent manifest error with
respect to the matters noted therein. In addition to the Loan Accounts, each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and

 

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sales by such Lender of participations in Letters of Credit and Swing Line
Loans. In the event of any conflict between the accounts and records maintained
by the Administrative Agent and the accounts and records of any Lender in
respect of such matters, the accounts and records of the Administrative Agent
shall control.

 

(b) Revolving Loan Notes. If any Lender so requests, such Lender’s Revolving
Loans shall be evidenced by a promissory note (or an amended and restated
promissory note, as applicable) substantially in the form of Exhibit H
(individually, a “Revolving Loan Note”) which note shall be (i) payable to the
order of such Lender, (ii) in the amount of such Lender’s Revolving Loan
Commitment, (iii) dated the Funding Date and (iv) otherwise appropriately
completed. The Borrowers authorize each Lender to record on the schedule annexed
to such Lender’s Revolving Loan Note the date and amount of each Revolving Loan
made by such Lender and of each payment or prepayment of principal thereon made
by the Borrowers, and agrees that all such notations shall be conclusive absent
manifest error with respect to the matters noted; provided, however, that any
failure by a Lender to make, or any error by any Lender in making, any such
notation shall not affect the Borrowers’ Obligations. The Borrowers further
authorize each Lender to attach to and make a part of such Lender’s Revolving
Loan Note continuations of the schedule attached thereto as necessary. If,
because any Lender designates separate Applicable Lending Offices for Base Rate
Loans and LIBOR Loans, such Lender requests that separate promissory notes be
executed to evidence separately such Loans, then each such note shall be
substantially in the form of Exhibit H, mutatis mutandis to reflect such
division, and shall be (w) payable to the order of such Lender, (x) in the
amount of such Lender’s Commitment, (y) dated the Funding Date and (z) otherwise
appropriately completed. Such notes shall, collectively, constitute a Revolving
Loan Note.

 

(c) Term Loan Notes. If any Lender so requests, such Lender’s Term Loan shall be
evidenced by a promissory note (or an amended and restated promissory note, as
applicable) substantially in the form of Exhibit I (individually, a “Term Loan
Note”) which note shall be (i) payable to the order of such Lender, (ii) in the
amount of such Lender’s Term Loan, (iii) dated the Funding Date and (iv)
otherwise appropriately completed. If, because any Lender designates separate
Applicable Lending Offices for Base Rate Portions and LIBOR Portions, such
Lender requests that separate promissory notes be executed to evidence
separately such Portions, then each such note shall be substantially in the form
of Exhibit I, mutatis mutandis to reflect such division, and shall be (w)
payable to the order of such Lender, (x) in the amount of such Lender’s Term
Loan, (y) dated the Funding Date and (z) otherwise appropriately completed. Such
notes shall, collectively, constitute a Term Loan Note.

 

(d) Swing Line Notes. The Swing Line Lender’s Swing Line Loans shall be
evidenced by a promissory note substantially in the form of Exhibit J
(individually, a “Swing Line Note”) which note shall be (i) payable to the order
of the Swing Line Lender, (ii) in the amount of the Swing Line Lender’s Swing
Line Loans, (iii) dated the Funding Date and (iv) otherwise appropriately
completed.

 

2.10. Loan Funding.

 

(a) Lender Funding and Disbursement to the Borrowers. Each Lender shall, before
11:00 a.m. on the date of each Revolving Borrowing, make available to the

 

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Administrative Agent at the Administrative Agent’s office specified in Section
8.01, in same day or immediately available funds, such Lender’s Revolving
Proportionate Share or Term Proportionate Share, as the case may be, of such
Borrowing. After the Administrative Agent’s receipt of such funds and upon
satisfaction of the applicable conditions set forth in Section 3.02 (and, if
such Revolving Borrowing is the initial Credit Extension, Section 3.01), the
Administrative Agent shall promptly make all funds so received available to the
Borrowers in like funds as received by the Administrative Agent either by (i)
crediting the account of the Borrowers maintained on the books of the
Administrative Agent (which account shall be a joint account of the Borrowers)
with the amount of such funds or (ii) wire transfer of such funds, in each case
in accordance with instructions provided to the Administrative Agent by the
Borrowing Agent to such account; provided, however, that if, on the date of the
Borrowing there are Swing Line Loans and/or L/C Borrowings outstanding, then the
proceeds of such Borrowing shall be applied, first, to the payment in full of
any such L/C Borrowings, second, to the payment in full of any such Swing Line
Loans, and third, to the Borrowers as provided above.

 

(b) Lender Failure to Fund. Unless the Administrative Agent shall have received
notice from a Lender prior to the date of any Revolving Borrowing that such
Lender will not make available to the Administrative Agent such Lender’s
Revolving Proportionate Share of such Revolving Borrowing, the Administrative
Agent shall be entitled to assume that such Lender has made or will make such
portion available to the Administrative Agent on the date of such Revolving
Borrowing in accordance with Section 2.10(a), and the Administrative Agent may
on such date, in reliance upon such assumption, disburse or otherwise credit to
the Borrowers a corresponding amount. If any Lender does not make the amount of
its such Lender’s Revolving Proportionate Share of any Revolving Borrowing
available to the Administrative Agent on or prior to the date of such Revolving
Borrowing, such Lender shall pay to the Administrative Agent, on demand,
interest which shall accrue on such amount from the date of such Revolving
Borrowing until such amount is paid to the Administrative Agent at rates equal
to (i) the daily Federal Funds Rate during the period from the date of such
Revolving Borrowing through the third Business Day thereafter and (ii) the rate
applicable to Base Rate Loans thereafter. A certificate of the Administrative
Agent submitted to any Lender with respect to any amount owing by such Lender
under this Section 2.10(b) shall be conclusive absent manifest error with
respect to such amount. If the amount of any Lender’s Revolving Proportionate
Share of any Revolving Borrowing is not paid to the Administrative Agent by such
Lender within three (3) Business Days after the date of such Revolving
Borrowing, the Borrowers shall repay such amount to the Administrative Agent, on
demand, together with interest thereon, for each day from the date such amount
was disbursed to the Borrowers until the date such amount is repaid to the
Administrative Agent, at the interest rate applicable at the time to the Loans
comprising such Revolving Borrowing.

 

(c) Lenders’ Obligations Several. The failure of any Lender to make the Loan to
be made by it as part of any Borrowing or to fund participations in Letters of
Credit and Swing Line Loans shall not relieve any other Lender of its obligation
hereunder to make its Loan as part of such Borrowing or fund its participations
in Letters of Credit and Swing Line Loans, but no Lender shall be obligated in
any way to make any Loan or fund any participation in Letters of Credit or Swing
Line Loans which another Lender has failed or refused to make or otherwise be in
any way responsible for the failure or refusal of any other Lender to make any
Loan required

 

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to be made by such other Lender on the date of any Borrowing or to fund any
participation required to be funded by such other Lender.

 

2.11. Pro Rata Treatment.

 

(a) Borrowings, Commitment Reductions, Etc. Except as otherwise provided herein:

 

(i) Each Revolving Loan and reduction of the Total Revolving Loan Commitment
shall be made or shared among the Lenders pro rata according to their respective
Revolving Proportionate Shares;

 

(ii) The Term Loan Borrowing shall be made or shared among the Lenders pro rata
according to their respective Term Proportionate Shares;

 

(iii) Each payment of principal on Loans in any Borrowing shall be shared among
the Lenders which made or funded the Loans in such Borrowing pro rata according
to the respective unpaid principal amounts of such Loans then owed to such
Lenders;

 

(iv) Each payment of interest on Loans in any Borrowing shall be shared among
the Lenders that made or funded the Loans in such Borrowing pro rata according
to (A) the respective unpaid principal amounts of such Loans so made or funded
by such Lenders and (B) the dates on which such Lenders so made or funded such
Loans;

 

(v) Each payment of Commitment Fees shall be shared among the Lenders with
Revolving Loan Commitments (except for Defaulting Lenders) pro rata according to
(A) their respective Revolving Proportionate Shares and (B) in the case of each
Lender which becomes a Lender hereunder after the date hereof, the date upon
which such Lender so became a Lender;

 

(vi) Each payment of any fees due in connection with any amendment hereto or any
waiver of or forbearance from any Event of Default existing hereunder shall be
shared among those Lenders consenting to such amendment, waiver or forbearance
or as otherwise agreed to by such Lenders;

 

(vii) Each payment of interest (other than interest on Loans) and fees (other
than Commitment Fees) shall be shared among the Lenders and the Administrative
Agent owed the amount upon which such interest accrues pro rata according to (A)
the respective amounts so owed such Lenders and the Administrative Agent and (B)
the dates on which such amounts became owing to such Lenders and the
Administrative Agent; and

 

(viii) All other payments under this Agreement and the other Credit Documents
shall be for the benefit of the Person or Persons specified.

 

(b) Sharing of Payments, Etc. If any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of the Loans made by it, or the participations in L/C
Obligations or in Swing Line Loans held by it, in excess of its ratable share of
payments on account of the Loans and the L/C

 

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Obligations obtained by all Lenders entitled to such payments, such Lender shall
forthwith purchase from the other Lenders such participations in the Loans
and/or participations in L/C Obligations or in Swing Line Loans as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase shall
be rescinded and each other Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such other Lender’s ratable share (according to the proportion of (i) the amount
of such other Lender’s required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrowers
agree that any Lender so purchasing a participation from another Lender pursuant
to this Section 2.11(b) may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrowers in the amount of such participation.

 

2.12. Change of Circumstances.

 

(a) Inability to Determine Rates. If, on or before the first day of any Interest
Period for any LIBOR Loan or LIBOR Portion, (i) any Lender shall advise the
Administrative Agent that the LIBOR Rate for such Interest Period cannot be
adequately and reasonably determined due to the unavailability of funds in or
other circumstances affecting the London interbank market or (ii) any Lender
shall advise the Administrative Agent that the rate of interest for such Loan or
Portion, as the case may be, does not adequately and fairly reflect the cost to
such Lender of making or maintaining such LIBOR Loan or LIBOR Portion, the
Administrative Agent shall immediately give written notice of such condition to
the Borrowers and the other Lenders. After the giving of any such notice and
until the Administrative Agent shall otherwise notify the Borrowers that the
circumstances giving rise to such condition no longer exist, the Borrowers’
right to request the making of, conversion to or a new Interest Period for LIBOR
Loans or LIBOR Portions shall be suspended. Any LIBOR Loans or LIBOR Portions
outstanding at the commencement of any such suspension shall be converted at the
end of the then current Interest Period for such LIBOR Loans or LIBOR Portions
into Base Rate Loans or Base Rate Portions, as the case may be, unless such
suspension has then ended.

 

(b) Illegality. If, after the date of this Agreement, the adoption of any
Governmental Rule, any change in any Governmental Rule or the application or
requirements thereof (whether such change occurs in accordance with the terms of
such Governmental Rule as enacted, as a result of amendment or otherwise), any
change in the interpretation or administration of any Governmental Rule by any
Governmental Authority, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any Governmental Authority
(a “Change of Law”) shall make it unlawful or impossible for any Lender to make
or maintain any LIBOR Loan or LIBOR Portion, such Lender shall immediately
notify the Administrative Agent and the Borrowers in writing of such Change of
Law. Upon receipt of such notice, (i) the Borrowers’ right to request the making
of, conversion to or a new Interest Period for LIBOR Loans or LIBOR Portions
with respect to such Lender shall be terminated, and (ii) the Borrowers shall,
at the request of such Lender, either (A) pursuant to Section 2.01(d) or Section
2.02(d), as the case may be, convert any such then outstanding LIBOR Loans or
LIBOR Portions of such Lender into Base Rate Loans or Base Rate Portions, as

 

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the case may be, at the end of the current Interest Period for such LIBOR Loans
or LIBOR Portions or (B) immediately repay or convert any such LIBOR Loans or
LIBOR Portions of such Lender if such Lender shall notify the Borrowers that
such Lender may not lawfully continue to fund and maintain such LIBOR Loans or
LIBOR Portions. Any conversion or prepayment of LIBOR Loans or LIBOR Portions
made pursuant to the preceding sentence prior to the last day of an Interest
Period for such LIBOR Loans or LIBOR Portions shall be deemed a prepayment
thereof for purposes of Section 2.14. After any Lender notifies the
Administrative Agent and the Borrowers of such a Change of Law and until such
Lender notifies the Administrative Agent and the Borrowers that it is no longer
unlawful or impossible for such Lender to make or maintain a LIBOR Loan or LIBOR
Portion, (such notice to be given promptly in writing to the Administrative
Agent and the Borrowers at such time as it is no longer unlawful or impossible
for such Lender to make or maintain a LIBOR Loan or LIBOR Portion), all
Revolving Loans and all Portions of the Term Loan of such Lender shall be Base
Rate Loans and Base Rate Portions, respectively.

 

(c) Increased Costs. If, after the date of this Agreement, any Change of Law:

 

(i) Shall subject any Lender to any tax, duty or other charge with respect to
any LIBOR Loan or LIBOR Portion, or shall change the basis of taxation of
payments by the Borrowers to any Lender on such a LIBOR Loan or LIBOR Portion or
in respect to such a LIBOR Loan or LIBOR Portion under this Agreement (except
for changes in the rate of taxation on the overall net income of any Lender
imposed by its jurisdiction of incorporation or the jurisdiction in which its
principal executive office or Applicable Lending Office is located); or

 

(ii) Shall impose, modify or hold applicable any reserve (excluding any Reserve
Requirement or other reserve to the extent included in the calculation of the
LIBOR Rate for any Loans or Portions), special deposit or similar requirement
against assets held by, deposits or other liabilities in or for the account of,
advances or loans by, or any other acquisition of funds by any Lender for any
LIBOR Loan or LIBOR Portion; or

 

(iii) Shall impose on any Lender any other condition related to any LIBOR Loan
or LIBOR Portion or such Lender’s Commitments;

 

and the effect of any of the foregoing is to increase the cost to such Lender of
making, renewing, or maintaining any such LIBOR Loan or LIBOR Portion or its
Commitments or to reduce any amount receivable by such Lender hereunder; then
the Borrowers shall from time to time, within five (5) Business Days after
demand by such Lender, pay to such Lender additional amounts sufficient to
reimburse such Lender for such increased costs or to compensate such Lender for
such reduced amounts. A certificate setting forth in reasonable detail the
amount of such increased costs or reduced amounts, submitted by such Lender to
the Borrowers shall be conclusive absent manifest error.

 

(d) Capital Requirements. If, after the date of this Agreement, any Lender
determines that (i) any Change of Law affects the amount of capital required or
expected to be maintained by such Lender or any Person controlling such Lender
(a “Capital Adequacy Requirement”) and (ii) the amount of capital maintained by
such Lender or such Person which is attributable to or based upon the Loans, the
Letters of Credit, the Commitments or this

 

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Agreement must be increased as a result of such Capital Adequacy Requirement
(taking into account such Lender’s or such Person’s policies with respect to
capital adequacy), the Borrowers shall pay to such Lender or such Person, within
ten (10) Business Days after demand of such Lender (which demand shall be
accompanied by the certificate referred to below), such amounts as such Lender
or such Person shall determine are necessary to compensate such Lender or such
Person for the increased costs to such Lender or such Person of such increased
capital. A certificate setting forth in reasonable detail the amount of such
increased costs, submitted by any Lender to the Borrowers shall be conclusive
absent manifest error. The obligations of the Borrowers under this Section
2.12(d) shall survive the payment and performance of the Obligations and the
termination of this Agreement. Notwithstanding the foregoing, the Borrowers
shall not be required to compensate a Lender pursuant to this Section 2.12(d)
for any increased costs incurred more than 180 days prior to the date that such
Lender notifies the Borrowers of the Change in Law giving rise to such increased
costs and of such Lender’s intention to claim compensation therefor.

 

(e) Notice, Reasonable Commercial Efforts. Any Lender which becomes aware of (i)
any Change of Law that will make it unlawful or impracticable for such Lender to
make or maintain any LIBOR Loan or LIBOR Portion or (ii) any Change of Law or
other event or condition that will obligate a Borrower to pay any amount
pursuant to Section 2.12(c) or Section 2.12(d) shall notify the Borrowers and
the Administrative Agent thereof as promptly as practical. If any Lender has
given notice of any such Change of Law or other event or condition and
thereafter becomes aware that such Change of Law or other event or condition has
ceased to exist, such Lender shall notify the Borrowers and the Administrative
Agent thereof as promptly as practical. Each Lender affected by any Change of
Law which makes it unlawful or impracticable for such Lender to make or maintain
any LIBOR Loan or LIBOR Portion or to which a Borrower is obligated to pay any
amount pursuant to Section 2.12(c) or Section 2.12(d) shall use reasonable
commercial efforts (including changing the jurisdiction of its Applicable
Lending Office) to avoid the effect of such Change of Law or to avoid or
materially reduce any amounts which a Borrower is obligated to pay pursuant to
Section 2.12(c) or Section 2.12(d) if, in the reasonable opinion of such Lender,
such efforts would not be disadvantageous to such Lender or contrary to such
Lender’s normal lending practices.

 

2.13. Taxes on Payments.

 

(a) Except as otherwise expressly provided in this Section 2.13, any and all
payments by the Borrowers in respect of principal or interest on any Loan, fee,
or other Obligation or other amount due to any Lender under this Agreement shall
be made free and clear of, and without deduction for, any and all present or
future United States federal, state or local and foreign taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
including withholding taxes imposed by the United States, any jurisdiction under
the laws of which a Borrower is organized, and other jurisdiction or any
political subdivision thereof, but excluding (i) taxes imposed on such Lender’s
overall net income and franchise taxes imposed on such Lender by the United
States or the jurisdiction of such Lender’s Applicable Lending Office or any
political subdivision thereof and (ii) any branch profits taxes imposed on any
Lender by the United States or by the jurisdiction of such Lender’s Applicable
Lending Office or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
referred to herein as “Taxes”). If a

 

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Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender, then (i) subject to the last sentence of
Section 2.13(f), the sum payable shall be increased by the amount necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.13) such Lender shall receive an
amount equal to the sum it would have received had no such deductions been made,
(ii) such Borrower shall make all required deductions and (iii) such Borrower
shall pay the full amount deducted to the relevant taxing authority or other
Governmental Authority in accordance with applicable law (other than with
respect to income taxes for which such Lender(s) are entitled to receive a
credit from the relevant taxing authority).

 

(b) In addition, the Borrowers agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Credit Document (hereinafter referred to as “Other Taxes”).

 

(c) Subject to the last sentence of Section 2.13(f), the Borrowers will
indemnify the Administrative Agent and each Lender for the full amount of Taxes
or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction
on amounts payable under this Section 2.13) paid by such Lender, and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Such indemnification shall be made within 30 days following
the date such Lender makes written demand therefor accompanied by documentation
evidencing payment of such Taxes or Other Taxes.

 

(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld hereunder (and, with respect to any Taxes or Other Taxes not so
withheld, to the extent available), the Borrowers will furnish to the
Administrative Agent, at its address set forth in Section 8.01, the original or
a certified copy of a receipt evidencing payment thereof.

 

(e) Without prejudice to the survival of any other agreement contained herein,
the agreements and obligations contained in this Section 2.13 shall survive the
payment in full of principal, interest and all other Obligations hereunder.

 

(f) Each Lender that is organized under the laws of a jurisdiction outside the
United States of America agrees that if and to the extent it is legally able to
do so, it shall deliver to the Borrowers and the Administrative Agent, on or
before the first date of any payment by the Borrowers hereunder, such
certificates, documents or other evidence, as required by the Internal Revenue
Code or Treasury Regulations issued pursuant thereto, including Internal Revenue
Service Form W-8BEN or W-8ECI (as applicable to it) and any other certificate or
statement or exemption required by Treasury Regulation section 1.1441-1(a) or
section 1.1441-6(c) or any subsequent version thereof, properly completed and
duly executed by such Lender establishing that such payment is (i) not subject
to withholding under the Internal Revenue Code because such payment is
effectively connected with the conduct by such Lender of a trade or business in
the United States of America or (ii) totally exempt from United States
withholding tax or subject to a reduced rate of such tax under a provision of an
applicable tax treaty. Each Lender that has delivered such certificate or form
shall, upon such certificate or form’s obsolescence, expiration

 

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or invalidity or upon the Borrowers’ reasonable request, replace or update such
certificate or form as necessary. Within 30 days after the reasonable request of
a Borrower or the Administrative Agent, each Lender that is not a foreign Lender
shall deliver to the Borrowers and the Administrative Agent one or more Internal
Revenue Service Forms W-9. Each Lender shall promptly notify the Borrowers and
the Administrative Agent upon the obsolescence, expiration or invalidity of any
form previously delivered by such Lender pursuant to this paragraph. A Lender
shall not be entitled to any additional amounts under Section 2.13(a) or to any
indemnification under Section 2.13(c) with respect to any Tax (x) that is in
effect and would apply to amounts payable to such Lender, at the time such
Lender becomes a party to this Agreement by assignment or designates a new
Applicable Lending Office, except to the extent that (a) in the case of a Lender
who becomes a Lender by assignment, the assignor of such Lender at the time of
assignment, or (b) in the case of a designation of a new Applicable Lending
Office, such Lender immediately prior to such designation, would have been
entitled to receive additional amounts or indemnity from the Borrowers with
respect to any withholding tax pursuant to Section 2.13(a) or Section 2.13(c),
(y) that is attributable to such Lender’s failure to comply with this Section
2.13(f) or Section 2.13(g) or (z) has already been reimbursed to such Lender
pursuant to the terms of Section 2.12(c).

 

(g) Each Lender that is entitled to an exemption from or reduction of non-U.S.
withholding tax or other tax under the law of the jurisdiction in which the
Borrowers are located, or any treaty to which such jurisdiction is a party, with
respect to any payments under this Agreement shall deliver to the Borrowers and
the Administrative Agent, at the time or times prescribed by applicable law or
reasonably requested by the Borrowers, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or other Tax or at a reduced rate, provided that such
Lender is legally entitled to complete, execute and deliver such documentation
and, in such Lender’s sole judgment, such completion, execution or delivery
would not materially prejudice the legal position of such Lender or be contrary
to its internal policies.

 

(h) Any Lender claiming any additional amounts in respect of Taxes payable
pursuant to this Section 2.13 shall use reasonable efforts (consistent with
legal and regulatory restrictions and such Lender’s internal policies) to file
any certificate or document requested by the Borrowers or to change its
Applicable Lending Office to another of its offices, branches or Affiliates, if
the making of such a filing or change of Applicable Lending Office would avoid
the need for or reduce the amount of any such Taxes attributable to the Loans
and would not, in the sole determination of such Lender, result in any
unreimbursed loss, cost or expense or otherwise be disadvantageous to such
Lender.

 

(i) Nothing contained in this Section 2.13 shall require any Lender or the
Administrative Agent to make available any of its tax returns or any other
information that it deems to be confidential or proprietary.

 

2.14. Funding Loss Indemnification. If the Borrowers shall (a) repay, prepay or
convert any LIBOR Loan or LIBOR Portion on any day other than the last day of an
Interest Period therefor (whether a scheduled payment, an optional prepayment or
conversion, a mandatory prepayment or conversion, a payment upon acceleration or
otherwise), (b) fail to borrow any LIBOR Loan or LIBOR Portion for which a
Notice of Borrowing has been delivered to the

 

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Administrative Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise) or (c) fail to convert any Revolving Loans
into LIBOR Loans or any Portion of a Term Loan into a LIBOR Portion in
accordance with a Notice of Conversion delivered to the Administrative Agent
(whether as a result of the failure to satisfy any applicable conditions or
otherwise), the Borrowers shall pay to the appropriate Lender within five (5)
Business Days after demand a prepayment fee, failure to borrow fee or failure to
convert fee, as the case may be (determined as though 100% of the LIBOR Loan or
LIBOR Portion had been funded in the London interbank eurodollar currency
market) equal to the sum of:

 

(a) $250; plus

 

(b) the amount, if any, by which (i) the additional interest would have accrued
on the amount prepaid or not borrowed at the LIBOR Rate plus the Applicable
Margin for LIBOR Loans if that amount had remained or been outstanding through
the last day of the applicable Interest Period exceeds (ii) the interest that
such Lender could recover by placing such amount on deposit in the London
interbank eurodollar currency market for a period beginning on the date of the
prepayment or failure to borrow and ending on the last day of the applicable
Interest Period (or, if no deposit rate quotation is available for such period,
for the most comparable period for which a deposit rate quotation may be
obtained); plus

 

(c) all out-of-pocket expenses reasonably incurred by such Lender reasonably
attributable to such payment, prepayment or failure to borrow.

 

Each Lender’s determination of the amount of any prepayment fee payable under
this Section 2.14 shall be conclusive in the absence of manifest error. The
obligations of the Borrowers under this Section 2.14 shall survive the payment
and performance of the Obligations and the termination of this Agreement.

 

2.15. Security.

 

(a) Security Documents. The Loans, together with all other Obligations, shall be
secured by the Liens created by the Security Documents. So long as the terms
thereof are in compliance with this Agreement, each Lender Rate Contract shall
be secured by the Lien of the Security Documents (a) on a pari passu basis to
the extent of the associated Termination Value, and (b) to the extent of any
excess, on a basis which is in all respects subordinated to all other
Obligations.

 

(b) Further Assurances. The Borrowers shall deliver, and shall cause each
Guarantor to deliver, to the Administrative Agent such additional mortgages,
deeds of trust, security agreements, pledge agreements, Control Agreements,
lessor consents and estoppels (containing appropriate mortgagee and lender
protection language) and other instruments, agreements, certificates, opinions
and documents (including Uniform Commercial Code financing statements, fixture
filings and landlord waivers) as the Administrative Agent may request to:

 

(i) Grant, perfect, maintain, protect and evidence security interests in favor
of the Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, in any or all present and future real and personal property of the
Borrowers and the Guarantors

 

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which would constitute Collateral under the Security Documents prior to the
Liens or other interests of any Person, except for Permitted Liens; and

 

(ii) Otherwise establish, maintain, protect and evidence the rights provided to
the Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, pursuant to the Security Documents.

 

The Borrowers shall fully cooperate with the Administrative Agent and the
Lenders and perform all additional acts requested by the Administrative Agent or
any Lender to effect the purposes of this Section 2.15.

 

2.16. Replacement of the Lenders. If (a) any Lender shall become a Defaulting
Lender more than one (1) time in a period of twelve (12) consecutive months, (b)
any Lender shall continue as a Defaulting Lender for more than five (5) Business
Days at any time, (c) any Lender shall suspend its obligation to make or
maintain LIBOR Loans or LIBOR Portions pursuant to Section 2.12(b) for a reason
which is not applicable to any other Lender, (d) any Lender shall demand any
payment under Section 2.12(c), 2.12(d) or 2.13(a) for a reason which is not
applicable to any other Lender or (e) any Borrower shall receive a notice from
any applicable Governmental Authority that a Lender is no longer qualified or
suitable to make Loans to such Borrower under the applicable Gaming Laws (and
such Lender is notified by such Borrower and the Administrative Agent in writing
of such disqualification), including because such Lender has been denied a
license, qualification or finding of suitability or has failed to deliver
information required under the applicable Gaming Laws, then the Administrative
Agent may (or upon the written request of the Borrowers, shall) replace such
Lender (the “affected Lender”), or cause such affected Lender to be replaced,
with another lender (the “replacement Lender”) satisfying the requirements of an
Assignee Lender under Section 8.05(c), by having the affected Lender sell and
assign all of its rights and obligations under this Agreement and the other
Credit Documents (including for purposes of this Section 2.16, participations in
L/C Obligations and in Swing Line Loans) to the replacement Lender pursuant to
Section 8.05(c); provided, however, that if the Borrowers seek to exercise such
right, it must do so within ninety (90) days after it first knows of the
occurrence of the event or events giving rise to such right, and neither the
Administrative Agent nor any Lender shall have any obligation to identify or
locate a replacement Lender for the Borrowers (it being expressly agreed that in
such circumstances it is the Borrowers’ obligation to identify or locate a
replacement Lender that is an Eligible Assignee and is reasonably acceptable to
the Administrative Agent). Upon receipt by any affected Lender of a written
notice from the Administrative Agent stating that the Administrative Agent is
exercising the replacement right set forth in this Section 2.16, such affected
Lender shall sell and assign all of its rights and obligations under this
Agreement and the other Credit Documents (including for purposes of this Section
2.16, participations in L/C Obligations and in Swing Line Loans) to the
replacement Lender pursuant to an Assignment Agreement and Section 8.05(c) for a
purchase price equal to the sum of the principal amount of the affected Lender’s
Loans so sold and assigned (or such other amount is agreed to by such affected
Lender and such replacement Lender), all accrued and unpaid interest thereon and
its ratable share of all fees to which it is entitled.

 

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2.17. Lending Offices; Mitigation Obligations.

 

(a) Right to Designate Lending Offices. Subject to subsection (b) below, each
Lender shall have the right at any time and from time to time to designate a
different office of such Lender as its Domestic Lending office and/or its
Euro-Dollar Lending Office, provided that such Lender shall promptly notify the
Administrative Agent and the Borrowers in writing of any such designation.

 

(b) Mitigation Obligations. If the Borrowers are required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Sections 2.12(c), 2.12(d) or 2.13(a), then such Lender shall use
reasonable commercial efforts to designate a Domestic Lending office or its
Euro-Dollar Lending Office for funding or booking its Loans, Portions or
obligations in respect of Letters of Credit (or any participation therein)
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or Affiliates, if, in the reasonable judgment of such Lender,
such designation or assignment (i) would eliminate or materially reduce amounts
payable pursuant to Sections 2.12(c), 2.12(d) or 2.13(a), as applicable, in the
future and (ii) would not subject the Administrative Agent, the L/C Issuer or
such Lender or any of its Affiliates to any unreimbursed cost or expense and
would not otherwise be disadvantageous to the Administrative Agent, the L/C
Issuer or such Lender or any of its Affiliates.

 

ARTICLE III. CONDITIONS PRECEDENT.

 

3.01. Conditions Precedent to Effectiveness of Amendment and Restatement. The
effectiveness of the amendment and restatement of the Existing Credit Agreement
in accordance with the terms of this Agreement is subject to: (i) in the case of
all conditions listed below which can be satisfied by the delivery of
documentation or other items by the Borrowers, receipt by the Administrative
Agent of such documentation or other items, each in form and substance
satisfactory to the Administrative Agent and each Lender, and with sufficient
copies for, the Administrative Agent and each Lender and (ii) in the case of all
other conditions listed below, the Administrative Agent’s determination that
such conditions have been satisfied; the first date on which all such conditions
have been satisfied shall hereinafter be referred to as the “Funding Date”:

 

(a) Principal Credit Documents.

 

(i) Delivery of this Agreement, duly executed by the Borrowers, each Lender, the
L/C Issuer, the Swing Line Lender and the Administrative Agent;

 

(ii) A Revolving Loan Note payable to each Lender requesting such a note, each
duly executed by the Borrowers;

 

(iii) A Term Loan Note payable to each Lender requesting such a note, each duly
executed by the Borrowers;

 

(iv) A Swing Line Note payable to the Swing Line Lender in the principal amount
of the Swing Line Sublimit, duly executed by the Borrowers;

 

(v) The Guaranty, duly executed by each Guarantor;

 

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(vi) The Collateral Certificate, duly executed by the Borrowers;

 

(vii) The Security Agreement, duly executed by the Borrowers;

 

(viii) The Intellectual Property Security Agreement, duly executed by the
Borrowers;

 

(ix) Pledge Agreement, duly executed by the Borrowers; and

 

(x) The Guarantor Security Agreement, duly executed by the Guarantors.

 

(b) Borrowers Organizational Documents. A certificate of the Secretary or an
Assistant Secretary of each of the Borrowers, dated the Funding Date (A)
certifying that attached thereto is the certificate of incorporation or articles
of incorporation of such Borrower, certified as of a recent date prior to the
Funding Date by the Secretary of State of such Borrower’s state of
incorporation; (B) certifying that attached thereto is a true and correct copy
of the bylaws of such Borrower as in effect on the Funding Date; (C) certifying
that there are no proceedings for the dissolution or liquidation of such
Borrower; (D) certifying that attached thereto are true and correct copies of
resolutions duly adopted by the board of directors of such Borrower and
continuing in effect, which authorize the execution, delivery and performance by
such Borrower of this Agreement and the other Credit Documents executed or to be
executed by such Borrower and the consummation of the transactions contemplated
hereby and thereby, (E) attaching certificates of good standing (or comparable
certificates) for such Borrower, certified as of a recent date prior to the
Funding Date by the Secretaries of State (or comparable official) of such
Borrower’s state of incorporation and each other state in which such Borrower is
qualified to do business; and (F) attaching certificates of the Franchise Tax
Board, Secretary of State or comparable official of the state of Nevada and each
other state in which such Borrower is qualified to do business, dated as of a
date close to the Funding Date, stating that such Borrower is in good tax
standing under the laws of such states.

 

(c) Guarantor Organizational Documents. A certificate of the Secretary or an
Assistant Secretary of each of each Guarantor, dated the Funding Date (A)
certifying that attached thereto is the certificate of incorporation or articles
of incorporation of such Guarantor, certified as of a recent date prior to the
Funding Date by the Secretary of State of such Guarantor’s state of
incorporation; (B) certifying that attached thereto is a true and correct copy
of the bylaws of such Guarantor as in effect on the Funding Date; (C) certifying
that there are no proceedings for the dissolution or liquidation of such
Guarantor; (D) certifying that attached thereto are true and correct copies of
resolutions duly adopted by the board of directors of such Guarantor and
continuing in effect, which authorize the execution, delivery and performance by
such Guarantor of this Agreement and the other Credit Documents executed or to
be executed by such Guarantor and the consummation of the transactions
contemplated hereby and thereby, (E) attaching certificates of good standing (or
comparable certificates) for such Guarantor, certified as of a recent date prior
to the Funding Date by the Secretaries of State (or comparable official) of such
Guarantor’s state of incorporation and each other state in which such Guarantor
is qualified to do business; and (F) attaching certificates of the Franchise Tax
Board, Secretary of State or comparable official of the state of California or
Nevada, as applicable, and each other

 

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state in which such Guarantor is qualified to do business, dated as of a date
close to the Funding Date, stating that such Guarantor is in good tax standing
under the laws of such states.

 

(d) Financial Statements, Financial Condition, Etc.

 

(i) To the extent not already provided, a copy of the unaudited Financial
Statements of the Borrowers for the fiscal quarters ended March 31, 2005 and
June 30, 2005 and for the fiscal year to such date (prepared on a consolidated
and consolidating basis), in each case certified by the chief financial officer
of each such Borrower to present fairly the financial condition, results of
operations and other information reflected therein and to have been prepared in
accordance with GAAP (subject to normal year-end audit adjustments);

 

(ii) Such financial and other information relating to the Acquisition as the
Administrative Agent or any Lender shall reasonably require.

 

(iii) A copy of the most recently completed annual report (Form 5500 Series)
filed with the Internal Revenue Service with respect to each Employee Benefit
Plan of the Borrowers and their Subsidiaries, certified by a senior officer of
the Borrowers;

 

(iv) A copy of the budget and projected financial statements of the Loan Parties
by fiscal year for each of the fiscal years through the Revolving Loan Maturity
Date, including, in each case, projected balance sheets, statements of income
and retained earnings and statements of cash flow of the Loan Parties, all in
reasonable detail and acceptable to the Administrative Agent;

 

(v) Such other financial, business and other information regarding the Borrowers
or any of their Subsidiaries as the Administrative Agent, the L/C Issuer, the
Swing Line Lender or any Lender may reasonably request, including information as
to possible contingent liabilities, tax matters, environmental matters and
obligations for employee benefits and compensation.

 

(e) Collateral Documents.

 

(i) Such Uniform Commercial Code financing statements and fixture filings naming
each Borrower as debtor (appropriately completed) shall have been filed in such
jurisdictions as the Administrative Agent may request to perfect the Liens
granted to the Lenders in this Agreement, the Security Documents and the other
Credit Documents;

 

(ii) Such Uniform Commercial Code termination statements (appropriately
completed) shall have been filed in such jurisdictions as the Administrative
Agent may request to terminate any financing statement evidencing Liens of other
Persons in the Collateral which are prior to the Liens granted to the Lenders in
this Agreement, the Security Documents and the other Credit Documents, except
for any such prior Liens which are expressly permitted by this Agreement to be
prior;

 

(iii) Uniform Commercial Code search certificates from the jurisdictions in
which Uniform Commercial Code financing statements are to be filed pursuant to
subsection (e)(i) above or such other jurisdictions as the Administrative Agent
deems necessary

 

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reflecting no other financing statements or filings which evidence Liens of
other Persons in the Collateral which are prior to the Liens granted to the
Lenders in this Agreement, the Security Documents and the other Credit
Documents, except for any such prior Liens (a) which are expressly permitted by
this Agreement to be prior or (b) for which the Administrative Agent has
received a termination statement pursuant to subsection (e)(ii) above;

 

(iv) Such additional searches as the Administrative Agent may request in
connection with the perfection of any security interest or the recording of any
real estate documents, including judgment searches, litigation searches, tax
lien searches, bankruptcy searches or any other searches deemed necessary by the
Administrative Agent in its discretion;

 

(v) The stock certificates representing all of the outstanding Equity Securities
owned by the Borrowers and each Subsidiary of a Borrower, in each case pledged
to the Administrative Agent and the Lenders pursuant to the Security Agreement
(or any other pledge or security agreement), together with undated stock powers
duly executed by the applicable Borrower in blank and attached thereto to the
extent not previously delivered;

 

(vi) A Control Agreement with each bank at which a Borrower maintains a deposit
account in the United States of America, each appropriately completed, duly
executed by such Borrower, and the Administrative Agent and acknowledged by the
depositary bank to which addressed;

 

(vii) A Control Agreement with each securities intermediary at which a Borrower
maintains a securities account in the United States of America, each
appropriately completed, duly executed by such Borrower, and the Administrative
Agent and acknowledged by the securities intermediary to which addressed to the
extent not previously delivered;

 

(viii) The Deeds of Trust, or modifications thereto, as applicable, shall have
each been duly executed and recorded in all appropriate jurisdictions;

 

(ix) The Depot Casino Assignment and the Red Hawk Assignment shall have been
duly executed and recorded in all appropriate jurisdictions;

 

(x) ALTA standard coverage Lender’s policies of title insurance and/or
endorsement(s) to the Existing Title Insurance Policy, as the Administrative
Agent shall determine in its sole discretion (or commitments therefor) insuring
the validity and priority of each of the Deeds of Trust (subject only to such
exceptions as the Administrative Agent may approve), in such amounts and with
such endorsements as the Administrative Agent may require, issued by a title
insurer acceptable to the Administrative Agent, together with such policies of
co-insurance or re-insurance (or commitments therefor) as the Administrative
Agent may require;

 

(xi) Preliminary title reports or lot book guarantees issued by a title insurer
acceptable to the Administrative Agent with respect to the property listed in
Schedule 4.01(h);

 

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(xii) Phase I environmental reports or such other environmental reports or
updates to environmental reports as the Administrative Agent requests, for the
Depot Casino Real Property and the Red Hawk Real Property;

 

(xiii) A certificate of the Borrowers certifying that, to their knowledge, the
Borrowers and their Subsidiaries possess all material environmental permits
necessary for the conduct of their respective businesses; and

 

(xiv) Such other documents, instruments and agreements as the Administrative
Agent may reasonably request to establish and perfect the Liens granted to the
Administrative Agent or any Lender in this Agreement, the Security Documents and
the other Credit Documents.

 

(f) Opinions.

 

(i) A favorable written opinion from Bible, Hoy & Trachok, special counsel for
the Borrowers, dated the Funding Date, addressed to the Administrative Agent for
the benefit of the Administrative Agent and the Lenders covering such legal
matters as the Administrative Agent may request and otherwise in form and
substance satisfactory to the Administrative Agent; and

 

(g) Conditions Related to the Acquisition.

 

(i) With respect to the Acquisition, the purchase price shall not exceed
$10,715,000, the Borrowers shall not undertake any undue risk in the reasonable
determination of the Administrative Agent, there shall have been no material
adverse change in Depot Casino or Red Hawk or their respective businesses since
June 30, 2004, and such other conditions to the closing of the Acquisition as
are set forth in the Depot Red Hawk Purchase Agreement, and Dayton Gaming shall
have been satisfied or waived, which waiver shall have been approved by the
Administrative Agent and the Required Lenders, and no event or circumstance
known to the Borrowers exists that would prevent or reduce the likelihood of the
consummation of the Acquisition on the date set forth in the Depot Red Hawk
Purchase Agreement, all as evidenced by a certificate executed by a Responsible
Officer of Dayton Gaming;

 

(ii) There shall not exist (a) any order, decree, judgment, ruling or injunction
which restrains the consummation of the Acquisition in the manner contemplated
by the Acquisition Documents, or (b) any pending or threatened action, suit,
investigation or proceeding which, in the Administrative Agent’s reasonable
judgment, is expected to materially and adversely affect the Borrowers and their
subsidiaries, taken as a whole, or the ability of Dayton Gaming and either Depot
Casino or Red Hawk to consummate the Acquisition in the manner contemplated by
the Acquisition Documents, or the ability of the Borrowers and their
Subsidiaries to perform their respective material obligations under the Credit
Documents or the ability of Administrative Agent or the Lenders to exercise
their rights thereunder;

 

(iii) All governmental, shareholder and third party consents (including
Hart-Scott Rodino clearance) and approvals necessary in connection with the
Acquisition and the other transactions contemplated by the Acquisition Documents
shall have been obtained; all such consents and approvals shall be in force and
effect; and all applicable waiting periods shall have

 

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expired without any action being taken by any authority that could, in the
Administrative Agent’s reasonable judgment, be expected to restrain, prevent or
impose any material adverse conditions on the Acquisition or such other
transactions, and no law or regulation shall be applicable which in the
reasonable judgment of Administrative Agent could have such effect; and

 

(iv) The Administrative Agent shall have received audited Financial Statements
for Depot Casino for the fiscal years ending December 31, 2002, December 31,
2003 and December 31, 2004 and unaudited Financial Statements for Red Hawk for
the fiscal years ending December 31, 2002, December 31, 2003 and December 31,
2004.

 

(h) Other Items.

 

(i) A duly completed Notice of Revolving Loan Borrowing in the event that a
Revolving Borrowing is to be made on the Funding Date;

 

(ii) A duly completed Notice of Term Loan Borrowing in the event that a Term
Loan Borrowing is to be made on the Funding Date;

 

(iii) Original certificates of insurance, lender loss payable and mortgagee
endorsements naming the Administrative Agent as mortgagee, lender loss payee and
additional insured, as required by Section 5.01(d) of this Agreement;

 

(iv) Evidence that all existing Indebtedness (excluding the Existing Credit
Agreement) of the Loan Parties has been or concurrently with the Funding Date is
being repaid in full (other than Indebtedness described on Schedule 5.02(a));

 

(v) The Permitted Subordinated Indebtedness shall have been subordinated to the
Obligations on terms satisfactory to the Administrative Agent and the Lenders,
including payment and remedy blockage provisions upon the occurrence of a
Default or Event of Default;

 

(vi) No event or circumstance shall have occurred that has resulted or could
result in a material adverse change in the business, assets, operations,
condition (financial or otherwise) or prospects of the Borrowers and their
Subsidiaries (taken as a whole);

 

(vii) Evidence that no material disruption of or a material adverse change in
conditions in the financial, banking or capital markets shall have occurred
which the Administrative Agent, in either of their sole discretion, deems
material in connection with its ability to syndicate the Revolving Loan
Commitment or Term Loan Commitment;

 

(viii) There shall not exist any pending or threatened action, suit,
investigation or proceeding, which, if adversely determined, could materially
and adversely affect the Loan Parties, any transaction contemplated hereby or
the ability of any Loan Party to perform its obligations under the Credit
Documents or the ability of the Lenders to exercise their rights thereunder;

 

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(ix) Copies of all Rate Contracts to which the Borrowers or any Subsidiary of a
Borrower is a party;

 

(x) An organization chart for the Borrowers and their Subsidiaries, setting
forth the relationship among such Persons, certified by an the Secretary or an
Assistant Secretary of each of the Borrowers;

 

(xi) Each Loan Party has obtained all Governmental Authorizations and all
consents of other Persons, in each case that are necessary or advisable to have
been obtained prior to the Funding Date in connection with the transactions
herein and all Governmental Authorizations and all consents of other Persons
material to the continued operation of the business conducted by the Loan
Parties in substantially the same manner as conducted prior to the Funding Date.
Each such Governmental Authorization or consent is in full force and effect,
except in a case where the failure to obtain or maintain a Governmental
Authorization or consent, either individually or in the aggregate, could not
have a Material Adverse Effect. All applicable waiting periods have expired
without any action being taken or threatened by any competent authority that
would restrain, prevent or otherwise impose adverse conditions on the
transactions contemplated by the Credit Documents. No action, request for stay,
petition for review or rehearing, reconsideration, or appeal with respect to any
of the foregoing is pending, and the time for any applicable Governmental
Authority to take action to set aside its consent on its own motion has expired;

 

(xii) The Borrowers shall be in compliance with all of the financial covenants
contained in Section 5.03 hereof for the most recent period for which financial
information is available (the “Test Period”), on a pro forma basis, based upon
the assumptions that: (i) the Acquisition was consummated on the first day of
the Test Period, (ii) an amount equal to the purchase price for the Acquisition
was borrowed as a loan by the Borrowers on the first day of the Test Period,
(iii) the applicable interest rate for such amount advanced under clause (ii)
hereof was the average term loan interest rate under the Existing Credit
Agreement in effect during the Test Period and (iv) scheduled amortization
payments were due with respect to such amount advanced under clause (ii) hereof
on dates and in amounts consistent with the percentages used to derive the
amortization schedule for the “Term Loans” under and as defined in the Existing
Credit Agreement.

 

(xiii) A certificate of a Responsible Officer of the Borrowers, addressed to the
Administrative Agent and dated the Funding Date, certifying that:

 

(A) The representations and warranties set forth in Article IV and in the other
Credit Documents are true and correct in all material respects as of such date
(except for such representations and warranties made as of a specified date,
which shall be true as of such date);

 

(B) No Default has occurred and is continuing as of such date; and

 

(C) The conditions set forth in Section 3.01(g)(i) and Section 3.01(h)(xii) have
been satisfied;

 

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(xiv) A certified copy of each of the Material Documents, duly executed by each
party thereto;

 

(xv) All fees and expenses payable to the Administrative Agent and the Lenders
on or prior to the Funding Date (including all fees payable to the
Administrative Agent pursuant to the Administrative Agent’s Fee Letter);

 

(xvi) All customary fees and expenses of counsel to the Administrative Agent
through the Funding Date; and

 

3.02. Conditions Precedent to each Credit Event. The occurrence of each Credit
Event (including the initial Credit Event) is subject to the further conditions
that:

 

(a) The Borrowers shall have delivered to the Administrative Agent and, if
applicable, the L/C Issuer or the Swing Line Lender, the Notice of Borrowing,
Letter of Credit Application, Notice of Conversion or Notice of Interest Period
Selection, as the case may be, for such Credit Event in accordance with this
Agreement; and

 

(b) On the date such Credit Event is to occur and after giving effect to such
Credit Event, the following shall be true and correct:

 

(i) The representations and warranties of the Loan Parties set forth in Article
IV and in the other Credit Documents are true and correct in all material
respects as if made on such date (except for representations and warranties
expressly made as of a specified date, which shall be true as of such date);

 

(ii) No Default has occurred and is continuing or will result from such Credit
Event;

 

(iii) No material adverse change in the business, assets, operations, condition
(financial or otherwise) or prospects of the Loan Parties (taken as a whole)
having occurred since the date of latest audited financial statements delivered
to the Administrative Agent and the Lenders prior to the date of this Agreement;
and

 

(iv) All of the Credit Documents are in full force and effect.

 

The submission by the Borrowers to the Administrative Agent of each Notice of
Borrowing and each Letter of Credit Application shall be deemed to be a
representation and warranty by the Borrowers that each of the statements set
forth above in this Section 3.02(b) is true and correct as of the date of such
notice.

 

3.03. Post Closing Items. The Borrowers agree that the following items shall be
delivered or effected not later than November 30, 2005 (or such other time as is
provided in subsection (d) below) and the failure to so deliver or effect all
such items by such date shall constitute an immediate Event of Default hereunder
(provided, that any of such items may be waived or modified by the
Administrative Agent, acting at the direction of the Required Lenders):

 

(a) A copy of the Red Hawk NDOT Lease which shall be on substantially the same
terms and conditions as, and in substitution for, that certain Multi Use Lease
of the Red Hawk NDOT Parcel between NDOT, as lessor, and Cletus F. Wandler and
Georgette Wandler as lessee, which was recorded in the Official Records of Lyon
County on May 28, 2002 in Book as document number 277418.

 

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(b) The Red Hawk NDOT Consent shall have each been executed by all of the
parties thereto, and shall have been delivered to Administrative Agent.

 

(c) With respect to Section 3.01(c), as such section relates to CPLTD, the
certificate of good standing from the Secretary of State and the certificate of
the Franchise Tax Board of the state of California shall have been delivered to
the Administrative Agent.

 

(d) To the extent not already provided, a copy of the audited Financial
Statements of the Borrowers for the fiscal year ended June 30, 2005 (prepared on
a consolidated basis), prepared by Deloitte & Touche LLP or such other certified
public accountant as the Borrowers, the Administrative Agent deem acceptable and
a copy of the unqualified opinion delivered by such accountants in connection
with such Financial Statements; provided, however, that such items shall be
received by the Administrative Agent within one hundred five (105) days after
the close of such fiscal year.

 

ARTICLE IV. REPRESENTATIONS AND WARRANTIES.

 

4.01. Representations and Warranties. In order to induce the Administrative
Agent and the Lenders to enter into this Agreement, each Borrower hereby
represents and warrants to the Administrative Agent and the Lenders for
themselves and each of the other Loan Parties as follows and agrees that each of
said representations and warranties shall be deemed to survive until full,
complete and indefeasible payment and performance of the Obligations and shall
apply anew to each Borrowing hereunder:

 

(a) Due Incorporation, Qualification, etc. Each Loan Party (i) is a corporation,
partnership or limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or formation;
(ii) has the power and authority to own, lease and operate its properties and
carry on its business as now conducted; and (iii) is duly qualified, licensed to
do business and in good standing as a foreign corporation, partnership or
limited liability company, as applicable, in each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license and where the failure to be so qualified
or licensed, individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect.

 

(b) Authority. The execution, delivery and performance by each Loan Party of
each Credit Document executed, or to be executed, by such Loan Party and the
consummation of the transactions contemplated thereby (i) are within the power
of such Loan Party and (ii) have been duly authorized by all necessary actions
on the part of such Loan Party.

 

(c) Enforceability. Each Credit Document executed, or to be executed, by each
Loan Party has been, or will be, duly executed and delivered by such Loan Party
and constitutes, or will constitute, a legal, valid and binding obligation of
such Loan Party,

 

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enforceable against such Loan Party in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors’ rights generally and general principles of equity.

 

(d) Non-Contravention. The execution and delivery by each Loan Party of the
Credit Documents executed by such Loan Party and the performance and
consummation of the transactions (including the use of loan proceeds)
contemplated thereby (including the consummation of the Acquisition) do not (i)
violate any Requirement of Law applicable to such Loan Party; (ii) violate any
provision of, or result in the breach or the acceleration of, or entitle any
other Person to accelerate (whether after the giving of notice or lapse of time
or both), any Contractual Obligation of such Loan Party; (iii) result in the
creation or imposition of any Lien (or the obligation to create or impose any
Lien) upon any Property, asset or revenue of such Loan Party (except for
Permitted Liens) or (iv) violate any provision of any existing law, rule,
regulation, order, writ, injunction or decree of any court or Governmental
Authority to which it is subject, where such breach could result in a Material
Adverse Effect.

 

(e) Approvals.

 

(i) Except as is provided in Section 8.17 hereof, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority or other Person (including the equity holders of any Person) is
required in connection with (A) the execution and delivery of the Credit
Documents executed by any Loan Party or the performance or consummation of the
transactions contemplated thereby (including the consummation of the
Acquisition) or (B) the exercise by the Administrative Agent of any default
rights or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Security Documents or created or provided for by
any Governmental Rule), except for those which have been made or obtained and
are in full force and effect and as to clause (B) except those required by
applicable law which are applicable to all Persons.

 

(ii) Except as is provided in Section 8.17 hereof, all Gaming Licenses and
Governmental Authorizations material to the conduct of the business of the
Borrowers and all Subsidiaries of a Borrower as currently conducted have been
duly obtained and are in full force and effect without any known conflict with
the rights of others and free from any unduly burdensome restrictions, except
where any such failure to obtain such Gaming License or Governmental
Authorizations or any such conflict or restriction could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect. No Loan Party has received any written notice or other written
communications from any Gaming Authority or other Governmental Authority having
jurisdiction thereof regarding (i) any revocation, withdrawal, suspension,
termination or modification of, or the imposition of any material conditions
with respect to, any Gaming License or other Governmental Authorization, or (ii)
any other limitations on the conduct of business by any Loan Party, except where
any such revocation, withdrawal, suspension, termination, modification,
imposition or limitation could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

 

(iii) Except as is provided in Section 8.17 hereof, no Governmental
Authorization is required for either (x) the pledge or grant by any Loan Party
of the Liens

 

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purported to be created in favor of the Lenders in connection herewith or any
other Credit Document or (y) the exercise by the Administrative Agent on behalf
of the Lenders of any rights or remedies in respect of any Collateral (whether
specifically granted or created pursuant to any of the Security Documents or
created or provided for by any Governmental Rule), except for (1) such
Governmental Authorizations that have been obtained and are in full force and
effect and fully disclosed to Administrative Agent in writing, (2) filings or
recordings contemplated in connection with this Agreement or any Security
Document and (3) prior to the Funding Date, Governmental Authorizations required
from Gaming Authorities which have been or on or promptly after the Funding Date
shall be applied for by the Borrowers.

 

(f) No Violation or Default. No Loan Party is in violation of or in default with
respect to (i) any Requirement of Law applicable to such Person or (ii) any
Contractual Obligation of such Person (nor is there any waiver in effect which,
if not in effect, could result in such a violation or default), where, in each
case, such violation or default could reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the foregoing, except as set
forth on Schedule 4.01(f), no Loan Party (A) has violated any Environmental
Laws, (B) has any liability under any Environmental Laws or (C) has received
notice or other communication of claim or an investigation by any Governmental
Authority having authority to enforce Environmental Laws, where such violation,
liability, claim or investigation could reasonably be expected to have a
Material Adverse Effect. No Default has occurred and is continuing.

 

(g) Litigation. Except as set forth in Schedule 4.01(g), no actions (including
derivative actions), suits, proceedings (including arbitration proceedings or
mediation proceedings) or investigations are pending or, to the best of each
Borrower’s knowledge, threatened against any Loan Party at law or in equity in
any court or before any other Governmental Authority which (i) if adversely
determined (and there exists a reasonable possibility of such an adverse
determination) could reasonably be expected to result in a Material Adverse
Effect or (ii) seek to enjoin, either directly or indirectly, the execution,
delivery or performance by any Loan Party of the Credit Documents or the
transactions contemplated thereby (including the Acquisition).

 

(h) Title; Possession Under Leases.

 

(i) All real property which is owned or leased by Last Chance or CPTLD, or which
is occupied by Last Chance or CPTLD pursuant to a license, management agreement
or similar arrangement, is described by Schedule 4.01(h)A. Pursuant to the Last
Chance Prospector Documents, Last Chance has: (i) a valid Leasehold interest in
all of the Last Chance Real Property (except for the Last Chance RV Park and the
Last Chance Lottery Property); (ii) the right to occupy and operate the Last
Chance RV Park as the manager thereof (and to retain certain proceeds from such
operation); (iii) an option to purchase all of the Last Chance Real Property;
and (iv) the right to utilize the Last Chance Water and Sewer Entitlements in
conduct of its casino and other business operations at the Last Chance Real
Property, and CPLTD has a valid leasehold interest in the Last Chance Lottery
Property; all in accordance with the terms and conditions of the Last Chance
Prospector Documents. The Last Chance Prospector Documents, which have been
delivered by Borrowers in accordance with Section

 

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3.01(a)(v), represent the entire agreement between the Stremmel Group, Last
Chance and CPLTD regarding ownership and occupation of the Last Chance Real
Property and use of the Last Chance Water and Sewer Entitlements by Last Chance.
The Last Chance Prospector Documents are each fully enforceable in accordance
with their respective terms except as enforcement may be limited by bankruptcy
and similar laws affecting the enforcement of creditors’ rights generally.
Neither Last Chance, CPLTD, nor any member of the Stremmel Group are in default
of any of their respective obligations under the Last Chance Prospector
Documents, nor are there any circumstances existing which would constitute such
a default with notice, or lapse of time, or both. The interests which Last
Chance and CPLTD hold in the Last Chance Real Property and in the Last Chance
Water and Sewer Entitlements are free and clear of all exceptions and conditions
of title, other than the Last Chance Permitted Exceptions.

 

(ii) All real property which is owned or leased by Zante, or which is occupied
by Zante pursuant to a license, management agreement or similar arrangement, is
described by Schedule 4.01(h)B. Zante is the owner of the fee interest in all of
the Zante Real Property without exception or condition of title other than the
Zante Permitted Exceptions.

 

(iii) All real property which is owned or leased by Rail City, or which is
occupied by Rail City pursuant to a license, management agreement or similar
arrangement, is described by Schedule 4.01(h)C. Rail City is the owner of the
fee interest in all of the Rail City Real Property (other than the Rail City
NDOT Parcel). Pursuant to the Rail City Parking License Documents, Rail City
holds a valid nonexclusive license to utilize the Rail City NDOT Parcel for
public parking, including parking by patrons of the casino operated by Rail City
at the Rail City Real Property. The Rail City Parking Documents, which have been
delivered by Borrowers in accordance with Section 3.01(a)(vi), represent the
entire agreement between the City of Sparks and Rail City regarding use of the
Rail City NDOT Parcel by Rail City, and are each fully enforceable in accordance
with their respective terms except as enforcement may be limited by bankruptcy
and similar laws affecting the enforcement of creditors’ rights generally. From
and after the Acquisition Date, neither the City of Sparks to the knowledge of
Borrower’s, nor Rail City, are in default of any of their respective obligations
under the Rail City Parking License Documents, nor are there any circumstances
existing which would constitute such a default with notice, or lapse of time, or
both. Rail City’s license in the Rail City NDOT Parcel, and its fee interest in
the remainder of the Rail City Real Property, is all free and clear of any
exceptions or conditions of title other than the Rail City Permitted Exceptions.

 

(iv) All real property which is owned or leased by Dayton Gaming, or which is
occupied by Dayton Gaming pursuant to a license, management agreement or similar
arrangement (or prior to the Acquisition Date, all real property which is
subject to the Depot Red Hawk Purchase Agreement, other than the RV Park Option
Property) is described by Schedule 4.01(h)D and Schedule 4.01(h)E. Prior to the
Funding Date, the applicable Depot Red Hawk Sellers are, and from and after the
Funding Date, Dayton Gaming is, the owner of: (i) the fee interest in all of the
Depot Casino Real Property without exception or condition of title other than
the Depot Casino Permitted Exceptions;

 

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and (ii) the fee interest in all of the Red Hawk Fee Parcels and a leasehold
interest in the Red Hawk NDOT Parcel, in each case, without exception or
condition of title other than the Red Hawk Permitted Exceptions.

 

(v) The Loan Parties own and have good and marketable title, or a valid
leasehold interest in, all their respective properties and assets as reflected
in the most recent Financial Statements delivered to the Administrative Agent
(except those assets and properties disposed of in the ordinary course of
business or otherwise in compliance with this Agreement since the date of such
Financial Statements) and all respective assets and properties acquired by the
Loan Parties, as applicable, since such date (except those disposed of in the
ordinary course of business or otherwise in compliance with this Agreement).
Such assets and properties are subject to no Lien, except for Permitted Liens.
Each of the Loan Parties has complied with all material obligations under all
material leases to which it is a party and enjoys peaceful and undisturbed
possession under such leases.

 

(i) Financial Statements. The Financial Statements of the Loan Parties which
have been delivered to the Administrative Agent (i) are in accordance with the
books and records of the Loan Parties, which have been maintained in accordance
with good business practice; (ii) have been prepared in conformity with GAAP;
and (iii) fairly present in all material respects the financial conditions and
results of operations of the Borrowers and their Subsidiaries as of the date
thereof and for the period covered thereby. No Loan Party has any Contingent
Obligations, liability for taxes or other outstanding obligations which, in any
such case, are material in the aggregate, except (i) as of the Funding Date, as
disclosed on Schedule 4.01(i) or as disclosed or provided for in the audited
Financial Statements for the fiscal year ended June 30, 2005, furnished by the
Borrowers to the Administrative Agent prior to the date hereof, or (ii) as of
the last day of any fiscal quarter or fiscal year, as applicable, following the
Funding Date, as disclosed or provided for in the Financial Statements delivered
for such fiscal quarter or fiscal year to the Administrative Agent pursuant to
clause (i) or (ii) of Section 5.01(a) and in the Compliance Certificate
delivered concurrently with such Financial Statements.

 

(j) Creation, Perfection and Priority of Liens.

 

(i) As of the Funding Date (i) the execution and delivery of the Security
Documents by the Loan Parties, together with the filing of any Uniform
Commercial Code financing statements and the recording of the U.S. Patent and
Trademark Office filings delivered to the Administrative Agent for filing and
recording, and the recording of any mortgages or deeds of trust delivered to the
Administrative Agent for recording (but not yet recorded), are effective to
create in favor of the Administrative Agent for the benefit of itself and the
Lenders, as security for the Obligations, a valid and perfected first priority
Lien on all of the Collateral as of the Funding Date (subject only to Permitted
Liens), and (ii) all filings and other actions necessary or desirable to perfect
and maintain the perfection and first priority status of such Liens have been
duly made or taken and remain in full force and effect.

 

(ii) The Intellectual Property Security Agreement is effective to create in
favor of the Administrative Agent, for the benefit of itself and the Lenders, a
legal, valid, binding and enforceable security interest in the Collateral
described therein as security for the

 

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Obligations to the extent that a legal, valid, binding and enforceable security
interest in such Collateral may be created under applicable law of the United
States of America and any states thereof, including the UCC and the United
States Trademark Act of 1946, the United States Patent Act of 1972 or the United
States Copyright Act of 1976, as applicable (the “IP Collateral”). Upon the
proper and timely filing of (i) the Intellectual Property Security Agreement (or
the short form security documents attached thereto) in the appropriate indexes
of the United States Patent and Trademark Office relative to patents and
trademarks (within three (3) months after the Funding Date), and the United
States Copyright Office relative to copyrights (within thirty (30) days after
the Funding Date), where the documents filed with the United States Patent and
Trademark Office and the United States Copyright Office do not contain any
conditional assignment provisions, together with provisions for payment of all
requisite fees, and (ii) UCC financing statements in appropriate form for filing
in the applicable filing offices, the Intellectual Property Security Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in the IP Collateral described therein,
as security for the Obligations, prior and superior to the Lien of any other
Person (except Permitted Liens).

 

(k) Equity Interests. All outstanding Equity Securities of the Loan Parties are
duly authorized, validly issued, fully paid and non-assessable. Except as set
forth on Schedule 4.01(k), there are no outstanding subscriptions, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (firm or conditional) obligating any of the Loan Parties to issue,
deliver or sell, or cause to be issued, delivered or sold, any additional Equity
Securities of the Loan Parties, or obligating such Loan Party to grant, extend
or enter into any such agreement or commitment. All Equity Securities of the
Loan Parties have been offered and sold in compliance with all federal and state
securities laws and all other Requirements of Law, except where any failure to
comply could not reasonably be expected to have a Material Adverse Effect.

 

(l) No Agreements to Sell Assets; Etc. No Loan Party has any legal obligation,
absolute or contingent, to any Person to sell any of its assets or the assets of
any Subsidiary (except as permitted by Section 5.02(c)), or to effect any
merger, consolidation or other reorganization of the Borrowers or any Subsidiary
of a Borrower (except for the Acquisition and as permitted by Section 5.02(d))
or to enter into any agreement with respect thereto.

 

(m) Employee Benefit Plans.

 

(i) Based upon the latest valuation of each Pension Plan (if any) that any Loan
Party or any ERISA Affiliate maintains or contributes to, or has any obligation
under (which occurred within twelve months of the date of this representation),
the aggregate benefit liabilities of such plan within the meaning of section
4001 of ERISA did not exceed the aggregate value of the assets of such plan. No
Loan Party has any liability with respect to any post-retirement benefit under
any Employee Benefit Plan which is a welfare plan (as defined in section 3(1) of
ERISA), other than liability for health plan continuation coverage described in
Part 6 of Title I(B) of ERISA, which liability for health plan contribution
coverage could not reasonably be expected to have a Material Adverse Effect.

 

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(ii) Except as could not, either individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect, (A) each Employee Benefit Plan
complies, in both form and operation, in all material respects, with its terms,
ERISA and the IRC, and no condition exists or event has occurred with respect to
any such plan which would result in the incurrence by any Loan Party or any
ERISA Affiliate of any material liability, fine or penalty; (B) each Employee
Benefit Plan, related trust agreement, arrangement and commitment of any Loan
Party or any ERISA Affiliate is legally valid and binding and in full force and
effect; (C) no Employee Benefit Plan is being audited or investigated by any
government agency or is subject to any pending or threatened claim or suit; (D)
none of the Loan Parties or the ERISA Affiliates nor any fiduciary of any
Employee Benefit Plan has engaged in a non-exempt prohibited transaction under
section 406 of ERISA or section 4975 of the IRC; and (E) none of the Loan
Parties maintains a Foreign Plan.

 

(iii) Except as set forth on Schedule 4.01(m), none of the Loan Parties and the
ERISA Affiliates contributes to or has any material contingent obligations to
any Multiemployer Plan. None of the Loan Parties and the ERISA Affiliates has
incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under section 4201 of ERISA or as a result of a sale of
assets described in section 4204 of ERISA. None of the Loan Parties and the
ERISA Affiliates has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of section 4241 or
section 4245 of ERISA or that any Multiemployer Plan intends to terminate or has
been terminated under section 4041A of ERISA.

 

(n) Other Regulations. No Loan Party is subject to regulation under the
Investment Company Act of 1940, the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, any state public utilities
code or to any other Governmental Rule limiting its ability to incur
Indebtedness.

 

(o) Trademarks, Patents, Copyrights and Licenses. Each of the Loan Parties owns,
licenses or otherwise has the full right to use, under validly existing
agreements, all material patents, licenses, trademarks, trade names, trade
secrets, service marks, copyrights and all rights with respect thereto, which
are required to conduct their businesses as now conducted, except where the
failure to own, license or otherwise have the full right to use could not
reasonably be expected to result in a Material Adverse Effect. Each of the
patents, trademarks, trade names, service marks and copyrights owned by a Loan
Party which is registered with any Governmental Authority is set forth on
Schedule 4.01(o).

 

(p) Governmental Charges. The Loan Parties have filed or caused to be filed all
federal tax returns, tax returns in all states where they are respectively
required to do so and all other material tax returns which in each case are
required to be filed by them. The Loan Parties have paid, or made provision for
the payment of, all taxes and other Governmental Charges which have or may have
become due pursuant to said returns or otherwise and all other indebtedness,
except such Governmental Charges or indebtedness, if any, which are being
contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been established.

 

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(q) Margin Stock. No Loan Party owns any Margin Stock which, in the aggregate,
would constitute a substantial part of the assets of the Borrowers or the Loan
Parties (taken as a whole), and no proceeds of any Loan will be used to purchase
or carry, directly or indirectly, any Margin Stock or to extend credit, directly
or indirectly, to any Person for the purpose of purchasing or carrying any
Margin Stock.

 

(r) Subsidiaries, Etc. Schedule 4.01(r) (as supplemented by the Borrowers in a
Compliance Certificate or in a notice delivered pursuant to Section 5.01(a)(ix))
sets forth each of the Subsidiaries of each Borrower, its jurisdiction of
organization, the classes of its Equity Securities, the number of shares of each
such class issued and outstanding, the percentages of shares of each such class
owned directly or indirectly by each Borrower and whether such Borrower own such
shares directly or, if not, the Subsidiary of such Borrower that owns such
shares and the number of shares and percentages of shares of each such class
owned directly or indirectly by such Borrower. All of the outstanding Equity
Securities of each such Subsidiary indicated on Schedule 4.01(r) as owned by
each Borrower or any Domestic Subsidiary are owned beneficially and of record by
such Borrower or such Domestic Subsidiary free and clear of all Liens (other
than Permitted Liens).

 

(s) Solvency, Etc. Each of the Loan Parties is Solvent and, after the execution
and delivery of the Credit Documents and the consummation of the transactions
contemplated thereby and after the consummation and the consummation of the
transactions contemplated thereby (including the Acquisition), will be Solvent.

 

(t) Labor Matters. There are no disputes presently subject to grievance
procedure, arbitration or litigation under any of the collective bargaining
agreements, employment contracts or employee welfare or incentive plans to which
any Loan Party is a party, and there are no strikes, lockouts, work stoppages or
slowdowns, or, to the best knowledge of each Borrower, jurisdictional disputes
or organizing activities occurring or threatened which alone or in the aggregate
could have a Material Adverse Effect.

 

(u) Burdensome Contractual Obligations, Etc. None of the Loan Parties and none
of their properties is subject to any Contractual Obligation or Requirement of
Law which, either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.

 

(v) No Material Adverse Effect. Since September 30, 2003, no event has occurred
and no condition exists which, either individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.

 

(w) Accuracy of Information Furnished. The Credit Documents and the other
certificates, statements and information (excluding projections) furnished by
the Loan Parties to the Administrative Agent and the Lenders in connection with
the Credit Documents and the transactions contemplated thereby, taken as a
whole, do not contain any untrue statement of a material fact and do not omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. All projections
furnished by the Loan Parties to the Administrative Agent and the Lenders in
connection with the Credit Documents and the transactions contemplated thereby
have been prepared on a basis

 

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consistent with the historical financial statements described above, except as
described therein, have been based upon reasonable assumptions and represent, as
of their respective dates of presentations, the Loan Parties’ best estimates of
the future performance of the Loan Parties, and as of such respective dates the
Borrowers had no reason to believe that such estimates and assumptions are not
reasonable.

 

(x) Brokerage Commissions. No person is entitled to receive any brokerage
commission, finder’s fee or similar fee or payment in connection with the
extensions of credit contemplated by this Agreement as a result of any agreement
entered into by any Loan Party. No brokerage or other fee, commission or
compensation is to be paid by the Lenders with respect to the extensions of
credit contemplated hereby as a result of any agreement entered into by a
Borrower, and the Borrowers agree to indemnify the Administrative Agent and the
Lenders against any such claims for brokerage fees or commissions and to pay all
expenses including attorney’s fees incurred by the Lenders in connection with
the defense of any action or proceeding brought to collect any such brokerage
fees or commissions.

 

(y) Policies of Insurance. The properties of the Loan Parties are insured with
financially sound and reputable insurance companies not Affiliates of the Loan
Parties, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Loan Parties operate. Such insurance
has not been terminated and is in full force and effect, and each of the Loan
Parties has taken all action required to be taken as of the date of this
Agreement to keep unimpaired its rights thereunder. Schedule 4.01(y) sets forth
a true and complete listing of all insurance maintained by the Loan Parties as
of the Funding Date.

 

(z) Agreements with Affiliates and Other Agreements. Except (i) as disclosed on
Schedule 4.01(z), or (ii) as permitted by Section 5.02(j), no Loan Party has
entered into and, as of the date of the applicable Credit Event does not
contemplate entering into, any material agreement or contract with any Affiliate
of any Loan Party, except upon terms at least as favorable to such Loan Party as
an arms-length transaction with unaffiliated Persons, based on the totality of
the circumstances. No Loan Party is a party to or is bound by any Contractual
Obligation or is subject to any restriction under its respective charter or
formation documents, which could reasonably be expected to result in a Material
Adverse Effect.

 

(aa) Unfunded Pension Liabilities. The Unfunded Pension Liabilities of the Loan
Parties do not exceed $500,000.

 

(bb) Internal Controls.

 

(i) The Borrowers have established and maintain disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the U.S. Securities
Exchange Act of 1934, as amended (the “Exchange Act”), which (i) are designed to
ensure that material information relating to the Borrowers, including its
consolidated subsidiaries, is made known to the Borrowers’ principal executive
officer and their principal financial officer or persons performing similar
functions by others within those entities, particularly during the periods in
which the periodic reports required under the Exchange Act are being prepared;
(ii) have been evaluated for effectiveness as of a date within 90 days prior to
the filing of the Borrowers’ most

 

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recent annual or quarterly report filed with the Securities Exchange Commission;
and (iii) are effective in all material respects to perform the functions for
which they were established;

 

(ii) Based on the evaluation of its disclosure controls and procedures, the
Borrowers are not aware of (i) any significant deficiency in the design or
operation of internal controls which could adversely affect the Borrowers’
ability to record, process, summarize and report financial data or any material
weaknesses in internal controls or (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Borrowers’ internal controls; and

 

(iii) Since the date of the most recent evaluation of such disclosure controls
and procedures, there have been no significant changes in internal controls or
in other factors that could significantly affect internal controls, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

 

(cc) Zante, Inc. is a single entity that operates under each of the following
“dba”s: (i) The Sands Regency and (ii) Pericles Distributing.

 

(dd) Foreign Assets Control, etc. Neither the Borrower nor any Subsidiary is a
Designated Person. The Borrower has taken reasonable measures to ensure
compliance with the requirement that (i) no Person who owns any direct or
indirect interest in the Borrower is a Designated Person and (ii) funds invested
directly or indirectly in the Borrower by are derived from legal sources .

 

(ee) Foreign Corrupt Practices. No portion of the proceeds of any Credit Event
made hereunder has been or will be used, directly or indirectly for, and no fee,
commission, rebate or other value has been or will be paid to, or for the
benefit of, any governmental official, political party, official of a political
party or any other Person acting in an official capacity in violation of any
applicable law, including the U.S. Foreign Corrupt Practices Act of 1977, as
amended.

 

ARTICLE V. COVENANTS.

 

5.01. Affirmative Covenants. Until the termination of the Commitments and the
satisfaction in full by the Borrowers of all Obligations, the Borrowers will
comply, and will cause compliance by the other Loan Parties, with the following
affirmative covenants, unless the Required Lenders shall otherwise consent in
writing:

 

(a) Financial Statements, Reports, etc. The Borrowers shall furnish to the
Administrative Agent and each Lender the following, each in such form and such
detail as the Administrative Agent or the Required Lenders shall reasonably
request:

 

(i) As soon as available and in no event later than forty-five (45) days after
the last day of each of the first three fiscal quarters of each fiscal year of
the Borrowers (i) a copy of the Financial Statements of the Borrowers and all
Subsidiaries of the Borrowers (prepared on a consolidated and consolidating
basis) for such quarter (beginning with the first quarter after the Funding
Date) and for the fiscal year to date, certified by a Responsible Officer of
each Borrower to present fairly in all material respects the financial
condition, results of

 

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operations and other information reflected therein and to have been prepared in
accordance with GAAP (subject to normal year-end audit adjustments and the
absence of footnotes) and (ii) a narrative from management of the Borrowers
which discusses results and prospects;

 

(ii) As soon as available and in no event later than one hundred five (105) days
after the close of each fiscal year of the Borrowers, (A) copies of the audited
consolidated and unaudited consolidating Financial Statements of the Borrowers
and all Subsidiaries of the Borrowers (prepared on a consolidated and
consolidating basis, as applicable) for such year, audited (as to the
consolidated Financial Statements) by Deloitte & Touche LLP or other independent
certified public accountants of recognized national standing and accompanied by
copies of the unqualified opinions delivered by such accountants in connection
with all such Financial Statements;

 

(iii) Contemporaneously with delivery of the quarterly and year-end Financial
Statements required by the foregoing clauses (i) and (ii), (x) a compliance
certificate of a Responsible Officer of the Borrowers in substantially the form
of Exhibit L (a “Compliance Certificate”) which (A) states that no Default has
occurred and is continuing, or, if any such Default has occurred and is
continuing, a statement as to the nature thereof and what action the Borrowers
propose to take with respect thereto and (B) sets forth, for the quarter or year
covered by such Financial Statements or as of the last day of such quarter or
year (as the case may be), the calculation of the financial ratios and tests
provided in Section 5.03;

 

(iv) As soon as possible and in no event later than five (5) Business Days after
any Loan Party knows of the occurrence or existence of (A) any ERISA Event under
any Pension Plan or Multiemployer Plan, (B) any actual or threatened litigation,
suits, claims, disputes or investigations against any Loan Party involving
potential monetary damages payable by any Loan Party of $250,000 or more (alone
or in the aggregate) or in which injunctive relief or similar relief is sought,
which if adversely determined (and there exists a reasonable possibility of such
an adverse determination), could reasonably be expected to result in a Material
Adverse Effect, (C) any other event or condition which, either individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect, including (I) breach or non-performance of, or any default under, a
Contractual Obligation of a Borrower or any Guarantor; (II) any dispute,
litigation, investigation, proceeding or suspension between a Borrower or any
Guarantor and any Governmental Authority; or (III) the commencement of, or any
material development in, any litigation or proceeding affecting a Borrower or
any Guarantor, including pursuant to any applicable Environmental Laws; (D) any
Default, or (E) any material change in accounting policies of or financial
reporting practices by the applicable Loan Party, the statement of a Responsible
Officer of the Borrowers setting forth details of such event, condition or
Default and the action which the Borrowers propose to take with respect thereto;

 

(v) Promptly, and in no event later than five (5) Business Days after they are
sent, made available or filed, copies of (A) all registration statements and
reports filed by the Borrowers or any Subsidiary with any securities exchange or
the United States Securities and Exchange Commission (including all 10-Q, 10-K
and 8-K reports); (B) all reports, proxy statements and financial statements
sent or made available by such Borrower or any Subsidiary to its security
holders; and (C) all press releases and other similar public announcements

 

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concerning any material developments in the business of the Borrowers or any of
their Subsidiaries made available by the Borrowers or any of their Subsidiaries
to the public generally;

 

(vi) As soon as available and in no event later than five (5) Business Days
after they are filed, copies of all IRS Form 5500 reports for all Pension Plans
required to file such form;

 

(vii) As soon as available, and in any event not later than thirty (30) days
prior to the commencement of each fiscal year of the Borrowers, projected
financial statements of the Loan Parties for such fiscal year, including, in
each case, projected balance sheets, statements of income and retained earnings
and statements of cash flow of the Loan Parties, all in reasonable detail.

 

(viii) As soon as available, and in any event not later than thirty (30) days
after the end of each month, monthly Financial Statements of the Loan Parties
for such month (as well as a comparison of the performance of the Borrowers for
such month during the prior year), prepared in accordance with GAAP.

 

(ix) As soon as possible and, to the extent not prohibited by applicable law,
not later than five (5) Business Days prior to (or to the extent applicable law
prohibits prior disclosure or in the case of casualty events, not later than
five (5) Business Days after) the occurrence of any event or circumstance that
would require a prepayment pursuant to Section 2.07(c), the statement of a
Responsible Officer of the Borrowers setting forth the details thereof;

 

(x) As soon as possible and, to the extent not prohibited by applicable law, not
later than five (5) Business Days prior to (or to the extent applicable law
prohibits prior disclosure or in the case of casualty events, not later than
five (5) Business Days after) the establishment or acquisition by a Borrower or
any Subsidiary of a Borrower of any new Subsidiary or any new Equity Securities
of any existing Subsidiary or any liquidation or dissolution of a Subsidiary
under Section 5.02(d)(iv);

 

(xi) As soon as possible and in no event later than five (5) Business Days after
the receipt thereof by a Borrower or any Subsidiary of a Borrower, a copy of any
notice, summons, citations or other written communications concerning any
actual, alleged, suspected or threatened violation of any Environmental Law, or
any notice or assertion of liability of a Borrower or any Subsidiary of a
Borrower for Environmental Damages, in each case, which could reasonably be
expected to have a Material Adverse Effect;

 

(xii) As soon as possible and in no event later than five (5) Business Days
after the receipt thereof by any Borrower or any Subsidiary, copies of any and
all material notices and other material adverse communications from any
Governmental Authority or Gaming Authority with respect to any Loan Party or any
Gaming Facility (including copies of the Nevada “Regulation 6.090 Report” and
“6-A Report” and any other written communication to a Loan Party from any Gaming
Authority advising it of a violation of or non-compliance with any Gaming Law by
a Loan Party) and promptly upon the request of the Administrative Agent or

 

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any Lender, copies of any and all periodic or special reports filed by any Loan
Party with any Gaming Authority or other Governmental Authority with respect to
any Gaming Facility;

 

(xiii) As soon as possible and in no event later than ten (10) days prior to the
acquisition by any Loan Party of any leasehold or ownership interest in real
property, including the RV Park Option, a written supplement to Schedule
4.01(h);

 

(xiv) As soon as possible and in no event later than five (5) Business Days
after the receipt thereof by any Borrower or any Subsidiary, copies of any and
all notices received from the NDOT terminating or evidencing an intent to
terminate the RedHawk NDOT Lease; and

 

(xv) Such other instruments, agreements, certificates, opinions, statements,
documents and information relating to the properties, operations or condition
(financial or otherwise) of the Loan Parties, and compliance by the Borrowers
with the terms of this Agreement and the other Credit Documents as the
Administrative Agent or any Lender may from time to time reasonably request.

 

(b) Books and Records. The Loan Parties shall at all times keep proper books of
record and account in which full, true and correct entries will be made of their
transactions in accordance with GAAP.

 

(c) Inspections. The Loan Parties shall permit the Administrative Agent and each
Lender, or any agent or representative thereof, upon reasonable notice and
during normal business hours so long as no Event of Default shall have occurred
and be continuing and otherwise any time as the Administrative Agent and any
Lender may determine with or without prior notice to the Borrowers during normal
business hours, to visit and inspect any of the properties and offices of the
Loan Parties, to conduct audits of any or all of the Collateral, to examine the
books and records of the Loan Parties and make copies thereof, and to discuss
the affairs, finances and business of the Loan Parties with, and to be advised
as to the same by, their officers, auditors and accountants, in each case at the
Borrowers’ expense and all at such times and intervals as the Administrative
Agent or any Lender may request.

 

(d) Insurance. The Loan Parties shall:

 

(i) Carry and maintain insurance during the term of this Agreement of the types
and in the amounts customarily carried from time to time by others engaged in
substantially the same business as such Person and operating in the same
geographic area as such Person, including fire, public liability, property
damage, business interruption and worker’s compensation (including, in the case
of worker’s compensation, by way of self insurance);

 

(ii) Furnish to any Lender, upon written request, complete and accurate
information as to the insurance carried;

 

(iii) Carry and maintain each policy for such insurance with (A) a company which
is rated A or better by A.M. Best and Company at the time such policy is placed
and at the time of each annual renewal thereof or (B) any other insurer which is
satisfactory to the Administrative Agent; and

 

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(iv) Obtain and maintain endorsements acceptable to the Administrative Agent for
such insurance naming the Administrative Agent as an additional insured and as
lender’s loss payee or mortgagee, as applicable;

 

provided, however, that if any Loan Party shall fail to maintain insurance in
accordance with this Section 5.01(d), or if any Loan Party shall fail to provide
the required endorsements with respect thereto, the Administrative Agent shall
have the right (but shall be under no obligation) to procure such insurance and
the Borrowers agree to reimburse the Administrative Agent for all costs and
expenses of procuring such insurance.

 

(e) Governmental Charges and Other Indebtedness. Each Loan Party shall promptly
pay and discharge when due (i) all taxes and other Governmental Charges prior to
the date upon which penalties accrue thereon, (ii) all Indebtedness which, if
unpaid, could become a Lien upon the property of such Loan Party (other than a
Permitted Lien) and (iii) subject to any subordination provisions applicable
thereto, all other Indebtedness which in each case, if unpaid, could reasonably
be expected to result in a Material Adverse Effect, except such Indebtedness,
taxes or Governmental Charges as may in good faith be contested or disputed, or
for which arrangements for deferred payment have been made; provided that in
each such case appropriate reserves are maintained to the reasonable
satisfaction of the Administrative Agent and no material Property of any Loan
Party is at impending risk of being seized, levied upon or forfeited.

 

(f) Use of Proceeds. The Borrowers shall use the proceeds of the Loans only for
the respective purposes set forth in Section 2.01(g) and Section 2.02(g). No
part of the proceeds of any Loan or any Letter of Credit shall be used, whether
directly or indirectly, to purchase, acquire or carry and Margin Stock or for
any purpose that entails a violation of any of the regulations of the Federal
Reserve Board, including Regulations T, U and X.

 

(g) General Business Operations. Each of the Loan Parties shall (i) preserve,
renew and maintain in full force its legal existence and good standing under the
Governmental Rules of the jurisdiction of its organization and all of its
rights, licenses, leases, qualifications, privileges franchises and other
authority material to the conduct of its business, provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 5.02(d) or any sale, lease, transfer or other
disposition permitted in Section 5.02(c), (ii) conduct its business activities
in compliance with all Requirements of Law and Contractual Obligations
applicable to such Person in all material respects, (iii) keep all Property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted and from time to time make, or cause to be made,
all necessary and proper repairs, except, in each case, where any failure,
either individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect, (iv) maintain, preserve and protect all of
its rights to enjoy and use material trademarks, trade names, service marks,
patents, copyrights, licenses, leases, franchise agreements and franchise
registrations and (v) conduct its business as currently conducted without
voluntary interruption. Each Borrower shall maintain its chief executive office
and principal place of business in the United States and shall not relocate its
chief executive office or principal place of business outside of the cities and
states listed on Schedule 5.01(g) or change its jurisdiction of formation except
upon not less than ninety (90) days prior written notice to the Administrative
Agent.

 

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(h) Compliance with Requirements of Law and Contractual Obligations; Maintenance
of Licenses.

 

(i) Each Loan Party shall comply with all Requirements of Law (including all
Environmental Laws and Gaming Laws) and Contractual Obligations, except where
noncompliance therewith could not, individually or in the aggregate, have a
Material Adverse Effect; and

 

(ii) Each Loan Party shall maintain such valid Gaming Licenses in all
jurisdictions as may be necessary to operate each of its Gaming Facilities, the
absence of which could reasonably be expected to result in a Material Adverse
Effect. Each Loan Party shall notify the Administrative Agent promptly upon the
revocation or non-renewal of any such Gaming License.

 

(i) Additional Collateral. If at any time from and after the Funding Date, any
Loan Party acquires any fee or leasehold interest in real property, such Loan
Party shall deliver to the Administrative Agent, at its own expense, as soon as
possible all documentation and information in form and substance reasonably
satisfactory to the Administrative Agent (including any environmental reports)
to assist the Administrative Agent in obtaining deeds of trust or mortgages on
such additional real property and ALTA policies of title insurance, with such
endorsements as the Administrative Agent may reasonably require, issued by a
company and in form and substance satisfactory to the Administrative Agent, in
an amount equal to the principal amount of the sum of the Revolving Commitments
and the Term Commitments on the Funding Date, insuring the Administrative
Agent’s Lien on such additional real property Collateral to be of first
priority, subject only to such exceptions as the Administrative Agent shall
approve in its discretion, with all costs thereof to be paid by such Loan Party.

 

(j) New Subsidiaries. The Borrowers shall, at their own expense, promptly, and
in any event within ten (10) Business Days after the formation or acquisition of
any new direct or indirect Subsidiary of a Borrower after the date hereof (i)
notify the Administrative Agent of such event, (ii) amend the Security Documents
as appropriate in light of such event to pledge to the Administrative Agent for
the benefit of itself and the Lenders 100% of the Equity Securities of each
Person which becomes a Subsidiary and execute and deliver all documents or
instruments required thereunder or appropriate to perfect the security interest
created thereby, (iii) deliver to the Administrative Agent all stock
certificates and other instruments added to the Collateral thereby free and
clear of all Liens, accompanied by undated stock powers or other instruments of
transfer executed in blank, (iv) cause each Person that becomes a direct or
indirect Subsidiary of a Borrower after the date hereof to guarantee the
Obligations pursuant to documentation which is in form and substance
satisfactory to the Administrative Agent, (v) cause each such Person that
becomes a direct or indirect Domestic Subsidiary after the date hereof to
execute a pledge and security agreement in form and substance satisfactory to
the Administrative Agent, (vi) cause each document (including each Uniform
Commercial Code financing statement and each filing with respect to intellectual
property owned by each such Person that becomes a direct or indirect Subsidiary
of a Borrower after the date hereof) required by law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to create
in favor of the Administrative Agent for the benefit of the Lenders a valid,
legal and perfected first-priority security interest in and lien on the
Collateral subject to the Security

 

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Documents to be so filed, registered or recorded and evidence thereof delivered
to the Administrative Agent and (vii) deliver an opinion of counsel in form and
substance satisfactory to the Administrative Agent with respect to each such
Person and the matters set forth in this section.

 

(k) Appraisals. During the existence of an Event of Default or upon the written
request of any Lender acting pursuant to any Requirement of Law, the Borrowers
agree that the Administrative Agent may, at the expense of the Borrowers,
commission an appraisal of any property (i) to which any Loan Party holds legal
title and (ii) which is encumbered by any Security Document.

 

(l) Acquisition. The Acquisition shall be consummated on the Funding Date on
terms and conditions satisfactory to the Administrative Agent.

 

(m) Last Chance Prospector Documents. Last Chance and CPTLD shall perform all of
their respective obligations under the Last Chance Prospector Documents in a
timely manner and, from time to time, shall take all other actions necessary to
keep the Last Chance Prospector Documents in full force and effect.

 

(n) Rail City Parking License Documents. Rail City shall perform all of its
obligations under the Rail City Parking License Documents in a timely manner
and, from time to time, shall take all actions necessary to keep the Rail City
Parking License Documents in full force and effect.

 

(o) Red Hawk NDOT Lease. Dayton Gaming shall perform all of its obligations
under the Red Hawk NDOT Lease in a timely manner and, from time to time, shall
take all actions necessary to keep the Red Hawk NDOT Lease in full force and
effect.

 

5.02. Negative Covenants. Until the termination of the Commitments and the
satisfaction in full by the Borrowers of all Obligations, no Borrower will, nor
will it permit any of the other Loan Parties, to do any of the following, unless
the Required Lenders shall have otherwise consented in writing:

 

(a) Indebtedness and Guaranty Obligations. Create, incur, assume or permit to
exist any Indebtedness or Guaranty Obligations except for the following
(“Permitted Indebtedness”):

 

(i) Indebtedness or Guaranty Obligations of the Loan Parties under the Credit
Documents;

 

(ii) Indebtedness of the Loan Parties listed in Schedule 5.02(a) and existing on
the date of this Agreement;

 

(iii) Indebtedness of the Loan Parties to any other Loan Party;

 

(iv) Indebtedness of the Loan Parties under Lender Rate Contracts entered into
with respect to the Loans; provided that (A) all such Lender Rate Contracts are
entered into in connection with bona fide hedging operations and not for
speculation and (B) the

 

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aggregate notional principal amount under all such Rate Contracts does not
exceed the Effective Amount of the Loans at any time;

 

(v) Guaranty Obligations of any Loan Party in respect of Permitted Indebtedness
of any other Loan Party;

 

(vi) Capital Leases in an aggregate principal amount not to exceed $2,000,000 at
any one time outstanding;

 

(vii) Indebtedness used to finance the purchase of slot machines in an aggregate
principle amount not to exceed $2,000,000 at any one time outstanding;

 

(viii) Subordinated Indebtedness in favor of Belding in an aggregate amount not
to exceed $504,004 as of the date hereof (the “Belding Subordinated
Indebtedness”), which Belding Subordinated Indebtedness shall be subject to a
subordination agreement satisfactory to the Administrative Agent including
payment and remedy blockage provisions upon the occurrence of a Default or Event
of Default; and

 

(ix) Additional Indebtedness in an amount not to exceed $2,000,000 outstanding
at any time.

 

(b) Liens, Negative Pledges. Create, incur, assume or permit to exist any Lien
on or with respect to any of its assets or property of any character or suffer
to exist any Negative Pledge with respect to any of its assets or property of
any character, in either case whether now owned or hereafter acquired, except
for the following (“Permitted Liens”):

 

(i) Liens or Negative Pledges in favor of the Administrative Agent or any Lender
under the Credit Documents (including any Lender Rate Contracts);

 

(ii) Liens listed in Schedule 5.02(b) and existing on the date of this
Agreement;

 

(iii) Liens for taxes or other Governmental Charges not at the time delinquent
or thereafter payable without penalty or being contested in good faith; provided
that adequate reserves for the payment thereof have been established in
accordance with GAAP and no Property of any Loan Party is subject to impending
risk of loss or forfeiture by reason of nonpayment of the obligations secured by
such Liens;

 

(iv) Liens of carriers, warehousemen, mechanics, materialmen, repairmen,
vendors, and landlords and other similar Liens imposed by law incurred in the
ordinary course of business for sums which are not overdue more than 45 days or
are being contested in good faith; provided that adequate reserves for the
payment thereof have been established in accordance with GAAP;

 

(v) Deposits under workers’ compensation, unemployment insurance and social
security laws or to secure the performance of bids, tenders, contracts (other
than for the repayment of borrowed money) or leases, or to secure statutory
obligations of surety or

 

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appeal bonds or to secure indemnity, performance or other similar bonds in the
ordinary course of business;

 

(vi) Zoning restrictions, easements, rights-of-way, title irregularities and
other similar encumbrances, which alone or in the aggregate are not substantial
in amount and do not materially detract from the value of the Property subject
thereto or interfere with the ordinary conduct of the business of any Loan
Party; and

 

(vii) Liens securing some or all of the Indebtedness permitted by Section
5.02(a)(ix); provided that (A) such Liens exist at the time such property or
assets or such Persons are so acquired and (B) such Liens were not created in
contemplation of such acquisitions;

 

provided, however, that the foregoing exceptions shall not permit any Lien in
any Equity Securities issued by any Subsidiary and owned by any Loan Party,
except for Liens in favor of the Administrative Agent securing the Obligations.

 

(c) Asset Dispositions. Directly or indirectly, sell, lease, convey, transfer or
otherwise dispose (including via any Sale and Leaseback (but excluding the
granting of a license in respect of intellectual property in the ordinary course
of business)) of any of its assets or Property, whether now owned or hereafter
acquired, except for the following:

 

(i) Sales, leases, conveyances, transfers or other dispositions by the Loan
Parties of surplus, damaged, worn or obsolete equipment in the ordinary course
of their businesses for not less than fair market value; and

 

(ii) Sales, transfers or other dispositions by any Loan Party of Investments
permitted by clause (i) of Section 5.02(e) for not less than fair market value.

 

(d) Mergers, Acquisitions, Etc. Consolidate with or merge into any other Person
or permit any other Person to merge into it, establish any new Subsidiary,
acquire any Person as a new Subsidiary or acquire all or substantially all of
the assets of any other Person, except that (A) the Borrowers may, subject to
satisfaction of the conditions precedent set forth in Section 3.01(g),
consummate the Acquisition, (B) the Borrowers may acquire the Rail City NDOT
Parcel from the State of Nevada for an amount not to exceed $1,000,000 and (C)
the Borrowers and the other Loan Parties may merge with each other; provided
that (I) no Default will result after giving effect to any such merger, (II) in
any such merger involving a Borrower and another Loan Party (other than another
Borrower), such Borrower is the surviving Person.

 

(e) Investments. Make any Investment except for Investments in the following:

 

(i) Investments by the Loan Parties in cash and Cash Equivalents;

 

(ii) Investments listed in Schedule 5.02(e) existing on the date of this
Agreement;

 

(iii) Extensions of trade credit in the ordinary course of business;

 

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(iv) Subject to Section 5.02(h), Investments by the Loan Parties in each other;
and

 

(v) Deposit accounts; provided that for deposit accounts (located in the United
States of America) of the Borrowers and Domestic Subsidiaries such Investments
are subject to a Control Agreement in form and substance satisfactory to the
Administrative Agent.

 

(f) Distributions. Make any Distributions or set apart any sum for any such
purpose except that any Borrower (other than Sands) and any Subsidiary may pay
dividends on its Equity Securities to its parent.

 

(g) Change in Business. Engage, either directly or indirectly through
Affiliates, in any business other than those businesses conducted by the Loan
Parties on the date hereof and those businesses conducted by Rail City on the
Acquisition Date.

 

(h) Payments of Subordinated Indebtedness. Pay, prepay, redeem, purchase,
defease or otherwise satisfy in any manner prior to the scheduled payment
thereof any Subordinated Indebtedness; provided, however, that so long as no
Default or Event of Default exists at the time of such proposed prepayment or
would result therefrom, the Borrowers may pay or prepay the Permitted
Subordinated Indebtedness to the extent permitted by the subordination agreement
related thereto.

 

(i) Amendments to Documents. Amend, terminate, surrender or otherwise modify (i)
the Last Chance Prospector Documents, the Rail City Parking License Documents or
the Red Hawk NDOT Lease or (ii) the terms of any document, instrument or
agreement evidencing Subordinated Indebtedness.

 

(j) Last Chance Prospector Documents; Rail City Parking License Documents. Pay,
prepay, redeem, purchase (whether by exercise of an option or otherwise,
including exercise of any option to purchase under the Last Chance Prospector
Documents), defease or otherwise satisfy in any manner prior to the scheduled
payment thereof any obligations owed under the Last Chance Prospector Documents,
the Rail City Parking License Documents or the Red Hawk NDOT Lease (except with
respect to the Rail City NDOT Parcel as permitted by Section 5.02(d)).

 

(k) ERISA.

 

(i) (A) Adopt or institute any Pension Plan; (B) take any action which will
result in the partial or complete withdrawal, within the meanings of sections
4203 and 4205 of ERISA, from a Multiemployer Plan; (C) engage or permit any
Person to engage in any transaction prohibited by section 406 of ERISA or
section 4975 of the IRC involving any Employee Benefit Plan or Multiemployer
Plan which would subject a Borrower or any ERISA Affiliate to any tax, penalty
or other liability including a liability to indemnify; (D) incur or allow to
exist any accumulated funding deficiency (within the meaning of section 412 of
the IRC or section 302 of ERISA); (E) fail to make full payment when due of all
amounts due as contributions to any Employee Benefit Plan or Multiemployer Plan;
(F) fail to comply with the requirements of section 4980B of the IRC or Part 6
of Title I(B) of ERISA; or (G) adopt any amendment to any Pension Plan which
would require the posting of security pursuant to Section

 

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401(a)(29) of the IRC, where singly or cumulatively, the above could reasonably
be expected to have a Material Adverse Effect.

 

(ii) (A) Engage in any transaction prohibited by any Governmental Rule
applicable to any Foreign Plan, (B) fail to make full payment when due of all
amounts due as contributions to any Foreign Plan or (C) otherwise fail to comply
with the requirements of any Governmental Rule applicable to any Foreign Plan,
where singly or cumulatively, the above would be reasonably likely to have a
Material Adverse Effect.

 

(l) Transactions With Affiliates. Enter into any Contractual Obligation with any
Affiliate or engage in any other transaction with any Affiliate except upon
terms at least as favorable to such Loan Party as an arms-length transaction
with unaffiliated Persons.

 

(m) Accounting Changes. Change (i) its fiscal year (currently July 1 through
June 30) or (ii) its accounting practices except as required by GAAP.

 

(n) Rate Contracts. Enter into any Rate Contract, except (i) Rate Contracts
entered into to hedge or mitigate risks to which the Borrowers or any Subsidiary
has actual exposure (other than those in respect of Equity Securities of the
Borrowers or any Subsidiary of a Borrower), and (ii) Rate Contracts entered into
in order to effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of a Borrower or
any Subsidiary.

 

(o) Amendment of Material Documents. Agree to amend, modify, supplement or
replace any Material Document or any document executed and delivered in
connection therewith, in any respect that would adversely affect any right or
interest of the Lenders or any Loan Party’s ability to pay and perform the
Obligations.

 

(p) Joint Ventures. Enter into any Joint Venture.

 

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5.03. Financial Covenants. Until the termination of the Commitments and the
satisfaction in full by the Borrowers of all Obligations, the Borrowers will
comply, and will cause compliance by the other Loan Parties, with the following
financial covenants, unless the Required Lenders shall otherwise consent in
writing:

 

(a) Leverage Ratio. The Borrowers shall not permit the Leverage Ratio of the
Borrowers and their Subsidiaries on a consolidated basis at any time to be
greater than the following for each applicable period:

 

Period

--------------------------------------------------------------------------------

 

Leverage Ratio

--------------------------------------------------------------------------------

The Funding Date through and including
March 31, 2006

  3.25:1.00

April 1, 2006 through and including
March 31, 2007

  3.00:1.00

April 1, 2007 through and including
March 31, 2008

  2.75:1.00

April 1, 2008 and thereafter

  2.50:1.00

 

(b) Fixed Charge Coverage Ratio. The Borrowers shall not permit the Fixed Charge
Coverage Ratio of the Borrowers and their Subsidiaries on a consolidated basis,
as at the end of any fiscal quarter to be less than 1.15:1.00.

 

(c) Minimum Net Worth. The Borrowers shall not permit Net Worth of the Loan
Parties, as of the last day of any fiscal quarter (such date to be referred to
herein as a “Determination Date”), to be less than the sum on such Determination
Date of the following:

 

(i) Eighty percent (80%) of the Net Worth of the Loan Parties as of June 30,
2005; plus

 

(ii) Fifty percent (50%) of the cumulative sum of the Loan Parties’ quarterly
consolidated Net Income for each fiscal year (excluding any quarters in which
such Net Income is less than zero); plus

 

(iii) One hundred percent (100%) of the Net Proceeds from the issuance of Equity
Securities by any Loan Party from and after the date hereof.

 

(d) Capital Expenditures. The Borrowers shall not permit the aggregate amount of
Capital Expenditures (excluding any Permitted Acquisition which is treated as a
Capital Expenditure under GAAP) made by the Loan Parties in any fiscal year to
(i) be less than three percent (3%) of the consolidated net revenues of the Loan
Parties for the prior fiscal year or (ii) to be greater than six percent (6%) of
the consolidated net revenues of the Loan Parties for the prior fiscal year
other than with respect to Capital Expenditures (the “Additional Capital
Expenditures”) in an amount not to exceed $10,500,000 during the term of this
Agreement, which Additional Capital Expenditures shall be used solely for
Capital Assets located at Rail City, Depot Casino or Red Hawk. In addition to
the Capital Expenditures otherwise permitted under this clause (d), the
Borrowers may use up to $5,000,000 of the Net Proceeds from the issuance or sale
of Equity Securities (to the extent such Net Proceeds are available after the
Borrowers have satisfied the mandatory prepayment required under Section
2.07(c)(v)) for Capital Expenditures which improve or expand the Borrowers’
existing properties (including Depot Casino and Red Hawk).

 

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ARTICLE VI. DEFAULT.

 

6.01. Events of Default. The occurrence or existence of any one or more of the
following shall constitute an “Event of Default” hereunder:

 

(a) Non-Payment. Any Borrower shall (i) fail to pay when due any principal of
any Loan or any L/C Obligation or (ii) fail to pay within three (3) days after
the same becomes due, any interest, fees or other amounts payable under the
terms of this Agreement or any of the other Credit Documents; or

 

(b) Specific Defaults. Any Borrower shall fail to observe or perform any
covenant, obligation, condition or agreement set forth in Section 5.01(a)(i),
Section 5.01(a)(ii), Section 5.01(h), Section 5.01(i), Section 5.02 or Section
5.03; or

 

(c) Other Defaults. (i) Any Loan Party shall fail to observe or perform any
covenant, obligation, condition or agreement contained in the Guaranty or any
Security Document and such failure continues beyond any period of grace provided
with respect thereto; or (ii) any Loan Party shall fail to observe or perform
any other covenant, obligation, condition or agreement contained in this
Agreement or any other Credit Document (other than a default described in
Sections 6.01(a) or (b) or clause (i) above) and such failure shall continue for
thirty (30) days after the date of such failure; or

 

(d) Representations and Warranties. Any representation, warranty, certificate,
information or other statement (financial or otherwise) made or furnished by or
on behalf of any Loan Party to the Administrative Agent or any Lender in or in
connection with this Agreement or any of the other Credit Documents, or as an
inducement to the Administrative Agent or any Lender to enter into this
Agreement, shall be false, incorrect, incomplete or misleading in any material
respect when made or furnished; or

 

(e) Cross-Default. (i) Any Loan Party shall fail to make any payment on account
of any Indebtedness or Contingent Obligation of such Person (other than the
Obligations) when due (whether at scheduled maturity, by required prepayment,
upon acceleration or otherwise) and such failure shall continue beyond any grace
period provided with respect thereto, if the amount of such Indebtedness or
Contingent Obligation exceeds $500,000 or the effect of such failure is to
cause, or permit the holder or holders thereof to cause, such Indebtedness
and/or Contingent Obligation of any Loan Party (other than the Obligations) in
an aggregate amount exceeding $500,000 to become redeemable, due, liquidated or
otherwise payable (whether at scheduled maturity, by required prepayment, upon
acceleration or otherwise) and/or to be secured by cash collateral or (ii) any
Loan Party shall otherwise fail to observe or perform any agreement, term or
condition contained in any agreement or instrument relating to any Indebtedness
or Contingent Obligation of such Person (other than the Obligations), or any
other event shall occur or condition shall exist, if the effect of such failure,
event or condition is to cause, or permit the holder or holders thereof to
cause, such Indebtedness and/or Contingent Obligation of any Loan Party (other
than the Obligations) in an aggregate amount exceeding $500,000 to become
redeemable, due, liquidated or otherwise payable (whether at scheduled maturity,
by required prepayment, upon acceleration or otherwise) and/or to be secured by
cash collateral; or

 

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(f) Insolvency; Voluntary Proceedings. Any Loan Party shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian of
itself or of all or a substantial part of its Property, (ii) be unable, or admit
in writing its inability, to pay its debts generally as they mature, (iii) make
a general assignment for the benefit of its or any of its creditors, (iv) be
dissolved or liquidated in full or in part (except as permitted by Section
5.02(d)(iv)), (v) become insolvent (as such term may be defined or interpreted
under any applicable statute), or (vi) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the appointment of or
taking possession of its Property by any official in an involuntary case or
other proceeding commenced against it; or

 

(g) Involuntary Proceedings. Proceedings for the appointment of a receiver,
trustee, liquidator or custodian of any Loan Party or of all or a substantial
part of the Property thereof, or an involuntary case or other proceedings
seeking liquidation, reorganization or other relief with respect to any Loan
Party or the debts thereof under any bankruptcy, insolvency or other similar law
now or hereafter in effect shall be commenced and an order for relief entered or
such proceeding shall not be dismissed or discharged within ninety (90) days of
commencement; or

 

(h) Judgments. One or more judgments, orders, decrees or arbitration awards
shall be rendered against any Loan Party in connection with any single or
related series of transactions, incidents or circumstances, provided that, in
the case of any such judgment, order, decree or arbitration award in an
aggregate amount of less than $500,000, the same shall not constitute an Event
of Default if such judgment, order, decree or arbitration award is satisfied,
vacated or stayed pending appeal within thirty (30) days after the issuance
thereof; (ii) any judgment, writ, assessment, warrant of attachment, tax lien or
execution or similar process shall be issued or levied against a substantial
part of the Property of any Loan Party and the same shall not be released,
stayed, vacated or otherwise dismissed within thirty (30) days after issue or
levy; or (iii) any other judgments, orders, decrees, arbitration awards, writs,
assessments, warrants of attachment, tax liens or executions or similar
processes which, alone or in the aggregate, are reasonably likely to have a
Material Adverse Effect are rendered, issued or levied; or

 

(i) Credit Documents. Any Credit Document or any material term thereof shall
cease to be, or be asserted by any Loan Party not to be, a legal, valid and
binding obligation of such Loan Party enforceable in accordance with its terms;
or

 

(j) Security Documents. Any Lien intended to be created by any Security Document
shall at any time be invalidated, subordinated or otherwise cease to be in full
force and effect, for whatever reason, or any security interest purported to be
created by any Security Document shall cease to be, or shall be asserted by any
Loan Party not to be, a valid, first priority (except as expressly otherwise
provided in this Agreement or such Security Document) perfected Lien in the
Collateral covered thereby, or any Loan Party shall issue, create or permit to
be outstanding any Equity Securities which shall not be subject to a first
priority perfected Lien under the Security Documents; or

 

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(k) Pension Plans. Any Reportable Event which the Administrative Agent
reasonably believes in good faith constitutes grounds for the termination of any
Pension Plan by the PBGC or for the appointment of a trustee by the PBGC to
administer any Pension Plan shall occur and be continuing for a period of thirty
(30) days or more after notice thereof is provided to the Borrowers by the
Administrative Agent, or any Pension Plan shall be terminated within the meaning
of Title IV of ERISA or a trustee shall be appointed by the PBGC to administer
any Pension Plan except to the extent that such Reportable Event, termination or
appointment could not, either individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect; or

 

(l) Change of Control. Any Change of Control shall occur; or

 

(m) Involuntary Dissolution or Split Up. Any order, judgment or decree shall be
entered against any Loan Party decreeing its involuntary dissolution or split up
and such order shall remain undischarged and unstayed for a period in excess of
sixty (60) days; or

 

(n) Lender Rate Contracts. The occurrence of any liquidation or termination
event or event of default, beyond any applicable grace period, under any Lender
Rate Contract; or

 

(o) Gaming and Other Licenses. The occurrence of a License Revocation in any
jurisdiction in which any Loan Party owns or operates a Gaming Facility; or the
failure of any Borrower to maintain gaming activities at any Gaming Facility, at
least to the same general extent as is presently conducted thereon for a period
in excess of ten (10) consecutive days; or

 

(p) Material Adverse Effect. Any event or condition which is reasonably likely
to have a Material Adverse Effect shall occur or exist.

 

(q) Acquisition. The failure to consummate the Acquisition on the Funding Date
on terms and conditions satisfactory to the Administrative Agent.

 

(r) Designated Person. The Borrowers or any Subsidiary of a Borrower shall
become a Designated Person.

 

6.02. Remedies. At any time after the occurrence and during the continuance of
any Event of Default (other than an Event of Default referred to in Section
6.01(f) or 6.01(g)), the Administrative Agent may or shall, upon instructions
from the Required Lenders, by written notice to the Borrowers, (a) terminate the
Commitments, any obligation of the L/C Issuer to make L/C Credit Extensions and
the obligations of the Lenders to make Loans, (b) require that the Borrowers
Cash Collateralize the Obligations in an amount equal to the then Effective
Amount of the L/C Obligations; and/or (c) declare all or a portion of the
outstanding Obligations payable by the Borrowers to be immediately due and
payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived, anything contained herein or in the
Notes to the contrary notwithstanding. Upon the occurrence or existence of any
Event of Default described in Section 6.01(f) or 6.01(g), immediately and
without notice, (1) the Commitments, any obligation of the L/C Issuer to make
L/C Credit Extensions and the obligations of the Lenders to make Loans shall
automatically terminate, (2) the obligation of the Borrowers to Cash
Collateralize the Obligations in an amount equal to

 

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107% of the then Effective Amount of the L/C Obligations shall automatically
become effective and (3) all outstanding Obligations payable by the Borrowers
hereunder shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Notes to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Administrative Agent may
exercise any other right, power or remedy available to it under any of the
Credit Documents or otherwise.

 

ARTICLE VII. THE ADMINISTRATIVE AGENT AND RELATIONS AMONG THE LENDERS.

 

7.01. Appointment, Powers and Immunities.

 

(a) Each Lender hereby appoints and authorizes the Administrative Agent to act
as its agent hereunder and under the other Credit Documents with such powers as
are expressly delegated to the Administrative Agent by the terms of this
Agreement and the other Credit Documents, together with such other powers as are
reasonably incidental thereto. Each Lender hereby authorizes the Administrative
Agent to take such action on its behalf under the provisions of this Agreement
and the other Credit Documents and to exercise such powers as are set forth
herein or therein, together with such other powers as are reasonably incidental
thereto. The Administrative Agent shall not have any duties or responsibilities
except those expressly set forth in this Agreement or in any other Credit
Document, be a trustee for any Lender or have any fiduciary duty to any Lender.
Notwithstanding anything to the contrary contained herein, the Administrative
Agent shall not be required to take any action which is contrary to this
Agreement or any other Credit Document or any applicable Governmental Rule.
Neither the Administrative Agent nor any Lender shall be responsible to any
other Lender for any recitals, statements, representations or warranties made by
any Loan Party contained in this Agreement or in any other Credit Document, for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Credit Document or for any failure by any Loan
Party to perform its obligations hereunder or thereunder. The Administrative
Agent may each employ agents and attorneys-in-fact and shall not be responsible
to any Lender for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither the
Administrative Agent nor any of their respective directors, officers, employees,
agents or advisors shall be responsible to any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other Credit Document
or in connection herewith or therewith, except for its or their own gross
negligence or willful misconduct. Except as otherwise provided under this
Agreement, the Administrative Agent shall take such action with respect to the
Credit Documents as shall be directed by the Required Lenders. If Administrative
Agent seeks the consent or approval of any Lender to the taking or refraining
from taking any action hereunder, then Administrative Agent shall send notice
thereof to each Lender.

 

(b) The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith until such
time (and except for so long) as the Administrative Agent may agree at the
request of the Required Lenders to act for the L/C Issuer with respect thereto;
provided, however, that the L/C Issuer shall have all of the benefits and
immunities (i) provided to the Administrative Agent in this Article VII with
respect to any acts taken or omissions suffered by the L/C Issuer in connection
with Letters of

 

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Credit issued by it or proposed to be issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit as fully as
if the term “Administrative Agent” as used in this Article VII included the L/C
Issuer with respect to such acts or omissions, and (ii) as additionally provided
herein with respect to the L/C Issuer.

 

7.02. Reliance by the Administrative Agent. The Administrative Agent, the L/C
Issuer and the Swing Line Lender shall be entitled to rely upon any certificate,
notice or other document (including any cable, telegram, facsimile or telex)
believed by it in good faith to be genuine and correct and to have been signed
or sent by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Administrative Agent with reasonable care. As to any other matters not
expressly provided for by this Agreement, the Administrative Agent shall not be
required to take any action or exercise any discretion, but shall be required to
act or to refrain from acting upon instructions of the Required Lenders and
shall in all cases be fully protected by the Lenders in acting, or in refraining
from acting, hereunder or under any other Credit Document in accordance with the
instructions of the Required Lenders (or all Lenders if required by Section
8.04), and such instructions of the Required Lenders (or all the Lenders as the
case may be) and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders.

 

7.03. Defaults. The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default unless the Administrative Agent has
received a written notice from a Lender or the Borrowers, referring to this
Agreement, describing such Default and stating that such notice is a “Notice of
Default”. If the Administrative Agent receives such a notice of the occurrence
of a Default, the Administrative Agent shall give prompt notice thereof to the
Lenders. The Administrative Agent shall take such action with respect to such
Default as shall be reasonably directed by the Required Lenders; provided,
however, that until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default as
it shall deem advisable in the best interest of the Lenders. Notwithstanding
anything in the contrary contained herein, the order and manner in which the
Lenders’ rights and remedies are to be exercised (including the enforcement by
any Lender of its Note) shall be determined by the Required Lenders in their
sole discretion.

 

7.04. Indemnification. Without limiting the Obligations of the Borrowers
hereunder, each Lender agrees to indemnify the Administrative Agent, ratably in
accordance with its Proportionate Share, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of this Agreement or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or the enforcement of any of the terms hereof or thereof; provided,
however, that no Lender shall be liable for any of the foregoing to the extent
they arise from the Administrative Agent’s gross negligence or willful
misconduct. The Administrative Agent shall be fully justified in refusing to
take or in continuing to take any action hereunder unless it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The obligations of each Lender under this Section 7.04 shall
survive the payment and performance of the Obligations, the termination of this
Agreement and

 

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any Lender ceasing to be a party to this Agreement (with respect to events which
occurred prior to the time such Lender ceased to be a Lender hereunder).

 

7.05. Non-Reliance. Each Lender represents that it has, independently and
without reliance on the Administrative Agent, or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of the business, prospects, management, financial condition and
affairs of the Loan Parties and its own decision to enter into this Agreement
and agrees that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
appraisals and decisions in taking or not taking action under this Agreement.
Neither the Administrative Agent nor any of their respective affiliates nor any
of their respective directors, officers, employees, agents or advisors shall (a)
be required to keep any Lender informed as to the performance or observance by
any Loan Party of the obligations under this Agreement or any other document
referred to or provided for herein or to make inquiry of, or to inspect the
properties or books of any Loan Party; (b) have any duty or responsibility to
provide any Lender with any credit or other information concerning any Loan
Party which may come into the possession of the Administrative Agent, except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Administrative Agent hereunder; or (c) be
responsible to any Lender for (i) any recital, statement, representation or
warranty made by any Loan Party or any officer, employee or agent of any Loan
Party in this Agreement or in any of the other Credit Documents, (ii) the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any Credit Document, (iii) the value or sufficiency of the
Collateral or the validity or perfection of any of the liens or security
interests intended to be created by the Credit Documents, or (iv) any failure by
any Loan Party to perform its obligations under this Agreement or any other
Credit Document.

 

7.06. Resignation or Removal of the Administrative Agent. The Administrative
Agent may resign at any time by giving thirty (30) days prior written notice
thereof to the Borrowers and the Lenders, and the Administrative Agent may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Administrative Agent, which successor Administrative Agent, if not a
Lender, shall be reasonably acceptable Borrowers; provided, however, that the
Borrowers shall have no right to approve a successor Administrative Agent if an
Event of Default has occurred and is continuing. Upon the acceptance of any
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from the duties and obligations thereafter arising hereunder. After any retiring
Administrative Agent’s resignation or removal hereunder as the Administrative
Agent, the provisions of this Article VII shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Administrative Agent. Notwithstanding the foregoing, however,
Wells Fargo may not be removed as Administrative Agent at the request of the
Required Lenders unless Wells Fargo shall also simultaneously be replaced and
fully released as “L/C Issuer” and “Swing Line Lender” hereunder pursuant to
documentation in form and substance reasonably satisfactory to Wells Fargo.

 

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7.07. Collateral Matters.

 

(a) The Administrative Agent is hereby authorized by each Lender, without the
necessity of any notice to or further consent from any Lender, and without the
obligation to take any such action, to take any action with respect to any
Collateral or any Security Document which may from time to time be necessary to
perfect and maintain perfected the Liens of the Security Documents.

 

(b) The Lenders irrevocably authorize the Administrative Agent, at its option
and in its discretion, to release (and to execute and deliver such documents,
instruments and agreements as the Administrative Agent may deem necessary to
release) any Lien granted to or held by the Administrative Agent upon any
Collateral (i) upon termination of the Commitments and the full Cash
Collateralization of the then outstanding L/C Obligations and the payment in
full of all Loans and all other Obligations payable under this Agreement and
under the other Credit Documents; (ii) constituting property of the Loan Parties
which is sold, transferred or otherwise disposed of in connection with any
transaction not prohibited by this Agreement or the Credit Documents; (iii)
constituting property leased to the Loan Parties under an operating lease which
has expired or been terminated in a transaction not prohibited by this Agreement
or the Credit Documents or which will concurrently expire and which has not been
and is not intended by the Loan Parties to be, renewed or extended; (iv)
consisting of an instrument, if the Indebtedness evidenced thereby has been paid
in full; or (v) if approved or consented to by those of the Lenders required by
Section 8.04. Upon request by the Administrative Agent, the Lenders will confirm
in writing the Administrative Agent’s authority to release particular types or
items of Collateral pursuant to this Section 7.07.

 

(c) The Lenders irrevocably authorize the Administrative Agent to release Net
Insurance Proceeds and Net Condemnation Proceeds it may have in its possession
to the Borrowers in accordance with Section 2.07(c)(v) hereof. Unless all of the
Lenders otherwise consent in writing, any and all cash collateral (other than as
described in the preceding sentence) for the Obligations shall be released to
the Borrowers, to the extent not applied to the Obligations, only if (i) the
Commitments have been terminated (ii) all Obligations have been paid in full and
are no longer outstanding, including any L/C Obligations or any other contingent
obligations.

 

7.08. The Administrative Agent in its Individual Capacity. The Administrative
Agent and its affiliates may make loans to, issue letters of credit for the
account of, accept deposits from and generally engage in any kind of banking or
other business with the any Loan Party and its Affiliates as though the
Administrative Agent were not the Administrative Agent, L/C Issuer or Swing Line
Lender hereunder. With respect to Loans, if any, made by the Administrative
Agent in its capacity as a Lender, the Administrative Agent in its capacity as a
Lender shall have the same rights and powers under this Agreement and the other
Credit Documents as any other Lender and may exercise the same as though it were
not the Administrative Agent, L/C Issuer or Swing Line Lender, and the terms
“Lender” or “Lenders” shall include the Administrative Agent in its capacity as
a Lender.

 

7.09. Release of Collateral. At such time as (i) all of the Obligations,
including all principal, interest and other amounts owing with respect to the
Loans or the Notes, the

 

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Borrowers’ obligations to reimburse the L/C Issuer for drawings under Letters of
Credit and the other obligations under the Credit Documents (other than
obligations under Sections 2.12(c), 2.13, 2.14 and 8.02 that are not then due
and payable) shall have been paid in full in cash, the Commitments have been
terminated and all Letters of Credit shall have been discharged or cash
collateralized to the reasonable satisfaction of the Administrative Agent and
L/C Issuer in amount equal to 107% of the aggregate face amount thereof, and
(ii) the counterparties and other beneficiaries under Lender Rate Contracts have
evidenced their agreement to release of the Collateral in a writing or other
manner reasonably acceptable to the Administrative Agent (or at such time as
certain Collateral has been sold or disposed of in accordance with the
provisions of this Agreement), the Administrative Agent shall be authorized to
release the Collateral (or such portion of the Collateral, as applicable) from
the Liens created by the Security Documents; provided, however, that, (x) the
Administrative Agent and the Lenders shall be entitled to the benefits of all
the ongoing reimbursement obligations and indemnities set forth in the Credit
Documents, including those set forth in Sections 2.12(c), 2.13, 2.14 and 8.02 of
this Agreement, in each case subject to the limitations set forth therein, if
any, and (y) to the extent that any payments or proceeds received pursuant
hereto or otherwise in respect of the Obligations, or any part of such payments,
shall be subsequently invalidated, declared to be fraudulent, a fraudulent
conveyance, or preferential, set aside and/or required to be repaid to the
Borrowers, any Guarantor, a trustee, receiver, debtor in possession, or any
other party, whether under any bankruptcy law, state or federal law, common law
or equitable cause, or otherwise, then to the extent that such payment or
proceeds received by any such Person is rescinded or must be otherwise restored
by any such Person, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, the obligations or part thereof which were intended
to be satisfied, and all rights of such Person with respect to such obligations
(including all liens and security interests and other similar interests arising
pursuant to the Credit Documents), shall be revived and continue in full force
and effect, as if such payment or proceeds had never been received by such
Person, and this section or any release thereunder shall in no way impair the
claims of any of such Persons with respect to such revived obligations. The
Administrative Agent shall, if so requested by any Loan Party at or after such
termination, upon agreement of such Loan Party or other Person to pay all cost
and expenses relating thereto (including all legal fees and costs) acceptable to
the Administrative Agent and without recourse, and without any representation or
warranty of any kind, express or implied, execute, deliver and (if necessary)
acknowledge such termination statements or releases as may be necessary or
reasonably appropriate to confirm, assure or give notice of such termination and
take such actions as may be necessary to redeliver or release all Collateral
within its control.

 

ARTICLE VIII.   MISCELLANEOUS.

 

8.01. Notices.

 

(a) Except as otherwise provided herein, all notices, requests, demands,
consents, instructions or other communications to or upon the Borrowers, any
Lender or the Administrative Agent under this Agreement or the other Credit
Documents shall be in writing and faxed, mailed or delivered, if to the
Borrowers or to the Administrative Agent, the L/C Issuer or the Swing Line
Lender, at its respective facsimile number or address set forth below or, if to
any Lender, at the address or facsimile number specified for such Lender in Part
B of Schedule I (or to such other facsimile number or address for any party as
indicated in any notice given by

 

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that party to the other parties). All such notices and communications shall be
effective (a) when sent by an overnight courier service of recognized standing,
upon receipt; (b) when mailed, first class postage prepaid and addressed as
aforesaid through the United States Postal Service, upon receipt; (c) when
delivered by hand, upon delivery; and (d) when sent by facsimile transmission,
upon confirmation of receipt; provided, however, that any notice delivered to
the Administrative Agent, the L/C Issuer or the Swing Line Lender under Article
II shall not be effective until actually received by such Person.

 

The Administrative Agent,

the L/C Issuer and the

Swing Line Lender:

  

Wells Fargo Bank

Wholesale Loan Services - Agency Division

201 Third Street, 8th floor

San Francisco, CA

Fax no. (415) 512-7059

The Borrowers:   

The Sands Regent

345 North Arlington Avenue

Reno, Nevada 98501

Telecopy: (775) 348-6241

Attention: Rob Medeiros

 

Each Notice of Borrowing, Notice of Conversion and Notice of Interest Period
Selection shall be given by the Borrowers to the Administrative Agent’s office
located at the address referred to above during the Administrative Agent’s
normal business hours; provided, however, that any such notice received by the
Administrative Agent after 11:00 a.m. on any Business Day shall be deemed
received by the Administrative Agent on the next Business Day. In any case where
this Agreement authorizes notices, requests, demands or other communications by
the Borrowers to the Administrative Agent or any Lender to be made by telephone
or facsimile, the Administrative Agent or any Lender may conclusively presume
that anyone purporting to be a person designated in any incumbency certificate
or other similar document received by the Administrative Agent or a Lender is
such a person.

 

(b) The Borrowers agree that the Administrative Agent may make any material
delivered by the Borrowers to the Administrative Agent, as well as any
amendments, waivers, consents, and other written information, documents,
instruments and other materials relating to the Borrowers, any of their
Subsidiaries, or any other materials or matters relating to this Agreement, the
Notes or any of the transactions contemplated hereby (collectively, the
“Communications”) available to the Lenders by posting such notices on an
electronic delivery system (which may be provided by the Administrative Agent,
an Affiliate of the Administrative Agent, or any Person that is not an Affiliate
of the Administrative Agent), such as IntraLinks, or a substantially similar
electronic system (the “Platform”). The Borrowers acknowledge that (i) the
distribution of material through an electronic medium is not necessarily secure
and that there are confidentiality and other risks associated with such
distribution, (ii) the Platform is provided “as is” and “as available” and (iii)
neither the Administrative Agent nor any of its Affiliates warrants the
accuracy, completeness, timeliness, sufficiency, or sequencing of the
Communications posted on the Platform. The Administrative Agent and its
Affiliates expressly disclaim with respect to the Platform any liability for
errors in transmission, incorrect or incomplete downloading, delays in posting
or delivery, or problems accessing the

 

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Communications posted on the Platform and any liability for any losses, costs,
expenses or liabilities that may be suffered or incurred in connection with the
Platform. No warranty of any kind, express, implied or statutory, including any
warranty of merchantability, fitness for a particular purpose, non-infringement
of third party rights or freedom from viruses or other code defects, is made by
the Administrative Agent or any of its Affiliates in connection with the
Platform.

 

(c) Each Lender agrees that notice to it (as provided in the next sentence) (a
“Notice”) specifying that any Communication has been posted to the Platform
shall for purposes of this Agreement constitute effective delivery to such
Lender of such information, documents or other materials comprising such
Communication. Each Lender agrees (i) to notify, on or before the date such
Lender becomes a party to this Agreement, the Administrative Agent in writing of
such Lender’s e-mail address to which a Notice may be sent (and from time to
time thereafter to ensure that the Administrative Agent has on record an
effective e-mail address for such Lender) and (ii) that any Notice may be sent
to such e-mail address.

 

8.02. Expenses. The Borrowers shall pay on demand, whether or not any Credit
Event occurs hereunder, (a) all fees and expenses, including syndication
expenses, travel expenses, attorneys’ consultants’ and experts’ fees (including
allocated costs of internal counsel) and expenses, incurred by the
Administrative Agent in connection with the syndication of the facilities
provided hereunder, the preparation, negotiation, execution and delivery of, and
the exercise of its duties under, this Agreement and the other Credit Documents,
and the preparation, negotiation, execution and delivery of amendments and
waivers hereunder and thereunder and (b) all fees and expenses, including
customary attorneys’ fees and expenses, incurred by the Administrative Agent and
the Lenders in the enforcement or attempted enforcement of any of the
Obligations or in preserving any of the Administrative Agent’s or the Lenders’
rights and remedies (including all such fees and expenses incurred in connection
with any “workout” or restructuring affecting the Credit Documents or the
Obligations or any bankruptcy or similar proceeding involving any Loan Party).
The obligations of the Borrowers under this Section 8.02 shall survive the
payment and performance of the Obligations and the termination of this
Agreement.

 

8.03. Indemnification. To the fullest extent permitted by law, and in addition
to any other indemnity set forth in the Credit Documents, the Borrowers agree to
protect, indemnify, defend and hold harmless the Administrative Agent, the L/C
Issuer, the Swing Line Lender, the Lenders and their Affiliates and their
respective directors, officers, employees, attorneys, agents, trustees and
advisors (collectively, “Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, judgments, costs, disbursements, or
expenses of any kind or nature and from any suits, claims or demands (including
in respect of or for customary attorneys’ fees and other expenses) arising on
account of, in connection with or relating to (a) the Credit Documents or any
transaction contemplated thereby or related thereto, including the making of any
Loans and any use by a Borrower of any proceeds of the Loans or the Letters of
Credit, (b) any Environmental Damages, (c) the Acquisition or any transaction
contemplated in connection therewith (or any other acquisitions consummated,
announced or intended to be consummated), (d) any claims for brokerage fees or
commissions in connection with the Credit Documents or any transaction
contemplated thereby or in connection with a Borrower’s failure to conclude any
other financing, and to reimburse each Indemnitee on demand for all customary

 

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legal and other expenses incurred in connection with investigating or defending,
or (e) any claim, litigation, investigation or proceeding relating to any of the
foregoing, regardless of whether such Indemnitee is a party thereto; provided,
however, that nothing contained in this Section 8.03 shall obligate the
Borrowers to protect, indemnify, defend or hold harmless any Indemnitee against
any liabilities, obligations, losses, damages, penalties, judgments, costs,
disbursements, or expenses of any kind or nature and from any suits, claims or
demands (i) to the extent arising out of the gross negligence or willful
misconduct of such Indemnitee or any of its Affiliates or (ii) between or among
Indemnitees. No Indemnitee will be liable to the Borrowers or any of their
Subsidiaries or Affiliates or to their respective security holders or creditors
for any special, indirect, consequential or punitive damages relating to this
Agreement or any of the other Credit Documents or any of the other matters
described in the preceding sentence or for any damages arising from the use by
others of confidential information or other materials sent through electronic,
telecommunications or other information transmittal systems. Upon receiving
knowledge of any suit, claim or demand asserted by a third party that the
Administrative Agent or any Lender believes is covered by this indemnity, the
Administrative Agent or such Lender shall give the Borrowers written notice of
the matter and the Administrative Agent or such Lender may select its own
counsel or request that the Borrowers defend such suit, claim or demand, with
legal counsel satisfactory to the Administrative Agent or such Lender as the
case may be, at the Borrowers’ sole cost and expense; provided, however, that
the Administrative Agent or such Lender shall not be required to so notify the
Borrowers and the Administrative Agent or such Lender shall have the right to
defend, at the Borrowers’ sole cost and expense, any such matter that is in
connection with a formal proceeding instituted by any Governmental Authority
having authority to regulate or oversee any aspect of the Administrative Agent’s
or such Lender’s business or that of its Affiliates. The Administrative Agent or
such Lender may also require the Borrowers to defend the matter. Any failure or
delay of the Administrative Agent or any Lender to notify the Borrowers of any
such suit, claim or demand shall not relieve the Borrowers of their obligations
under this Section 8.03 but shall reduce such obligations to the extent of any
increase in those obligations caused solely by any such failure or delay.
Expenses of counsel to the Indemnitees shall be reimbursed on a current basis by
the Borrowers. The obligations of the Borrowers under this Section 8.03 shall
survive the payment and performance of the Obligations and the termination of
this Agreement.

 

8.04. Waivers; Amendments. Any term, covenant, agreement or condition of this
Agreement or any other Credit Document may be amended or waived, and any consent
under this Agreement or any other Credit Document may be given, if such
amendment, waiver or consent is in writing and is signed by the Borrowers and
the Required Lenders (or the Administrative Agent on behalf of the Required
Lenders with the written approval of the Required Lenders); provided, however,
that:

 

(a) Any amendment, waiver or consent which would (i) increase the Total
Revolving Loan Commitment or the Total Term Loan Commitment, (ii) extend the
Revolving Loan Maturity Date or the Term Loan Maturity Date, (iii) reduce the
principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or any fees or other amounts payable for the account of the Lenders
hereunder or under any other Credit Document, (iv) extend any date fixed for any
payment of the principal of or interest on any Loans or any fees or other
amounts payable for the account of the Lenders hereunder or under any other
Credit Document, (v) amend this Section 8.04 or Section 2.11, (vi) amend the
definition of Required Lenders or

 

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modify in any other manner the number or percentage of the Lenders required to
make any determinations or to waive any rights under, or to modify any provision
of, this Agreement or any other Credit Document or (vii) release any Guarantor
or any substantial part of the Collateral, except for any release in connection
with a sale or other disposition of such Guarantor or such Collateral authorized
by Section 5.02(c), must be in writing and signed or approved in writing by all
Lenders. In connection with any such proposed amendment, modification, waiver or
termination requiring the consent of all Lenders (such proposed amendment,
modification, waiver or termination, a “Proposed Change”), if the consent of the
Required Lenders is obtained, but the consent of other Lenders whose consent is
required is not obtained (any such Lender whose consent is not obtained as
described in this Section 8.04 being referred to as a “Non-Consenting Lender”),
then, so long as the Lender that is acting as the Administrative Agent is not a
Non-Consenting Lender and provided no Event of Default has occurred and is then
continuing, at the Borrower’s request, the Lender that is acting as the
Administrative Agent or an Eligible Assignee (which can include an existing
Lender) that is acceptable to the Administrative Agent shall have the right with
the Administrative Agent’s consent and in the Administrative Agent’s sole
discretion (but shall have no obligation) to purchase from such Non-Consenting
Lender, and such Non-Consenting Lender hereby agrees that it shall, upon the
Administrative Agent’s request, sell and assign to the Lender that is acting as
the Administrative Agent or such Eligible Assignee, all of its rights and
obligations under this Agreement and the other Credit Documents (including for
purposes of this subsection (a), the Revolving Loan Commitments, the Revolving
Loans, the Term Loan Commitments, the Term Loans, L/C Advances and
participations in Swing Line Loans) for an amount equal to the principal balance
of all Revolving Loans, Term Loans, L/C Advances and aggregate amounts funded
under Section 2.04(c)(ii) in respect of Swing Line Loans, by the Non-Consenting
Lender and all accrued interest and fees and any other amounts due such Lender
with respect thereto through the date of sale (or such other amounts as may be
agreed upon by the Non-Consenting Lender and the assignee). In such event, such
Non-Consenting Lender agrees to execute an Assignment Agreement to reflect such
purchase and sale, but regardless of whether such Assignment Agreement is
executed, such Non-Consenting Lender’s rights hereunder, except rights under
Section 8.03 with respect to actions prior to such date, shall cease from and
after the date of tender by the purchaser of the amount of the purchase price;

 

(b) Any amendment, waiver or consent which increases or decreases the
Proportionate Share of any Lender must be in writing and signed by such Lender;

 

(c) Any amendment, waiver or consent which affects the rights or duties of the
Swing Line Lender under this Agreement must be in writing and signed by the
Swing Line Lender;

 

(d) Any amendment, waiver or consent which affects the rights or duties of the
L/C Issuer under this Agreement or any Letter of Credit Application relating to
any Letter of Credit issued or to be issued by it must be in writing and signed
by the L/C Issuer; and

 

(e) Any amendment, waiver or consent which affects the rights or obligations of
the Administrative Agent must be in writing and signed by the Administrative
Agent.

 

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No failure or delay by the Administrative Agent or any Lender in exercising any
right under this Agreement or any other Credit Document shall operate as a
waiver thereof or of any other right hereunder or thereunder nor shall any
single or partial exercise of any such right preclude any other further exercise
thereof or of any other right hereunder or thereunder. Unless otherwise
specified in such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose for
which given. The Lenders may condition the giving or making of any amendment,
waiver or consent of any term, covenant, agreement or condition of this
Agreement or any other Credit Document on payment of a fee by the Borrowers.

 

8.05. Successors and Assigns.

 

(a) Binding Effect. This Agreement and the other Credit Documents shall be
binding upon and inure to the benefit of the Borrowers, the Lenders, the
Administrative Agent, all future holders of the Notes and their respective
successors and permitted assigns, except that no Loan Party may assign or
transfer any of its rights or obligations under any Credit Document without the
prior written consent of the Administrative Agent and each Lender. Any purported
assignment or transfer in contravention of the foregoing shall be null and void.

 

(b) Participations. Any Lender may, without notice to or consent of the
Borrowers, at any time sell to one or more banks or other financial institutions
(“Participants”) participating interests in all or a portion of any Loan owing
to such Lender, any Note held by such Lender, any Commitment of such Lender or
any other interest of such Lender under this Agreement and the other Credit
Documents (including for purposes of this subsection (b), participations in L/C
Obligations and in Swing Line Loans). In the event of any such sale by a Lender
of participating interests, such Lender’s obligations under this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of its Notes for all
purposes under this Agreement and the Borrowers and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement. Any agreement
pursuant to which any such sale is effected may require the selling Lender to
obtain the consent of the Participant in order for such Lender to agree in
writing to any amendment, waiver or consent of a type specified in Section
8.04(a) but may not otherwise require the selling Lender to obtain the consent
of such Participant to any other amendment, waiver or consent hereunder. The
Borrowers agree that if amounts outstanding under this Agreement and the other
Credit Documents are not paid when due (whether upon acceleration or otherwise),
each Participant shall, to the fullest extent permitted by law, be deemed to
have the right of setoff in respect of its participating interest in amounts
owing under this Agreement and any other Credit Documents to the same extent as
if the amount of its participating interest were owing directly to it as a
Lender under this Agreement or any other Credit Documents; provided, however,
that (i) no Participant shall exercise any rights under this sentence without
the consent of the Administrative Agent, (ii) no Participant shall have any
rights under this sentence which are greater than those of the selling Lender
and (iii) such rights of setoff shall be subject to the obligation of such
Participant to share the payment so obtained with all of the Lenders entitled
thereto as provided in Section 2.11(b). The Borrowers also agree that any Lender
which has transferred any participating interest in its Commitment or Loans
shall, notwithstanding any such

 

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transfer, be entitled to the full benefits accorded such Lender under Sections
2.12, 2.13 and 2.14, as if such Lender had not made such transfer.

 

(c) Assignments. Any Lender may, at any time, sell and assign to any Lender or
any Eligible Assignee (individually, an “Assignee Lender”) all or a portion of
its rights and obligations under this Agreement and the other Credit Documents
(including for purposes of this subsection (c), participations in L/C
Obligations and in Swing Line Loans) (such a sale and assignment to be referred
to herein as an “Assignment”) pursuant to an assignment agreement in
substantially the form of Exhibit K (an “Assignment Agreement”), executed by
each Assignee Lender and such assignor Lender (an “Assignor Lender”) and
delivered to the Administrative Agent for its acceptance and recording in the
Register; provided, however, that:

 

(i) Each Assignee Lender shall provide appropriate assurances and indemnities
(which may include letters of credit) to the L/C Issuer and the Swing Line
Lender as each may require with respect to any continuing obligation to purchase
participation interests in any L/C Obligations or any Swing Line Loans then
outstanding;

 

(ii) Without the written consent of the Administrative Agent and, if no Event of
Default has occurred and is continuing, the Borrowers (which consent of the
Administrative Agent and the Borrowers shall not be unreasonably withheld or
delayed), no Lender may make any Assignment to any Assignee Lender which is not,
immediately prior to such Assignment, a Lender hereunder or an Affiliate
thereof;

 

(iii) Without the written consent of the Administrative Agent and, if no Event
of Default has occurred and is continuing, the Borrowers (which consents shall
not be unreasonably withheld or delayed), no Lender may make any Assignment to
any Assignee Lender if, after giving effect to such Assignment, the Commitment
or Loans of such Lender or such Assignee Lender would be less than Five Million
Dollars ($5,000,000) (except that a Lender may make an Assignment which reduces
its Commitment or Loans to zero without the written consent of the Borrowers and
the Administrative Agent except to the extent such written consent is required
by clause (ii) above and clause (iv) below); and

 

(iv) No Lender may make any Assignment which does not assign and delegate an
equal pro rata interest in such Lender’s Revolving Loans, Term Loan, Commitments
and all other rights, duties and obligations of such Lender under this Agreement
and the other Credit Documents. Any assignment made in contravention of the
foregoing shall be null and void.

 

Upon such execution, delivery, acceptance and recording of each Assignment
Agreement, from and after the Assignment Effective Date determined pursuant to
such Assignment Agreement, (A) each Assignee Lender thereunder shall be a Lender
hereunder with a Revolving Loan Commitment and Loans (including Term Loans) as
set forth on Attachment 1 to such Assignment Agreement and shall have the
rights, duties and obligations of such a Lender under this Agreement and the
other Credit Documents, and (B) the Assignor Lender thereunder shall be a Lender
with a Revolving Loan Commitment and Loans (including Term Loans) as set forth
on Attachment 1 to such Assignment Agreement or, if the Revolving Loan
Commitment and Loans of the Assignor Lender have been reduced to $0, the
Assignor Lender shall cease to be a Lender

 

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and to have any obligation to make any Loan; provided, however, that any such
Assignor Lender which ceases to be a Lender shall continue to be entitled to the
benefits of any provision of this Agreement which by its terms survives the
termination of this Agreement. Each Assignment Agreement shall be deemed to
amend Schedule I to the extent, and only to the extent, necessary to reflect the
addition of each Assignee Lender, the deletion of each Assignor Lender which
reduces its Revolving Loan Commitment and Loans to $0 and the resulting
adjustment of Revolving Loan Commitment and Loans arising from the purchase by
each Assignee Lender of all or a portion of the rights and obligations of an
Assignor Lender under this Agreement and the other Credit Documents. On or prior
to the Assignment Effective Date determined pursuant to each Assignment
Agreement, the Borrowers, at their own expense, shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Revolving Loan Note or
Term Loan Note, if any, of the Assignor Lender thereunder, a new Revolving Loan
Note or Term Loan Note to the order of each Assignee Lender thereunder that
requests such a note (with each new Revolving Loan Note to be in an amount equal
to the Revolving Loan Commitment assumed by such Assignee Lender and each new
Term Loan Note to be in the original principal amount of the Term Loan then held
by such Assignee Lender) and, if the Assignor Lender is continuing as a Lender
hereunder, a new Revolving Loan Note or Term Loan Note to the order of the
Assignor Lender if so requested by such Assignor Lender (with the new Revolving
Loan Note to be in an amount equal to the Revolving Loan Commitment retained by
it and the new Term Loan Note to be in the original principal amount of the Term
Loan retained by it). Each such new Revolving Loan Note and Term Loan Note shall
be dated the Funding Date or the applicable Assignment Effective Date, as
determined by the Administrative Agent, and each such new Note shall otherwise
be in the form of the Note replaced thereby. The Notes surrendered by the
Assignor Lender shall be returned by the Administrative Agent to the Borrowers
marked “Replaced”. Each Assignee Lender which was not previously a Lender
hereunder and which is not incorporated under the laws of the United States of
America or a state thereof shall, within three (3) Business Days of becoming a
Lender, deliver to the Borrowers and the Administrative Agent two duly completed
copies of United States Internal Revenue Service Form W-8BEN or W-8ECI (or
successor applicable form), as the case may be, appropriately completed.

 

Notwithstanding anything to the contrary contained herein, if at any time Wells
Fargo assigns all of its Commitments and Loans pursuant to subsection (c) above,
Wells Fargo may, (i) upon 30 days’ notice to the Borrowers and the Lenders,
resign as L/C Issuer and/or (ii) upon five Business Days’ notice to the
Borrowers, terminate the Swing Line. In the event of any such resignation as L/C
Issuer or termination of the Swing Line, the Borrowers shall be entitled to
appoint from among the Lenders a successor L/C Issuer or Swing Line Lender
hereunder; provided, however, that no failure by the Borrowers to appoint any
such successor shall affect the resignation of Wells Fargo as L/C Issuer or the
termination of the Swing Line, as the case may be. Wells Fargo shall retain all
the rights and obligations of the L/C Issuer hereunder with respect to all
Letters of Credit outstanding as of the effective date of its resignation as L/C
Issuer and all L/C Obligations with respect thereto (including the right to
require the Lenders to make Base Rate Revolving Loans or fund participations in
Unreimbursed Amounts pursuant to Section 2.04(c)). If Wells Fargo terminates the
Swing Line, it shall retain all the rights of the Swing Line Lender provided for
hereunder with respect to Swing Line Loans made by it and outstanding as of the
effective date of such termination, including the right to require the Lenders
to make Base Rate Revolving Loans or fund participations in outstanding Swing
Line Loans pursuant to Section 2.04(c).

 

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(d) Register. The Administrative Agent shall maintain at its address referred to
in Section 8.01 a copy of each Assignment Agreement delivered to it and a
register (the “Register”) for the recordation of the names and addresses of the
Lenders and the Commitments or Loans of each Lender from time to time. The
entries in the Register shall be conclusive in the absence of manifest error,
and the Borrowers, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register as the owner of the Loans recorded
therein for all purposes of this Agreement. The Register shall be available for
inspection by the Borrowers or any Lender at any reasonable time and from time
to time upon reasonable prior notice.

 

(e) Registration. Upon its receipt of an Assignment Agreement executed by an
Assignor Lender and an Assignee Lender (and, to the extent required by Section
8.05(c), by the Borrowers and the Administrative Agent) together with payment to
the Administrative Agent by Assignor Lender of a registration and processing fee
of $3,500 (provided, however, that such registration and processing fee shall
not be applicable in the case of an Assignment to an Assignee Lender who,
immediately prior to such Assignment, is a Lender hereunder or an Affiliate
thereof), the Administrative Agent shall (i) promptly accept such Assignment
Agreement and (ii) on the Assignment Effective Date determined pursuant thereto
record the information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrowers. The Administrative
Agent may, from time to time at its election, prepare and deliver to the Lenders
and the Borrowers a revised Schedule I reflecting the names, addresses and
respective Commitments or Loans of all Lenders then parties hereto.

 

(f) Confidentiality. Subject to Section 8.10, the Administrative Agent and the
Lenders may disclose the Credit Documents and any financial or other information
relating to the Borrowers and all Subsidiaries of a Borrower to each other or to
any potential Participant or Assignee Lender.

 

(g) Pledges to Federal Reserve Banks. Notwithstanding any other provision of
this Agreement, any Lender may at any time assign all or a portion of its rights
under this Agreement and the other Credit Documents to a Federal Reserve Bank.
No such assignment shall relieve the assigning Lender from its obligations under
this Agreement and the other Credit Documents.

 

(h) Assignments by Wells Fargo. Notwithstanding any provision in this Section
8.05 to the contrary, no Assignment by Wells Fargo shall be subject to the
requirements set forth in clauses (i), (ii), (iii) and (iv) of the proviso of
Section 8.05(c) until the syndication of the Commitments and the Loans has been
successfully completed (as determined by Wells Fargo in its sole discretion),
and no registration or processing fee shall be payable in connection with any
such Assignment by Wells Fargo.

 

8.06. Setoff by Lenders. In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, with the prior consent of the
Administrative Agent but without prior notice to or consent of the Borrowers,
any such notice and consent being expressly waived by the Borrowers to the
extent permitted by applicable law, upon the occurrence and during the
continuance of an Event of Default, to set-off and apply against the Obligations
any amount owing from such Lender to the Borrowers. The aforesaid right of
set-off may be

 

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exercised by such Lender against the Borrowers or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver or execution, judgment or attachment creditor of the Borrowers or
against anyone else claiming through or against the Borrowers or such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of set-off may not have been exercised by such Lender at
any prior time. Each Lender agrees promptly to notify the Borrowers after any
such set-off and application made by such Lender; provided, that the failure to
give such notice shall not affect the validity of such set-off and application.

 

8.07. No Third Party Rights. Nothing expressed in or to be implied from this
Agreement is intended to give, or shall be construed to give, any Person, other
than the parties hereto and their permitted successors and assigns hereunder
(and any Indemnitees), any benefit or legal or equitable right, remedy or claim
under or by virtue of this Agreement or under or by virtue of any provision
herein.

 

8.08. Partial Invalidity. If at any time any provision of this Agreement is or
becomes illegal, invalid or unenforceable in any respect under the law or any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions of this Agreement nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction shall in any way be
affected or impaired thereby.

 

8.09. Jury Trial. EACH OF THE BORROWERS, THE LENDERS AND THE ADMINISTRATIVE
AGENT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT.

 

8.10. Confidentiality. Neither any Lender nor the Administrative Agent shall
disclose to any Person any information with respect to any Loan Party which is
furnished pursuant to this Agreement or under the other Credit Documents which
is marked or identified as “confidential”, except that any Lender or the
Administrative Agent may disclose any such information (a) to its own directors,
officers, employees, auditors, counsel and other advisors and to its Affiliates
and their respective directors, officers and employees; (b) to any other Lender
or the Administrative Agent; (c) which is otherwise available to the public; (d)
if required or appropriate in any report, statement or testimony submitted to
any Governmental Authority having or claiming to have jurisdiction over such
Lender or the Administrative Agent; (e) if required in response to any summons
or subpoena; (f) in connection with any enforcement by the Lenders and the
Administrative Agent of their rights under this Agreement or the other Credit
Documents or any litigation among the parties relating to the Credit Documents
or the transactions contemplated thereby; (g) to comply with any Requirement of
Law applicable to such Lender or the Administrative Agent; (h) to any Assignee
Lender or Participant or any prospective Assignee Lender or Participant,
provided that such Assignee Lender or Participant or prospective Assignee Lender
or Participant agrees to be bound by this Section 8.10; or (i) otherwise with
the prior consent of such Loan Party; provided, however, that any disclosure
made in violation of this Agreement shall not affect the obligations of the Loan
Parties under this Agreement and the other Credit Documents; and provided,
further, however, that the parties hereto (and each of their

 

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Affiliates and each respective employee, representative or other agent thereof)
may disclose to any and all persons, without limitation of any kind, the
“structure” and “tax aspects” (in each case, within the meaning of Treasury
Regulation Section 1.6011-4T) of the transactions contemplated hereby and all
materials of any kid (including opinions or other tax analyses) that are or have
been provided to such Person relating to such structure and tax aspects, except
that, with respect to any document or similar item that in either case contains
information concerning such tax structure or tax aspects of the transactions
contemplated hereby as well as other information, this proviso shall only apply
to such portions of the document or similar item that relate to such tax
structure or tax aspects of the transactions contemplated hereby.

 

8.11. Counterparts. This Agreement may be executed in any number of identical
counterparts, any set of which signed by all the parties hereto shall be deemed
to constitute a complete, executed original for all purposes. Transmission by
telecopier of an executed counterpart of this Agreement shall be deemed to
constitute due and sufficient delivery of such counterpart.

 

8.12. Consent to Jurisdiction. Each of the Loan Parties irrevocably submits to
the non-exclusive jurisdiction of the courts of the State of Nevada and the
courts of the United States of America located in the State of Nevada and agrees
that any legal action, suit or proceeding arising out of or relating to this
Agreement or any of the other Credit Documents may be brought against such party
in any such courts. Final judgment against any party in any such action, suit or
proceeding shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the judgment, or in any other manner provided by law.
Nothing in this Section 8.12 shall affect the right of any party to commence
legal proceedings or otherwise sue any other party in any other appropriate
jurisdiction, or concurrently in more than one jurisdiction, or to serve
process, pleadings and other papers upon any other party in any manner
authorized by the laws of any such jurisdiction. The Borrowers agree that
process served either personally or by registered mail shall, to the extent
permitted by law, constitutes adequate service of process in any such suit. Each
of the Loan Parties irrevocably waives to the fullest extent permitted by
applicable law (a) any objection which it may have now or in the future to the
laying of the venue of any such action, suit or proceeding in any court referred
to in the first sentence above; (b) any claim that any such action, suit or
proceeding has been brought in an inconvenient forum; (c) its right of removal
of any matter commenced by any other party in the courts of the State of Nevada
to any court of the United States of America; (d) any immunity which it or its
assets may have in respect of its obligations under this Agreement or any other
Credit Document from any suit, execution, attachment (whether provisional or
final, in aid of execution, before judgment or otherwise) or other legal
process; and (e) any right it may have to require the moving party in any suit,
action or proceeding brought in any of the courts referred to above arising out
of or in connection with this Agreement or any other Credit Document to post
security for the costs of any party or to post a bond or to take similar action.

 

8.13. Relationship of Parties. The relationship between the Borrowers, on the
one hand, and the Lenders and the Administrative Agent, on the other, is, and at
all times shall remain, solely that of borrowers and lenders. Neither the
Lenders nor the Administrative Agent shall under any circumstances be construed
to be partners or joint venturers of the Borrowers or any of its Affiliates; nor
shall the Lenders nor the Administrative Agent under any circumstances

 

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be deemed to be in a relationship of confidence or trust or a fiduciary
relationship with the Borrowers or any of their Affiliates, or to owe any
fiduciary duty to the Borrowers or any of their Affiliates. The Lenders and the
Administrative Agent do not undertake or assume any responsibility or duty to
the Borrowers or any of their Affiliates to select, review, inspect, supervise,
pass judgment upon or otherwise inform the Borrowers or any of their Affiliates
of any matter in connection with its or their Property, any security held by the
Administrative Agent or any Lender or the operations of the Borrowers or any of
their Affiliates. The Borrowers and their Affiliates shall rely entirely on
their own judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment or supply of information undertaken or assumed
by any Lender or the Administrative Agent in connection with such matters is
solely for the protection of the Lenders and the Administrative Agent and
neither the Borrowers nor any of their Affiliates is entitled to rely thereon.

 

8.14. Time. Time is of the essence as to each term or provision of this
Agreement and each of the other Credit Documents.

 

8.15. Waiver of Punitive Damages. Notwithstanding anything to the contrary
contained in this Agreement, each Borrower hereby agrees that it shall not seek
from the Lenders or the Administrative Agent punitive damages under any theory
of liability.

 

8.16. Arbitration.

 

(a) Arbitration. The parties hereto agree, upon demand by the Administrative
Agent, the Required Lenders or the Borrowers, to submit to binding arbitration
all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents), whether
in tort, contract or otherwise arising out of or relating to in any way (i) the
Loans and related Credit Documents which are the subject of this Agreement and
its negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination, or (ii) requests for additional credit.

 

(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location
in Nevada in which the American Arbitration Association (“AAA”) has an office as
selected by the party filing such proceeding; (ii) except as to the conduct of a
proceeding which shall be governed as provided in clause (iii) of this Section
8.16(b), be governed by the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in any of
the documents between the parties; and (iii) be conducted by the AAA, or such
other administrator as the parties shall mutually agree upon, in accordance with
the AAA’s commercial dispute resolution procedures, unless the claim or
counterclaim is at least $1,000,000.00 exclusive of claimed interest,
arbitration fees and costs in which case the arbitration shall be conducted in
accordance with the AAA’s optional procedures for large, complex commercial
disputes (the commercial dispute resolution procedures or the optional
procedures for large, complex commercial disputes to be referred to, as
applicable, as the “Rules”). If there is any inconsistency between the terms
hereof and the Rules, the terms and procedures set forth herein shall control.
Any party who fails or refuses to submit to arbitration following a demand by
any other party shall bear all costs and expenses (including fees of attorneys
or expert witnesses) incurred by such other party in compelling arbitration of
any

 

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dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law.

 

(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this subsection.

 

(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00, then two additional arbitrators shall be appointed
and the proceeding shall be decided in the manner set forth in the next
sentence. Any dispute in which the amount in controversy exceeds $5,000,000.00
shall be decided by majority vote of a panel of three arbitrators; provided
however, that all three arbitrators must actively participate in all hearings
and deliberations. The arbitrator will be a neutral attorney licensed in the
State of Nevada or a neutral retired judge of the state or federal judiciary of
Nevada, in either case with a minimum of ten years experience in the substantive
Nevada law applicable to the subject matter of the dispute to be arbitrated. The
arbitrator will determine whether or not an issue is arbitratable and will give
effect to the statutes of limitation and any other legal defense in determining
any claim. In any arbitration proceeding the arbitrator will decide (by
documents only or with a hearing at the arbitrator’s discretion) any pre-hearing
motions which are similar to motions to dismiss for failure to state a claim or
motions for summary adjudication. The arbitrator shall resolve all disputes in
accordance with the substantive law of Nevada and may grant any remedy or relief
that a court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator
shall also have the power to award recovery of all costs and fees, to impose
sanctions and to take such other action as the arbitrator deems necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Nevada Rules of Civil Procedure or other applicable law. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.

 

(e) Discovery. In any arbitration proceeding discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date and within 180 days of the filing of the
dispute with the AAA. Any requests for an extension of the discovery periods, or
any discovery disputes, will be subject to final determination by the arbitrator
upon a showing that the request for discovery is essential for the party’s
presentation and that no alternative means for obtaining information is
available.

 

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(f) Class Proceedings and Consolidations. The resolution of any dispute arising
pursuant to the terms of this Agreement shall be determined by a separate
arbitration proceeding and such dispute shall not be consolidated with other
disputes or included in any class proceeding.

 

(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs
and expenses of the arbitration proceeding.

 

(h) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, this Section 8.16 shall control. The
arbitration provisions set forth in this Section 8.16 shall survive termination,
amendment or expiration of any of the Credit Documents or any relationship
between the parties.

 

8.17. Application of Gaming Laws.

 

(a) This Agreement and the other Credit Documents are subject to Gaming Laws.
Without limiting the foregoing, each of the Administrative Agent and the Lenders
acknowledges that (i) it is subject to being called forward by the Gaming
Authorities, in their discretion, for licensing or a finding of suitability or
to file or provide other information, and (ii) all rights, remedies and powers
in or under this Agreement and the other Credit Documents, including with
respect to the Collateral (including Equity Securities) and the ownership and
operation of Gaming Facilities, may be exercised only to the extent that the
exercise thereof does not violate any applicable provisions of the Gaming Laws
and only to the extent that required approvals (including prior approvals) are
obtained from the requisite Governmental Authorities.

 

(b) Each of the Administrative Agent and the Lenders agrees to cooperate with
all Gaming Authorities (or be subject to the provisions of Section 2.16) in
connection with the provision of such documents or other information as may be
requested by such Gaming Authorities relating to the Loan Parties or to the
Credit Documents.

 

(c) If during the existence of an Event of Default hereunder or under any of the
other Credit Documents it shall become necessary, or in the opinion of the
Required Lenders advisable, for an agent, supervisor, receiver or other
representative of the Administrative Agent and the Lenders to become licensed
under any Governmental Rule as a condition to receiving the benefit of any
Collateral encumbered by the Security Documents or other Credit Documents or to
otherwise enforce the rights of the Administrative Agent and the Lenders under
the Credit Documents, the Borrowers hereby agree to grant such license or
licenses and to execute such further documents as may be required in connection
with the evidencing of such consent.

 

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8.18. USA Patriot Act Notification. The following notification is provided to
Borrowers pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C.
Section 5318:

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the
government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify and record
information that identifies each person that opens an account, including any
deposit account, treasury management account, loan, other extension of credit or
other financial services product. What this means for the Borrowers: When an
entity Borrower opens an account, the applicable financial institution will ask
for such Borrower’s name, business address, taxpayer identification number and
other information that will allow the Financial Institution to identify the
entity Borrower. The Financial Institution may also ask to see such entity
Borrower’s legal organizational documents or other identifying documents.

 

8.19. Waivers and Agreements of the Borrowers. The parties do not intend to
create a suretyship relationship between the Borrowers. If it is determined that
any Borrower is a surety of the other Borrowers, the following provisions in
this Section 8.19 shall be effective as of the Funding Date:

 

(a) Without limiting the provisions of Section 1.13, the covenants, agreements
and obligations of each Borrower set forth herein are joint and several and
shall be primary obligations of such Borrower, and, to the extent not prohibited
by applicable law, such obligations shall be absolute and unconditional, shall
not be subject to any counterclaim, set-off, deduction, diminution, abatement,
recoupment, suspension, deferment, reduction or defense (other than full and
strict compliance by each Borrower with its obligations hereunder) based upon
any claim such Borrower, any other Borrower or any other Person may have against
the Administrative Agent, the Lenders or any other Person, and shall remain in
full force and effect without regard to, and shall not be released, discharged
or in any way affected by, any circumstance or condition whatsoever, foreseeable
or unforeseeable and without regard to whether such Borrower, any other
Borrower, the Administrative Agent or any Lender shall have any knowledge or
notice thereof, including:

 

(i) any termination, amendment, modification, addition, deletion or supplement
to or other change to any of the terms of any Credit Document in accordance with
its terms or any other instrument or agreement applicable to any of the parties
hereto or thereto, or any assignment or transfer of any thereof, or any
furnishing or acceptance or release of additional security for any Obligation or
for the obligations of any Person under any Credit Document, or the failure of
any security or the failure of any Person to perfect any interest in any
collateral (including the Collateral); any waiver of, or extension of time for
the performance of, the payment, performance or observance of any of the
obligations, conditions, covenants or agreements contained in any Credit
Document, or any other waiver, forbearance, consent, extension, renewal,
indulgence, compromise, release, settlement, refunding or other action or
inaction under or in respect of any Credit Document or any other instrument or
agreement, or under or in respect of any obligation or liability of each
Borrower, or the Administrative Agent or any exercise or non-exercise of any
right, remedy, power or privilege under or in respect of any such instrument of
agreement or any such obligation or liability;

 

(ii) any failure, omission or delay on the part of the Administrative Agent to
enforce, assert or exercise any right, power or remedy conferred on it in any
Credit Document to give notice to any Borrower of the occurrence of an Event of
Default;

 

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(iii) any voluntary or involuntary bankruptcy, insolvency, reorganization,
moratorium, assignment for the benefit of creditors, receivership, liquidation,
marshaling of assets and liabilities or similar proceedings with respect to any
Borrower or any other Person or any of their respective properties or creditors,
or any action taken by any trustee or receiver or by any court in any such
proceeding;

 

(iv) any limitation on the liability or obligations of any Borrower under any
Credit Document or any other instrument or agreement, which may now or hereafter
be imposed by law, or any discharge, termination, cancellation, frustration,
irregularity, invalidity or unenforceability, in whole or in part, of any
thereof; or

 

(v) any other occurrence, circumstance, happening or event whatsoever, whether
similar or dissimilar to the foregoing, whether foreseen or unforeseen, and any
other circumstance (other than full and irrevocable performance and payment of
the Obligations) which might otherwise constitute a legal or equitable defense,
release or discharge or which might otherwise limit recourse against each
Borrower, whether or not such Borrower shall have notice or knowledge of the
foregoing.

 

(b) Each Borrower hereby waives, to the fullest extent permitted by law, (i) any
right of redemption with respect to the Collateral after the sale hereunder, and
all rights, if any, of marshalling of the Collateral or other collateral or
security for the Obligations and (ii) any right (except as shall be required by
applicable statute and cannot be waived) to require the Administrative Agent or
any Lender to (A) proceed against any other Borrower or any other Person, (B)
proceed against or exhaust any other collateral or security for any of the
Obligations or (C) pursue any remedy in the Administrative Agent’s or any
Lender’s power whatsoever. Each Borrower hereby waives any defense based on or
arising out of any defense of any other Borrower or any other Person other than
payment in full of the Obligations, including any defense based on or arising
out of the disability of the other Borrowers or any other Person, or the
enforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of the other Borrowers other than
payment in full of the Obligations. Subject to the terms of this Agreement, the
Administrative Agent may, at its election, foreclose on any security held by the
Administrative Agent by one or more judicial or non-judicial sales, whether or
not every aspect of any such sale is commercially reasonable (to the extent such
sale is permitted by applicable law), or exercise any other right or remedy the
Administrative Agent may have against the other Borrowers or any other Person,
or any security, without affecting or impairing in any way the liability of any
Borrower hereunder except to the extent the Obligations have been paid in full.

 

(c) Each Borrower waives, to the extent permitted by law, any defense, right of
set-off, claim or counterclaim whatsoever and any and all other rights,
benefits, protections and other defenses available to it now or at any time
hereafter.

 

(d) Each Borrower waives all rights and defenses arising out of an election of
remedies by the Administrative Agent, even though that election of remedies,
such as nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed such Borrower’s rights of subrogation and
reimbursement against the other Borrowers by the operation of law or otherwise.

 

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(e) Each Borrower represents and warrants that it is fully aware of the
financial condition of the other Borrower, and each Borrower delivers this
Agreement based solely upon its own independent investigation of the other
Borrower’s financial condition and in no part upon any representation or
statement of the Administrative Agent or any Lender with respect thereto. Each
Borrower further represents and warrants that it is in a position to and hereby
does assume full responsibility for obtaining such additional information
concerning the other Borrower’s financial condition as each Borrower may deem
material to its obligations hereunder, and each Borrower is not relying upon,
nor expecting the Administrative Agent or any Lender to furnish it any
information in the Administrative Agent’s or any Lender’s possession concerning
the other Borrower’s financial condition or concerning any circumstances bearing
on the existence or creation, or the risk of nonpayment or nonperformance of the
Obligations. Each Borrower hereby waives any duty on the part of the
Administrative Agent and the Lenders to disclose to each Borrower any facts the
Administrative Agent or any Lender may now or hereafter know about any other
Borrower, regardless of whether the Administrative Agent or such Lender has
reason to believe that any such facts materially increase the risk beyond that
which each Borrower intended to assume or has reason to believe that such facts
are unknown to such Borrower.

 

8.20. Effectiveness of Restatement. The Borrowers, the Lenders and the
Administrative Agent agree that upon the satisfaction of the conditions set
forth in Section 3.01, the following transactions shall be deemed to occur
automatically, without further action by any party hereto (except as set forth
below):

 

(a) The Existing Credit Agreement shall be deemed to be amended and restated in
its entirety by this Agreement.

 

(b) Each Lender (or the Administrative Agent on behalf of such Lender) shall,
promptly after receipt of the Notes delivered pursuant to Section 3.01(a)
hereof, cancel and return to the Borrower (upon receipt from the Lenders) the
promissory notes being replaced by such Notes.

 

The Borrower, each Lender and the Administrative Agent agree that (i) the
restatement transactions provided in the foregoing sentence shall not be
effective until the execution of this Agreement by all of the parties hereto and
the satisfaction of the conditions precedent set forth in Section 3.01 hereof;
(ii) all terms and conditions of the Existing Credit Agreement which are amended
and restated by this Agreement shall remain effective until such amendment and
restatement becomes effective hereunder and thereafter shall continue to be
effective only as amended and restated by this Agreement and (iii) the
representations, warranties and covenants set forth herein shall become
effective on the date on which such conditions are satisfied.

 

8.21. Adjustments of Proportionate Shares.

 

(a) Pursuant to the terms of this Agreement, prior to the Funding Date, the
Borrowers shall have provided a Notice of Term Loan Borrowing and a Notice of
Revolving Loan Borrowing, each appropriately completed. Upon receipt of the
Notices of Borrowing referenced above, the Administrative Agent shall notify
each Lender of the amount, if any, that it must advance on the Funding Date, and
each such Lender shall advance such amount as required

 

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pursuant to this Agreement in immediately available funds at or before 1:00 p.m.
on the Funding Date. In connection with such funding, the Administrative Agent
shall make the appropriate calculations such that on the Funding Date, each
Lender shall have the appropriate amount of outstanding Revolving Loans and
outstanding Term Loans based upon its Revolving Loan Commitment and Term Loan
Commitment under this Agreement, respectively.

 

(b) In connection with the funding of Loans on the Funding Date, each Lender
which shall have either (i) a lower principal amount of outstanding Revolving
Loans immediately after the funding on the Funding Date than it had prior to
such funding or (ii) a lower principal amount of outstanding Term Loans
immediately after the funding on the Funding Date than it had prior to such
funding (each such Lender, a “Decreasing Lender”) shall be deemed to have
assigned, without recourse or warranty of any kind whatsoever (except that each
Decreasing Lender warrants that it is the legal and beneficial owner of the
Loans and any Notes assigned by it under this Section 8.21 and that such Loans
and Notes are held by such Decreasing Lender free and clear of adverse claims),
pro rata to each of the Lenders which shall have (A) a greater principal amount
of outstanding Revolving Loans immediately after the funding made on the Funding
Date than it had prior to such funding or (B) a greater principal amount of
outstanding Term Loans immediately after the funding on the Funding Date than it
had prior to such funding (each such Lender, a “Increasing Lender”)
respectively, and each of the Increasing Lenders shall be deemed to have
acquired such portion of the Revolving Loans or Term Loans as applicable. Such
assignment and acquisition shall be deemed effective on the Funding Date
automatically and without any action required on the part of any party.

 

(c) To the extent any of the Loans deemed assigned by the Decreasing Lenders to
the Increasing Lenders pursuant to Section 8.21(b) above are LIBOR Loans (as
defined in the Existing Credit Agreement) and the Funding Date is not the last
day of an Interest Period for such Loans (as such terms are defined in the
Existing Credit Agreement), the Decreasing Lenders shall be entitled to
compensation from the Borrowers as provided in Section 2.14 of the Existing
Credit Agreement (as if the Borrowers had prepaid such Loans in an amount equal
to the Acquired Portion on the Funding Date).

 

[The first signature page follows.]

 

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IN WITNESS WHEREOF, the Borrowers, the Lenders, the Administrative Agent, the
L/C Issuer and the Swing Line Lender have caused this Agreement to be executed
as of the day and year first above written.

 

BORROWERS:

THE SANDS REGENT,

a Nevada corporation

By:

  /s/    FERENC B. SZONY        

Name:

  Ferenc B. Szony

Title:

  President and CEO

LAST CHANCE, INC.,

a Nevada corporation

By:

  /s/    FERENC B. SZONY        

Name:

  Ferenc B. Szony

Title:

  President and CEO

ZANTE, INC.,

a Nevada corporation

By:

  /s/    FERENC B. SZONY        

Name:

  Ferenc B. Szony

Title:

  President and CEO

PLANTATION INVESTMENTS, INC.,

dba “Rail City”, a Nevada corporation

By:

  /s/    FERENC B. SZONY        

Name:

  Ferenc B. Szony

Title:

  President and CEO

--------------------------------------------------------------------------------

DAYTON GAMING, INC.,

a Nevada corporation

By:

  /s/    FERENC B. SZONY        

Name:

  Ferenc B. Szony

Title:

  President and CEO

--------------------------------------------------------------------------------

ADMINISTRATIVE AGENT, L/C

ISSUER AND SWING LINE LENDER:

Wells Fargo Bank, National Association,

as Administrative Agent, L/C Issuer and

Swing Line Lender

By:

  /s/    STEPHEN G. BUNTIN        

Name:

  Stephen G. Buntin

Title:

  Vice President

--------------------------------------------------------------------------------

THE LENDERS: WELLS FARGO BANK, NATIONAL ASSOCIATION

By:

  /s/    STEPHEN G. BUNTIN        

Name:

  Stephen G. Buntin

Title:

  Vice President

--------------------------------------------------------------------------------

NEVADA STATE BANK

By:

  /s/    RICK THOMAS        

Name:

  Rick Thomas

Title:

  Vice President

--------------------------------------------------------------------------------

WEST COAST BANK

By:

  /s/    TIM JOHNSON        

Name:

  Tim Johnson

Title:

  Vice President

--------------------------------------------------------------------------------

NEVADA FIRST BANK By:   /s/    WILLIAM M. PAREDES        

Name:

  William M. Paredes

Title:

  Executive Vice President

--------------------------------------------------------------------------------

FIRST NATIONAL BANK OF NEVADA By:   /S/    G. PHILIP POTARVITIS        

Name:

  G. Philip Potarvitis

Title:

  Senior Vice President

--------------------------------------------------------------------------------

HIBERNIA NATIONAL BANK By:   /S/    ROSS S. WALES        

Name:

  Ross S. Wales

Title:

  Vice President

--------------------------------------------------------------------------------

U.S. BANK NATIONAL ASSOCIATION By:   /S/    NICK BUTLER        

Name:

  Nick Butler

Title:

  Relationship Manager

--------------------------------------------------------------------------------

THE CIT GROUP EQUIPMENT
FINANCING, INC. By:   /S/    KATIE J. SAUNDERS        

Name:

  Katie J. Saunders

Title:

  Vice President

 

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