EXHIBIT 10.1

 

Herbst Gaming Amended and Restated Lock-Up Agreement

 

As of June 29, 2009

 

To the Consenting Lenders Identified
on the Signature Pages Hereof:

 

This letter agreement (this “Agreement”) restates and amends the terms and
provisions of a letter agreement dated as of March 9, 2009 (as amended,
supplemented or otherwise modified and in effect as of the date hereof, the
“Original Lock-Up Agreement”).  This Agreement sets forth the terms on which
Consenting Lenders (as defined below) agree, among other things, to support a
restructuring (the “Restructuring”) by Herbst Gaming, Inc. (the “Company”) and
the Guarantor Debtors (as defined below) and by which the Company and Guarantor
Debtors reaffirm their obligations under the Original Lock-Up Agreement as
amended and modified herein.  Capitalized terms used herein without definition
shall have the meanings ascribed to such terms in the Debtors’ Joint Plan of
Reorganization (the “Plan”) to be filed by the Company with the United States
Bankruptcy Court for the District of Nevada (the “Bankruptcy Court”) in the
pending chapter 11 cases (the “Bankruptcy Cases”) for the Company and the
Guarantor Debtors (collectively, the “Debtors”) which Bankruptcy Cases were
commenced voluntarily on March 22, 2009 (the “Petition Date”) in the form
attached hereto as Exhibit A.

 

For purposes of this Agreement, (a) “Consenting Lenders” means each of the
lenders under the Company’s Second Amended and Restated Credit Agreement, dated
as of January 3, 2007 (as amended, supplemented or otherwise modified and in
effect as of the date hereof, the “Senior Credit Facility”) that executed the
Original Lock-Up Agreement, as listed on Schedule 1 hereto (other than the
Opt-out Consenting Lenders), plus any Opt-in Consenting Lenders; (b) “Guarantor
Debtors” means each of the Company’s subsidiaries that are guarantors of the
Company’s obligations under the Senior Credit Facility and/or the Senior
Subordinated Notes; (c) “Opt-out Consenting Lenders” means those Consenting
Lenders that notify the Administrative Agent’s counsel as provided in Section 4
on or before July 7, 2009 that they no longer agree to be a Consenting Lender
and therefore are no longer bound by the Original Lock-Up Agreement or this
Agreement; (d) “Opt-in Consenting Lenders” means each of the undersigned lenders
that execute this Agreement at any time; and (e) “Effective Date” means June 29,
2009.

 

In exchange for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Debtors and each Consenting Lender intending
to be legally bound, hereby agree that this Agreement shall restate and amend
the Original Lock-Up Agreement in its entirety  as follows:

 

1.             The Bankruptcy Case.

 

(a)           The Debtors, the Consenting Lenders and the THI Parties (as
defined therein) were previously party to the Original Lock-Up Agreement.  A
termination event thereunder was waived on March 20, 2009; such Original Lock-Up
Agreement was terminated with respect to the THI Parties and amended and waived
with respect to the remaining parties on May 28, 2009.  Each of the parties
hereto hereby acknowledges and agrees that as of the date hereof, the Original
Lock-Up Agreement is valid, binding and effective from and following the date
thereof, and that from and following the date hereof, the Original Lock-Up
Agreement shall be amended and restated in its entirety as provided for herein.

 

(b)           The Debtors intend to file the Plan, which is in form and
substance reasonably satisfactory to the Consenting Lenders, prior to the
hearing on the Disclosure Statement, subject to (i) further immaterial or
ministerial revisions, and (ii) further material revisions acceptable to
Required Consenting Lenders.

 

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(c)           This Agreement is not and shall not be deemed to be a solicitation
for consents to the Plan.  The solicitation shall not occur until the Bankruptcy
Court has approved a disclosure statement for the Plan and shall occur in
accordance with such solicitation procedures as may be approved or established
by the Bankruptcy Court.

 

2.             The Restructuring; Conversion of Senior Credit Facility
Obligations; Corporate Governance.

 

(a)           As more fully set forth in the Plan the Restructuring will
principally consist of (a) conversion of all outstanding obligations under the
Senior Credit Facility into debt and equity of the Reorganized Debtors and a
newly formed holding company, Reorganized Herbst Gaming, LLC, (b) termination of
all outstanding obligations under the indentures (the “Indentures”) governing
the Company’s (i) 8 1/8% Senior Subordinated Notes due 2012 and/or (ii) 7%
Senior Subordinated Notes due 2014 (together, the “Senior Subordinated Notes”),
(c) cancellation of 100% of the existing equity in the Company and
(d) negotiated amendments or modifications to, assumptions and assignments of,
or rejections of the Debtors’ executory contracts and unexpired leases, and
(e) certain other matters as set forth in the Plan.

 

(b)           The outstanding principal balance under the Senior Credit Facility
as of the Petition Date  was $847.96 million.  Pursuant to the Restructuring and
as provided for in the Plan, $350 million of these obligations will be allocated
to Reorganized Herbst Gaming pursuant to a new first priority senior secured
bank loan (the “Reorganized Herbst Gaming Senior Loan”) having the terms set
forth in Exhibit B attached hereto; and (ii) the remaining balance of these
obligations will be exchanged for 100% of the new common equity of Reorganized
Herbst Gaming (the “Reorganized Herbst Gaming New Common Equity”).  The parties
shall cooperate to structure the Reorganized Herbst Gaming Senior Loan and
Reorganized Herbst Gaming New Common Equity to be issued under the Plan in a
manner that facilitates and satisfies applicable regulatory requirements.

 

(c)           During the Bankruptcy Case, there was created the position of
COO/Gaming.  The COO/Gaming is  David D. Ross or, if a replacement is needed,
such replacement shall (i) be reasonable acceptable to Required Consenting
Lenders; (ii) satisfy all applicable requirements under applicable gaming laws
and regulations and, in conjunction with the Company and with the Company’s full
cooperation, file any required applications in connection therewith; (iii) be
reasonably acceptable to the Company’s board of directors; (iv) be employed by
the Company (as a member of the Company’s Office of the CEO and reporting to the
Company’s board of directors) until the Substantial Consummation Date; (v) not
be removed other than for cause and, if removed for cause, promptly be replaced
by an individual reasonably acceptable to Required Consenting Lenders and the
Company’s board of directors; and (vi) be made available to the Consenting
Lenders upon reasonable notice to provide status reports on operations.

 

(d)           The initial board of directors of Reorganized Herbst Gaming shall
be comprised of directors selected by the Lenders.  Each director shall satisfy
all applicable requirements under applicable gaming laws and regulations. 
Reorganized Herbst Gaming will adopt a certificate of organization, an LLC
agreement or other governance documents consistent with applicable securities,
bankruptcy and/or state laws.  Appropriate corporate governance documents shall
be set forth in the definitive documentation.

 

3.             Consultation and Cooperation.

 

(a)           The Debtors and the Consenting Lenders agree to consult and
cooperate with each other in connection with any analyses, appearances,
presentations, briefs, filings, arguments or proposals made or submitted by any
such party to the Bankruptcy Court, other creditor constituents or other parties
with an interest in the Restructuring.

 

(b)           From the Effective Date until all gaming licenses and approvals
are obtained as required to effectuate the Plan and the Plan is substantially
consummated (the “Substantial Consummation Date”), the Debtors and the
Consenting Lenders will (i) work together in good faith to determine

 

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the optimal management of operations, maintenance of working capital and
utilization of excess cash flow of Reorganized Herbst Gaming and (ii) reasonably
cooperate with each other in connection with the management and operations of
Reorganized Herbst Gaming, all in accordance with applicable gaming laws and
regulations.

 

4.             Opt-Out Right of Lenders. Each Consenting Lender under the
Original Lock-Up Agreement shall have the right to no longer be bound by the
Original Lock-Up Agreement and to not enter into this Agreement by notifying the
Administrative Agent’s counsel in writing via facsimile at 212-822-5231 or
electronic mail at achen@milbank.com on or before July 7, 2009 that it no longer
agrees to be a Consenting Lender and therefore is no longer bound by the
Original Lock-Up Agreement or this Agreement (“Opt-out Right”).

 

5.             Effectiveness.  This Agreement shall become effective as of the
Effective Date provided   Consenting Lenders holding in the aggregate at least a
majority in amount of all outstanding Claims under the Senior Credit Facility
remain after the exercise of Opt-out Right by any Opt-out Consenting Lenders.

 

6.             Pursuit/Support of the Restructuring.

 

(a)           Each of the Debtors agrees and covenants that it shall (i) use
commercially reasonable efforts to successfully consummate the Restructuring in
the manner and in accordance with the timeline contemplated by this Agreement,
(ii) use commercially reasonable efforts to avoid the occurrence of any of the
Agreement Termination Events set forth in Section 13, (iii) take all
commercially reasonably necessary actions to achieve the expeditious
confirmation and consummation of the Plan, and (iv) use commercially reasonable
efforts to maintain the Final Order Approving Amended and Restated Stipulation
Authorizing Use of Cash Collateral By Debtors, and Granting Adequate Protection
(the “Cash Collateral Order”), dated May 21, 2009, from the Bankruptcy Court
granting adequate protection to the holders of Claims arising under the Senior
Credit Facility.

 

(b)           Each Consenting Lender (i) agrees to take, or cause to be taken,
all actions reasonably necessary to facilitate, encourage or otherwise support
the Restructuring and (ii) agrees not to take, or cause to be taken, directly or
indirectly, any action inconsistent with the consummation of or opposing the
Restructuring.  Without limiting the generality of the foregoing and subject to
the terms and conditions of this Agreement, each Consenting Lender agrees to
neither take or direct any other person to take any action to accelerate any
obligation of any Debtor owing to such Consenting Lender that is or may become
due nor initiate or pursue, or have initiated or pursued on its behalf, any
litigation or proceeding, or any other rights or remedies of any kind, with
respect to any Claim such Consenting Lender may now or hereafter have against
any Debtor or any Debtor’s subsidiaries, affiliates, directors, officers, and/or
employees other than to enforce this Agreement.

 

7.             Support of the Plan and Disclosure Statement.  Each Consenting
Lender agrees that it will take or refrain from taking, as applicable, the
following actions in connection with the Bankruptcy Case:

 

(a)           provided that such Consenting Lender has been properly solicited
pursuant to Bankruptcy Code sections 1125 and 1126, (i) to vote in favor of the
Plan in accordance with the voting procedures established in the Solicitation
Materials and (ii) to the extent such election is available, not to elect on its
ballot to preserve any Claims such Consenting Lender may own that may be
affected by any releases provided for under the Plan;

 

(b)           not object to the Plan, or take any actions inconsistent with, or
that would delay approval or confirmation of, the Plan, except to the extent
that such Plan is amended or modified in a manner either (i) materially
inconsistent with the Plan attached hereto, or (ii) not reasonably satisfactory
to Consenting Lenders holding at least two-thirds in amount of the total Claims
held by all Consenting Lenders arising under the Senior Credit Facility
(“Required Consenting Lenders”);

 

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(c)           not object to any Plan Document, or take any actions inconsistent
with, or that would delay approval of, any Plan Document, except to the extent
that such Plan Document is either (i) materially inconsistent with this
Agreement, or (ii) not reasonably satisfactory to Required Consenting Lenders;

 

(d)           take all reasonable actions necessary or reasonably requested by
the Company to support the Plan and the transactions contemplated thereby,
except to the extent that such Plan or such transactions are either
(i) materially inconsistent with the Plan attached hereto, or (ii) not
reasonably satisfactory to Required Consenting Lenders;

 

(e)           support and effectuate the release provisions contained in the
Plan;

 

(f)            not to directly or indirectly seek, solicit, encourage or,
subject to any applicable fiduciary duties, participate in any negotiations
regarding any other plan, sale, proposal or offer of dissolution, winding up,
liquidation, reorganization, merger or restructuring of the Company or any
Guarantor Debtor (other than with respect to potential sales of some or all of
the casino and slot assets);

 

(g)           promptly notify the other Consenting Lenders upon the receipt of
any written solicitation or proposal relating to any other plan, sale, proposal
or offer of dissolution, winding up, liquidation, reorganization, merger or
restructuring of the  Debtors, including potential sales of some or all of the
casino and slot assets; and

 

(h)           not to withdraw or revoke any properly solicited vote to accept
the Plan unless (x) the Plan or any Plan Document is modified in any respect in
a manner materially inconsistent with the Plan attached hereto, or that has not
been approved by Required Consenting Lenders, or (y) this Agreement is
terminated in accordance with its terms.

 

8.             Modification of Plan Documents.

 

(a)           The Restructuring and the Plan Documents may from time to time be
amended or modified by the Debtors to modify the treatment of certain
constituents junior to the Consenting Lenders under the Plan (each, a “Permitted
Plan Amendment”), if such amendment or modification either (i) does not
negatively impact the Consenting Lenders or (ii) is in writing and consented to
by Consenting Lenders holding at least two-thirds in amount of the total Claims
held by all Consenting Lenders arising under the Senior Credit Facility (the
“Required Consenting Lenders”).

 

(b)           The making of any Permitted Plan Amendment shall not release any
Consenting Lender from its obligations under this Agreement.

 

9.             Cooperation During the Bankruptcy Case and In Implementation of
Plan.  Each of the Debtors agrees and covenants that it shall:

 

(a)           during the Bankruptcy Case, cooperate and consult with the
Consenting Lenders and any consultants or advisors engaged by the Consenting
Lenders regarding the Debtors’ ongoing operations, including without limitation
supplementing the Debtors’ management team and/or exploring potential sales or
other restructuring transactions with respect to some or all of the Debtors’
assets; and

 

(b)           in connection with the implementation of the Plan, (i) cooperate
with any consultants or advisors engaged by the Consenting Lenders and
(ii) continue to deliver any diligence information reasonably requested by the
Consenting Lenders or their respective consultants or advisors.

 

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10.           Representations and Warranties.

 

(a)           Each Consenting Lender represents and warrants, severally and not
jointly, that, as of the date hereof, such Consenting Lender is the legal owner,
beneficial owner and/or holder of investment and voting authority over, the
aggregate amount of obligations outstanding under the Senior Credit Facility as
set forth in the records maintained by the Senior Credit Facility Agent, and
legally or beneficially owns, or has investment and voting authority over, no
other obligations outstanding under the Senior Credit Facility.

 

(b)           Each Consenting Lender represents and warrants, severally and not
jointly, that such Consenting Lender (i) is a sophisticated investor with
respect to the transactions described in this Agreement with sufficient
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of owning and investing in securities (including
any securities that may be issued in connection with the transactions
contemplated by this Agreement), is making an informed decision with respect
thereto and has made its own analysis and decision to enter this Agreement and
(ii) is an “accredited investor” within the meaning of Rule 501 of the
Securities Act of 1933, as amended.

 

(c)           Each Consenting Lender represents and warrants, severally and not
jointly, that such Consenting Lender has not been offered, nor shall such
Consenting Lender accept, any treatment or compensation or the right to
participate in any transactions with any of the Debtors relating to the Plan or
the Debtors’ operations that is different than such treatment, compensation or
right offered to all lenders under the terms of this Agreement.

 

(d)           (x) Each of the Consenting Lenders, severally and not jointly,
represents and warrants to each of the Debtors and (y) each of the Debtors
represents and warrants as Debtors in the Chapter 11 Cases and subject to the
provisions of the Bankruptcy Code, only as to itself and not as to each other,
to each Consenting Lender, that the following statements, as applicable, are
true, correct and complete as of the date hereof:

 

(i)            Power and Authority.  It has all requisite corporate, partnership
or limited liability company power and authority to abide by  this Agreement
being an amendment to and restatement of the Original Lock-Up Agreement and to
carry out the transactions contemplated hereby, and to perform its obligations
hereunder.

 

(ii)           Due Organization.  It is duly organized, validly existing and in
good standing under the laws of its state of organization and it has the
requisite power and authority to perform its obligations hereunder.

 

(iii)          Authorization.  The  performance of its obligations hereunder
have been duly authorized by all necessary corporate, partnership or limited
liability company action on its part.

 

(iv)          No Conflicts.  The performance of this Agreement does not and
shall not (i) violate any provision of law, rule or regulation applicable to it,
except to the extent the failure to comply therewith could not reasonably be
expected to have a material adverse effect on its ability to perform its
obligations hereunder; (ii) violate its articles or certificate of
incorporation, bylaws or other organizational documents, except as contemplated
in the Plan or this Agreement; or (iii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation to which it or any of its subsidiaries is a
party,.

 

(v)           Governmental Consents.  The performance by it of this Agreement
does not and shall not require any registration or filing with, consent or
approval of, or notice to, or other action to, with or by, any federal, state or
other governmental authority or regulatory body, except such filings as (i) are
identified in this Agreement, (ii) may be necessary and/or

 

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required under antitrust laws or the federal securities laws, (iii) may be
necessary and/or required under any gaming laws or regulations of any state, or
(iv) may be necessary and/or required in connection with the approval of the
Disclosure Statement and the confirmation of the Plan.

 

(vi)          Binding Obligation.  Subject to the provision of sections 1125 and
1126 of the Bankruptcy Code, this Agreement is a legally valid and binding
obligation of such party, enforceable against such party in accordance with its
terms.

 

11.           Survival of Agreement.  Each of the parties acknowledges and
agrees that (i) this Agreement is  in connection with the Restructuring of the
Debtors and amends and restates the Original Lock-Up Agreement; and (ii) the
rights granted in this Agreement are enforceable by each signatory hereto,
except as specifically contemplated by this Agreement.

 

12.           Adequate Protection Payments.  The Plan as confirmed  shall
provide  that during the period commencing on the Effective Date and running
through the Substantial Consummation Date, adequate protection payments shall be
made to the lenders under the Senior Credit Facility in an amount equal to the
Debtors’ Cash and Cash Equivalents (as reflected on the Debtors’ balance sheet)
in excess of $100 million to be measured (x) initially,  as of the last day of
the third full calendar month following the month in which the Effective Date
occurs and (y)  as of the last day of every third full calendar month
thereafter, and to be paid in each case  on the 30th day after the date on which
it is measured; provided, however, that such payments shall be reduced by any
unpaid restructuring costs for services rendered by the Debtors’ professionals,
that have accrued or otherwise have been recorded on the Debtors’ balance sheet
as of the last day of any fiscal quarter and are reasonably anticipated to be
paid within 45 days thereafter.

 

13.           Termination.

 

(a)           This Agreement shall automatically terminate upon the occurrence
of any of the following events (the “Agreement Termination Events”), unless such
automatic termination is waived in writing by Required Consenting Lenders and/or
the Debtors, as applicable, within 7 Business Days of the occurrence of such
event; provided, however, that the waiver of the Debtors, but not the Required
Consenting Lenders, shall be required with respect to any automatic termination
to the extent that such automatic termination occurs pursuant to any of
paragraphs (xiii) (resulting from an announcement by a Consenting Lender) or
(xv) below; provided, further, that the waiver of Required Consenting Lenders,
but not the Debtors, shall be required with respect to any automatic termination
to the extent that such automatic termination occurs pursuant to any of
paragraphs (i), (iv), (vi), (x), (xii) or (xiv) below.

 

(i)            In the event the Debtors decide to seek DIP financing, the
Debtors file a motion seeking approval of DIP financing with anyone other than
some or all of the lenders under the Senior Credit Facility, unless some or all
of the lenders under the Senior Credit Facility have not agreed to provide DIP
financing on commercially reasonable terms;

 

(ii)           The Disclosure Statement with respect to the Plan shall not have
been approved by the entry of an order of the  Bankruptcy Court by August 14,
2009;

 

(iii)          The Plan shall not have been confirmed by the entry of an order
by Bankruptcy Court by October 15, 2009;

 

(iv)          The order confirming the Plan shall not be in form and substance
reasonably satisfactory to Required Consenting Lenders;

 

(v)           The Plan shall not have been substantially consummated within one
year of the Effective Date of the Plan;

 

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(vi)          The Plan is modified in any manner that is not acceptable to
Required Consenting Lenders or any other Plan Document is not in form and
substance reasonably satisfactory to Required Consenting Lenders;

 

(vii)         The Bankruptcy Case with respect to any Debtor is dismissed or is
converted to a case under chapter 7 of the Bankruptcy Code;

 

(viii)        The Bankruptcy Court shall enter an order appointing (i) a trustee
under chapter 7 or chapter 11 of the Bankruptcy Code, (ii) a responsible officer
or (iii) an examiner, in each case with enlarged powers relating to the
operation of the business (powers beyond those set forth in subclauses (3) and
(4) of Section 1106(a)) under Section 1106(b) of the Bankruptcy Code;

 

(ix)           The orders of the Bankruptcy Court approving the Disclosure
Statement or confirming the Plan or any interim or final order granting adequate
protection to the lenders under the Senior Credit Facility shall have been
stayed, reversed, vacated or otherwise modified, other than merely ministerial
modifications (e.g., with  respect to names, addresses and similar
modifications);

 

(x)            Any of the Debtors shall file a motion or the Bankruptcy Court
shall enter an order approving a payment to any other party (whether in cash or
other property or whether as adequate protection, settlement of a dispute, or
otherwise) that would be materially inconsistent with the treatment of such
party under the Plan attached hereto;

 

(xi)           Any court shall enter a final, non-appealable judgment or order
declaring this Agreement or any material portion hereof to be unenforceable;

 

(xii)          The Debtors shall withdraw the Plan or publicly announce their
intention not to support the Plan;

 

(xiii)         Any Consenting Lenders holding sufficient Claims under the Senior
Credit Facility to result in all other Consenting Lenders holding less than a
majority in dollar amount of all outstanding Claims under the Senior Credit
Facility shall publicly announce their intention not to support the Plan;

 

(xiv)        Any material breach of this Agreement by any Debtor; or

 

(xv)         Any material breach of this Agreement by Consenting Lenders holding
sufficient Claims under the Senior Credit Facility to result in all other
Consenting Lenders holding less than a majority in dollar amount of all
outstanding Claims under the Senior Credit Facility.

 

(b)           Upon a termination of this Agreement in accordance with this
Section 13, no party hereto shall have any continuing liability or obligation to
any other party hereunder and the provisions of this Agreement shall have no
further force or effect, except for the provisions in Sections 14 and 17-24,
each of which shall survive termination of this Agreement; provided that no such
termination shall relieve any party from liability for its breach or
non-performance of its obligations hereunder prior to the date of such
termination.

 

14.           No Third-Party Beneficiaries.  This Agreement shall be solely for
the benefit of the parties hereto and no other person or entity shall be a
third-party beneficiary hereof.

 

15.           Additional Claims and Interests Subject.  Nothing in this
Agreement shall be deemed to limit or restrict the ability or right of a
Consenting Lender to purchase or take assignment of any additional Claims
(“Additional Claims”) against or interests in any Debtor or any affiliate of any
Debtor; provided, however,

 

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that in the event a Consenting Lender purchases or takes assignment of any such
Additional Claims or other interests after the date hereof, such Additional
Claims or other interests shall immediately upon such acquisition become subject
to the terms of this Agreement.

 

16.           Restrictions on Transfer.

 

(a)           Except as set forth in Section 16(b), each Consenting Lender
hereby agrees that, for so long as this Agreement shall remain in effect, it
shall not sell, transfer or assign all or any of its Claims, as the case may be,
or any option thereon or any right or interest (voting, participation or
otherwise) therein (each, a “Transfer”) without the prior written consent of the
Company.

 

(b)           Notwithstanding the foregoing, any Consenting Lender may Transfer
any or all of its respective Claims, provided that, as a condition precedent,
the transferee thereof agrees in writing to be bound by the terms of this
Agreement.

 

(c)           Any Transfer of any Claim that does not comply with the foregoing
shall be deemed void ab initio.

 

17.           Entire Agreement.  As of the date this Agreement becomes
effective, this Agreement, including the attachments hereto, constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof,
including without limitation the Original Lock-Up Agreement.

 

18.           Amendment or Waiver.

 

(a)           Except as provided in Section 8 hereof, this Agreement, including
the attachments hereto, may not be modified, altered, amended, waived or
supplemented except by an agreement in writing by each of the Debtors and
Required Consenting Lenders.

 

(b)           Each of the parties hereto agrees to negotiate in good faith all
amendments and modifications to this Agreement, including the attachments
hereto, as reasonably necessary and appropriate to consummate the Restructuring.

 

(c)           No waiver of any of the provisions of this Agreement shall be
deemed or constitute a waiver of any other provision of this Agreement, whether
or not similar, nor shall any waiver be deemed a continuing waiver.

 

19.           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.  Each party agrees that
the Bankruptcy Court shall have exclusive jurisdiction of all matters arising
out of or in connection with this Agreement.

 

20.           Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts and by
facsimile, with the same effect as if all parties had signed the same document. 
All such counterparts shall be deemed an original, shall be construed together
and shall constitute one and the same instrument.

 

21.           Severability.  Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.  If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only as broad as is enforceable.

 

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22.           Headings.  The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not affect the interpretation hereof.

 

23.           Prior Negotiations.  This Agreement supersedes all prior
negotiations with respect to the subject matter hereof but shall not supersede
the Definitive Documentation.

 

24.           Notice.  Any notices or other communications required or permitted
under, or otherwise in connection with, this Agreement shall be in writing and
shall be deemed to have been duly given when delivered in person or upon
confirmation of receipt when transmitted by facsimile transmission or on receipt
after dispatch by registered or certified mail, postage prepaid, or on the next
Business Day if transmitted by national overnight courier, addressed in each
case as follows:

 

(a)           If to the Company, at:

 

 

Herbst Gaming, Inc.

 

3440 West Russell Road

 

Las Vegas, Nevada 89118

 

Attn: Office of the CEO

 

Telephone: (702) 798-6400

 

Facsimile: (702) 798-8079

 

 

with a copy to:

 

 

 

 

Herbst Gaming, Inc.

 

3440 West Russell Road

 

Las Vegas, Nevada 89118

 

Attn: Sean Higgins, General Counsel

 

Telephone: (702) 798-6400

 

Facsimile: (702) 798-8079

 

 

and:

 

 

 

 

Gordon Silver Ltd.

 

3960 Howard Hughes Parkway, Suite 900

 

Las Vegas, Nv. 89169

 

Attn: Gerald Gordon, Esq.

 

Telephone: (702) 796-5555

 

Facsimile: (702) 369-2666

 

(b)           If to a Consenting Lender, to the address for such Consenting
Lender provided on the signature pages hereof.

 

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Very truly yours,

 

 

 

 

 

HERBST GAMING, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: CEO

 

 

 

 

GUARANTOR DEBTORS:

 

 

 

FLAMINGO PARADISE GAMING, LLC

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Managing Member

 

 

 

MARKET GAMING, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

CARDIVAN COMPANY

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

CORRAL COIN, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

CORRAL COUNTRY COIN, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

E-T-T ENTERPRISES, L.L.C.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

10

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

 

 

E-T-T, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

HGI – ST. JO, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

HGI – LAKESIDE, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

HGI – MARK TWAIN, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

THE SANDS REGENT

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

ZANTE INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

LAST CHANCE, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

11

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CALIFORNIA PROSPECTORS, LTD.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

PLANTATION INVESTMENTS, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

DAYTON GAMING, INC.

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

 

 

 

THE PRIMADONNA COMPANY, LLC

 

 

 

 

 

By:

/s/ Troy Herbst

 

 

Name: Troy Herbst

 

 

Title: Secretary/Treasurer

 

12

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Accepted and agreed to by the

Consenting Lenders named below:

 

[NAME OF OPT-IN CONSENTING LENDER]

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

Address:

 

 

 

 

 

 

Telephone:

 

 

 

Facsimile:

 

 

 

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

 

The Consenting Lenders named below is exercising its Opt-out Right:

 

[NAME OF OPT-OUT CONSENTING LENDER]

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

Address:

 

 

 

 

 

Telephone:

 

 

 

Facsimile:

 

 

 

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

 

 

SCHEDULE 1

 

Consenting Lenders under the Original Lock-Up Agreement

 

1.

 

AIG Annuity Insurance Company

2.

 

American General Life Insurance Company

3.

 

American General Life and Accident Insurance Company

4.

 

Ameriprise Certificate Company

5.

 

AMMC CLO VI, Limited

6.

 

AMMC VII, Limited

7.

 

AMMC VIII, Limited

8.

 

Atlas Loan Funding (CENT I) LLC

9.

 

Avery Point CLO, Ltd.

10.

 

Baltic Funding LLC

11.

 

Bank of Scotland PLC

12.

 

Battery Park High Yield Long Short Fund, Ltd.

13.

 

Battery Park High Yield Opportunity Fund, Ltd.

14.

 

Battery Park High Yield Opportunity Strategic Fund, Ltd.

15.

 

Big Sky III Senior Loan Trust

16.

 

Canaras Summit CLO Ltd.

17.

 

Castle Hill I – INGOTS, Ltd.

18.

 

Castle Hill II – INGOTS, Ltd.

19.

 

Centurion CDO VI, Ltd.

20.

 

Centurion CDO VII, Limited

21.

 

Centurion CDO 8, Limited

22.

 

Centurion CDO 9, Ltd.

23.

 

Cent CDO 10, Ltd.

24.

 

Cent CDO XI, Limited

25.

 

Cent CDO 12 Limited

26.

 

Cent CDO 14 Limited

27.

 

Cent CDO 15 Limited

28.

 

CIT Lending Services Corporation

29.

 

Citigroup Financial Products Inc.

30.

 

Clydesdale CLO 2003 Ltd.

31.

 

Clydesdale CLO 2004, Ltd.

32.

 

Clydesdale CLO 2005, Ltd.

33.

 

Clydesdale CLO 2006, Ltd.

34.

 

Clydesdale CLO 2007, Ltd.

35.

 

Clydesdale Strategic CLO I, Ltd.

36.

 

Comerica Bank

37.

 

Eaton Vance CDO VII PLC

38.

 

Eaton Vance CDO VIII, Ltd.

39.

 

Eaton Vance CDO X PLC

40.

 

Eaton Vance Credit Opportunities Fund

41.

 

Eaton Vance Institutional Senior Loan Fund

42.

 

Eaton Vance Limited Duration Income Fund

43.

 

Eaton Vance Loan Opportunities Fund, LTD.

44.

 

Eaton Vance Medallion Floating-Rate Income Portfolio

45.

 

Eaton Vance Senior Income Trust

46.

 

Eaton Vance Short Duration Diversified Income Fund

47.

 

Eaton Vance VT Floating-Rate Income Fund

48.

 

Gannett Peak CLO I, Ltd.

49.

 

General Electric Capital Corporation

50.

 

Genesis CLO 2007-1 Ltd.

51.

 

Global Leveraged Capital Credit Opportunity Fund I

52.

 

Grand Central Asset Trust, PFV Series

53.

 

Grand Central Asset Trust, SIL Series

 

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

 

54.

 

Granite Ventures IV Ltd.

55.

 

Grayson & Co

56.

 

Green Island CBNA Loan Funding LLC

57.

 

Hamilton Floating Rate Fund LLC

58.

 

J.P. Morgan Core Plus Bond Fund

59.

 

J.P. Morgan Distressed Debt Master Fund, Ltd.

60.

 

Katonah III, Ltd.

61.

 

Loan Funding XI LLC

62.

 

Malibu CBNA Loan Funding LLC

63.

 

Nash Point II CLO

64.

 

Nash Point III CLO

65.

 

Nationwide Life Insurance Company

66.

 

Nationwide Mutual Insurance Company

67.

 

Natixis

68.

 

Nautique Funding II Ltd.

69.

 

NCRAM Senior Loan Trust 2005

70.

 

Newcastle CDO X, Limited

71.

 

Nob Hill CLO, Limited

72.

 

Nob Hill CLO II, Limited

73.

 

PPM Monarch Bay Funding LLC

74.

 

PPM Shadow Creek Funding LLC

75.

 

Race Point IV CLO, Ltd

76.

 

Rampart 2007-2 CLO

77.

 

RiverSource Bond Series, Inc. – RiverSource Floating Rate Fund

78.

 

San Gabriel CLO Ltd

79.

 

Sankaty Credit Opportunities III, L.P.

80.

 

Sankaty Credit Opportunities IV, L.P.

81.

 

Sankaty Credit Opportunities (Offshore Master) IV, L.P.

82.

 

Senior Debt Portfolio

83.

 

Sequils-Centurion V, Ltd.

84.

 

SERVES 2006-1, Ltd.

85.

 

Shasta CLO Ltd

86.

 

Sierra II CLO Ltd

87.

 

Sky CBNA Loan Funding LLC

88.

 

SPCP Group, LLC

89.

 

SSSI CBNA Loan Funding LLC

90.

 

SunAmerica Life Insurance Company

91.

 

The Variable Annuity Life Insurance Company

92.

 

Tralee CDO I Ltd.

93.

 

U.S. Bank National Association

94.

 

Western Asset F/R High Income Fund LLC

95.

 

Whitney CLO I Ltd

 

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

 

EXHIBIT A

 

Plan

 

[attached]

 

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

 

EXHIBIT B

 

[REORGANIZED HERBST LLC]
SENIOR SECURED CREDIT FACILITY

 

Summary of Terms and Conditions

 

I.                                         PARTIES

 

Borrower:                                                                                         
[Reorganized Herbst LLC], a [Nevada] limited liability company (the “Borrower”).

 

Guarantors:                                                                               
Each of the Borrower’s existing, and after acquired or created, direct and
indirect subsidiaries (the “Guarantors”; the Borrower and the Guarantors,
collectively, the “Obligors”).

 

Administrative Agent:                       Wilmington Trust Company (“WTC”) (in
such capacity, the “Administrative Agent”).

 

Lenders:                                                                                               
A syndicate of banks, financial institutions and other entities (collectively,
the “Lenders”).

 

II.                                     TYPE AND AMOUNT OF THE FACILITY

 

Type and Amount:                                         5-year senior secured
term loan facility (the “Facility”) in an aggregate principal amount equal to
$350,000,000 (the loans thereunder, the “Loans”).

 

Effective Date:                                                               
The date of the satisfaction of the conditions precedent referred to below under
“Initial Conditions”.

 

Availability:                                                                         
The Loans shall be deemed made on the Effective Date.

 

Amortization:                                                                  
None.

 

Purpose:                                                                                              
The Loans shall be in partial satisfaction of the obligations owing by the
Obligors to holders of the Second Amended and Restated Credit Agreement, dated
as of January 3, 2007, between Herbst Gaming, Inc., the lenders party thereto
(the “Prepetition Lenders”), WTC, as administrative agent, and certain other
parties (the “Prepetition Credit Agreement”).

 

III.                                 CERTAIN PAYMENT PROVISIONS

 

Fees and Interest Rates:              As set forth on Annex I.

 

Optional Prepayments:                     Loans may be prepaid in minimum
amounts to be agreed upon.  Optional prepayments shall be applied ratably to the
Loans in the prepaid borrowing and may not be reborrowed.

 

Mandatory Prepayments:       The following amounts shall be applied to prepay
the Loans:

 

(a)                                  100% of the net proceeds of any sale or
issuance of equity or incurrence of certain indebtedness by the Borrower or any
of its subsidiaries (subject to customary exceptions to be agreed);

 

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

 

(b)                                 100% of the net proceeds of any sale or
other disposition (including as a result of casualty or condemnation) by the
Borrower or any of its subsidiaries of any assets exceeding an aggregate amount
to be agreed (except for the sale of inventory in the ordinary course of
business and certain other dispositions to be agreed on and subject to
reinvestment provisions to be agreed);

 

(c)                                  75% of excess cash flow (to be defined in a
mutually satisfactory manner) for each fiscal year of the Borrower; and

 

(d)                                 100% of the net proceeds of any
extraordinary receipts (to be defined in a mutually satisfactory manner).

 

All such amounts shall be applied to the Loans on a pro rata basis and may not
be reborrowed.

 

Prepayment Fee:                                                    All optional
prepayments of principal and mandatory prepayments of principal of the type
described in clauses (a) and (b) above (excluding as a result of casualty or
condemnation) shall be accompanied by a prepayment fee equal to (a) if such
prepayment is made on or prior to the first anniversary of the Effective Date,
3.00% of the principal prepaid, (b) if such prepayment is made after the first
anniversary of the Effective Date and on or prior to the second anniversary of
the Effective Date, 2.00% of the principal prepaid and (c) if such prepayment is
made after the second anniversary of the Effective Date and on or prior to the
third anniversary of the Effective Date, 1.00% of the principal prepaid.

 

IV.                                 COLLATERAL

 

The Facility and any swap agreement and any cash management arrangements
provided by any Lender (or any affiliate of a Lender) shall be secured by a
perfected first priority security interest in all of the present and future
tangible and intangible assets of the Obligors (including, without limitation,
accounts receivable, inventory, intellectual property, real property (whether
owned or leased) and all of the capital stock of the Guarantors), except for
those assets as to which the Lenders shall determine in their sole discretion
that the costs of obtaining such a security interest are excessive in relation
to the value of the security to be afforded thereby.  The creation and
perfection of any security interest shall be subject to applicable local gaming
laws and regulations.

 

V.                                     CERTAIN CONDITIONS

 

Initial Conditions:                                               The
availability of the Facility shall be conditioned upon the satisfaction of,
among other things, the following conditions:

 

A.                                   Executed Documentation.  Each Obligor shall
have executed and delivered reasonably satisfactory definitive financing
documentation with respect to the Facility (the “Credit Documentation”, and each
document, a “Credit Document”).

 

B.                                     Confirmation of Plan of Reorganization. 
The Lenders shall have received a certified copy of a satisfactory final order
(the “Confirmation Order”), entered by the United States Bankruptcy Court for
the District of Nevada confirming the plan of reorganization under

 

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

 

Chapter 11 of the Bankruptcy Code (the “Plan of Reorganization”) of Herbst
Gaming, Inc. and its subsidiaries, and authorizing the Obligors to enter into
the Credit Documentation.  The Confirmation Order shall be in full force and
effect and final, and shall not have been modified or reversed.  All conditions
precedent to the effectiveness of the Plan of Reorganization shall have been (or
are simultaneously being) fulfilled (or waived in accordance with the terms of
the Plan of Reorganization).  The Lenders shall have received satisfactory
evidence that all consents, approvals or withholding of objections appropriate
or necessary to consummate the Plan of Reorganization and the Credit
Documentation have been obtained.

 

C.                                     Legal Opinions.  The Lenders shall have
received such legal opinions (including, without limitation, opinions from local
gaming counsel) as are customary for transactions of this type.

 

D.                                    Corporate Documents; Officer’s
Certificates.  The Lenders shall have received satisfactory secretary’s and
officer’s certificates and other customary corporate documentation with respect
to the Obligors as the Lenders shall reasonably request.

 

E.                                      Security Agreement and Related
Documents. All documents and instruments required to perfect the Lenders’ first
priority security interest in the collateral shall have been executed and be in
proper form for filing, including, without limitation, security agreements,
mortgages, ship mortgages, trademark security agreements, Uniform Commercial
Code financing statements (including, without limitation, financing statements
necessary to release security interests of any person other than the Lenders)
and account control agreements, and, in connection with any real estate
collateral, the Lenders shall have received reasonably satisfactory title
insurance policies, surveys and other customary documentation.

 

F.                                      Governmental Authorizations, Consents
and Approvals.  All governmental and third party approvals necessary in
connection with the Plan of Reorganization, the Credit Documentation and the
financing contemplated hereby (including, without limitation, any approvals
needed in connection with local gaming laws or regulations) shall have been
obtained on satisfactory terms and shall be in full force and effect, and all
applicable waiting periods shall 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 or the financing thereof.

 

G.                                     Insurance.  The Lenders shall have
received certificates of insurance (1) evidencing the existence of all insurance
contemplated by the Credit Documentation (including, without limitation, flood
insurance) and (2) designating the Administrative Agent as loss payee or
additional named insured.

 

H.                                    Satisfaction of Prepetition Credit
Agreement.  The Prepetition Credit Agreement shall have been satisfied in the
manner contemplated by the Plan of Reorganization, and the Lenders shall have
received satisfactory termination and release agreements with respect to the
Prepetition Credit Agreement and all related documents.

 

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

 

I.                                         Lien Searches.  The Lenders shall
have received the results of recent lien searches in each relevant jurisdiction
with respect to each Obligor, and such searches revealed no liens on any of the
assets of any Obligor except for liens permitted by the Credit Documentation.

 

J.                                        Material Agreements.  The Lenders
shall be satisfied with all material agreements of the Obligors.

 

K.                                    Adequate Protection Payments.  The Lenders
shall have received satisfactory evidence that all accrued and unpaid adequate
protection payments payable to the Prepetition Lenders under the Plan of
Organization shall have been paid in full.

 

L.                                      Representations and Warranties; No
Default.  The representations and warranties in the Credit Documentation shall
be true and correct on and as of the Effective Date and no default or event of
default shall be in existence at the time of and immediately after giving effect
to the deemed making of the Loans.

 

M.                                 Fees.  The Lenders and the Administrative
Agent shall have received all fees and expenses required to be paid.

 

N.                                    Ratings Condition.  The Facility shall
have been rated by each of S&P and Moody’s.

 

O.                                    Other Conditions.  Other conditions to be
reasonably requested by the Administrative Agent or any Lender.

 

VI.                                 CERTAIN DOCUMENTATION MATTERS

 

The Credit Documentation shall contain representations,  warranties, covenants
and events of default customary for financings of this type and other terms
deemed appropriate by the Lenders, including, without limitation:

 

Representations and

Warranties:                                                                               
Organization; powers; authorization; enforceability; governmental approvals; no
conflicts; financial condition; no material adverse change; property generally;
intellectual property; actions, suits and proceedings; environmental matters;
change in disclosed matters; compliance with laws and agreements; investment
company status; taxes; ERISA; disclosure; use of credit; subsidiaries;
restrictions on subsidiaries; real property; casino leases; and material
agreements.

 

Affirmative Covenants:                  Financial statements and other
information; notices of material events; existence; conduct of business; payment
of obligations; maintenance of properties; insurance (including, without
limitation, flood insurance); books and records; inspection rights; compliance
with laws; use of proceeds; subsidiary guarantors; ownership of subsidiaries;
and further assurances.

 

Financial Covenants:                              Minimum interest coverage
ratio; maximum total leverage ratio; and maximum annual capital expenditures.

 

Negative Covenants:                              Limitations on: indebtedness;
liens; fundamental changes; lines of business; investments; restricted payments;
transactions with affiliates; restrictive agreements; and optional prepayment
and modifications of certain documents.

 

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

 

Events of Default:                                             
(i)                                     Nonpayment of principal when due.

 

(ii)                                  Nonpayment of interest, fees or other
amounts after a grace period to be agreed upon.

 

(iii)                               Material inaccuracy of representations and
warranties.

 

(iv)                              Violation of covenants (subject, in the case
of certain covenants, to a grace period to be agreed upon).

 

(v)                                 Cross-default to material indebtedness to be
agreed.

 

(vi)                              Bankruptcy events.

 

(vii)                           Material judgments.

 

(viii)                        ERISA events.

 

(ix)                                Environmental matters.

 

(x)                                   A change in control (the definition of
which is to be agreed).

 

(xi)                                Actual or asserted invalidity of any
security document or security interest.

 

(xii)                             Revocation of casino or gaming licenses with
respect to locations accounting for, in the aggregate, a specified amount of
revenue, subject to a grace period to be agreed upon.

 

(xiii)                          Termination of any material agreement or
material casino lease.

 

Voting:                                                                                                      
Amendments and waivers with respect to the Credit Documentation shall require
the approval of Lenders holding not less than a majority of the aggregate amount
of the Loans, except that (a) the consent of each Lender affected thereby shall
be required with respect to (i) reductions in the amount or extensions of the
scheduled date of maturity of any loan, (ii) reductions in the rate of interest
or any fee or extensions of any due date thereof, and (iii) modifications to the
pro rata provisions of the Credit Documentation and (b) the consent of 100% of
the Lenders shall be required with respect to (i) modifications to any of the
voting percentages, (ii) assignments or transfers by any Obligor of its rights
and obligations under any Credit Document, (iii) modifications to  provisions
relating to assignments to the Obligors and their affiliates, (iv) releases of
all or substantially all of the collateral or liens created by the Credit
Documentation (other than in connection with permitted dispositions),
(v) additional obligations being secured by all or substantially all of the
collateral (exceptions to be agreed upon), (vi) altering the priorities of the
obligations entitled to the benefit of the liens created by the Credit
Documentation with respect to all or substantially all of the collateral, and
(vii) releases of all or substantially all of the Guarantors.

 

Assignments and

Participations:                                                                   
The Lenders shall be permitted to assign all or a portion of their loans with
the consent (not to be unreasonably withheld or delayed) of the Administrative
Agent, unless the assignment is to a Lender, an affiliate thereof or an approved
fund.  In the case of partial assignments (other than to another Lender, an

 

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

 

affiliate of a Lender or an approved fund), the minimum assignment amount shall
be $1,000,000, unless otherwise agreed by the Borrower and the Administrative
Agent (consent not to be unreasonably withheld or delayed).  No assignment shall
be permitted to any Obligor, any affiliate of the Borrower (other than any
Lender or any affiliate thereof), or a natural person without the consent of
each Lender.

 

The Lenders shall also be permitted to sell participations in their loans (other
than to a natural person or to the Borrower or any of the Borrower’s affiliates
or subsidiaries).  Participants shall have the same (but no greater) benefits as
the Lenders with respect to yield protection and increased cost provisions. 
Voting rights of participants shall be limited to those matters with respect to
which the affirmative vote of the specific Lender from which it purchased its
participation would be required as described under “Voting” above.

 

Pledges of loans in accordance with applicable law shall be permitted without
restriction.  Promissory notes shall be issued under the Credit Facilities only
upon request. The Administrative Agent shall be entitled to a processing fee of
$3,500 from the assignor and/or the assignee in connection with each assignment
(provided that only one such fee shall be payable in the case of multiple
contemporaneous assignments to or by related approved funds).

 

Any assignment or participation shall be subject to applicable local gaming laws
and regulations.

 

Yield Protection:                                                   The Credit
Documentation shall contain customary provisions (a) protecting the Lenders
against increased costs or loss of yield resulting from changes in reserve, tax,
capital adequacy and other requirements of law and from the imposition of or
changes in withholding or other taxes and (b) indemnifying the Lenders for
“breakage costs” incurred in connection with, among other things, any prepayment
of a Eurodollar Loan (as defined in Annex I) on a day other than the last day of
an interest period with respect thereto.

 

Expenses and

Indemnification:                                                     The
Borrower shall pay (a) all reasonable out-of-pocket expenses of the
Administrative Agent and its affiliates associated with the preparation,
execution, delivery and administration of the Credit Documentation and any
amendment or waiver with respect thereto (including, without limitation, the
reasonable fees, disbursements and other charges of counsel) and (b) all
out-of-pocket expenses of the Administrative Agent and the Lenders (including,
without limitation, the fees, disbursements and other charges of counsel or
advisors) in connection with the enforcement of the Credit Documentation

 

The Administrative Agent and the Lenders (and their affiliates and their
respective officers, directors, employees, advisors and agents) will have no
liability for, and will be indemnified and held harmless against, any loss,
liability, cost or expense incurred in respect of the financing contemplated
hereby, the use or the proposed use of proceeds thereof, any environmental
liability, or any actual or prospective claim related to the foregoing.

 

Governing Law and Forum:                                              State of
New York.

 

Counsel to WTC:                                              Milbank, Tweed,
Hadley & McCloy LLP.

 

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

 

Annex I

 

Interest and Certain Fees

 

Interest Rate Options:                         The Borrower may elect that the
loans comprising each borrowing bear interest at a rate per annum equal to:

 

the ABR plus the Applicable Margin; or

 

the Adjusted LIBO Rate plus the Applicable Margin.

 

As used herein:

 

“ABR” means the higher of (i) the rate of interest publicly announced by Bank of
America, N.A. as its prime rate (the “Prime Rate”), (ii) the federal funds
effective rate from time to time plus 0.50%, (iii) 4.00%, and (iv) the Adjusted
LIBO Rate for a one month interest period plus 1.00%.

 

“Adjusted LIBO Rate” means the LIBO Rate, as adjusted for statutory reserve
requirements for eurocurrency liabilities (if any).

 

“Applicable Margin” means (a) 6.50%, in the case of ABR Loans (as defined
below), and (b) 7.00%, in the case of Eurodollar Loans (as defined below).

 

“LIBO Rate” means the higher of (i) the rate for eurodollar deposits in the
London interbank market for a period of one, two, three or six months (or, if
agreed to by each Lender, nine or twelve months), in each case as selected by
the Borrower, appearing on the relevant Reuters screen page and (ii) 3.00%.

 

Interest Payment
Dates:                                                               In the case
of loans bearing interest based upon the ABR (“ABR Loans”), the last business
day of each calendar month.

 

In the case of loans bearing interest based upon the Adjusted LIBO Rate
(“Eurodollar Loans”), on the last day of each relevant interest period and, in
the case of any interest period longer than three months, on each successive
date three months after the first day of such interest period.

 

Default
Rate:                                                                                                                        
At any time upon the occurrence and during the continuation of any event of
default, all outstanding loans shall bear interest at 2.00% above the rate
otherwise applicable thereto.  Overdue interest, fees and other amounts shall
bear interest at 2.00% above the rate applicable to ABR Loans.

 

Rate and Fee
Basis:                                                                                     
All per annum rates shall be calculated on the basis of a year of 360 days (or
365/366 days, in the case of ABR Loans the interest rate payable on which is
then based on the Prime Rate) for actual days elapsed.

 

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