Exhibit 10.7


 


MENDENHALL B


 


LOAN AGREEMENT


 


 





By and Among


 


 


MGIM, LLC,


as Borrower


 


 


MILLENNIUM GAMING, INC.,


as Guarantor


 


 


OCM INVESTCO, LLC,


as Lender


 


 


and


 


 


CANNERY CASINO RESORTS, LLC


 


 


Dated as of January 5, 2006


 

















 


THIS LOAN AGREEMENT (this “Agreement”), dated as of January 5,
2006, is entered into by and among MGIM, LLC, a Nevada limited liability
company (“MGIM” or the “Borrower”), Millennium Gaming, Inc.,
a Nevada corporation (“Millennium” or the “Guarantor”), OCM InvestCo,
LLC, a Nevada limited liability company (“InvestCo” or the “Lender”),
and Cannery Casino Resorts, LLC, a Nevada limited liability company (“CCR”).


 


W I T N E S S E T H


 


WHEREAS, pursuant to the CUP Agreement and subject to the terms and
conditions set forth therein and herein, Lender has agreed to loan to MGIM, on
the 1B Closing Date, the principal amount of Five Million One Hundred
Twenty-Five Thousand Dollars ($5,125,000) (the “Loan”), evidenced by a
promissory note in the form attached hereto as Exhibit A
(the “Note”), that will be used by MGIM at the 1B Closing solely to fund
the purchase by MGIM of all of Mendenhall’s membership units in the Company
(such purchase, the “Mendenhall Purchase” and such units, the “Mendenhall
Units”).


 


WHEREAS, pursuant to the CUP Agreement and subject to the terms and
conditions set forth therein, herein and in the Note, immediately after the
making of the Millennium Distribution and the Millennium Contribution, to the
extent they are made at the Second Closing, or at anytime thereafter prior to
the Eighteen Month Anniversary, the Loan, including the principal and any and
all interest accrued thereon, shall become immediately due and payable, and as
payment in full for the principal and interest of the Loan MGIM shall pay to Lender
cash in the amount of the Distribution Base (the “Mendenhall II Payment”),
and the Note shall be canceled and this Agreement shall terminate.


 


WHEREAS, pursuant to the CUP Agreement and
subject to the terms and conditions set forth therein, herein and in the
Security Documents, to the extent the Millennium Distribution and the Millennium
Contribution are not made as of the Second Closing, and as an inducement to and
in consideration of making the Loan by Lender and the benefits flowing therefrom,
CCR shall provide to Lender a guarantee of the payment in full of all remaining
obligations of the Borrower under this Agreement and the Note pursuant to a
guarantee agreement in a form reasonably satisfactory to Lender (the “CCR
Guarantee Agreement”), which guarantee shall be secured by a pledge of Nine
Thousand (9,000) Preferred Units to be issued by CCR in an aggregate value not
to exceed Nine Million Dollars ($9,000,000) (the “Mendenhall Margin Limit”)
pursuant to a pledge agreement in a form reasonably satisfactory to Lender
(the “CCR Pledge Agreement” and together with the CCR Guarantee
Agreement, the “CCR Security Documents”).


 


WHEREAS, pursuant to the CUP Agreement and subject to the terms and
conditions set forth therein, herein and in the Note, if the Mendenhall II Payment
is not made prior to the Eighteen Month Anniversary, then on the Eighteen Month
Anniversary, Lender may designate AcquisitionCo as a third party
beneficiary under the Note or may contribute the Note downstream to
AcquisitionCo and assign to AcquisitionCo all of its right, title and interest
in, to and under the Note, and AcquisitionCo shall become a party to this
Agreement and the CCR Security Documents, with all rights of Lender thereunder
(including the right to declare an Event of Default and foreclose on the Collateral
granted by this Agreement or the CCR Security Documents).


 


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WHEREAS, pursuant to the CUP Agreement and subject to the terms and
conditions set forth therein, herein and in the Note, if the Millennium
Distribution and the Millennium Contribution are not made prior to the Eighteen
Month Anniversary, then on the Eighteen Month Anniversary, the Loan, including
the principal and any and all interest accrued thereon, shall become immediately
due and payable, and if not paid, InvestCo or AcquisitionCo, as the case may be,
shall have the right to call the guarantee granted by CCR under the CCR
Guarantee Agreement and to foreclose on the Collateral granted by the CCR
Pledge Agreement, and pursuant to such foreclosure, CCR shall issue such number
of Preferred Units to AcquisitionCo equal to the Mendenhall Margin Number subject
to the Mendenhall Margin Limit.


 


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


 


SECTION 1. DEFINITIONS


 


1.1.          Defined
Terms


 


(a)           Capitalized
terms used herein and not otherwise defined have the meanings set forth in the
CUP Agreement, which meanings shall continue to apply herein without regard to
whether the CUP Agreement has been Terminated.


 


(b)           As
used in this Agreement, the following terms shall have the following meanings:


 


“AcquisitionCo”:  OCM AcqusitionCo, LLC, a Nevada limited
liability company.


 


“Agreement”:  as defined in the preamble hereto.


 


“Borrower”:  as defined in the preamble hereto.


 


“Capital Stock”:  shares of capital stock, partnership interests
in a partnership or limited partnership, membership interests in a limited
liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the
holder thereof to purchase or acquire any such equity ownership interest.


 


“CCR”:  as defined in the preamble hereto.


 


“CCR Guarantee Agreement”:  as defined in the third recital hereto.


 


“CCR Pledge Agreement”:  as defined in the third recital hereto.


 


“CCR Security Documents”:  as defined in the third recital hereto.


 


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“Collateral”:  from the date hereof to the Second Closing
Date, the rights in and to the collateral of the Borrower and the Guarantor as
evidenced by the Pledge Agreements and as described in Section 5, and to
the extent the Millennium Distribution and the Millennium Contribution are not
made as of the Second Closing, from and after the Second Closing Date, the
rights in and to the collateral of CCR as evidenced by the CCR Security
Documents and as described in Section 5.


 


“CUP Agreement”:  that certain First Amendment to and
Restatement of Contribution and Unit Purchase Agreement, dated as of September 23,
2005, by and among Paulos, Wortman, MGIM, Millennium, CCR, NP Land, WCW, InvestCo,
AcquisitionCo and LandCo.


 


“Default”:  any of the events specified in Section 7,
whether or not any requirement for the giving of notice, the lapse of time or
both, or any other condition, has been satisfied.


 


“Dollars” and “$”:  dollars in lawful currency of the United
States of America.


 


“Event of Default”:  any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of
time or both, or any other condition, has been satisfied.


 


“Guarantee Agreement”:  as defined in Section 5.2.


 


“Guarantor”:  as defined in the preamble hereto.


 


“Indemnified Liabilities”:  as defined in Section 8.6.


 


“Indemnified Person”:  as defined in Section 8.6.


 


“InvestCo”:  as defined in the preamble hereto.


 


“Knowledge”:  as defined in the CUP Agreement; provided,
however, that the Knowledge of the Borrower shall be limited to the
Knowledge of Wortman and Paulos.


 


“LandCo”:  OCM LandCo, LLC, a Delaware limited liability
company.


 


“Lender”:  as defined in the preamble hereto.


 


“Loan”:  as defined in the first recital hereto.


 


“Loan Documents”:  this Agreement, the Note, the Pledge
Agreements, the Guarantee Agreement, the CCR Security Documents (if any) and
any certificate or other document made or delivered pursuant hereto or thereto.


 


“Material Adverse Effect”:  any event, circumstance, occurrence, state of
facts, condition, change or effect that, individually or in the aggregate, is
or would reasonably be


 


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expected to be materially adverse to (a) the
validity or enforceability of this Agreement or any of the other Loan Documents
or (b) the business, results of operations, condition (financial or
otherwise) or prospects of any of the Borrower, the Guarantor, CCR or any
Subsidiary of CCR. Notwithstanding the immediately preceding sentence, the
following are not and shall not contribute to or result in a Material Adverse
Effect: (i) any condition or event which adversely affects the gaming
industry generally or the gaming industry in Nevada, in either case which does
not adversely affect any of the Borrower, the Guarantor, CCR or any Subsidiary
of CCR disproportionately relative to other entities operating in such
industry; (ii) any changes in general economic conditions in the United
States; (iii) any outbreak of hostilities or escalation thereof involving
the United States or the declaration by the United States of war; and (iv) the
performance or consummation of any of the transactions contemplated by this
Agreement or the other Loan Documents.


 


“Maturity Date”:  as defined in Section 2.4.


 


“Mendenhall”:  Mendenhall, LLC, a Nevada limited liability
company.


 


“Mendenhall II Payment”:  as defined in the second recital hereto.


 


“Mendenhall Margin Limit”:  as defined in the third recital hereto.


 


“Mendenhall Margin Number”:  the number equal to all outstanding principal
and accrued but unpaid interest on the Loan and any other obligations
outstanding under this Agreement divided by One Thousand Dollars ($1,000).


 


“Mendenhall Purchase”:  as defined in the first recital hereto.


 


“Mendenhall Units”:  as defined in the first recital hereto.


 


“MGIM”:  as defined in the preamble hereto.


 


“MGIM Pledge Agreement”:  as defined in Section 5.1.


 


“Millennium”:  as defined in the preamble hereto.


 


“Millennium Pledge Agreement”:  as defined in Section 5.2.


 


“Nevada Gaming Authorities”:  the NGC and the NGCB.


 


“NGC”:  the Nevada Gaming Commission.


 


“NGCB”:  the Nevada State Gaming Control Board.


 


“Note”:  as defined in the first recital hereto.


 


“NP Land”:  NP Land, LLC, a Nevada limited liability company.


 


“Paulos”:  William J. Paulos, an individual.


 


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“PBGC”:  the Pension Benefit Guaranty Corporation.


 


“Plan”:  at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the Borrower, the
Guarantor, CCR, any Subsidiary of CCR or any ERISA Affiliate of any of them is
(or, if such plan were terminated at such time, would under Section 4069
of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.


 


“Pledge Agreements”:  the MGIM Pledge Agreement and the Millennium
Pledge Agreement, individually or collectively, as the case may be.


 


“Responsible Officer”:  with respect to the Borrower, the Guarantor, CCR
or any Subsidiary of CCR, Paulos or Wortman (or any manager or member
exercising similar authority), or any employee designated by any of the
foregoing.


 


“Syndicated Loan Agreement”:  that certain Credit Agreement, dated as of
the date hereof, among CCR, The Cannery Hotel and Casino, LLC, and Rampart Resort
Management, LLC (as Borrowers), Bank of America, N.A. (as Administrative Agent,
Swing Line Lender, and L/C Issuer), CIT Lending Services Corporation (as
Syndication Agent), General Electric Capital Corporation (as Documentation
Agent), and the Other Lenders party thereto.


 


“Taxes”:  as defined in Section 2.8(b).


 


“Terminated,” “Termination” (or
words of similar effect):  valid termination
of the CUP Agreement in accordance with Section 8.1 thereof.


 


“Transferee”:  as defined in Section 8.9.


 


“Voidable Transfer”:  as defined in Section 8.10.


 


“Voluntary Termination” as defined in Section 2.3(a).


 


“WCW”: 
WCW Landco, LLC, a Nevada limited liability company.


 


“Wortman”:  William C. Wortman,  an individual.


 


1.2.          Other
Definitional Provisions.


 


(a)           Unless
otherwise specified therein, all terms defined in this Agreement shall have
their defined meanings when used in the other Loan Documents.


 


(b)           As
used herein and in any other Loan Document, accounting terms not defined in Section 1.1,
to the extent not defined, shall have the respective meanings given to them
under GAAP.


 


(c)           The
words “hereof,” “herein” and “hereunder” and words of
similar import when used in this Agreement or any other Loan Document shall
refer to this


 


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Agreement or such other Loan
Document as a whole and not to any particular provision of this Agreement or
such other Loan Document.


 


(d)           The
meanings given to terms defined in this Agreement or any other Loan Document
shall be equally applicable to both the singular and plural forms of such
terms.


 


(e)           Whenever
the context may require, any pronoun used in this Agreement or any other
Loan Document shall include the corresponding masculine, feminine and neuter
forms.


 


(f)            All
references in this Agreement or any other Loan Document to Sections, Exhibits
and Schedules shall be deemed to be references to Sections of, and Exhibits and
Schedules to, this Agreement or such other Loan Document unless the context
shall otherwise require. All Exhibits and Schedules attached to this Agreement or
any other Loan Document shall be deemed incorporated herein or therein as if
set forth in full herein or therein.


 


(g)           The
words “include,” “includes” and “including” when used in
this Agreement or any other Loan Document shall be deemed to be followed by the
phrase “without limitation.”


 


(h)           The
word “or” as used in this Agreement or any other Loan Document is used in
the inclusive sense of “and/or.”


 


(i)            References
to a “party” in this Agreement or any other Loan Document are also to
its successors and permitted assigns.


 


(j)            Unless
otherwise expressly provided in this Agreement or any other Loan Document, any
agreement, instrument or statute defined or referred to herein or therein or in
any agreement, instrument or statute defined or referred to herein or therein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes.


 


SECTION 2. AMOUNT AND TERMS
OF THE LOAN


 


2.1.          Loan.
The Lender agrees, on the terms and conditions hereinafter set forth, to make the
Loan to the Borrower on the 1B Closing Date, subject to the satisfaction or
wavier, at or prior to the 1B Closing Date, of the conditions set forth in
Sections 5.1(b) and 5.2(b) of the CUP Agreement.


 


2.2.          Repayment
of Loan; Evidence of Debt.


 


(a)           The
Borrower unconditionally promises to pay to Lender, or any successor or permitted
assignee or third party beneficiary thereof, on the applicable Maturity Date
(or such earlier date on which the Loan becomes due and payable pursuant to Section 7),
the then unpaid principal amount of the Loan due and payable on such Maturity
Date (or such earlier date on which the Loan becomes due and payable pursuant
to Section 7). The Borrower


 


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further agrees to pay interest on the unpaid
principal amount of the Loan as set forth in Section 2.3.


 


(b)           The
Borrower’s unconditional promise to pay the Loan and any interest thereon shall
be evidenced by the Note, which shall be executed and delivered by the Borrower
on the 1B Closing Date in connection with the making of the Loan by the Lender.


 


2.3.          Interest. Interest shall accrue on the unpaid principal amount of the
Loan, as evidenced by the Note, as follows:


 


(a)           Interest Rate. Interest on the Loan shall accrue at a rate per annum equal
to twelve percent (12%); provided, however, that if the CUP
Agreement is Terminated (i) by the Oaktree Parties pursuant to Section 8.1(g) of
the CUP Agreement solely because the Oaktree Licenses will not or cannot be
obtained (other than as a result of the failure by any Selling Party
to perform in any material respect any of its obligations under the CUP
Agreement that causes, or results in, such Oaktree Licenses not being obtained),
(ii) by the Selling Parties pursuant to Section 8.1(c) or 8.1(f) of
the CUP Agreement solely because of the failure by any Oaktree Party to perform in
any material respect any of its obligations under the CUP Agreement or (iii) by
either the Selling Parties or the Oaktree Parties pursuant to Section 8.1(d) of
the CUP Agreement and the Oaktree Licenses have not been obtained (in each case
of (i) through (iii), a “Voluntary Termination”), then no interest
on the Loan shall accrue from the date of such Voluntary Termination of the CUP
Agreement until the date that is six (6) months after the date of such
Voluntary Termination of the CUP Agreement, at which time interest on the Loan shall
accrue at a rate per annum equal to six percent (6%); and provided,
further, that Termination of the CUP Agreement because of termination or
expiration of the Mendenhall Purchase Agreement or failure of the Mendenhall
Purchase to close shall in no circumstance be considered a Voluntary
Termination.


 


(b)           Interest Payment Dates. Interest on
the Loan accrued in accordance with Section 2.3(a) shall be payable
as follows:


 


(i)            If
the Second Closing occurs, then all interest accrued on the Loan in accordance
with Section 2.3(a) from the 1B Closing Date to the Second Closing
Date shall be immediately due and payable in arrears on the Second Closing Date,
and if the Millennium Contribution and the Millennium Distribution are not made
on the Second Closing Date, then all interest accrued in accordance with Section 2.3(a) on
the Loan from the Second Closing Date to the applicable Maturity Date of the Loan
as set forth in Section 2.4 shall be immediately due and payable in arrears
on such applicable Maturity Date.


 


(ii)           If
the CUP Agreement is Terminated for any reason (including as a result of a
Voluntary Termination), then all interest accrued on the Loan in accordance
with Section 2.3(a) from the 1B Closing Date to the applicable
Maturity Date of the Loan as set forth in Section 2.4 shall be immediately
due and payable in arrears on such applicable Maturity Date.


 


(c)           Compounding. Any interest not paid
when due pursuant to Section 2.3(b) shall be compounded with and
added to the principal of the Loan to which such interest


 


7

















 


relates and shall thereafter constitute a part of
the Loan hereunder and shall accrue interest at the rate then applicable to the
Loan.


 


(d)           Default Interest. Upon an Event of
Default, the interest rate applicable to the Loan as set forth
in Section 2.3(a) shall increase by 300 basis points per annum above
the rate otherwise applicable to the Loan on the ninetieth (90th)
day following the date of such Event of Default and on each ninetieth (90th)
day thereafter until the Loan is paid in full; provided, however,
that the interest rate shall not exceed the maximum rate permitted by
applicable Law.


 


(e)           Computation. Interest shall be calculated on the basis of the actual
number of days elapsed over a 365- (or 366-, as the case may be) day year.


 


2.4.          Maturity
Dates. The then unpaid principal amount of the Loan shall be immediately
due and payable on the following dates (each, a “Maturity Date”) which,
if not falling on a Business Day, shall be extended to the immediately
following Business Day (with interest accruing thereon pursuant to Section 2.3):


 


(a)           If
the Second Closing occurs, the then unpaid principal amount of the Loan shall
be immediately due and payable on earlier to occur of the following


 


(i)            the
date that the Millennium Distribution and the Millennium Contribution are made,
to the extent they are made on the Second Closing Date or at anytime thereafter
prior to the Eighteen Month Anniversary; and


 


(ii)           the
Eighteen Month Anniversary if the Millennium Distribution and the Millennium
Contribution are not made prior to the Eighteen Month Anniversary, at which
time InvestCo or AcquisitionCo, as the case may be, shall have the right
to call the guarantee granted by CCR under the CCR Guarantee Agreement and to foreclose
on the Collateral granted under the CCR Pledge Agreement, and pursuant to such
foreclosure, CCR shall issue such number of Preferred Units to AcquisitionCo
equal to the Mendenhall Margin Number subject to the Mendenhall Margin Limit.


 


(b)           If
the CUP Agreement is Terminated pursuant to Section 8.1(c), 8.1(d), 8.1(e),
8.1(f), or 8.1(g) of the CUP Agreement as a result of
the failure by any Selling Party to perform in any
material respect any of its obligations under the CUP Agreement, the then
unpaid principal amount of the Loan shall be immediately due and payable on the
date that is six (6) months following the date of such Termination.


 


(c)           If
the CUP Agreement is Terminated pursuant to Section 8.1(c), 8.1(d), 8.1(e),
8.1(f), or 8.1(g) of the CUP Agreement as a result of a Voluntary
Termination, the then unpaid principal amount of the Loan shall be immediately
due and payable on the date that is eighteen (18) months following the date of
such Voluntary Termination.


 


(d)           If
the CUP Agreement is Terminated pursuant to Section 8.1(a) or 8.1(h) of
the CUP Agreement or the CUP Agreement is Terminated pursuant to Section 8.1(c),
8.1(d), 8.1(e) or 8.1(f) of the CUP Agreement for any reason other
than a reason set forth in


 


8

















 


Section 2.4(b) or (c) hereof,
the then unpaid principal amount of the Loan shall be immediately due and
payable on the date that is twelve (12) months following the date of such Termination.


 


2.5.          Prepayments.
The Loan, along with all accrued but unpaid interest thereon, (a) may not
be prepaid prior to the earlier of the Second Closing or Termination of the CUP
Agreement; provided, however, that the Loan may be prepaid in
whole or in part at the option of the Borrower at any time prior to the
Second Closing so long as (i) all interest on all of the other loans made by
InvestCo or AcquisitionCo at the 1A or 1B Closings pursuant to the CUP
Agreement (other than the Mendenhall A Loan and the Wortman Loan) is paid prior
to the prepayment of principal on the Loan and (ii) if, after prepayment
of the principal on the Loan any loans made by InvestCo or AcquisitionCo at the
1A or 1B Closings pursuant to the CUP Agreement (other than the Mendenhall A Loan
and the Wortman Loan) remain outstanding, such prepayment of the principal on
the Loan will not result in a situation in which the interest owing on such
loans as of the Second Closing cannot be paid at the Second Closing, and (b) may be
prepaid in whole or in part at the option of the Borrower at any time after
any of the events set forth in clause (a) upon at least five (5) Business
Days’ prior written notice to the Lender. Any such prepayment (i) shall be
in an amount of One Million Dollars ($1,000,000) or any Five Hundred Thousand
Dollar ($500,000) increment thereof and shall be applied first to accrued but
unpaid interest and then to outstanding principal.


 


2.6.          Method
of Payment. All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest or otherwise, shall be
made without offset or counterclaim except as permitted by Section 9.5 of
the CUP Agreement and shall be made prior to 11:00 A.M., Nevada time, on
the due date thereof to the Lender, at the Lender’s office set forth on the
signature page hereto, in Dollars and in immediately available funds. Any
payment made after such time shall be deemed to be made as of the opening of
business on the immediately following Business Day.


 


2.7.          Use
of Proceeds. The proceeds of the Loan shall be used by the Borrower
exclusively to effect the Mendenhall Purchase and for no other purpose
whatsoever.


 


2.8.          Expenses
and Withholding Taxes.


 


(a)           The
Borrower agrees to pay the Lender any and all expenses or other amounts
otherwise agreed to be paid by the Borrower in any provision of this Agreement
or in any other Loan Document.


 


(b)           All
payments made by the Borrower under this Agreement or the Note shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, assessments, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority
with respect to this Agreement or any other Loan Document, and all interest,
penalties or similar liabilities with respect thereto (all such taxes, levies,
imposts, duties, charges, fees, assessments, deductions or withholdings being
referred to collectively as “Taxes”), unless the Borrower is compelled
by Law to make such deduction or withholding. If any such Taxes are required to
be withheld from any amounts payable to the Lender hereunder or under the Note,
the amounts so payable to the Lender shall be increased to


 


9

















 


the extent necessary to yield
to the Lender (after payment of all such Taxes) principal, interest or any such
other amounts payable hereunder in the amounts or at the rates the Lender would
have received had no such obligation been imposed on the Borrower. In addition,
the Borrower shall pay any Taxes to the relevant Governmental Authority in
accordance with applicable Law, and as promptly as possible thereafter, the
Borrower shall send to the Lender proof of payment thereof. If the Borrower
fails to pay any such Taxes when due to the appropriate Governmental Authority
or fails to remit to the Lender such proof, the Borrower shall indemnify the
Lender for any incremental Taxes that may become payable by the Lender as
a result of any failure to pay any such amounts.


 


SECTION 3. CONDITIONS
PRECEDENT


 


The effectiveness of this Agreement and the Lender’s obligation to make
the Loan are subject to the satisfaction or wavier, at or prior to the 1B Closing
Date, of the conditions set forth in Sections 5.1(b) and 5.2(b) of
the CUP Agreement (which itself shall be in full force and effect, enforceable
against the parties thereto in accordance with the terms and conditions thereof).


 


SECTION 4. REPRESENTATIONS
AND WARRANTIES


 


To induce the Lender to make the Loan hereunder, the Borrower hereby
represents and warrants to the Lender as of the date hereof:


 


4.1.          No
Liabilities. The Borrower was formed on April 26, 2005, for the sole
purpose of effecting the Mendenhall Purchase, the Mendenhall Exchange and the
Mendenhall II Payment and has no Liabilities as of the date hereof except for
those Liabilities contemplated by this Agreement, the other Loan Documents or
the CUP Agreement.


 


4.2.          Purpose
of Loans. The proceeds of the Loan are to be used by the Borrower
exclusively to effect the Mendenhall Purchase and for no other purpose
whatsoever.


 


SECTION 5. SECURITY
INTERESTS AND COLLATERAL


 


5.1.          Borrower
Collateral. As security for the timely
payment of all principal and accrued interest under this Agreement and the Note,
the Borrower agrees to grant to the Lender, for the benefit of the Lender, a
continuing security interest in all of MGIM’s right, title and interest in and
to the Mendenhall Units and any and all hereafter acquired membership units of
CCR held by MGIM, including in each case any and all distributions thereon and
the right to any and all proceeds from the sale or transfer thereof, and in
connection therewith, shall enter into a pledge and security agreement in the form attached
hereto as Exhibit B (the “MGIM Pledge
Agreement”) simultaneously herewith for the benefit of the Lender.


 


5.2.          Millennium
Collateral. Millennium,
the owner of 98% of the total number of issued and outstanding membership units
of the Borrower, agrees to guarantee the timely payment by the Borrower of all principal
and accrued interest under this Agreement and the Note and, in connection
therewith, shall enter into a guarantee agreement in the form attached
hereto as Exhibit C1 (the “Guarantee
Agreement”) simultaneously herewith for the benefit of the


 


10

















 


Lender, and as security for
such guarantee, agrees to grant to the Lender, for the benefit of the Lender, a
continuing security interest in all of Millennium’s assets, tangible or
intangible, whether now owned or hereafter acquired, including all right, title
and interest in and to all of the membership units in CCR held by Millennium
(including any and all distributions thereon), and any and all additions,
attachments, accessories and accessions to any such assets, any and all
substitutions, replacements or exchanges therefor and any and all proceeds from
the sale or transfer thereof and any and all other proceeds (including insurance
proceeds) thereon, and, in connection therewith, shall enter into a pledge and
security agreement in the form attached hereto as Exhibit C2
(the “Millennium Pledge Agreement”) simultaneously herewith for the
benefit of the Lender; provided, however,
that the Millennium Pledge Agreement shall provide that if the Second Closing
occurs, the security granted pursuant to the MGIM Pledge Agreement shall be
released as of the Second Closing and replaced at the
Second Closing by the guarantee and pledge by CCR set forth in the CCR Security
Documents.


 


5.3           CCR Collateral. The
parties hereto expect that the Loan and all accrued interest thereon under this
Agreement and the Note will  be paid in
full at the Second Closing pursuant to the execution of the Syndicated Loan
Agreement on the date hereof and the refinancing of CCR pursuant thereto. At
the Second Closing, to the extent that (i) the Loan and all interest
thereon under this Agreement and the Note is not repaid pursuant to the
Syndicated Loan Agreement and the refinancing of CCR, or (ii) Millennium
Distribution and the Millennium Contribution are not made as of the Second
Closing, then CCR (which is as of the date hereof, and will be immediately
prior to the Second Closing, 100% owned by the Borrower and Millennium) shall guarantee
the timely payment by the Borrower of all principal and accrued interest under
this Agreement and the Note and, in connection therewith, agrees to enter into
the CCR Security Documents for the benefit of the Lender and issue to the Lender
such number of Preferred Units equal to the Mendenhall Margin Number subject to
the Mendenhall Margin Limit in the event that all amounts outstanding under the
Loan are not be paid in full as of the Eighteen Month Anniversary. If the
Syndicated Loan Agreement is not executed as of the date hereof and does not
provide a facility on terms acceptable to CCR by which the Loan and all accrued
interest thereon under this Agreement and the Note may be repaid in full
at the Second Closing, then the parties shall agree upon forms of the CCR
Security Documents promptly after the date hereof. Notwithstanding anything in this
Section 5.3 or any other provision of this Agreement, the execution of the
Syndicated Loan Agreement is not a condition to the Loan.


 


SECTION 6. COVENANTS


 


The Borrower and the Guarantor hereby agree that, so long as the the Loan
(including the payment of any and all accrued interest thereon) and all other
obligations shall remain unpaid in whole or in part:


 


6.1.          Financial
Statements; Certificates. The Borrower and the Guarantor shall furnish to
the Lender, at the Borrower’s or the Guarantor’s sole expense:


 


(a)           so
long as the Credit Agreement remains in full force and effect, a copy of any
document, certificate or notice provided to the lenders or administrative or
other agent pursuant to Article 7 of the Credit Agreement, delivered promptly
after delivery of such document, certificate or notice under the Credit
Agreement;


 


11

















 


(b)           without
duplication, so long as the Note Purchase Agreement remains in full force and
effect, a copy of any document, certificate or notice provided to the lenders
or administrative or other agent pursuant to the Note Purchase Agreement, delivered
to the Lender promptly after delivery of such document, certificate or notice under
the Note Purchase Agreement;


 


(c)           without
duplication, so long as the Syndicated Loan Agreement remains in full force and
effect, a copy of any document, certificate or notice provided to the lenders
or administrative or other agent pursuant to the Syndicated Loan Agreement,
delivered to the Lender promptly after delivery of such document, certificate
or notice under the Syndicated Loan Agreement;


 


(d)           without
duplication, as soon as practicable, but in any event not later than one-hundred
and twenty (120) days (or, after the Second Closing has occurred, fifty (50)
days) after the end of (i) each fiscal year of each of the Borrower and
the Guarantor, a copy of the unaudited consolidated balance sheet of each of
the Borrower and the Guarantor as at the end of such year, certified by a
Responsible Officer as being fairly stated in all material respects, and (ii) each
fiscal year of CCR and its consolidated Subsidiaries, a copy of the audited
consolidated balance sheet of CCR and its consolidated Subsidiaries as at the
end of such year, and the related audited consolidated statements of operations
and cash flows for such year, and the report thereon of Piercy, Bowler, Taylor &
Kern, independent certified public accountants;


 


(e)           without
duplication, as soon as practicable, but in any event not later than thirty
(30) (or, after the Second Closing has occurred, twenty-five (25) days) after
the end of each of the first three (3) quarterly periods of (i) each
fiscal year of each of the Borrower and the Guarantor, a copy of the unaudited consolidated
balance sheet of each of the Borrower and the Guarantor as at the end of such
quarter, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end adjustments), and (ii) each
fiscal year of CCR and its consolidated Subsidiaries, a copy of the unaudited
consolidated balance sheet of CCR and its consolidated Subsidiaries as at the
end of such quarter, and the related unaudited consolidated statements of
operations and of cash flows for such quarter, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal year-end
audit adjustments);


 


(f)            promptly,
such additional financial and other information regarding the Borrower, the
Guarantor, CCR or any Subsidiary of CCR as the Lender may from time to
time reasonably request in writing; and


 


(g)           concurrently
with the delivery of any quarterly or annual financial statements of the Borrower
or the Guarantor pursuant to this Section 6.1, a certificate of a
Responsible Officer (i) stating that the Borrower or the Guarantor during
such period has observed or performed all of its covenants and other agreements
in this Agreement and the other Loan Documents to be observed or performed by
it, and that such Responsible Officer has obtained no knowledge of any Default
or Event of Default except as specified in such certificate.


 


All such financial statements delivered pursuant to this Section 6.1
for CCR and its Subsidiaries shall be complete and correct in all material
respects and shall be prepared in reasonable detail


 


12

















 


and in accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein). All
such financial statements delivered pursuant to this Section 6.1 for each
of the Borrower and the Guarantor shall be complete and correct in all material
respects and shall be prepared on the cash basis of accounting in a manner
consistent with the internal financial reporting of each of the Borrower and
the Guarantor.


 


6.2.          Compliance;
Maintenance of Existence. The Borrower and the Guarantor shall, and shall
cause CCR and each Subsidiary of CCR to, (a) comply in all material
respects with all Laws, (b) perform all obligations under all
Contracts to which the Borrower or the Guarantor is a party in all material respects,
except with respect to Article 6 of the Credit Agreement, which is
addressed by Section 6.5(a) of this Agreement, and prior to the
Second Closing or Termination of the CUP Agreement, except with respect to Article 5
of the Credit Agreement, which is addressed by Section 6.1(a)(i) of
the CUP Agreement, and (c)(i) preserve, renew and keep in full force and
effect its organizational existence and (ii) take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the ordinary
course of its business, except as permitted by the CUP Agreement or Section 6.5.


 


6.3.          Inspection
of Property; Books and Records; Discussions. The Borrower and the Guarantor
shall, and shall cause CCR and each Subsidiary of CCR to, (a) keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Laws shall be made of all dealings and
transactions in relation to its business and activities and (b) permit
representatives of the Lender (not more frequently than twice per year if no
Default or Event of Default exists) upon reasonable notice to the Borrower to
visit and inspect its properties and request and obtain copies of its financial
records and to discuss the business, operations, properties and financial and other
condition of the Borrower, the Guarantor, CCR and each Subsidiary of CCR with
officers of the Borrower, the Guarantor, CCR and any Subsidiary of CCR and with
their independent certified public accountants.


 


6.4.          Notices.
The Borrower shall promptly give notice to the Lender of:


 


(a)           the
occurrence of any Default or Event of Default;


 


(b)           the
occurrence of any event that could be a default under the Credit Agreement, the
Note Purchase Agreement, or the Syndicated Loan Agreement, whether or not such
event may give rise to a right to notice or otherwise, and whether or not
any such right is waived by a party thereto;


 


(c)           any
Action or, to the Knowledge of the Borrower, investigation (i) that may exist
at any time between the Borrower, the Guarantor, CCR or any Subsidiary of CCR,
on the one hand, and any Governmental Authority, on the other hand, that is
reasonably expected to have a Material Adverse Effect or (ii) that relates
to any Loan Document; and


 


(d)           any
other development or event that could reasonably be expected to have a Material
Adverse Effect.


 


13

















 


Each notice pursuant to this Section 6.4
shall be accompanied by a statement of a Responsible Officer setting forth
details of the occurrence referred to therein and stating what action the
affected party proposes to take with respect thereto.


 


6.5.          Conduct
of the Business. Except as contemplated by the CUP Agreement or, from and
after the Second Closing Date or Termination of the CUP Agreement, as is
reasonably necessary to effect a refinancing of the Borrower, the Guarantor and
CCR, the proceeds of which will be used to repay the obligations of CCR
pursuant to the loans made under the CUP Agreement, the Borrower and the
Guarantor shall not, and shall not permit CCR or any Subsidiary of CCR to,
unless otherwise consented to by the Lender:


 


(a)           take
any action prohibited by Article 6 of the Credit Agreement, without regard
to the expiration or termination of the Credit Agreement;


 


(b)           amend
its Governing Documents;


 


(c)           issue,
sell, pledge, encumber, transfer, dispose of or otherwise create any Lien on,
or redeem, purchase or acquire, any shares of its Capital Stock or any other
equity or debt interests, or grant any options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other agreements or
rights to purchase or otherwise acquire, any shares of its Capital Stock or any
other equity or debt interests, or grant any stock appreciation, phantom stock,
profit participation or similar rights;


 


(d)           effect
any recapitalization, reclassification, stock split or like change in its
capitalization;


 


(e)           declare
or pay any dividends on or make any other distributions (whether in cash,
property or otherwise) in respect of any of its Capital Stock or any other
equity interest;


 


(f)            make
any change in the principal nature of its business;


 


(g)           make
any change in any method of accounting for financial reporting, except for any
change in financial reporting after the 1B Closing Date required by reason of a
concurrent change in or interpretation of GAAP;


 


(h)           enter
into (i) any transaction with a Person or entity affiliated with or
related to itself, except upon arms-length terms and conditions, or (ii) any
transaction which is motivated by an intent to evade this Agreement or any
other Loan Document; or


 


(i)            make
any commitment (whether or not in writing) to any of the foregoing.


 


6.6.          Limitation
on Fundamental Changes. The Borrower and the Guarantor shall not, and shall
cause CCR and each Subsidiary of CCR not to, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, except as contemplated by the CUP Agreement.


 


14

















 


6.7.          Payment
of Taxes. The Borrower and the Guarantor shall, and shall cause CCR and
each Subsidiary of CCR to, pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all
material taxes, assessments and governmental charges or levies imposed upon any
of them or their income or profits.


 


6.8.          Ownership.
The direct and indirect ownership structure of the Capital Stock of the Borrower,
the Guarantor, CCR and each Subsidiary of CCR shall at all times remain as of
the 1B Closing Date except for such changes as are contemplated by the CUP
Agreement or, after the Second Closing, as are permitted under the Company
Amended Operating Agreement or the Omnibus Management Agreement.


 


6.9.          Proceeds.
The Borrower shall use the proceeds from the Loan solely to effect the
Mendenhall Purchase and for no other purpose whatsoever.


 


6.10.        Clauses
Restricting Distributions from CCR. The Borrower and the Guarantor shall
not, and shall not permit CCR to, enter into or suffer to exist or become
effective any contractual restriction on the ability of CCR to pay dividends
on, or make other distributions or payments with respect to, the Capital Stock
of CCR, except for those (a) contained in the CUP Agreement, this
Agreement and any other Loan Documents and (b) existing on this date as
set forth in Schedule A attached hereto.


 


SECTION 7. DEFAULTS AND
EVENTS OF DEFAULT


 


7.1.          Events of Default.
If any of the following events shall occur and be continuing:


 


(a)           the
Borrower shall fail to pay any principal of or interest on the Loan when due and
payable in accordance with the terms hereof;


 


(b)           the
Borrower shall fail to perform or observe (i) any term, covenant, or
agreement contained in Sections 6.2, 6.5, 6.6, 6.8, 6.9 and 6.10; provided,
however, that if Section 6.5(a) would be violated but for the
waiver or consent by the “Administrative Agent” (as such term is defined in the
Credit Agreement) of such action otherwise prohibited by Article 6 of the
Credit Agreement, then such action shall constitute a default under this Section 7.1(c)(i) if
such action was intentional, knowing or otherwise taken with reckless
indifference, or (ii) any other term, covenant or agreement contained in
this Agreement or any other Loan Document (other than as provided in Sections 7.1(a) and
7.1(b)) and, in the case of any default under this clause (ii), such default
shall continue unremedied for thirty (30) days after the Lender shall have
given notice thereof to the Borrower;


 


(c)           prior
to the Termination of the CUP Agreement for any reason or, if the Second
Closing occurs, after the Second Closing, there shall have occurred (i) any
“Event of Default” (as defined in the Credit Agreement) under Sections 9.1(h),
9.1(j) or 9.1(n) of the Credit Agreement or (ii) any other “Event of
Default” as defined in the Credit Agreement pursuant to which the lenders
thereunder shall have proceeded to enforce their remedies under Section 9.2(c) of
the Credit Agreement;


 


15

















 


(d)           after
the Termination of the CUP Agreement for any reason, there shall have occurred
any “Event of Default,” as such term is defined under either the Credit
Agreement or the Note Purchase Agreement (which shall not include (i) any “event
of default” that has been waived by any lender or administrative or other agent
under the Note Purchase Agreement or the Credit Agreement to the extent such
waiver is unconditional (or, if conditional, the conditions to such waiver have
been fully satisfied prior to the date of Termination) or not temporally
limited (or, if temporally limited, such wavier shall not expire until at least
the applicable Maturity Date), (ii) any “event of default” that has been
cured or (iii) any “event of default” that has occurred prior to the date
of Termination of the CUP Agreement and is continuing through such date of
Termination);


 


(e)           the
Borrower, the Guarantor, CCR or any Subsidiary of CCR shall (i) apply for
or consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (ii) admit in writing its inability, or be generally unable,
to pay its debts as such debts become due, (iii) make a general assignment
for the benefit of its creditors, (iv) commence a voluntary case under the
federal bankruptcy Laws (as now or hereafter in effect), (v) file a
petition seeking to take advantage of any other Law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment of
debts, (vi) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against the Borrower, the Guarantor,
CCR or any Subsidiary of CCR, as the case may be, in an involuntary case
under such federal Laws, or (vii) take any corporate action for the
purpose of affecting any of the foregoing;


 


(f)            an
Action shall be commenced (including commencement of such Action by way of
service of process on the Borrower, the Guarantor, CCR or any Subsidiary of CCR),
in any court of competent jurisdiction, seeking (i) the liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment
of debts of the Borrower, the Guarantor, CCR or any Subsidiary of CCR, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of the
Borrower, the Guarantor, CCR or any Subsidiary of CCR or of all or any
substantial part of the assets of the Borrower, the Guarantor, CCR or any
Subsidiary of CCR or (iii) similar relief in respect of the Borrower, the
Guarantor, CCR or any Subsidiary of CCR under any Law relating to bankruptcy,
insolvency, reorganization, winding up, or composition or readjustment of
debts, or a warrant of attachment, execution or similar process shall be issued
against a substantial part of the property of the Borrower, the Guarantor,
CCR or any Subsidiary of CCR and such Action shall continue undismissed or
unstayed and in effect for a period of forty-five (45) days, or an Order
approving or ordering any of the foregoing shall be entered in an involuntary
case under such federal bankruptcy Laws;


 


(g)           a
trustee shall be appointed to administer any Plan under Section 4042 of
ERISA, or the PBGC shall institute proceedings to terminate, or to have a
trustee appointed to administer any Plan and such proceedings shall continue
undismissed or unstayed and in effect for a period of thirty (30) days, and any
such event shall result in any liability which is material in relation to the
consolidated financial condition of the Borrower, the Guarantor or CCR;


 


(h)           there
shall have been entered by a court of competent jurisdiction within the United
States one or more judgments or decrees for payment of money involving a


 


16

















 


liability against the Borrower,
the Guarantor, CCR or any Subsidiary of CCR in excess of $1,000,000 that is not
otherwise covered by insurance;


 


(i)            the
obligation of the Guarantor under the Guarantee Agreement is limited or
terminated by operation of Law (other than as a result of an action taken by
the Nevada Gaming Authorities solely attributable to any action or inaction of
the Lender, AcquisitionCo or any of their respective Affiliates) or the
obligation of the Guarantor thereunder is limited or terminated by the
Guarantor;


 


(j)            the
Borrower, the Guarantor, CCR or any Subsidiary of CCR is enjoined, restrained
or in any way prevented by Order from continuing to conduct all or any material
part of its business;


 


(k)           this
Agreement or any other Loan Document that purports to create a security
interest in the Collateral shall, for any reason (other than as a result of an
action taken by the Nevada Gaming Authorities solely attributable to any action
or inaction of the Lender, AcquisitionCo or any of their respective Affiliates),
fail or cease to create a valid and perfected first priority Lien on or
security interest in the Collateral covered hereby or thereby (other than as
disclosed on Schedule 1 to any Pledge Agreement);


 


(l)            any
direct or indirect change in the ownership of Capital Stock of the Borrower, the
Guarantor, CCR or any Subsidiary of CCR shall occur, other than changes of ownership
as are permitted by the CUP Agreement or, after the Second Closing, as are
permitted under the Company Amended Operating Agreement or the Omnibus
Management Agreement;


 


(m)          any
provision of any Loan Document shall at any time for any reason (other than as
a result of an action taken by the Nevada Gaming Authorities solely
attributable to any action or inaction of the Lender, AcquisitionCo or any of
their respective Affiliates) be declared to be null and void, or the validity
or enforceability thereof shall be contested by the Borrower, the Guarantor,
CCR or any Subsidiary of CCR, or an Action shall be commenced by the Borrower,
the Guarantor, CCR or any Subsidiary of CCR, or by any Governmental Authority
(other than an Action by the Nevada Gaming Authorities brought as a result of
an action taken by the Nevada Gaming Authorities solely attributable to any
action or inaction of the Lender, AcquisitionCo or any of their respective
Affiliates) having jurisdiction over the Borrower, the Guarantor, CCR or any
Subsidiary of CCR seeking to establish the invalidity or unenforceability
thereof, or the Borrower, the Guarantor, CCR or any Subsidiary of CCR shall
deny that the Borrower, the Guarantor, CCR or any Subsidiary of CCR has any
liability or obligation purported to be created under any Loan Document; or


 


(n)           an
“Event of Default” (as such term is defined therein) shall be declared under
the Mendenhall A Loan;


 


then, and in any such event, (i) if
such event is an Event of Default specified in paragraph (e) or (f) of
this Section 7, automatically the Loan hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents shall immediately become due and payable, and (ii) if such event
is any other Event of Default, the Lender may declare the Loan hereunder
(with accrued interest thereon) and all other amounts owing under


 


17

















 


this Agreement and the other
Loan Documents to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Except as expressly provided above in this Section 7.1,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived. Subject to Section 7.2, the rights of the Lender under this
Section 7.1 are in addition to other rights and remedies which the Lender may have,
including the right to:


 


(A)          Terminate
this Agreement and any of the other Loan Documents as to any future liability
or obligation of the Lender, but without affecting any of the security
interests in the Collateral.


 


(B)           Without
notice to or demand upon the Borrower, make such payments and do such acts as
the Lender considers necessary or reasonable to protect its security interests
in the Collateral. Each of the Borrower and the Guarantor agrees to assemble
the Collateral if the Lender so requires, and to make the Collateral available
to the Lender at a place that the Lender may designate which is reasonably
convenient to both parties. Each of the Borrower and the Guarantor authorizes
the Lender to enter the premises where the Collateral is located, to take and
maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest or compromise any Lien that in the Lender’s determination
appears to conflict with the security interest in and to the Collateral and to
pay all expenses incurred in connection therewith and to charge the Borrower
therefor. With respect to any of the Borrower’s or the Guarantor’s owned
premises, each of the Borrower and the Guarantor hereby grants the Lender a
license to enter into possession of such premises and to occupy the same,
without charge, in order to exercise any of the Lender’s rights or remedies
provided herein, at law, in equity or otherwise.


 


(C)           To
the extent permitted by applicable Law, foreclose on the Collateral and ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale and sell (in the manner provided for herein) the Collateral. Each of the
Borrower and the Guarantor hereby grants to the Lender a license or other right
to use, without charge, the labels, patents, copyrights, trade secrets, trade
names, trademarks, service marks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral and rights of the Borrower or
the Guarantor under all licenses and all franchise agreements shall inure to the
Lender’s benefit.


 


(D)          To
the extent permitted by applicable Law, sell the Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including the Borrower’s
or the Guarantor’s premises) as the Lender determines is commercially
reasonable. It is not necessary that the Collateral be present at any such sale.
Each of the Borrower and the Guarantor covenants and agrees that it will, upon
the Lender’s request, execute and deliver such documents and take such other
action as the Lender deems necessary or advisable in order that any such sale may be
made in compliance with Law. Each purchaser at any such sale shall hold the
Collateral so sold absolutely and free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Borrower or the
Guarantor, as applicable, which may be waived, and each of the Borrower
and the Guarantor, to the extent permitted by Law, hereby specifically waives
all rights of redemption, stay or appraisal which it has or may have under
any Law now existing or hereafter adopted.


 


18

















 


(E)           The
Lender shall give notice of the disposition of the Collateral as follows:


 


(1)           The
Lender shall give the Borrower and the Guarantor a notice in writing of the
time and place of public sale, or, if the sale is a private sale or some other
disposition other than a public sale, the time on or after which the private
sale or other disposition is to be made; and


 


(2)           The
notice shall be personally delivered or mailed, postage prepaid, to the Borrower
and the Guarantor, at least ten (10) days before the earliest time of
disposition set forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Collateral that is perishable or threatens to
decline speedily in value or that is of a type customarily sold on a recognized
market.


 


The Lender shall not be obligated to make any
such sale pursuant to any such notice. The Lender may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be
so adjourned. In case of any sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be retained by the
Lender until the selling price is paid by the purchaser thereof, but the Lender
shall not incur any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice.


 


(F)           The
Lender may credit bid and purchase at any public sale and may purchase
at any private sale, each as conducted in accordance with clause (E) above.


 


(G)           The
Lender may seek the appointment of a receiver or keeper to take possession
of all or any portion of the Collateral or to operate same and, to the maximum
extent permitted by Law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing.


 


7.2.          Effect
of Gaming Laws.


 


(a)           The
remedies set forth in Section 7.1 shall be subject to applicable limitations
set forth in the Pledge Agreements required for purposes of the Gaming Laws or
with respect to the Nevada Gaming Authorities.


 


(b)           In
connection with exercising its rights under Section 7.1, the Lender may,
if it so elects in its sole discretion, require the Borrower and the Guarantor
to, and to cause CCR and its Subsidiaries to, cooperate with the Lender and
immediately to take all actions required by the Lender to assist with the
preparation and filing by the Lender of all applications for licensure and
approval with all applicable regulatory authorities as are necessary, if any,  for the Lender to acquire ownership and
control of CCR and its Subsidiaries, or of any other Person owning or operating
the Businesses, or of the Businesses and the hotels and casinos operated by
Cannery, Rampart or, after the Second Closing, Nevada LLC. To enforce the
provisions of this Section 7.2(b), to the extent they are applicable, the
Lender is empowered to request the appointment of a receiver or supervisor from
the Nevada Gaming Authorities or, if


 


19

















 


applicable, from any court of competent
jurisdiction or to engage a licensed third party operator to operate the
Businesses until such time as the Lender is prepared to sell and transfer the
Collateral consisting of membership units or other interests in CCR or its
Subsidiaries, or their properties and assets, to a third party purchaser
licensed by the Nevada Gaming Authorities. Each of the Borrower and the
Guarantor shall, and shall cause CCR and its Subsidiaries to, use reasonable
best efforts to obtain the approval of the applicable Nevada Gaming Authority,
if required, for any action or transactions contemplated by this Agreement or
the Loan Documents, including preparation, execution and filing with the
applicable Nevada Gaming Authority of any applications relating to the change
of control of the Businesses and the properties and assets of CCR and its
Subsidiaries, to the extent approval is required by applicable Law.


 


SECTION 8. MISCELLANEOUS


 


8.1.          Cooperation
with Gaming Laws. To the extent the Nevada Gaming Authorities have
regulatory jurisdiction over the Borrower or the Guarantor, the Lender shall
cooperate with the Nevada Gaming Authorities in connection with the
administration of their regulatory jurisdiction over Cannery, Rampart and
Nevada LLC, including through the provision of such documents or other
information as may be requested by the Nevada Gaming Authorities relating
to the Lender or such companies. In connection therewith, to the extent the
foregoing sentence is applicable, the Lender, its successors and its permitted
assignees and designees acknowledge that each of them is subject to being
called forward by the Nevada Gaming Authorities, in the discretion of the
Nevada Gaming Authorities, for licensing or a finding of suitability in order to
remain entitled to the benefits under this Agreement and the other Loan
Documents.


 


8.2.          Termination.
This Agreement shall terminate on the last Maturity Date to occur of the Loan. As
set forth in Section 7.1(A), the Lender shall also have the right to terminate
its obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default. No termination
of this Agreement shall relieve or discharge the Borrower or the Guarantor of
its duties, obligations or covenants hereunder, and except as expressly set
forth in the applicable Pledge Agreements, the Lender’s security interest in
the Collateral shall remain in effect until all Loans and other obligations
under this Agreement (including Sections 2.8 and 8.6) or the Note have been
paid in full. When all obligations under the Loan have been paid in full, the
Note shall be canceled. When this Agreement has been terminated and all such
obligations have been paid in full, or when the security interests in the
Collateral are otherwise released pursuant to the applicable Pledge Agreements,
the Lender shall, at the Borrower’s or the Guarantor’s sole expense, execute
and deliver any UCC termination statements, lien releases, mortgage releases,
discharges of security interests and other similar discharge or release
documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the security interests in the Collateral.


 


8.3.          Amendments
and Waivers. The provisions of this Agreement and the other Loan Documents may be
amended, supplemented, modified or waived; provided, however,
that any such amendment, supplement, modification or waiver be in writing and
executed by each party hereto; and provided, further, that for
the purposes of waiver by the Borrower and the Guarantor under this Section 8.3,
as well as any other waiver, agreement or consent (including an


 


20

















 


agreement or consent as to
satisfactoriness, reasonability or termination) granted to or required of the Borrower
or the Guarantor under this Agreement, such waiver by or agreement or consent
of the Borrower or the Guarantor shall be considered effective if given by
Wortman and Paulos, acting on behalf of all of them.


 


8.4.          Notices.
Any and all notices and demands by a party hereto to the
other party hereto required or desired to be given hereunder shall be in
writing and shall be validly given or made only if: (a) delivered by hand;
(b) delivered by FedEx or other similar overnight delivery or courier
service which keeps records of deliveries; or (c) served by telecopy or
similar facsimile transmission, so long as such method is followed up by one of
the methods set forth in (a) or (b). Delivery of notice by method (a) or
(b) shall be effective upon receipt. Delivery of notice by telecopy or
similar facsimile transmission shall be effective upon the printing by sender
of a positive confirmation sheet, so long as such sheet reflects that the
telecopy or facsimile was received during regular business hours. Telecopy or
facsimile transmissions shown as having been received at any other time shall
be deemed received on the next Business Day. Notice on behalf of a party hereto
may be signed and sent by any attorney for such party.
The address of each party hereto is set forth on the signature page hereof.


 


(a)           Address of the Borrower and the Guarantor. Any notice or demand to the Borrower or the Guarantor shall
be addressed to the applicable party at:


 


Cannery Casino Resorts


211 North Rampart Boulevard


Las Vegas, Nevada  89145


Attn:  William Paulos


Attn:  William Wortman


Fax:  (702) 507-5992


 


with a copy to


 


Michael E. Kearney


Santoro, Driggs, Walch, Kearney, Johnson & Thompson


400 South Fourth Street, Suite 300


Las Vegas, Nevada  89101


Fax:  (702) 791-1912


 


(b)           Address of the Lender. Any notice
or demand to the Lender shall be addressed to InvestCo at:


 


OCM InvestCo,
LLC


333 South
Grand Avenue, 28th Floor


Los Angeles,
California  90071


Attn:  Chris Brothers


Attn:  Skardon Baker


Fax:  (213) 830-6394


 


with a copy to


 


21

















 


Munger, Tolles &
Olson LLP


355 South
Grand Avenue, 35th Floor


Los Angeles,
California  90071


Attn:  Robert Knauss


Fax:  (213) 683-5137


 


(c)           Change of Address. Each of
the parties hereto may change its address for the purpose of receiving
notices or demands as herein provided by a written notice given in the manner
aforesaid to the others, which notice of change of address shall not become
effective, however, until the actual receipt thereof by the others.


 


8.5.          No
Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by Law.


 


8.6.          Survival
of Representations and Warranties. All representations and warranties made
hereunder or incorporated by reference herein, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith or therewith shall survive the execution and delivery of
this Agreement and the making of the Loans hereunder until repaid in full.


 


8.7.          Payment
of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the
Lender for all its reasonable out-of-pocket costs and expenses incurred in
connection with any amendment, supplement or modification to, this Agreement
and the other Loan Documents, including the reasonable fees and expenses of
counsel in connection therewith, (b) to pay or reimburse the Lender for
all its out-of-pocket costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement or the other
Loan Documents, including the fees and disbursements of counsel to the Lender, (c) to
pay, indemnify or reimburse the Lender for, and hold the Lender harmless from,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other taxes (other
than any net income or franchise taxes), if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement and the other Loan Documents, and (d) to
pay, indemnify, and hold the Lender and its respective directors, officers,
employees, affiliates and agents (each, an “Indemnified Person”)
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement and the other
Loan Documents and the use of proceeds of the Loan (all the foregoing in this
clause (d), collectively, the “Indemnified Liabilities”); provided,
however, that the Borrower shall have


 


22

















 


no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of such Indemnified Person; and provided,
further, that no matter may be indemnified pursuant to this Section 8.7
to the extent already fully indemnified pursuant to Article IX of the CUP
Agreement. This Section 8.7 shall survive termination of this Agreement.


 


8.8.          Attorneys’
Fees For Disputes. In the event any Action is commenced by any party hereto
against any other party hereto in connection herewith, including any bankruptcy
proceeding, the prevailing party shall be entitled to recover, in addition to
its costs of enforcement, its costs and expenses, including reasonable
attorneys’ fees.


 


8.9.          Transfer;
Successors and Assigns. The Borrower and the Guarantor may not assign
or transfer any of its rights or obligations under this Agreement at any time without
the prior written consent of the Lender. The Lender may freely assign the
Note or this Agreement to any Person (including AcquisitionCo), including assigning
rights to payment or to declare an Event of Default and pursue remedies
hereunder, and to designate any Person (including AcquisitionCo) a third party
beneficiary under the Note or this Agreement; provided, however,
that promptly following such assignment or designation, the Lender must provide
notice of such assignment or designation to the Borrower and the Guarantor. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the Borrower, the Lender and their respective successors and assigns.


 


8.10.        Disclosure. The Borrower authorizes the Lender to disclose to any assignee
(a “Transferee”) and any prospective Transferee, any and all financial
information in the Lender’s possession concerning the Borrower, the Guarantor
and their respective Affiliates which has been delivered to such Lender by or
on behalf of the Borrower or the Guarantor pursuant to this Agreement or which
has been delivered to such Lender by or on behalf of the Borrower or the Guarantor
in connection with such Lender’s credit evaluation of the Borrower, the
Guarantor and their respective Affiliates prior to becoming a party to this Agreement.


 


8.11.        Revival
and Reinstatement of Obligations. If the incurrence or payment of any
principal, accrued interest or other obligations by either the Borrower or the
Guarantor or the transfer to Lender of any Collateral should for any reason
subsequently be declared to be void or voidable under any state or federal Law
relating to creditors’ rights, including provisions of the bankruptcy Laws
relating to fraudulent conveyances, preferences or other voidable or
recoverable payments of money or transfers of property (each, a “Voidable
Transfer”), and if the Lender is required to repay or restore, in whole or
in part, any such Voidable Transfer, or elects to do so upon the reasonable
advice of its counsel, then, as to any such Voidable Transfer, or the amount
thereof that the Lender is required or elects to repay or restore, and as to
all reasonable costs, expenses and attorneys’ fees of the Lender related
thereto, the liability of the Borrower or the Guarantor automatically shall be
revived, reinstated and restored and shall exist as though such Voidable
Transfer had never been made (including with respect to this Agreement, the
Pledge Agreements and the Guarantee Agreement).


 


8.12.        Counterparts.
This Agreement may be executed by facsimile and in any number of
counterparts, each of which when executed by and delivered shall be an
original, but all such counterparts shall constitute one and the same Agreement.
Any signature page of this


 


23

















 


Agreement may be detached
from any counterpart without impairing the legal effect of any signatures
thereon, and may be attached to another counterpart, identical in form thereto,
but having attached to it one or more additional signature pages.


 


8.13.        Severability.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.


 


8.14.        Integration.
This Agreement, the other Loan Documents and the CUP Agreement and the other
documents contemplated thereby represent the agreement of the Borrower and the
Lender with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Borrower and the Lender
relative to subject matter hereof not expressly set forth or referred to herein
or therein.


 


8.15.        GOVERNING LAW. THE INTERNAL LAWS OF THE
STATE OF NEVADA APPLICABLE TO CONTRACTS MADE AND WHOLLY PERFORMED THEREIN SHALL
GOVERN THE VALIDITY, CONSTRUCTION, PERFORMANCE AND EFFECT OF THIS AGREEMENT.


 


8.16.        WAIVER OF JURY TRIAL. EACH PARTY HERETO
HEREBY WAIVES ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY PERMITTED ACTION
ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, OR ANY DEALINGS BETWEEN ANY OF THE PARTIES
HERETO RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR OTHER MODIFICATIONS TO THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.


 


8.17.        Service
of Process; Consent To Jurisdiction. The parties hereto hereby irrevocably
submit and consent to the non-exclusive jurisdiction of any federal or state
court located within Reno, Nevada over any dispute arising out of or relating
to this Agreement, the other Loan Documents or any of the transactions
contemplated hereby or thereby. The parties hereto hereby irrevocably waive, to
the fullest extent permitted by applicable Law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the


 


24

















 


parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by applicable Law. The
parties hereto irrevocably consent to the service of any process, pleading,
notice or other papers by the mailing of copies thereof by registered,
certified or first class mail, postage prepaid, to such party’s address
set forth in Section 8.4 or permitted under Nevada law.


 


8.18.        Interpretation. The
parties hereto agree that no party hereto shall be deemed to be the drafter of
this Agreement and that in the event this Agreement is ever construed by a
court of law or equity, such court shall not construe this Agreement or any
provision hereof against any party hereto as the drafter of the Agreement. The
parties hereto acknowledge that each of them has contributed substantially and
materially to the preparation hereof. The captions appearing at the
commencement of the sections hereof are descriptive only and for convenience in
reference to this Agreement and in no way whatsoever define, limit or describe
the scope or intent of this Agreement, nor in any way affect this Agreement.


 


[Remainder of page intentionally left blank.]


 


25

















 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.


 


	
  Lender:

  	
  Borrower:

  
	
   

  	
   

  
	
  OCM InvestCo, LLC

  	
  MGIM, LLC

  
	
   

  	
   

  
	
  By:

  	
  /s/ Stephen Kaplan

  	
   

  	
  By:

  	
  /s/ William C. Wortman

  	
   

  
	
   

  	
  Name:

  	
  Stephen Kaplan

  	
  Its:

  	
  Manager

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ronald Beck

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ronald Beck

  	
  Guarantor:

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
   

  
	
  Lender’s Office:

  	
  Millennium Gaming, Inc.

  
	
  333 South Grand Avenue, 28th
  Floor

  	
   

  
	
  Los Angeles, California 90071

  	
  By:

  	
  /s/ William J. Paulos

  	
   

  
	
   

  	
  Its:

  	
  Manager

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Other:

  
	
   

  	
   

  
	
   

  	
  Cannery Casino Resorts, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William J. Paulos

  	
   

  
	
   

  	
  Its:

  	
  Manager

  	
   

  
												



 


 


SIGNATURE PAGE TO
MENDENHALL B LOAN AGREEMENT