Exhibit 10.1


 


 


	
  DEUTSCHE
  BANK TRUST COMPANY AMERICAS

  DEUTSCHE BANK SECURITIES INC.

  60 Wall Street

  New York, New York 10005

  	
  GOLDMAN
  SACHS CREDIT PARTNERS L.P.

  85 Broad Street

  New York, New York 10004

  	
  LEHMAN
  COMMERCIAL PAPER INC.

  LEHMAN BROTHERS INC. 745 Seventh Avenue

  New York, New York 10019

  



 


 


November 3,
2004


 


Penn National
Gaming, Inc.

825 Berkshire Boulevard

Suite 200

Wyomissing, Pennsylvania 19610


 


	
  Attention:

  	
  William J.
  Clifford,

  
	
   

  	
  Senior Vice
  President Finance and

  
	
   

  	
    Chief Financial Officer

  



 


Re:  Acquisition Financing - Senior Secured
Financing Commitment Letter


 


Ladies and
Gentlemen:


 


Penn National Gaming, Inc., a Pennsylvania
corporation (“you” or the “Borrower”), has informed Deutsche Bank
Trust Company Americas (“DBTCA”), Deutsche Bank Securities Inc. (“DBSI”
and, together with DBTCA, “DB”), Goldman Sachs Credit Partners L.P. (“GSCP”), Lehman Brothers Inc. (“LBI”) and
Lehman Commercial Paper Inc. (“LCPI” and, together with LBI, “Lehman”)
that: (i) you intend to enter into a merger agreement (the “Acquisition
Agreement”) with Argosy Gaming Company, a Delaware corporation (“Target”),
pursuant to which you will acquire through merger (the “Acquisition”)
all of the capital stock of Target for cash and a newly created wholly-owned
subsidiary of yours will be merged with and into Target, with Target as the
surviving entity); (ii) at the time of or prior to the consummation of the
Acquisition, you will repay or cause to be repaid all outstanding borrowings
and other obligations owing under your existing credit facilities (the “Existing
Borrower Facilities”) and you shall terminate or cause to be terminated all
commitments under the Existing Borrower Facilities in connection therewith (the
“Borrower Refinancing”); (iii) at the time of the consummation of the Acquisition,
you will repay or cause to be repaid all outstanding borrowings and other obligations
owing under the existing credit facilities of Target and its subsidiaries (the “Existing
Target Facilities”) and all commitments thereunder shall be terminated in
connection therewith; and (iv) (A) on the Closing Date (defined below), you
will cause Target to either (x) consummate cash tender offers for not less than
a majority of each of Target’s 7% senior subordinated notes due 2014 and Target’s
9% senior subordinated notes due 2011 (collectively, the “Existing Target
Notes”) at a price not exceeding that reflected in the sources and uses of
funds described herein, plus accrued and unpaid interest, and, in connection
therewith, Target will obtain consents to eliminate all significant restrictive
covenants from the indentures governing the Existing Target Notes (the “Existing
Target Notes Indentures”) or (y) otherwise redeem, repurchase, retire or defease
the Existing Target Notes with the same effect as set forth in the preceding
subclause (x) (the transactions referred to in this clause (A) are the “Target
Notes Tender/Consent”) and (B) to the extent any Existing Target Notes
remain outstanding following the Closing Date, Target will


 





















 


commence change of control offers,
as and to the extent required, under the terms of the Existing Target Notes
Indentures at a price of 101% of the principal amount thereof, plus accrued and
unpaid interest (the “Target Notes COC Offers”).   The transactions described in preceding
clauses (iii) and (iv) being herein collectively referred to as the “Target
Refinancing” and the Borrower Refinancing and the Target Refinancing are collectively
referred to as the “Refinancing”.


 


For purposes of this Commitment Letter, (i)
DB, GSCP and Lehman are collectively referred to as the “Banks, “we”
or “us” and, individually as a “Bank”; (ii) DBTCA, GSCP and LCPI
are collectively referred to as the “Commitment Banks”; and (iii) DBSI,
GSCP and LBI are collectively referred to as the “Arrangers”.


 


It is our understanding that (w) the purchase
price for the equity and equity equivalents to be paid to effect the Acquisition
shall not exceed approximately $1,410.4 million, (x) the amount to effect the
Refinancing (including premiums but not accrued interest) shall be
approximately $1,195.2 million (of which approximately $575.2 million will be
in respect of the Existing Borrower Facilities and the Existing Target
Facilities and the balance will be in respect of the Existing Target Notes
(assuming 100% are tendered in the Target Notes Tender/Consent)), (y) the fees,
expenses and severance costs payable in connection with the Transaction (as
defined below) will not exceed approximately $141.5 million (which assumes a
Two Phase Syndication (as defined below)) and (z) after giving effect to the
Target Refinancing to be effected on the Closing Date, Target and its
subsidiaries shall be acquired free of all indebtedness and preferred stock,
except for (1) those Existing Target Notes not paid pursuant to the Target
Notes Tender/Consent, (2) intercompany indebtedness in amounts reasonably
acceptable to the Arrangers, provided such intercompany indebtedness
shall be subordinated to the Senior Secured Financing (defined below) to the
reasonable satisfaction of the Arrangers to the extent not prohibited by
applicable gaming laws, and (3) such exceptions (if any) for any other existing
indebtedness as may be agreed to by the Arrangers in their reasonable
discretion.


 


In order to finance the Acquisition and the
Refinancing, to pay the fees and expenses incurred in connection with the
Transaction, and to provide for the working capital needs and general corporate
requirements of the Borrower and its subsidiaries after giving effect to the
Acquisition, it is presently contemplated that the Borrower shall (i) utilize
cash on hand not to exceed approximately $15.8 million and (ii) obtain senior
secured credit facilities in the aggregate amount of $2.9 billion (the “Senior
Secured Financing”) (with the transactions described in preceding clauses
(i) and (ii) being herein collectively referred to as the “Financing
Transactions” and, together with the Acquisition and the Refinancing and
the fees and expenses payable in connection with the foregoing, being herein
referred to as the “Transaction”).


 


The sources of funds needed to effect the
Acquisition and the Refinancing, as well as to pay all fees and expenses incurred
in connection with the Transaction, shall be provided solely through the
Financing Transactions.  It is understood
further that the Senior Secured Financing shall consist of the following: (i) a
$400 million “A” term loan facility (the “A Term Loan Facility”); (ii) a
$1,750 million “B” term loan facility (the “B Term Loan Facility” and,
together with the A Term Loan Facility, the “Term Loan Facilities”); and
(iii) a $750 million revolving credit facility (the “Revolving Credit
Facility” and, together with the Term Loan Facilities, the “Credit Facilities”).  It is also understood that: (A) (x) all of
the A Term Loan Facility


 


2





















 


shall be drawn on the closing
date of the Acquisition (the “Closing Date”) and (y) up to $1,750
million of the B Term Loan Facility shall be drawn on the Closing Date, in each
case with respect to clauses (x) and (y), to effect the Acquisition and the
Refinancing (assuming 100% of the Existing Target Notes are tendered pursuant
to the Existing Target Notes/Repurchase Transactions) and to pay fees and
expenses incurred in connection with the Transaction; provided, however,
that, if the Pocono Downs Sale (as defined in the Term Sheet referred to below)
has been completed concurrent with or prior to the Closing Date, then the
aggregate amounts of the Pocono A Term Loan Commitment Tranche and the Pocono B
Term Loan Commitment Tranche (as such terms are defined in the Term Sheet) or
any part thereof shall not be available to be drawn at any time; (B) not more
than approximately $662.5 million of the proceeds of the Revolving Credit
Facility may be used to make payments owing to effect the Acquisition and the
Refinancing and to pay fees and expenses incurred in connection with the
Transaction; and (C) such unutilized portion of the B Term Loan Facility as may
be required (if any) under the existing terms of the applicable indentures to
fund the Target Notes COC Offers following the Closing Date but no later than
90 days following the Closing Date may be used to effect the Target Notes COC
Offers and, to the extent not so used during such period, shall not be
available at any time.


 


Notwithstanding the foregoing or anything
else herein to the contrary, the Arrangers (after consultation with the
Borrower and subject to applicable regulatory approvals) may require that the
Credit Facilities be structured to permit the following: (1) funds necessary
for the Borrower Refinancing and the working capital needs of the Borrower and
its subsidiaries without giving effect to the Acquisition will be made
available significantly prior to the Acquisition and as soon as practicable
after requested by the Arrangers; (2) two separate syndications of the
commitments hereunder may occur at separate times — one to effectuate the
Borrower Refinancing as provided under the preceding clause (1) and one to
effectuate the balance of the syndication of the commitments; (3) the
documentation for the Credit Facilities will be structured to permit the
multiple and delayed drawings reflected in the foregoing with appropriate
adjustments required by the Arrangers (after consultation with the Borrower) to
effectuate the foregoing that are not otherwise inconsistent with the terms
herein and in the Term Sheet and the Fee Letter and the term “Closing Date”
herein and in the Term Sheet and the Fee Letter shall include the initial funding
date to the extent appropriate; and (4) an amendment and restatement (or a
replacement facility consistent with this Commitment Letter and the Term Sheet
if the requisite votes to approve an amendment and restatement are not
obtainable) of the documentation of the Credit Facilities put in place for the
Borrower Refinancing may be required to facilitate and reflect the second phase
of the syndication.  The actions and
revisions necessary to effectuate the foregoing are referred to herein as the “Two
Phase Syndication.”  In addition, it
is understood that the Borrower will continue to review and consider the extent
to which the subject debt of the Refinancing (other than the Existing Borrower
Facilities and the Existing Target Facilities) should be modified and the
Arrangers will work with the Borrower in such review and consider alternatives,
all subject to the Arrangers’ prior written consent, which would require
mutually agreed modifications to the amounts and possibly structure of the
Credit Facilities.


 


A summary of certain of the terms and
conditions of the Senior Secured Financing is set forth in Exhibit A
attached hereto (the “Term Sheet”). 
Please note that those matters that are not covered or made clear herein
or in the Term Sheet or in the related fee letter of even


 


3





















 


date herewith among the parties
hereto (the “Fee Letter”) are subject to mutual agreement of the parties
hereto; provided, that any additional terms shall be consistent with
this Commitment Letter, the Term Sheet and the Fee Letter.


 


DBTCA is pleased to confirm that, subject to
the terms and conditions set forth herein and in the Term Sheet and the Fee
Letter, it hereby severally commits to provide one-third of the aggregate
principal amount of each of the Credit Facilities.  GSCP is pleased to confirm that, subject to
the terms and conditions set forth herein and in the Term Sheet and the Fee
Letter, it hereby severally commits to provide one-third of the aggregate
principal amount of each of the Credit Facilities.  LCPI is pleased to confirm that, subject to
the terms and conditions set forth herein and in the Term Sheet and the Fee
Letter, it hereby severally commits to provide one-third of the aggregate principal
amount of each of the Credit Facilities.


 


DBSI is pleased to confirm that, subject to
the terms and conditions set forth herein and in the Term Sheet and the Fee Letter,
it will act as joint lead arranger and joint book running manager for the
Senior Secured Financing.  GSCP is pleased
to confirm that, subject to the terms and conditions set forth herein and in
the Term Sheet and the Fee Letter, it will act as joint lead arranger, joint
book running manager and co-syndication agent for the Senior Secured
Financing.  LBI is pleased to confirm
that, subject to the terms and conditions set forth herein and in the Term
Sheet and the Fee Letter, it will act as joint lead arranger and joint book
running manager for the Senior Secured Financing.  LCPI is please to confirm that, subject to
the terms and conditions set forth herein and in the Term Sheet and the Fee
Letter, it will act as co-syndication agent for the Senior Secured Facilities.  DBTCA is pleased to confirm that, subject to
the terms and conditions set forth herein and in the Term Sheet and the Fee
Letter, it will act as the sole and exclusive administrative agent for the
Senior Secured Financing.


 


At the option of the Arrangers
(collectively), any Bank and/or one or more affiliates thereof may also be designated
as “Documentation Agent” or such other titles as may be deemed appropriate or
desirable by the Arrangers. 
Notwithstanding anything to the contrary contained above in this
paragraph, in connection with the syndication of the Senior Secured Financing,
the Arrangers shall have the right (in consultation with you) to award one or
more of the roles or titles described above, or such other titles as may be
determined by the Arrangers, to one or more other Lenders or affiliates
thereof, in each case as determined by the Arrangers in their sole
discretion.  It is agreed that DB’s names
shall receive “top-left” placement on any marketing materials in connection
with the Senior Secured Financing.  You
agree that, except as contemplated by the immediately preceding three
sentences, no other agents, co-agents or arrangers will be appointed, no other
titles will be awarded and no compensation (other than that expressly contemplated
by the Term Sheet and the Fee Letter) will be paid in connection with the
Senior Secured Financing unless you and the Arrangers shall so agree.


 


We reserve the right, prior to or after
execution of the definitive credit documentation for the Senior Secured Financing,
to syndicate all or part of our commitments hereunder to one or more other
Lenders (other than certain funds or institutions previously identified to us
by the Borrower and agreed to by us) that will
become party to such definitive credit documentation pursuant to a syndication
to be managed by the Arrangers.  You
agree that, upon delivery to the Arrangers by another Lender (which is a
reputable fund or financial institution) of a commitment


 


4





















 


letter in writing for the
benefit of the Borrower for all or a portion of the Senior Secured Financing
containing terms no less favorable to the Borrower than the terms hereof, the
Commitment Banks shall be fully relieved of their respective obligations
hereunder to the extent of the commitments set forth in such commitment letter
pro rata based on their respective commitments with respect to the Senior
Secured Financing.   All aspects of the syndication of the Senior
Secured Financing, including, without limitation, timing, potential syndicate
members to be approached, titles, allocations and division of fees, shall be
determined by the Arrangers in consultation with you.  You agree to actively assist the Arrangers in
such syndication, including by using your commercially reasonable efforts to
ensure that the Arrangers’ syndication efforts benefit from your existing lending
relationships and to provide the Arrangers and the Lenders, promptly upon
request, with all information reasonably deemed necessary by the Arrangers to
complete successfully the syndication, including, but not limited to, (a) an
information package for delivery to potential syndicate members and
participants and (b) projections prepared by you or your affiliates or advisors
relating to the transactions described herein. 
You also agree to make available your senior officers and
representatives, and to use commercially reasonable efforts to cause the senior
officers and representatives of Target and its subsidiaries, to be available,
in each case from time to time and to attend and make presentations regarding
the business and prospects of Target and its subsidiaries at a meeting or
meetings of Lenders or prospective Lenders at such times and places as the
Arrangers may reasonably request.


 


You represent, warrant and covenant that no
written information (including written reports filed with the SEC which we have
reviewed prior to the date hereof for purposes of evaluating the Transaction)
(to your knowledge with respect to written information and as to written
reports filed with the SEC pertaining to Target and its subsidiaries) which has
been or is hereafter furnished by you or on your behalf in connection with the
transactions contemplated hereby (such written information being referred to
herein collectively as the “Information”) taken as a whole contained
(or, in the case of Information furnished after the date hereof, will contain),
as of the time it was (or hereafter is) furnished, any material misstatement of
fact or omitted (or will omit) as of such time to state any material fact
necessary to make the statements therein taken as a whole not materially
misleading, in the light of the circumstances under which they were (or
hereafter are) made; provided that, with respect to Information
consisting of statements, estimates and projections regarding the future
performance of the Borrower, Target and their respective subsidiaries(1)
(collectively, the “Projections”), no representation, warranty or
covenant is made other than that the Projections have been (and, in the case of
Projections furnished after the date hereof, will be) prepared in good faith based
on assumptions believed to be reasonable at the time of preparation thereof (it
being understood that the Projections are subject to contingencies and
assumptions, many of which are beyond the control of the Borrower, and no
assurance can be given that the Projections will be realized).  You agree to supplement the Information and
the Projections from time to time until the date of the initial borrowing under
the Senior Secured Financing,


 










(1)                                  Unless
the context expressly requires otherwise, all references to subsidiaries in the
Term Sheet, the Commitment Letter and the Fee Letter shall exclude the
Unrestricted Group (as defined in the Term Sheet).


 


5





















 


as appropriate, so that the
representations and warranties in the preceding sentence remain correct in all
material respects (it being acknowledged and agreed that such supplements are
not subject to our approval and shall not affect the accuracy of any previous
representation and warranty as of the time just made).  You understand that, in syndicating the
Senior Secured Financing, we will use and rely on the Information and the
Projections without independent verification thereof.


 


Each Bank’s commitments and agreements
hereunder are subject to (a) since November 3, 2004, there not occurring any
Target Material Adverse Effect (as defined below), (b) the Arrangers’
reasonable satisfaction that, after the date hereof until the earlier of (i)
the successful syndication of the Senior Secured Financing and (ii) 90 days
after the Closing Date, there shall be no competing offering, placement or
arrangement of any debt securities or bank financing (other than the Permitted
Financings) (defined below) by or on behalf of the Borrower or any of its
subsidiaries that could reasonably be expected to disrupt, interfere with or
affect the syndication of the Credit Facilities or any part thereof, (c) you
shall not be in breach of the Fee Letter in any material respect, and (d) the
other conditions set forth or referred to herein and in the Term Sheet.


 


As used above, “Target Material Adverse
Effect” means any change, condition, circumstance or effect that, individually
or in the aggregate with all other changes, circumstances and effects, is or is
reasonably likely to have a material adverse effect on the business, assets,
results of operations or financial condition of Target and its subsidiaries,
taken as a whole, or the ability of Target to
perform its obligations under the Acquisition Agreement or consummate the other
transactions contemplated thereby; provided, however, that no
changes, circumstances or effects arising from or attributable to (i) general
economic, political or regulatory conditions (A) including any proposed or
adopted Law (as defined below) of general applicability or any other proposal,
enactment or action of general applicability of any Governmental Entity (as
defined below) but (B) excluding any Law or any other action, taken by any
Governmental Entity which is not an Excluded Action (as defined below) and
either: (1) is specifically directed at Target; or (2) prior to the receipt of
the Target Requisite Vote (as defined below), has a disproportionate effect on
the Target relative to other participants in the gaming industry in the state
to which such Law or other action applies; (ii) any changes in GAAP or
interpretations thereof; (iii) conditions in the stock or other financial
markets generally; (iv) conditions that affect the gaming industry generally to
the extent that such conditions either (A) do not have an effect on the Target
prior to the receipt of the Target Requisite Vote that is disproportionate
relative to the effect such conditions have on other participants in the gaming
industry in the states in which the Target conducts gaming operations or (B)
have any effect on the Target following the receipt of the Target Requisite
Vote; or (v) the taking of any action contemplated by the Acquisition Agreement
or the announcement of the existence or terms of the Acquisition Agreement or
the transactions contemplated thereby shall, in any such case, be deemed to
constitute, create or cause a Target Material Adverse Effect.  As used above, “Permitted Financings”
means, collectively, the following: (x) the Credit Facilities (including the
Uncommitted Incremental Loan Commitment (as defined in the Term Sheet)) and (y)
any issuance of senior subordinated debt securities to refinance or otherwise
replace the Borrower’s 111/8% Senior Subordinated Notes
due 2008.  As used above, (i) “Excluded
Action” means (x) any adoption or enactment of any Law or any other action
of any Governmental Entity that permits or would permit gaming activities in
the state of


 


6





















 


Kansas, Kentucky or Ohio or (y)
any grant of, or any proposal to grant, any license or other permission to
conduct gaming activities in any state in which the Target conducts gaming
operations or otherwise increase the type or volume of gaming activities
permitted in any state in which the Target conducts gaming operations; (ii) “Governmental
Entity” means any court or tribunal or administrative, legislative, governmental
or regulatory body, agency or authority; (iii) “Law” means any foreign
or domestic law, order, writ, injunction, decree, ordinance, award, stipulation,
statute, compact with any tribe, judicial or administrative doctrine, rule or
regulation entered by a Governmental Entity including Gaming Laws (defined
below); (iv) “Target Requisite Vote” means the affirmative approval of
the holders of shares of Target representing a majority of the votes that are
entitled to be cast by the holders of all outstanding shares of Target (voting
as a single class) as of the record date set for Target shareholder vote on the
Acquisition; and (v) “Gaming Laws” means any federal, state, local or
foreign statute, ordinance, rule, regulation, permit, consent, approval, registration,
finding of suitability, license, judgment, order, decree, injunction or other
authorization governing or relating to the current (or, in the case of Target
and its subsidiaries, contemplated) manufacturing, distribution, casino
gambling and gaming activities and operations of Target and the Borrower and
their respective subsidiaries, including, without limitation, the Ontario
Gaming Control Act and the rules and regulations promulgated thereunder, the
Illinois Riverboat Act and the rules and regulations promulgated thereunder,
Indiana Code 4, Article 33 and the rules and regulations promulgated
thereunder, Iowa Code Section 99F and the rules and regulations promulgated
thereunder, the Colorado Limited Gaming Act and the rules and regulations
promulgated thereunder, the Louisiana Riverboat Economic Development and Gaming
Control Act and the rules and regulations promulgated thereunder, 8 Maine Revised
Statutes Chapter 11 (Harness Racing) and the Maine “Governor’s Gambling Control
Legislation” (PL 2003, Chapter 687) and the rules and regulations promulgated
thereunder, the Mississippi Gaming Control Act and the rules and regulations
promulgated thereunder, Missouri Revised Statutes §313 and the rules and
regulations promulgated thereunder, the New Jersey Racing Act of 1940 and the
rules and regulations promulgated thereunder, the Pennsylvania Racing Act and
the rules and regulations promulgated thereunder, the West Virginia Horse and
Dog Racing Act and the rules and regulations promulgated thereunder and the
West Virginia Racetrack Video Lottery Act and the rules and regulations
promulgated thereunder and all applicable local rules and ordinances.  For purposes of this paragraph, the term “subsidiaries”
as used in this paragraph as it relates to Target shall include all
subsidiaries of Target (including its “Unrestricted Subsidiaries” (as defined
in the Term Sheet) and as it relates to the Borrower shall include all
subsidiaries of the Borrower (including its “Unrestricted Subsidiaries.


 


To induce the Banks to issue this letter
(together with the Term Sheet, this “Commitment Letter”) and to proceed
with the documentation of the proposed Senior Secured Financing, you hereby
agree that all reasonable fees and expenses (including the reasonable fees and
expenses of counsel and
consultants reasonably agreed to by you ) of the Banks and their respective
affiliates arising in connection with this Commitment Letter and in connection
with the Transaction and other transactions described herein (including in
connection with our due diligence and syndication efforts) shall be for your
account whether or not the Transaction is consummated or the Senior Secured
Financing is made available or definitive credit documents are executed; provided,
however, that, notwithstanding the foregoing, you shall only be liable
for fees and expenses of one counsel for the Banks and their respective affiliates
arising in connection with any Notes Offering (as defined in the Fee Letter) in
an amount not to exceed an amount


 


7





















 


as agreed to in any engagement
letter you may enter into with the Arrangers (or, in the case of GSCP, Goldman,
Sachs & Co.) in respect of such Notes Offering.   You further agree to indemnify and hold
harmless each Bank and each agent or co-agent (if any) designated by the
Arrangers with respect to the Senior Secured Financing (each, an “Agent”)
and their respective affiliates and each of their respective directors,
officers, employees, representatives and agents (each, an “Indemnified
Person”) from and against any and all actions, suits, proceedings
(including any investigations or inquiries), claims, losses, damages, liabilities
or expenses of any kind or nature whatsoever which may be incurred by or
asserted against or involve any such Indemnified Person as a result of or
arising out of or in any way related to or resulting from the Transaction or
this Commitment Letter and, upon demand, to pay and reimburse each Indemnified
Person for any legal or other out-of-pocket expenses incurred in connection
with investigating, defending or preparing to defend any such action, suit,
proceeding (including any inquiry or investigation) or claim (whether or not
any Indemnified Person is a party to any action or proceeding out of which any
such expenses arise); provided, however, that you shall not have
to indemnify any Indemnified Person against any loss, claim, damage, expense or
liability to the extent same resulted from the gross negligence or willful
misconduct of such Indemnified Person or any of its affiliates or a material
breach by such Indemnified Person or any of its affiliates of its respective
obligations to provide financing under this Commitment Letter.  This Commitment Letter is issued for your benefit
only and no other person or entity may rely hereon.  No Indemnified Person shall be responsible or
liable to you or any other person or entity for (x) any determination made by
it pursuant to this Commitment Letter in the absence of gross negligence,
willful misconduct or material breach of any Indemnified Person’s respective
obligations to provide financing under this Commitment Letter on the part of
such person or entity or (y) any punitive or consequential damages constituting
loss of profits, business or anticipated savings which may be alleged as a
result of this Commitment Letter or the financing contemplated hereby.


 


Each Bank reserves the right to employ the
services of any of its affiliates (including, in the case of DB, Deutsche Bank
AG) in providing services contemplated by this Commitment Letter and to
allocate, in whole or in part, to its affiliates certain fees payable to such
Bank in such manner as such Bank and its affiliates may agree in their sole
discretion.  You also agree that each
Commitment Bank may at any time and from time to time assign all or any portion
of its commitments hereunder to one or more of its affiliates (provided the
assigning Commitment Bank remains obligated to fund such commitment if such
assignee affiliate fails to fund, subject, however, to the terms and conditions
set forth in this Commitment Letter (including the Term Sheet)).  You further acknowledge that we may share
among us and/or our respective affiliates, and such affiliates may share with
any of us, any information related to the Transaction, the Borrower, Target and
their respective subsidiaries and affiliates, or any of the matters
contemplated hereby, provided such affiliates are bound by the confidentiality
provisions provided in the next sentence. 
Each Bank agrees to treat, and cause any such affiliate of such Bank to
treat, all non-public information provided to it by the Borrower as
confidential information in accordance with customary banking industry
practices and agrees not to use such information for any purpose other than in
connection with performing the services required to be performed by it under
this Commitment Letter.


 


You agree that this Commitment Letter and the
Fee Letter are for your confidential use only and that, unless we have otherwise
consented, neither its existence nor the terms


 


8





















 


hereof will be disclosed by you
to any person or entity other than your officers, directors, employees,
accountants, attorneys and other advisors, and then only on a “need to know”
basis in connection with the transactions contemplated hereby and on a
confidential basis.  Notwithstanding the
foregoing, you shall be permitted to furnish a copy hereof to Target and its
advisors on a confidential basis in connection with the proposed Acquisition
and, following your acceptance of the provisions hereof and your return of an
executed counterpart of this Commitment Letter and the Fee Letter to us as
provided below, (i) you may make public disclosure of the existence and amount
of the commitments hereunder and of the identity of the Administrative Agent
and the Arrangers (defined in the Term Sheet), (ii) you may file a copy of this
Commitment Letter (but not the Fee Letter) in any public record in which it is
required by law to be filed and (iii) you may make such other public disclosure
of the terms and conditions hereof as, and to the extent, you are required by
law, in the opinion of your counsel, to make. 
If this Commitment Letter is not accepted by you as provided below,
please immediately return this Commitment Letter (and any copies hereof) to the
undersigned.


 


You hereby represent and acknowledge that, to
the best of your knowledge, no Bank, nor any employees or agents of, or other
persons affiliated with, such Bank, have directly or indirectly made or
provided any statement (oral or written) to you or to any of your employees or
agents, or other persons affiliated with or related to you (or, so far as you
are aware, to any other person), as to the potential tax consequences of the
Transaction.


 


The provisions of the four immediately
preceding paragraphs shall survive any termination of this Commitment Letter (except
as provided below).  The compensation,
reimbursement, indemnification and confidentiality provisions contained herein
and in the Fee Letter any other provision herein or therein which by its terms
expressly survives the termination of this Commitment Letter shall remain in
full force and effect regardless of whether definitive credit documentation
shall be executed and delivered and notwithstanding the termination of this
Commitment Letter or the commitments hereunder; provided, that your
obligations under this Commitment Letter relating to indemnification shall
automatically terminate and be superseded by the provisions of the definitive
documentation relating to the Credit Facilities upon the initial funding
thereunder, to the extent such indemnification covers the same matters as
provided for herein and you shall automatically be released from all
indemnification obligations under this Commitment Letter to such extent.


 


This Commitment Letter and the Fee Letter
(and your rights and obligations hereunder and thereunder) shall not be assignable
by you to any person or entity without the prior written consent of all the
Banks (and any purported assignment without such consent shall be null and
void).  This Commitment Letter and the
Fee Letter may not be amended or waived except by an instrument in writing
signed by you and all the Banks.  Each of
this Commitment Letter and the Fee Letter may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one agreement. 
Delivery of an executed signature page of this Commitment Letter or the
Fee Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof or thereof, as the case may be.  This Commitment Letter and the Fee Letter
shall be governed by, and construed in accordance with, the laws of the State
of New York.  This Commitment Letter and
the Fee Letter


 


9





















 


set forth the entire agreement
between the parties hereto as to the matters set forth herein and supersede all
prior communications, written or oral, with respect to the matters herein.


 


EACH OF THE PARTIES HERETO HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR CONTEMPLATED BY THIS COMMITMENT LETTER OR THE FEE
LETTER.  YOU HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN
THE COUNTY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS COMMITMENT
LETTER, THE FEE LETTER OR ANY MATTERS CONTEMPLATED HEREBY OR THEREBY.


 


Each Bank’s willingness, and each Bank’s
commitments and agreements, with respect to the Senior Secured Financing as set
forth herein will terminate on the first to occur of (x) November 5, 2004,
unless on or prior to such date the Acquisition Agreement has been entered into
(with Target or its relevant affiliates), (y) December 31, 2005, unless on or
prior to such date the Transaction has been consummated and a definitive credit
agreement evidencing the Senior Secured Financing, in form and substance
reasonably satisfactory to the Banks, shall have been entered into and the
initial borrowings shall have occurred thereunder, or (z) any time after the
execution of the Acquisition Agreement and prior to the consummation of the
Transaction, the date of the termination of the Acquisition Agreement (other
than with respect to ongoing indemnities, confidentiality provisions and
similar provisions); provided, that your obligations under this Commitment Letter
relating to indemnification shall automatically terminate and be superseded by
the provisions of the definitive documentation relating to the Credit Facilities
upon the initial funding thereunder, to the extent such indemnification covers
the same matters as provided for herein and you shall automatically be released
from all indemnification obligations under this Commitment Letter to such
extent.


 


[Signature Pages Follow]


 


10





















 


If you are in agreement with the foregoing,
please sign and return to each Bank the enclosed copy of this Commitment Letter,
together with a copy of the enclosed Fee Letter, no later than 5:00 p.m., New
York time, on November 5, 2004.  Unless
this Commitment Letter and the Fee Letter are signed and returned by the time
and date provided in the immediately preceding sentence, this Commitment Letter
shall terminate at such time and date.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven P. Lapham

  	
   

  
	
   

  	
   

  	
  Name: Steven P. Lapham

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK SECURITIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven P. Lapham

  	
   

  
	
   

  	
   

  	
  Name: Steven P. Lapham

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. Drew Goldman

  	
   

  
	
   

  	
   

  	
  Name: A. Drew Goldman

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
  GOLDMAN, SACHS & Co.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert T. Wagner

  	
   

  
	
   

  	
   

  	
  Name: Robert T. Wagner

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LEHMAN COMMERCIAL PAPER INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steve Sterling

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  LEHMAN BROTHERS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steve Sterling

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 





















 


	
  Agreed to
  and accepted as of

  the date first above written

  
	
   

  
	
  PENN
  NATIONAL GAMING, INC.

  
	
   

  
	
  By:

  	
  /s/ William
  J. Clifford

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


 


[Signature page to Penn National Gaming, Inc. Commitment Letter]


 


2





















 


EXHIBIT A


 


SUMMARY OF CERTAIN TERMS

OF CREDIT FACILITIES


 


Unless otherwise defined herein, capitalized
terms used herein and defined in the letter agreement to which this Exhibit A
is attached (the “Commitment Letter”) are used herein as therein
defined.


 


I.              Description of Credit Facilities


 


	
  Borrower:

  	
   

  	
  Penn
  National Gaming, Inc. (the “Borrower”).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Credit
  Facilities:

  	
   

  	
  $2.9
  billion.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Credit
  Facilities:

  	
   

  	
  1.     A
  term loan facility in an aggregate principal amount of $400 million (the “A
  Term Loan Facility”).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.     B
  term loan facility in an aggregate principal amount of $1,750 million (the “B
  Term Loan Facility” and, together with the A Term Loan Facility, the “Term
  Loan Facilities”).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.     Revolving
  credit facility in an aggregate principal amount of $750 million (the “Revolving
  Credit Facility” and, together with the Term Loan Facilities, the “Credit
  Facilities”).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  A.            A Term Loan Facility

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Use of
  Proceeds:

  	
   

  	
  The proceeds
  of the loans made pursuant to the A Term Loan Facility (the “A Term Loans”)
  shall be used solely to finance and effect the Acquisition and the
  Refinancing and to pay the fees and expenses incurred in connection with the
  Transaction.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Maturity:

  	
   

  	
  The final maturity
  date of the A Term Loan Facility shall be the first to occur of (the “A
  Term Loan Maturity Date”) (a) the date that is the sixth anniversary of
  the Closing Date (defined below) or (b) the date that is 180 days prior to
  the Senior Subordinated Note Maturity Date (defined below).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Senior Subordinated Note Maturity Date”
  means the earlier to occur of (x) the final maturity date of the Borrower’s 87/8%
  senior subordinated notes due 2010 (the “Borrower’s 2010 Notes”),
  unless the Borrower’s 2010 Notes are repaid or discharged in full on or prior
  to the 180th day prior to such maturity date, provided that, if the
  Borrower’s 2010 Notes are refinanced, then the maturity date of such other
  indebtedness as shall have refinanced the Borrower’s 2010 Notes shall be the “Senior
  Subordinated Note Maturity Date” or (y) the maturity date of the Borrower’s 67/8%
  senior subordinated notes due 2011 (the “Borrower’s 2011 Notes”)
  unless the Borrower’s 2011 Notes are repaid or 

  	
   

  



 





















 


	
   

  	
   

  	
  discharged in full on or prior to the 180th day
  prior to such maturity date, provided that, if the Borrower’s 2011
  Notes are refinanced, then the maturity date of such other indebtedness as
  shall have refinanced the Borrower’s 2011 Notes shall be the “Senior
  Subordinated Note Maturity Date”.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Amortizations:

  	
   

  	
  During years one and two following the Closing Date,
  the A Term Loan Facility shall not amortize. 
  During years three, four, five and six following the Closing Date,
  annual amortization (payable in four equal quarterly installments) of the A
  Term Loan Facility shall be required in an amount equal to the percentage of
  the aggregate principal amount of the A Term Loan Facility funded at Closing
  Date as set forth in the table below opposite the year during which such
  amortization is required:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Year

  	
   

  	
  Percentage

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Year 3

  	
   

  	
  20

  	
  %

  	 

	
   

  	
   

  	
  Year 4

  	
   

  	
  25

  	
  %

  	 

	
   

  	
   

  	
  Year 5

  	
   

  	
  25

  	
  %

  	 

	
   

  	
   

  	
  Year 6

  	
   

  	
  30

  	
  %

  	 

	
   

  	
   

  	
   

  	
   

  
	
  Availability:

  	
   

  	
  Amounts under the A Term Loan Facility shall be
  available as follows:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           A Term Loans in the amount of $325
  million shall be made on the date of the consummation of the Acquisition (the
  “Closing Date”); and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           in addition to the foregoing, A
  Term Loans in the amount of $75 million under the A Term Loan Facility (the “Pocono
  A Term Loan Commitment Tranche”) shall be made on the Closing Date if and
  only if the Pocono Downs Sale (defined below) has not been completed
  concurrent with or prior to the Closing Date (such amount referred to in this
  clause (b) if so borrowed shall be referred to as the “Pocono A Term Loan
  Amount”).  If the Pocono Downs Sale
  has been completed concurrent with or prior to the Closing Date, then the
  amount of the Pocono A Term Loan Commitment Tranche shall not be available to
  be borrowed and the commitments under the A Term Loan Facility in the amount
  of such Pocono A Term Loan Commitment Tranche shall automatically terminate
  at the Closing Date or earlier, at the Borrower’s option.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  No amount of A Term Loans once repaid may be
  reborrowed.

  	
   

  
								



 


2





















 


B.            B Term Loan Facility


 


	
  Use of Proceeds:

  	
   

  	
  The proceeds of the loans made pursuant to the B
  Term Loan Facility (the “B Term Loans” and, together with the A Term
  Loans, the “Term Loans”), shall be used as follows:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           The Initial B Term Loan Amount
  (defined below) of the B Term Loan Facility shall be used solely to finance
  and effect the Acquisition and the Refinancing and to pay the fees and
  expenses incurred in connection with the Transaction on the Closing Date; and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           in addition to the foregoing, an
  amount equal to 101% of the aggregate principal amount of the Existing Target
  Notes for which Target Notes COC Offers may be required (the “Delayed Draw
  B Term Loan Commitment Amount”) of the B Term Loan Facility (the “Delayed
  Draw B Term Loan Tranche”) may be used solely to finance the Target Notes
  COC Offers and only to the extent required by the terms of the governing
  indenture.  B Term Loans made under the
  Delayed Draw B Term Loan Tranche are referred to herein as the “Delayed
  Draw B Term Loans”.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Maturity:

  	
   

  	
  The final
  maturity date of the B Term Loan Facility shall be the first to occur of (the
  “B Term Loan Maturity Date”) (a) the date that is the seventh anniversary
  of the Closing Date or (b) the date that is 180 days prior to the Senior
  Subordinated Note Maturity Date. 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Amortizations:

  	
   

  	
  (a)           During the first six years
  following the Closing Date, annual amortization (payable in four equal
  quarterly installments) of the B Term Loans shall be required in an amount equal
  to one percent of the initial aggregate principal amount of the B Term Loans;
  and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           In the seventh year after the
  Closing Date, the remaining aggregate principal amount of B Term Loans
  originally incurred shall be paid in four equal quarterly installments.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Availability:

  	
   

  	
  Amounts under the B Term Loan Facility shall be
  available as follows:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           B Term Loans in the amount of
  approximately $1,030 million plus such amount as is required to consummate
  the Target Notes Tender/Consent (exclusive of accrued interest) on the
  Closing Date shall be made on the Closing Date to finance, in part, the Transaction;

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           in addition to the foregoing, B
  Term Loans in the amount of $100 million under the B Term Loan Facility (the “Pocono
  B Term Loan Commitment Tranche”) shall be made on the Closing

  	
   

  



 


3





















 


	
   

  	
   

  	
  Date if and only if the Pocono Downs Sale (defined
  below) has not been completed concurrent with or prior to the Closing Date
  (such amount referred to in this clause (b) if so borrowed shall be referred
  to as the “Pocono B Term Loan Amount” and together with the amount
  under clause (a) above shall be referred to herein as the “Initial B Term
  Loan Amount”).  If the Pocono Downs
  Sale has been completed concurrent with or prior to the Closing Date, then
  the amount of the Pocono B Term Loan Commitment Tranche shall not be
  available to be borrowed and the commitment under the B Term Loan Facility in
  the amount of such Pocono B Term Loan Commitment Tranche shall automatically
  terminate at the Closing Date or earlier, at the Borrower’s option; and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)           in addition to the foregoing,
  Delayed Draw B Term Loans under the Delayed Draw B Term Loan Tranche may only
  be made during the period commencing on the Closing Date and ending 90 days
  after the Closing Date.  If amounts
  under the Delayed Draw B Term Loan Tranche or any part thereof is not drawn
  or otherwise used during such 90 day period, then the aggregate unutilized
  commitments under the B Term Loan Facility that relates to the Delayed Draw B
  Term Loan Tranche shall terminate at the end of such 90 day period.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  No amount of B Term Loans once repaid may be reborrowed.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding, anything herein to the contrary,
  amounts under the B Term Loan Facility not required under the Existing Target
  Notes Indentures to consummate the Target Notes COC Offers following the
  Closing Date shall cease to be available on the Closing Date to the extent
  not used as permitted herein.

  	
   

  



 


C.            Revolving Credit Facility


 


	
  Use of Proceeds:

  	
   

  	
  The proceeds of loans under the Revolving Credit
  Facility (the “Revolving Loans” and, together with the Term Loans and
  the Swingline Loans (defined below), the “Loans”) shall be used for
  working capital, capital expenditures, permitted acquisitions and general
  corporate purposes; provided not more than approximately $662.5
  million of the proceeds of the Revolving Credit Facility may be used to pay
  amounts owing to effect the Acquisition and the Refinancing or to pay any
  fees and expenses incurred in connection with the Transaction.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Letters of Credit:

  	
   

  	
  A portion of the Revolving Credit Facility not in
  excess of an amount to be mutually agreed upon will be available for the issuance
  of stand-by and commercial letters of credit (“Letters of Credit”) to
  support 

  	
   

  



 


4





















 


	
   

  	
   

  	
  obligations of the Borrower and its
  subsidiaries.  Each of the Lenders under
  the Revolving Credit Facility will purchase an irrevocable and unconditional
  participation in each Letter of Credit. 
  Maturities for Letters of Credit will not exceed twelve months in the
  case of standby Letters of Credit or 180 days in the case of commercial
  Letters of Credit, renewable annually thereafter in the case of standby Letters
  or Credit and, in any event, shall not extend beyond the fifth business day
  prior to the Revolving Loan Maturity Date (as defined below).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Swingline Loans:

  	
   

  	
  A portion of the Revolving Credit Facility not in
  excess of an amount to be mutually agreed upon shall be available for
  swingline loans (the “Swingline Loans”) from one or more Lenders to be
  agreed upon.  Any such Swingline Loans
  will reduce the availability under the Revolving Credit Facility on a
  dollar-for-dollar basis.  Each Lender
  under the Revolving Credit Facility shall acquire, under certain circumstances,
  an irrevocable and unconditional pro rata participation in each Swingline
  Loan.  Each Swingline Loan shall be due
  and payable on the earlier of the Revolving Loan Maturity Date (defined below)
  and the first date after such Swingline Loan is made that is the 15th or last
  day of a calendar month and is at least two business days after such
  Swingline Loan is made.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Maturity:

  	
   

  	
  The final maturity date of the Revolving Credit Facility
  shall be the first to occur of (the “Revolving Loan Maturity Date”)
  (a) the date that is the fifth anniversary of the Closing Date or (b) the
  date that is 180 days prior to the Senior Subordinated Note Maturity Date. 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Availability:

  	
   

  	
  Revolving Loans may be borrowed, repaid and
  reborrowed on and after the Closing Date and prior to the Revolving Loan Maturity
  Date in accordance with the terms of the definitive credit documentation governing
  the Credit Facilities (the “Credit Documentation”).

  	
   

  



 


D.            Uncommitted Incremental
Commitments Facility


 


	
   

  	
   

  	
  During the period commencing on the Closing Date and
  ending on the third anniversary thereof, the Borrower may increase the Credit
  Facilities through additional commitments (the “Incremental Loans”)
  (whether an increase in commitments under the Revolving Credit Facility,
  additional commitments under the A Term Loan Facility, additional commitments
  under the B Term Loan Facility, or one or more new tranches of term loans to
  be made available under the credit agreement governing the Credit Facilities
  or any combination of the foregoing) from the existing Lenders and/or from
  new Lenders approved by the Arrangers and the Administrative Agent (such approval

  	
   

  



 


5





















 


	
   

  	
   

  	
  not to be unreasonably withheld or delayed) in
  minimum amounts to be determined; provided, however, that (a)
  any increase in commitments under the Revolving Credit Facility shall not
  exceed $100 million and (b) the aggregate amount of all Incremental Loans shall
  not exceed $300 million (the “Incremental Loan Commitment Amount”) and
  immediately before and after any such borrowing no Default or Event of
  Default exists, and provided, further that, to the extent that
  any Incremental Loans are under one or more new tranches of term loans and
  the weighted average interest rates payable in respect of such Incremental
  Loans (whether in the form of interest, fees, original issue discount or a
  combination of any thereof) is higher by more than 0.50% than the weighted
  average yield to final maturity (including fees and original issue discount)
  payable in respect of the B Term Loan Facility immediately prior to the
  incurrence of any such Incremental Loans, the interest rate applicable to the
  B Term Loan Facility shall increase to provide the existing lenders the same
  weighted interest rate provided to the lenders of such Incremental
  Loans.  Existing Lenders may, but shall
  not be obligated without their prior written consent to, provide a commitment
  and/or make any loans pursuant to any Incremental Loans, and nothing
  contained in this Term Sheet or the Commitment Letter constitutes, or shall
  be deemed to constitute, a commitment with respect to any Incremental Loans.
  The terms and conditions of the Incremental Loans shall be mutually agreed
  upon by the Borrower and the Arrangers. 
  Notwithstanding the foregoing to the contrary, the Borrower shall
  reserve and not utilize $175 million of the Incremental Loan Commitment
  Amount until the earlier of (a) the expiration of any obligation on the part
  of the Borrower to purchase the Pocono Downs and its related assets pursuant
  to the put provisions set forth in documentation
  related to the Pocono Downs Sale as publicly available on the date hereof
  (the “Pocono Downs Put Obligation”) or (b) the date on which the
  Borrower has fulfilled the Pocono Downs Put Obligation through proceeds from
  the Incremental Loans facility or other source of financing.

  	
   

  



 


II.            Terms Applicable to All Credit Facilities


 


	
  Administrative Agent:

  	
   

  	
  DBTCA will act as administrative agent for the
  Credit Facilities (in such capacity, the “Administrative Agent”).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Joint Lead Arrangers:

  	
   

  	
  DBSI, GSCP and LBI will act as joint lead arrangers
  for the Credit Facilities (in such capacities, the “Arrangers”).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Joint Book Running Managers:

  	
   

  	
  DBSI, GSCP and LBI will act as joint book running managers
  for the Credit Facilities (in such capacities, the “Book Managers”).

  	
   

  



 


6





















 


	
   

  	
   

  	
  for the
  Credit Facilities (in such capacities, the “Book Managers”).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Co-Syndication
  Agents:

  	
   

  	
  GSCP and
  LCPI will act as co-syndication agents for the Credit Facilities (in such
  capacities, the “Co-Syndication Agents”).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lenders:

  	
   

  	
  DBTCA, GSCP, LCPI and/or a syndicate of lenders
  arranged by the Arrangers (the “Lenders”) in consultation with the
  Borrower.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Required Lenders:

  	
   

  	
  Lenders having aggregate commitments and/or
  outstandings (as appropriate) pertaining to all tranches (taken in the aggregate)
  of the Credit Facilities in excess of 50%, subject to amendments or waivers
  of certain provisions of the Credit Documentation requiring the consent of
  Lenders having a greater share (or all) of the outstanding commitments and/or
  outstandings or requiring the consent of a specified affected Credit
  Facility.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Guaranties:

  	
   

  	
  Each of the Borrower’s direct and indirect domestic subsidiaries of the Borrower (each, other than such
  subsidiaries not providing a guarantee as provided below, a “Guarantor”
  and, collectively, the “Guarantors”) existing on the Closing Date or
  thereafter created or acquired shall be required to provide an unconditional
  joint and several guaranty of all amounts owing under the Senior Secured
  Financing (the “Guaranties”); provided, that no guarantee need
  be provided by (i) any member of the Unrestricted Group (defined below), (ii)
  any subsidiary of the Borrower or Target to the extent prohibited by relevant
  gaming authorities after the Borrower has used commercially reasonable efforts
  to arrange for such guarantees, or (iii) any subsidiary of Target to the
  extent prohibited by the Existing Target Notes and other existing
  indebtedness of the Borrower and its subsidiaries to remain outstanding following
  the Acquisition.  Such guarantees shall
  be in form and substance reasonably satisfactory to the Arrangers and shall,
  to the extent requested by the Arrangers, also guarantee the Borrower’s and
  its subsidiaries’ obligations under interest rate swaps or similar agreements
  with a Lender or its affiliates (the “Secured Hedging Agreements”)
  incurred in connection with the Senior Secured Financing.  All guarantees shall be guarantees of
  payment 

  	
   

  



 


7





















 


	
   

  	
   

  	
  and not of collection.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Unrestricted Group” shall include (i) the
  subsidiaries of Borrower currently treated as “Unrestricted Subsidiaries”
  under the Existing Borrower Facilities, (ii) the subsidiaries of Target
  currently treated as “Unrestricted Subsidiaries” under the Existing Target
  Facilities (it being understood that the subsidiaries of Target that are
  borrowers under the Existing Target Facilities shall not constitute “Unrestricted
  Subsidiaries” for purposes hereof) and (iii) such other subsidiaries as
  reasonably requested by Borrower and acceptable to the Arrangers.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Security:

  	
   

  	
  All amounts owing under the Senior Secured Financing
  and (if applicable) the Secured Hedging Agreements (and all obligations under
  the Guaranties) will be secured by (i) a first priority perfected security
  interest in all stock, other equity interests and promissory notes owned by
  the Borrower and the Guarantors, provided that not more than 65% of
  the total outstanding voting stock of any non-U.S. subsidiary of the Borrower
  shall be required to be pledged, and (ii) a first priority (subject to
  certain customary lien exceptions as the Administrative Agent shall
  reasonably determine in its sole discretion) perfected security interest in
  all other tangible and intangible properties and assets (including, without
  limitation, receivables, contract rights, securities, patents, trademarks,
  other intellectual property, inventory, equipment, real estate, leasehold interests,
  and vessels owned by the Borrower and each of the Guarantors, subject (in
  each case) to exceptions for those properties and assets as to which the
  Administrative Agent shall determine in its sole discretion that the costs of
  obtaining such security interest are excessive in relation to the value of
  the security to be afforded thereby and excluding (x) liens on the properties
  and assets of the Pennwood Joint Venture, on the Casino Rama management
  contract and on the leasehold estate at Casino Rouge and Boomtown Biloxi and
  (y) liens prohibited by applicable gaming authorities, by contractual provisions
  or by applicable laws, in the case with respect to clause (y) above, after
  the Borrower has used commercially reasonable efforts to secure approval.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All documentation (collectively referred to herein
  as the “Security Agreements”) evidencing the security required

  	
   

  



 


8





















 


	
   

  	
   

  	
  pursuant to the immediately preceding paragraph
  shall be in form and substance reasonably satisfactory to the Arrangers, and
  shall effectively create first priority security interests in the properties
  and assets purported to be covered thereby, with such exceptions as are
  acceptable to the Administrative Agent in its reasonable discretion.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Optional Commitment Reductions:

  	
   

  	
  The unutilized portion of the total commitments under
  the Credit Facilities may, upon three business days’ notice, be reduced or
  terminated by the Borrower in minimum amounts to be agreed, without premium
  or penalty. 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Voluntary Prepayments:

  	
   

  	
  Voluntary prepayments may be made at any time on
  three business days’ notice in the case of Eurodollar Loans, or one business
  day’s notice in the case of Base Rate Loans, without premium or penalty in
  minimum principal amounts to be agreed; provided that voluntary
  prepayments of Eurodollar Loans made on a date other than the last day of an
  interest period applicable thereto shall be subject to customary breakage
  costs.  Voluntary prepayments of Term
  Loans shall, subject to the provisions described under the heading “Waivable
  Prepayments” below, be applied pro rata
  to outstanding A Term Loans and B Term Loans, and shall apply to reduce
  future scheduled amortization payments of the respective Term Loans being
  prepaid in a manner to be determined.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Mandatory Repayments:

  	
   

  	
  Mandatory
  repayments of Term Loans shall be required from the following:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           100% of the proceeds (net of taxes
  and costs and expenses in connection with the sale) from asset sales by the
  Borrower and its restricted subsidiaries (subject to certain reinvestment
  rights and exceptions to be mutually agreed upon);

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           100% of the net proceeds from
  issuances of debt not permitted under the Credit Documentation and from any
  Notes Offering (as defined in the Fee Letter);

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)           50% (reducing to certain percentage
  amounts to be mutually agreed based on meeting a leverage test to be mutually
  agreed) of annual excess cash flow (with definitions to be mutually agreed
  upon) of the Borrower 

  	
   

  



 


9





















 


	
   

  	
   

  	
  and
  its restricted subsidiaries; and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)           100% of the net proceeds from insurance
  recovery and condemnation events of the Borrower and its restricted subsidiaries
  (subject to certain reinvestment rights to be negotiated). 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All mandatory repayments of Term Loans made pursuant
  to clauses (a)-(d) above (other than from the proceeds of a Notes Offering)
  will, subject to the provisions described under the heading “Waivable
  Prepayments” below and the next paragraph below, be applied pro rata to outstanding A Term Loans and B
  Term Loans, and shall apply to reduce future scheduled amortization payments
  of the respective Term Loans being repaid pro
  rata based upon the then remaining amounts of such payments.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding the foregoing to the contrary, any
  and all net proceeds received by the Borrower or its restricted subsidiaries
  from the sale by the Borrower or its restricted subsidiaries of the Pocono
  Downs and related assets as set forth in the documentation publicly filed by
  the Borrower prior to the date hereof (the “Pocono Downs Sale”) shall
  be applied first to outstanding A Term Loans made under the Pocono A Term
  Loan Commitment Tranche and to outstanding B Term Loans made under the Pocono
  B Term Loan Commitment Tranche on a pro rata basis based on the initial
  aggregate amount of the A Term Loans made under the Pocono A Term Loan
  Commitment Tranche and the initial aggregate amount of the B Term Loans made
  under the Pocono B Term Loan Commitment Tranche.  Notwithstanding the foregoing to the
  contrary, net proceeds received from the Pocono Asset Sale shall not be subject
  to any reinvestment rights.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In addition, if at any time the outstandings pursuant
  to the Revolving Credit Facility (including Letter of Credit outstandings and
  Swingline Loans outstandings) exceed the aggregate commitments with respect
  thereto, prepayments of Revolving Loans (and/or the cash collateralization of
  Letters of Credit) shall be required in an amount equal to such excess.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Waivable Prepayments

  	
   

  	
  So long as (and to the extent that) A Term Loans
  remain outstanding, Lenders holding B Term Loans shall have

  	
   

  



 


10





















 


	
   

  	
   

  	
  rights to waive their share of Voluntary Prepayments
  and Mandatory Repayments (excluding scheduled amortizations) as otherwise required
  above on terms to be established by the Arrangers (in which case the amounts
  so waived shall be applied to repay then outstanding A Term Loans); provided,
  however, that, notwithstanding the foregoing, provided that the senior
  debt leverage ratio (to be defined as mutually agreed upon and to include all
  unsubordinated and secured debt of Borrower and the Guarantors and all debt
  of restricted subsidiaries of the Borrower that are not Guarantors) is less
  than 3.5 to 1.00, the Borrower shall have the option of offering voluntary
  prepayments to both the Lenders holding B Term Loans and the Lenders holding
  A Term Loans, on a pro rata basis (and offering A Term Lenders any amounts
  declined by the B Term Lenders) and providing notice to such Lenders at the time
  of such offer that any declined amounts may be applied by the Borrower to
  repurchase its outstanding senior subordinated notes and/or equity.  Any such declined amounts may then be used
  by the Borrower to so repurchase its outstanding senior subordinated notes
  and/or equity.  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Interest Rates:

  	
   

  	
  At the Borrower’s option, Loans may be maintained
  from time to time as (x) Base Rate Loans, which shall bear interest at the
  Base Rate in effect from time to time plus the Applicable Margin (as
  defined below) or (y) Eurodollar Loans, which shall bear interest at the
  Eurodollar Rate (adjusted for maximum reserves) as determined by the Administrative
  Agent for the respective interest period plus the Applicable Margin, provided,
  that until the earlier to occur of (i) the 90th day following the Closing
  Date or (ii) the date upon which the Arrangers shall determine in their sole
  discretion that the primary syndication of the Credit Facilities has been
  completed, Eurodollar Loans shall be restricted to a single one month Interest
  Period at all times, with the first such Interest Period to begin not sooner
  than 3 business days after the Closing Date and with any subsequent Interest
  Periods to begin on the last day of the prior one month Interest Period
  theretofore in effect.  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Applicable
  Margin” shall mean a percentage per annum equal to as follows:

  	
   

  



 


11





















 


	
   

  	
   

  	
  (i) in the case of A
  Term Loans (A) maintained as Base Rate Loans, 1.375%, and (B) maintained as
  Eurodollar Loans, 2.375%;

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)
  in the case of B Term Loans (A) maintained as Base Rate Loans, 1.50%, and (B)
  maintained as Eurodollar Loans, 2.50%; and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii) in the case of
  Revolving Loans (A) maintained as Base Rate Loans, 1.375%, and (B) maintained
  as Eurodollar Loans, 2.375%.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  So
  long as no default or event of default exists under the Credit Facilities,
  the Applicable Margin for Revolving Loans and A Term Loans shall be subject
  to quarterly change (which shall not exceed the rates set forth in clauses
  (i) and (iii) above) to be determined (but, in any event, not commencing
  until the delivery of the Borrower’s financial statements in respect of its
  first fiscal quarter ending at least one full fiscal quarter after the
  Closing Date) based on meeting the Borrower’s applicable Leverage Ratios.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  It is understood that the Applicable Margins
  applicable to the B Term Loans may increase as set forth in the Section above
  entitled “Uncommitted Incremental Commitment Facility”.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Base Rate” shall mean the higher of (x) the
  rate that the Administrative Agent announces from time to time as its prime
  lending rate, as in effect from time to time, and (y) 1/2 of 1% in excess of
  the overnight federal funds rate.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest periods of 1, 2, 3 and 6 months or, to the
  extent available to all Lenders with commitments and/or Loans under a given
  tranche of the Credit Facilities, 9 or 12 months, shall be available in the
  case of Eurodollar Loans.  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest in respect of Loans bearing interest based
  upon the Base Rate (“Base Rate Loans”) shall be payable quarterly in
  arrears on the last business day of each calendar quarter. 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest in respect of Loans based upon the
  Eurodollar Rate (“Eurodollar Loans”) shall be payable in arrears at 

  	
   

  



 


12





















 


	
   

  	
   

  	
  the end of the applicable interest period and every
  three months in the case of interest periods in excess of three months.
  Interest will also be payable at the time of repayment of any Loans and at
  maturity.  All interest on Base Rate
  Loans, Eurodollar Loans and commitment fees and any other fees shall be based
  on a 360-day year and actual days elapsed unless calculated by reference to
  the Prime Rate, in which case it shall be based on a 365 or 366-day year, as
  applicable.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Interest Rate Management:

  	
   

  	
  At least 50% of the aggregate principal amount of
  outstanding funded indebtedness (excluding the Revolving Loans) of the
  Borrower and its restricted subsidiaries must be subject either to a fixed
  rate or be hedged on terms and for a period of time reasonably satisfactory
  to the Arrangers and with one or more Lenders or their respective affiliates.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Default Interest:

  	
   

  	
  Overdue principal, interest and other amounts shall
  bear interest at a rate per annum equal to the greater of (i) the rate which
  is 2% in excess of the rate otherwise applicable to Base Rate Loans of the
  respective tranche under the Senior Secured Financing from time to time and
  (ii) the rate which is 2% in excess of the rate then borne by such
  borrowings.  Such interest shall be payable
  on demand.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Yield Protection; and Replacement of Lenders:

  	
   

  	
  The Credit Facilities shall include customary protective
  provisions for such matters as defaulting banks, capital adequacy, increased
  costs, reserves, funding losses, breakage costs, illegality and withholding
  taxes.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Borrower shall have the right to replace any
  Lender that (i) charges an amount with respect to contingencies described in
  the immediately preceding paragraph or (ii) refuses to consent to certain
  amendments or waivers of the Senior Secured Financing which expressly require
  the consent of such Lender and which have been approved by the Required
  Lenders (or, in certain circumstances applicable to a particular tranche, a
  majority of the applicable tranche of Lenders).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Commitment Fees:

  	
   

  	
  Revolving Credit Facility.  A commitment fee, at a rate per annum rate
  equal to a certain percentage amounts to be mutually agreed based on meeting
  a leverage test to be

  	
   

  



 


13





















 


	
   

  	
   

  	
  mutually agreed (the “Commitment Fee Percentage”),
  on the daily undrawn portion of the commitments of each Lender under the
  Revolving Credit Facility, will commence accruing on the Closing Date and
  will be payable quarterly in arrears. 
  The Commitment Fee Percentage shall be subject to quarterly change to
  be determined (but, in any event, not commencing until the delivery of the
  Borrower’s financial statements in respect of its first fiscal quarter ending
  at least one full fiscal quarter after the Closing Date) based on meeting the
  Borrower’s applicable leverage tests; provided, however, that
  the Commitment Fee Percentage shall in no event be greater than 0.50%.  Notwithstanding the foregoing, the
  Commitment Fee Percentage on the Closing Date shall be 0.50%.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B Term Loan Facility.  A commitment fee, at a rate per annum of
  0.50%, on the daily undrawn portion of the commitment of each Lender under
  the B Term Loan Facility that relates to the Delayed Draw B Term Loan
  Tranche, will commence accruing on the Closing Date to the date on which the
  Delayed Draw B Term Loans have been made under the Delayed Draw B Term Loan
  Tranche or such commitment otherwise has terminated.  Such fee shall be computed on the basis of
  the actual number of days elapsed over a 360-day year, and shall be due and
  payable in cash on the date on which the Delayed Draw B Term Loans were made.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Letter of Credit Fees:

  	
   

  	
  A letter of credit fee equal to the Applicable Margin
  for Revolving Loans maintained as Eurodollar Loans on the outstanding stated
  amount of Letters of Credit (the “Letter of Credit Fee”) to be shared
  proportionately by the Lenders under the Revolving Credit Facility in
  accordance with their participation in the respective Letter of Credit, and a
  facing fee of 1/4 of 1% per annum (but in no event less than $500 per annum
  for each Letter of Credit) (the “Facing Fee”) to be paid to the issuer
  of each Letter of Credit for its own account, in each case calculated on the
  aggregate stated amount of all Letters of Credit for the stated duration
  thereof.  Letter of Credit Fees and
  Facing Fees shall be payable quarterly in arrears.  In addition, the issuer of a Letter of
  Credit will be paid its customary administrative charges in connection with
  Letters of Credit issued by it.

  	
   

  



 


14





















 


	
  Agent/Lender Fees:

  	
   

  	
  The Administrative Agent, the Arrangers and the
  Lenders shall receive such fees as have been separately agreed upon.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Assignments and Participations:

  	
   

  	
  The Borrower may not assign its rights or
  obligations under the Senior Secured Financing.  Any Lender may assign, and may sell
  participations in, its rights and obligations under the Senior Secured
  Financing, subject (x) in the case of participations, to customary restrictions
  on the voting rights of the participants and (y) in the case of assignments,
  to such limitations as may be established by the Administrative Agent
  (including (i) unless to another Lender or its affiliate, a minimum assignment
  amount of $1 million (unless the Borrower and the Administrative Agent
  otherwise consent) (or, if less, the entire amount of such assignor’s
  commitments and outstanding Loans at such time), (ii) an assignment fee in
  the amount of $3,500 to be paid by the respective assignor or assignee to the
  Administrative Agent and (iii) the receipt of the consent of the
  Administrative Agent and, so long as no Event of Default then exists under
  the Credit Documentation, the Borrower (but only with respect to assignments
  under the Revolving Credit Facility) (such consents
  not to be unreasonably withheld or delayed)).  The Senior Secured Financing
  shall provide for a mechanism which will allow for each assignee to become a
  direct signatory to the Senior Secured Financing and will relieve the
  assigning Lender of its obligations with respect to the assigned portion of
  its commitment.  The Credit Facilities need not be assigned
  on a pro-rata basis.  Each Lender will also
  have the right, without consent of the Borrower or the Administrative Agent,
  to assign or pledge as security all or part of its rights under the Credit
  Documentation to any Federal Reserve Bank.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Documentation; Governing Law:

  	
   

  	
  The Lenders’ commitments for the Senior Secured Financing
  will be subject to the negotiation, execution and delivery of definitive
  financing agreements (and related security documentation, guaranties, etc.)
  consistent with the terms of this Term Sheet, in each case prepared by Cahill
  Gordon & Reindel LLP as counsel to the Administrative Agent, and
  reasonably satisfactory to the Arrangers (including, without limitation, as
  to the terms, conditions, representations, covenants and events of default

  	
   

  



 


15





















 


	
   

  	
   

  	
  contained therein). 
  All documentation shall be governed by the internal laws of the State
  of New York (except security documentation that the Administrative Agent determines
  should be governed by local law).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Commitment Termination:

  	
   

  	
  Any portion of the commitments under the B Term Loan
  Facility in the amount of the Delayed Draw B Term Loan Tranche that has not
  been used within 90 days following the Closing Date shall automatically
  terminate at the end of the 90th day following the Closing Date.   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Conditions Precedent:

  	
   

  	
  Those conditions precedent set forth or reflected in
  the Commitment Letter, the Term Sheet and the Fee Letter.  Without limiting the foregoing, the following
  conditions shall apply:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  A.            To the Initial Extension

  of Credit.

  	
   

  	
  Conditions precedent for the initial extension of
  credit to finance the Acquisition and the Target Refinancing (and if there is
  not a Two Phase Syndication but only a one phase syndication, the Borrower
  Refinancing as well) shall be those conditions precedent set forth in Annex I
  to this Exhibit A.  Conditions
  precedent for the initial extension of credit or issuance a Letter of Credit
  under the Credit Facilities for a first phase of a Two Phase Syndications
  shall be conditions precedent that are usual and customary for credit
  facilities similar to the Credit Facilities.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  B.            To Each Extension of Credit.

  	
   

  	
  Conditions precedent for each borrowing (excluding
  the initial borrowing to finance the Acquisition and the Target Refinancing
  (and if there is not a Two Phase Syndication but only a one phase
  syndication, the Borrower Refinancing as well)) or issuance, extension,
  increase or renewal of a Letter of Credit (excluding the issuance of a
  replacement Letter of Credit on the Closing Date) under the Credit Facilities
  shall be as follows:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           all representations and warranties
  shall be true and correct in all material respects on and as of the date of
  each extension of credit (although any representations and warranties which
  expressly relate to a given date or period shall be required to be true and
  correct in all material respects only as of the respective date or for the
  respective period, as the case may be), before and after

  	
   

  



 


16





















 


	
   

  	
   

  	
  giving
  effect to such borrowing and to the application of the proceeds therefrom, as
  though made on and as of such date; 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           no event of default under the
  Credit Facilities or event which with the giving of notice or lapse of time
  or both would be an event of default under the Credit Facilities, shall have
  occurred and be continuing, or would result from such borrowing or such
  issuance, extension, increase or renewal of such Letter of Credit; and

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)           with respect to any Loans, notice
  of borrowing, and with respect to each Letter of Credit, a notice of
  issuance, extension, increase or renewal.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  C.            Conditions to Delayed

  Draw B Term Loans.

  	
   

  	
  In addition to the conditions referred to above and
  in the Commitment Letter, any drawing of the amounts under the Delayed Draw B
  Term Loan Tranche will be subject to the following conditions: (A) the Target
  Notes COC Offers shall have been effected in compliance with and under the
  existing terms of the applicable indentures and other related agreements and
  in compliance with applicable laws, rules and regulations, and all required
  consents, if necessary, shall have been obtained, (B) the proceeds from the
  Delayed Draw B Term Loans shall only be used to consummate the applicable
  Target Notes COC Offers and pay related fees and expenses, and (C) the Administrative
  Agent shall have received a certificate duly executed by a senior officer of
  the Borrower certifying that the condition set forth in clause (A) above has
  been satisfied in all respects.  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Representations
  and Warranties:

  	
   

  	
   

  	
  Those representations and warranties applicable to
  the Borrower and the restricted subsidiaries which are usual and customary
  for these types of facilities, and such additional representations and
  warranties as the Arrangers shall reasonably deem appropriate in the context
  of the proposed Transaction.  Notwithstanding
  the foregoing or any other provisions of the Commitment Letter, Term Sheet or
  Fee Letter, representations and warranties (i) with respect to Target and its
  subsidiaries shall not be more onerous 

  	
   

  
					



 


17





















 


	
   

  	
   

  	
  than those in the Acquisition Agreement insofar as
  they impact conditions to borrowings for the Acquisition and the Refinancing
  (it being understood that this does not impact transactional representations
  and warranties (e.g., authorization, execution, delivery and
  enforceability of the Credit Documentation, etc.) pertaining to the Credit
  Facilities, the Loans, the Borrower and Guarantors or representations and warranties
  for borrowings made other than for the purpose of the Acquisition and the
  Target Refinancing (and if there is not a Two Phase Syndication but only a
  one phase syndication, the Borrower Refinancing as well)) or (ii) with respect
  to the Borrower and its subsidiaries shall not include a material adverse
  change or effect representation and warranty or definition (or require for
  the satisfaction or accuracy of representations and warranties, the absence
  of a material adverse change or effect) regarding its business, assets,
  results of operations, conditions (financial or otherwise), liabilities or
  prospects insofar as such language impacts conditions to borrowings for the
  Acquisition and the Refinancing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Covenants:

  	
   

  	
  Those covenants applicable to the Borrower and the
  restricted subsidiaries usual and customary for these types of facilities
  (with customary exceptions to be agreed upon).  Although the covenants (other than the
  financial covenants, which shall be limited to those set forth in clause (x)
  below) have not yet been specifically determined, the covenants shall in any
  event include, but not be limited to the following (all such covenants to be
  subject to customary baskets and exceptions to be mutually agreed):  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)            Limitations on other indebtedness
  (including contingent liabilities and seller notes); provided, that
  subordinated debt issued by the Borrower shall be permitted so long as the
  Borrower is in pro forma compliance with financial covenants, the
  subordination terms are customary for high yield debt issuances and the
  aggregate principal amount of all such subordinated debt does not exceed at
  any time outstanding a certain dollar amount (to be mutually agreed upon) in
  the aggregate.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)           Limitations on investments,
  mergers, acquisitions, joint ventures, partnerships and acquisitions and
  dispositions of assets; provided that (a) acquisitions shall be
  permitted so long as the Borrower is in pro forma compliance with financial
  covenants (subject to baskets to be mutually agreed upon) and (b) investments
  shall be permitted without restrictions with respect to (1) joint ventures
  where

  	
   

  



 


18





















 


	
   

  	
   

  	
  the
  Borrower is in control or has a management contract and (2) casinos and “racinos”
  where the Borrower has entered into management contract; provided, however,
  that, notwithstanding the foregoing, with respect to clause (b) above, if, on a pro forma basis after giving effect thereto, the
  total debt leverage ratio (to be defined as mutually agreed upon) of the
  Borrower and its restricted subsidiaries is equal to or less than 4.5 to
  1.00, then the Borrower and its restricted subsidiaries shall be permitted to
  make prohibited investments under clause (b) above in an unlimited aggregate
  amount following the Closing Date; provided, further, however,
  that, if, on a pro forma basis after giving effect thereto, such total debt
  leverage ratio of the Borrower and its restricted subsidiaries exceeds 4.5 to
  1.00, then the Borrower and its restricted subsidiaries shall be permitted to
  make prohibited investments under clause (b) following the Closing Date only
  if such investments to be made together with all prohibited investments so
  made following the Closing Date does not exceed $300 million in the
  aggregate. 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)          Limitations on sale-leaseback
  transactions.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)          Limitations on dividends and
  restricted payments.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)           Limitations on voluntary
  prepayments of certain other indebtedness and amendments thereto, and
  amendments to organizational documents.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vi)          Limitations on transactions with
  affiliates.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vii)         Limitations on holding cash and Cash
  Equivalents at any time Revolving Loans are outstanding.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (viii)        Maintenance of existence and
  properties.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ix)           Limitations on liens.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (x)            Financial covenants shall consist
  of the following:

  	
   

  



 


	
   

  	
  (a)

  	
   

  	
  Maximum Total
  Debt to EBITDA;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
   

  	
  Maximum Senior
  Debt to EBITDA; and

  	
   

  



 


19





















 


	
   

  	
  (c)

  	
   

  	
  Minimum Fixed
  Charge Coverage Ratio.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The
  following shall be excluded from financial covenant calculations: (i) guarantees
  of indebtedness of joint ventures in which the Borrower or its subsidiaries
  has a equity interest (subject to a minimum percentage equity interest
  therein to be mutually agreed upon) not to exceed a certain dollar amount (to
  be mutually agreed upon) in the aggregate; provided, however, that if and
  when any such guarantee is demanded, then such guarantee shall be included in
  the financial covenant calculations; (ii) any guarantees of Borrower or any
  of its subsidiaries entered into with respect to casinos and “racinos”
  managed by the Borrower or any of its subsidiaries not to exceed a certain
  dollar amount (to be mutually agreed upon) in the aggregate; provided,
  however, that if and when such guarantee is demanded, then such guarantee
  shall be included in the financial covenant calculations; and (iii) the
  Pocono Downs Put Obligation.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xi)

  	
  Limitations
  on capital expenditures (with carry forwards to be mutually agreed upon).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xii)

  	
  Adequate
  insurance coverage.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xiii)

  	
  ERISA
  covenants.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xiv)

  	
  Financial
  reporting, notice of environmental, ERISA-related matters and material litigation
  and visitation and inspection rights.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xv)

  	
  Compliance
  with laws, including environmental and ERISA.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xvi)

  	
  Payment of taxes and other liabilities.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xvii)

  	
  Limitation on changes in nature of business.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (xviii)

  	
  Use of proceeds.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Events
  of Default:

  	
   

  	
  Those events
  of default usual and customary for these types of facilities, including,
  without limitation, a change of control (with a definition to be mutually
  agreed upon) of the Borrower. Notwithstanding the foregoing, events of
  default shall not be constructed to conflict with specifically negotiated
  conditions (or the absence thereof) to borrowings for the Acquisition and the
  Refinancing set forth herein or in the Term Sheet. Except as expressly set
  forth in Annex I hereto, the foregoing shall not preclude an event of default
  from occurring on a customary basis; however, it shall in no event prevent
  satisfaction of conditions to borrowing for the Acquisition and the Target
  Refinancing 

  	
   

  



 


20





















 


	
   

  	
   

  	
  (and if
  there is not a Two Phase Syndication but only a one phase syndication, the
  Borrower Refinancing as well). In the event of any action, circumstance or
  event occurring prior to the Closing Date that adversely affects compliance
  with financial covenants or otherwise may result in an Event of Default
  following borrowings for the Acquisition and the Target Refinancing (and if
  there is not a Two Phase Syndication but only a one phase syndication, the
  Borrower Refinancing as well), the Arrangers and the Borrower will review and
  negotiate, in good faith, revised levels or other changes in order to prevent
  an Event of Default from occurring on or following the Closing Date.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Expenses:

  	
   

  	
  The
  Borrower shall pay (a) all reasonable out-of-pocket expenses of the Administrative
  Agent and the Arrangers associated with the syndication of the Credit
  Facilities and the preparation, execution, delivery, and administration of
  the Credit Documentation with respect to the Credit Facilities and any
  amendment or waiver with respect thereto (including the reasonable fees,
  disbursements and other charges of counsel and any Clearpar costs and
  expenses) and (b) all out-of-pocket expenses of the Administrative Agent and
  the Lenders (including the fees, disbursements and other charges of one
  counsel in addition to any local counsel as the Arrangers reasonably
  determine) in connection with the enforcement of the Credit Documentation.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Indemnification:

  	
   

  	
  The
  Credit Documentation will contain customary indemnities for the
  Administrative Agent, the Arrangers, the Co-Syndication Agents, any
  documentation agent, the Lenders and their respective employees, agents and
  affiliates (other than as a result of such person’s gross negligence or
  willful misconduct or material breach).

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Counsel
  to the Administrative Agent and the Arrangers:

  	
   

  	
  Cahill
  Gordon & Reindel LLP

  	
   

  



 


21





















 


EXHIBIT A


 


Annex 1 to Exhibit A


 


SUMMARY OF CONDITIONS PRECEDENT TO INITIAL
EXTENSION OF CREDIT


 


All capitalized terms used herein but not defined herein shall have the
meanings provided in the Commitment Letter and Term Sheet.


 


The conditions precedent for the initial borrowing or issuance of
Letters of Credit under the Credit Facilities shall be those conditions precedent
set forth or reflected in the Commitment Letter, the Term Sheet and the
following:


 


	
   

  	
  (1)

  	
   

  	
  With respect to the Transaction (excluding the
  Senior Secured Financing): (a) the Acquisition shall be consummated in all
  respects in a manner consistent with the Acquisition Agreement, unless otherwise
  consented to by the Arrangers (such consent not to be unreasonably withheld
  or delayed). Any documentation executed and delivered in connection with the
  Acquisition Agreement not delivered to the Arrangers on or prior to the date
  hereof shall be reasonably satisfactory in form and substance to the
  Arrangers. All conditions precedent to the consummation of the Acquisition,
  as set forth in the Acquisition Agreement, shall have been satisfied in all
  material respects, and not otherwise waived in any material respect except
  with the consent of the Arrangers (not to be unreasonably withheld or
  delayed), to the satisfaction of the Arrangers; and (b) such Transaction and
  the consummation thereof shall be in compliance in all material respects with
  all applicable requirements of law, rules, statutes and regulations
  (including gaming regulations) and regulatory approvals.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
   

  	
  With respect to the Senior Secured Financing: (a)
  the negotiation, execution and delivery of definitive Credit Documentation
  (and related Security Agreements and guaranties) consistent with the terms of
  the Commitment Letter, this Term Sheet and reasonably satisfactory to the
  Arrangers and the Administrative Agent; (b) such documentation shall be in
  full force and effect; (c) all conditions precedent to the consummation of
  such Senior Secured Financing as set forth in the documentation relating
  thereto (and consistent with the terms of the Commitment Letter and the Fee
  Letter), including the Commitment Letter, shall have been satisfied in all
  respects, and not otherwise waived in any respect except with the consent of
  the Arrangers, to the satisfaction of the Arrangers; and (d) the consummation
  thereof shall be in material compliance with all applicable laws, rules,
  statutes and regulations (including gaming regulations and Regulations T, U
  and X of the Federal Reserve Board) and regulatory approvals.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)

  	
   

  	
  All obligations of the Borrower, Target and their
  respective subsidiaries with respect to the indebtedness being refinanced
  pursuant to the Refinancing (other than pursuant to the Target Notes COC Offers),
  and all obligations of the Borrower and Target under the Existing Borrower
  Facilities and the Existing Target Facilities, respectively, in each case
  shall have been paid in full, and all commitments, security interests and guaranties
  in connection therewith shall

  	
   

  



 





















 


	
   

  	
   

  	
   

  	
  have been terminated and released, all to the
  reasonable satisfaction of the Arrangers. All Existing Target Notes validly
  tendered pursuant to the Target Notes Tender/Consent shall have been
  purchased or a majority of the Existing Target Notes shall otherwise have
  been repaid and discharged and a supplemental indenture eliminating all
  significant restrictive covenants therein shall have been executed by the applicable
  trustees and Target. The Target Notes Tender/Consent shall have been effected
  in compliance with the applicable indentures and with all applicable laws,
  rules and regulations, and all required consents, if necessary shall have
  been obtained.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (4)

  	
   

  	
  After giving effect to the consummation of the
  Transaction, the Borrower and its restricted subsidiaries shall have no
  outstanding preferred equity and indebtedness or contingent liabilities in
  respect of indebtedness, except for the following (collectively, the “Existing
  Indebtedness”):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (i)            the Senior Secured Financing;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (ii)           to the extent that Existing Target
  Notes remain outstanding following the Target Notes Tender/Consent on the Closing
  Date, the Existing Target Notes;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iii)          intercompany indebtedness of the
  Borrower and its restricted subsidiaries in amounts reasonably acceptable to
  the Arrangers, provided such intercompany indebtedness is subordinated in
  full (including without limitation in right to payment) to the Senior Secured
  Financing to the reasonable satisfaction of the Arrangers to the extent not
  prohibited by applicable gaming laws;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (iv)          the Borrower’s 2010 Notes, the
  Borrower’s 2011 Notes, and the Borrower’s 111/8% Senior
  Subordinated Notes due 2008 (and replacements or refinancings thereof having
  a longer maturity and terms otherwise reasonably satisfactory to the
  Arrangers); no new debt securities (other than as referred to otherwise in
  this clause (iv)) shall be issued without the Arrangers’ consent not to be
  unreasonably withheld or delayed);

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (v)           capital leases and vendor and
  equipment financing indebtedness of the Borrower, Target and their respective
  restricted subsidiaries not to exceed approximately the amounts as of the date
  hereof plus that which is required in the ordinary course and consistent with
  past practices after the date hereof; and 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (vi)          such other existing indebtedness and
  disclosed contingent liabilities in respect of indebtedness as shall be permitted
  by the Arrangers.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (5)

  	
   

  	
  All necessary governmental, gaming regulatory and
  third party approvals and/or consents in connection with the Transaction,
  including without limitation, the transactions contemplated by the Credit
  Facilities (excluding landlord

  	
   

  



 


2





















 


	
   

  	
   

  	
   

  	
  consents under leases of the Casino Rouge and Boomtown
  Biloxi facilities so long as the applicable landlords so refuse to give such
  consents) shall have been obtained and shall remain in full force and effect,
  and all applicable waiting periods shall have expired without any action
  being taken by any competent authority which restrains, enjoins, prevents or
  imposes materially adverse conditions upon the consummation of the
  Transaction or the transactions contemplated by the Credit Facilities or otherwise
  referred to herein. Additionally, there shall not exist any judgment, order,
  injunction or other restraint, and there shall be no pending litigation or
  proceeding by any governmental entity, prohibiting, enjoining or imposing
  materially adverse conditions upon the Transaction or the transactions contemplated
  by the Credit Facilities, or on the consummation thereof. Notwithstanding the
  foregoing, it is understood that up to one asset sale in each of the State of
  Illinois and the State of Louisiana to the extent required by gaming,
  regulatory or antitrust authorities of such respective States in connection
  with the transactions contemplated hereby shall not be deemed to restrain,
  enjoin, prevent or otherwise impose materially adverse conditions upon the
  Transaction or any part thereof or the transactions contemplated by the
  Credit Facilities, or on the consummation thereof.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (6)

  	
   

  	
  The Borrower has complied in all respects with its
  obligations under the Fee Letter.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (7)

  	
   

  	
  After giving effect to the Transaction, the
  financings incurred in connection therewith and the other transactions
  contemplated hereby, there shall be no conflict with, or default under, any
  material agreement of the Borrower and its subsidiaries (including any such
  material agreements (i) acquired pursuant to the Acquisition, (ii) entered
  into pursuant to the Transaction and (iii) in respect of Existing Indebtedness),
  subject to such exceptions as may be agreed upon.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (8)

  	
   

  	
  All costs, fees, expenses (including, without
  limitation, reasonable legal fees and expenses) and other compensation
  contemplated hereby, payable to the Administrative Agent, the Arrangers and
  the Lenders payable in respect of the Transaction shall have been paid to the
  extent due.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (9)

  	
   

  	
  The Guaranties and Security Agreements required
  hereunder shall have been executed and delivered in form, scope and substance
  reasonably satisfactory to the Arrangers, and the collateral agent for the
  benefit of the Administrative Agent, the Lenders, the issuers of Letters of
  Credit, and the entities providing hedging arrangements contemplated by this
  Term Sheet shall have a first priority perfected security interest in the
  properties and assets of the Borrower and the Guarantors as and to the extent
  required above (including, without limitation, a first preferred ship’s
  mortgage on all vessels owned as of the Closing Date by the Borrower and the
  Guarantors (if documented with the U.S. Coast Guard)).

  	
   

  



 


3





















 


	
   

  	
  (10)

  	
   

  	
  The Lenders and the Administrative Agent shall have
  received (a) legal opinions from counsel (including, without limitation, from
  New York counsel and from local and gaming counsel in all material jurisdictions)
  covering matters reasonably acceptable to the Arrangers (including, without
  limitation, a customary enforceability opinion and a no-conflicts opinion),
  and such documents and certificates as the Arrangers or their counsel may
  reasonably request relating to the organization, existence and good standing
  of each of the Borrower and Guarantors, the authorization of the Transaction
  and any other legal matters relating to the Borrower and the Guarantors, the
  Credit Documentation or the Transaction, all in form and substance reasonably
  satisfactory to the Arrangers.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (11)

  	
   

  	
  The Lenders shall have received a solvency
  certificate, in form and substance reasonably satisfactory to the Arrangers,
  from the chief financial officer of the Borrower, setting forth the conclusions
  that, after giving effect to the Transaction and the incurrence of all the
  financings contemplated herein, the Borrower and the Borrower and its
  subsidiaries taken as a whole, is or are not insolvent and will not be
  rendered insolvent by the indebtedness incurred in connection therewith, and
  will not be left with unreasonably small capital with which to engage in its
  or their businesses and will not have incurred debts beyond its or their
  ability to pay such debts as they mature (which may assume that there exists
  no default or event of default on the Closing Date).

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (12)

  	
   

  	
  The Arrangers and the Lenders shall have received
  (i) audited consolidated financial statements of the Borrower and of Target
  for the three fiscal years ended prior to the Closing Date, (ii) unaudited consolidated
  financial statements of the Borrower and of Target for each fiscal quarter
  ended after the close of its most recent fiscal year and at least 45 days
  prior to the Closing Date, (iii) pro forma consolidated financial statements
  of the Borrower and its subsidiaries (including Target and its subsidiaries)
  meeting the requirements of Regulation S-X for registration statements (as if
  such a registration statement for a debt issuance of the Borrower became
  effective on the Closing Date) on Form S-1, (iv) interim financial statements
  of the Borrower and of Target for each month ended after the date of the last
  available quarterly financial statements and at least 30 days prior to the
  Closing Date and (v) projected consolidated financial statements of the Borrower
  and its subsidiaries for five fiscal years ended after the Closing Date,
  which projections shall (A) reflect the forecasted consolidated financial
  condition of the Borrower and its subsidiaries after giving effect to the
  Transaction and the related financing thereof, and (B) be prepared and
  approved by the Borrower.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (13)

  	
   

  	
  The Arrangers shall have received (if requested by
  them) Phase I reports from environmental consultants (which consultants shall
  be reasonably satisfactory to the Arrangers), and such Phase II reports (if requested
  by the Arrangers) as recommended or prudently suggested by the Phase I reports,
  in each case with

  	
   

  



 


4





















 


	
   

  	
   

  	
   

  	
  respect to the real properties of Target and its
  subsidiaries and such other reports, audits or certifications as is it may
  reasonably request.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (14)

  	
   

  	
  The Lenders and the Arrangers shall have received
  (i) customary title insurance policies (including such endorsements as the
  Arrangers may reasonably require), reasonably current certified surveys,
  evidence of zoning and other legal compliance, certificates of occupancy,
  legal opinions and other customary documentation required by the Arrangers
  with respect to all real property subject to mortgages (with exceptions to be
  mutually agreed upon); (ii) customary appraisals from an appraiser(s)
  reasonably satisfactory to the Arrangers, of the properties and assets to be
  agreed upon of the Borrower and its subsidiaries after giving effect to the
  Transaction; and (iii) FIRREA appraisals to the extent required by applicable
  law or regulation.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (15)

  	
   

  	
  The Arrangers shall have received a certificate,
  dated the date of the initial extension of credit and signed by a senior
  officer of the Borrower, confirming compliance with certain conditions
  precedent and other customary confirmatory documentation.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (16)

  	
   

  	
  With respect to the funding of the Acquisition and
  the Target Refinancing,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (a)           there shall not have occurred a
  material and willful or knowing breach of any representations and warranties
  and such breach results from intentional acts or omissions within the Borrower’s
  control or knowledge;

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)           there shall not have occurred a
  breach of customary representations and warranties concerning the accuracy of
  information supplied or made available to the Arrangers (to the knowledge of
  the Borrower with respect to information relating to Target) and the
  inaccuracy is material and adverse with respect to the Borrower and its
  subsidiaries, taken as a whole, after giving effect to the Transaction; and

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (c)           no default or event of default
  arising from any of the following shall exist: (i) a willful and material
  breach (resulting from intentional acts or omissions within the Borrower’s
  control) by the Borrower of any negative or affirmative covenant (excluding
  financial covenants) contained in the Credit Documentation; (ii) a failure by
  the Borrower to make payments under the Credit Documentation; (iii) payment
  defaults on other material indebtedness of the Borrower or any of its
  subsidiaries; (iv) a change of control of the Borrower (with a definition to
  be mutually agreed upon) shall have occurred; or (v) customary bankruptcy or
  insolvency events in respect of the Borrower shall have occurred.

  	
   

  



 


5