Exhibit 10.58


 




 





	
   

  	
   

  	
  Published Deal CUSIP:

  	
   

  	
                          

  
	
   

  	
   

  	
  Revolver Facility CUSIP:

  	
   

  	
                          

  



 


 


EXECUTION


 


AMENDED AND RESTATED CREDIT AGREEMENT


 


Dated as of October 8,
2004


 


among


 


HERBST GAMING, INC.,


 


as the Borrower,


 


BANK OF AMERICA, N.A.,

as
Administrative Agent, Swing Line Lender 

and L/C Issuer,


 


and


 


The Other Lenders Party
Hereto


 


BANC OF AMERICA SECURITIES LLC,


as Lead Arranger and Sole
Book Manager (for the Revolving Loans)


and as Joint Lead
Arranger and Joint Book Manager (for the Term Loans)


 


U.S. BANK, NATIONAL ASSOCIATION,

as a Co-Lead Arranger
(for the Revolving Loans)


 


LEHMAN COMMERCIAL PAPER INC.,

as Joint Lead
Arranger and Joint Book Manager (for the Term Loans)


and as Documentation Agent (for the Revolving Loans)


 


and


 


WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Syndication Agent
(for the Revolving Loans)




 





 





















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
  ARTICLE
  I. DEFINITIONS AND ACCOUNTING TERMS

  	
  1

  
	
  1.01.

  	
   

  	
  Defined Terms

  	
  1

  
	
  1.02.

  	
   

  	
  Other Interpretive
  Provisions

  	
  26

  
	
  1.03.

  	
   

  	
  Accounting Terms.

  	
  27

  
	
  1.04.

  	
   

  	
  Rounding

  	
  27

  
	
  1.05.

  	
   

  	
  Times of Day

  	
  27

  
	
  1.06.

  	
   

  	
  Letter of Credit Amounts

  	
  27

  
	
  ARTICLE II. the COMMITMENTS and Credit
  Extensions

  	
  29

  
	
  2.01.

  	
   

  	
  Revolving Loans

  	
  29

  
	
  2.02.

  	
   

  	
  Term Loans

  	
  29

  
	
  2.03.

  	
   

  	
  Borrowings,
  Conversions and Continuations of Loans.

  	
  29

  
	
  2.04.

  	
   

  	
  Letters of Credit.

  	
  31

  
	
  2.05.

  	
   

  	
  Swing Line Loans.

  	
  40

  
	
  2.06.

  	
   

  	
  Prepayments.

  	
  43

  
	
  2.07.

  	
   

  	
  Voluntary
  Termination or Reduction of the Revolving Commitments

  	
  44

  
	
  2.08.

  	
   

  	
  Scheduled
  Reductions of the Revolving Commitments.

  	
  44

  
	
  2.09.

  	
   

  	
  Amortization
  of the Term Loans; Mandatory Repayment of the Obligations.

  	
  45

  
	
  2.10.

  	
   

  	
  Interest.

  	
  45

  
	
  2.11.

  	
   

  	
  Fees

  	
  46

  
	
  2.12.

  	
   

  	
  Computation of
  Interest and Fees

  	
  46

  
	
  2.13.

  	
   

  	
  Evidence of Debt.

  	
  47

  
	
  2.14.

  	
   

  	
  Payments
  Generally; Administrative Agent’s Clawback.

  	
  47

  
	
  2.15.

  	
   

  	
  Sharing of
  Payments by Lenders

  	
  49

  
	
  2.16.

  	
   

  	
  Addition of the
  Term Commitments.

  	
  50

  
	
  ARTICLE III. TAXES, YIELD PROTECTION AND
  ILLEGALITY

  	
  53

  
	
  3.01.

  	
   

  	
  Taxes.

  	
  53

  
	
  3.02.

  	
   

  	
  Illegality

  	
  55

  
	
  3.03.

  	
   

  	
  Inability to
  Determine Rates

  	
  55

  
	
  3.04.

  	
   

  	
  Increased
  Costs; Reserves on Eurodollar Rate Loans.

  	
  56

  
	
  3.05.

  	
   

  	
  Compensation for Losses

  	
  57

  
	
  3.06.

  	
   

  	
  Mitigation
  Obligations; Replacement of Lenders.

  	
  58

  
	
  3.07.

  	
   

  	
  Survival

  	
  58

  
	
  ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT
  EXTENSIONS

  	
  59

  
	
  4.01.

  	
   

  	
  Conditions
  of Initial Credit Extension

  	
  59

  
	
  4.02.

  	
   

  	
  Conditions to all Credit Extensions

  	
  61

  
	
  4.03.

  	
   

  	
  Reserved
  Portion of the Revolving Commitments

  	
  61

  
	
  ARTICLE V. REPRESENTATIONS AND WARRANTIES

  	
  63

  
	
  5.01.

  	
   

  	
  Existence,
  Qualification and Power; Compliance with Laws

  	
  63

  
	
  5.02.

  	
   

  	
  Authorization;
  No Contravention

  	
  63

  
	
  5.03.

  	
   

  	
  Governmental
  Authorization; Other Consents

  	
  63

  
	
  5.04.

  	
   

  	
  Binding Effect

  	
  63

  
	
  5.05.

  	
   

  	
  Financial
  Statements; No Material Adverse Effect.

  	
  63

  
	
  5.06.

  	
   

  	
  Litigation

  	
  64

  



 


i





















 


	
  5.07.

  	
   

  	
  No Default

  	
  64

  
	
  5.08.

  	
   

  	
  Ownership of
  Property; Liens

  	
  65

  
	
  5.09.

  	
   

  	
  Environmental
  Compliance

  	
  65

  
	
  5.10.

  	
   

  	
  Insurance

  	
  65

  
	
  5.11.

  	
   

  	
  Taxes

  	
  65

  
	
  5.12.

  	
   

  	
  ERISA Compliance.

  	
  65

  
	
  5.13.

  	
   

  	
  Subsidiaries;
  Equity Interests

  	
  66

  
	
  5.14.

  	
   

  	
  Margin
  Regulations; Investment Company Act; Public Utility Holding Company Act.

  	
  66

  
	
  5.15.

  	
   

  	
  Disclosure

  	
  66

  
	
  5.16.

  	
   

  	
  Compliance with Laws

  	
  67

  
	
  5.17.

  	
   

  	
  Intellectual
  Property; Licenses, Etc.

  	
  67

  
	
  5.18.

  	
   

  	
  Route
  Agreements; Casino Leases.

  	
  67

  
	
  5.19.

  	
   

  	
  Existing Senior Secured Notes.

  	
  67

  
	
  ARTICLE VI. AFFIRMATIVE COVENANTS

  	
  69

  
	
  6.01.

  	
   

  	
  Financial Statements

  	
  69

  
	
  6.02.

  	
   

  	
  Certificates;
  Other Information

  	
  70

  
	
  6.03.

  	
   

  	
  Notices

  	
  72

  
	
  6.04.

  	
   

  	
  Payment of Obligations

  	
  72

  
	
  6.05.

  	
   

  	
  Preservation of
  Existence, Etc.

  	
  72

  
	
  6.06.

  	
   

  	
  Maintenance of
  Properties

  	
  73

  
	
  6.07.

  	
   

  	
  Maintenance of
  Insurance

  	
  73

  
	
  6.08.

  	
   

  	
  Compliance with Laws

  	
  74

  
	
  6.09.

  	
   

  	
  Books and Records

  	
  75

  
	
  6.10.

  	
   

  	
  Inspection Rights

  	
  75

  
	
  6.11.

  	
   

  	
  Use of Proceeds

  	
  75

  
	
  6.12.

  	
   

  	
  Additional
  Subsidiaries and Collateral

  	
  75

  
	
  6.13.

  	
   

  	
  Capital Projects

  	
  76

  
	
  ARTICLE VII. NEGATIVE COVENANTS

  	
  77

  
	
  7.01.

  	
   

  	
  Liens

  	
  77

  
	
  7.02.

  	
   

  	
  Investments

  	
  78

  
	
  7.03.

  	
   

  	
  Indebtedness

  	
  79

  
	
  7.04.

  	
   

  	
  Fundamental Changes

  	
  80

  
	
  7.05.

  	
   

  	
  Dispositions

  	
  81

  
	
  7.06.

  	
   

  	
  Restricted Payments

  	
  81

  
	
  7.07.

  	
   

  	
  Prepayment
  of Subordinated Obligations

  	
  82

  
	
  7.08.

  	
   

  	
  Change in Nature of
  Business

  	
  82

  
	
  7.09.

  	
   

  	
  Transactions with
  Affiliates

  	
  82

  
	
  7.10.

  	
   

  	
  Burdensome Agreements

  	
  82

  
	
  7.11.

  	
   

  	
  Use of Proceeds

  	
  83

  
	
  7.12.

  	
   

  	
  Senior Debt to
  EBITDA Ratio

  	
  83

  
	
  7.13.

  	
   

  	
  Total Debt to EBITDA
  Ratio

  	
  83

  
	
  7.14.

  	
   

  	
  Fixed Charge
  Coverage Ratio

  	
  83

  
	
  7.15.

  	
   

  	
  Capital Expenditures

  	
  84

  
	
  7.16.

  	
   

  	
  Hostile Acquisitions

  	
  84

  
	
  7.17.

  	
   

  	
  Grace Asset Purchase

  	
  84

  



 


ii





















 


	
  7.18.

  	
   

  	
  Certain
  Post-Effective Date Matters.

  	
  85

  
	
  ARTICLE VIII. EVENTS OF DEFAULT AND
  REMEDIES

  	
  86

  
	
  8.01.

  	
   

  	
  Events of Default

  	
  86

  
	
  8.02.

  	
   

  	
  Remedies Upon Event of
  Default

  	
  88

  
	
  8.03.

  	
   

  	
  Application of Funds

  	
  88

  
	
  ARTICLE IX. ADMINISTRATIVE AGENT

  	
  90

  
	
  9.01.

  	
   

  	
  Appointment and Authority

  	
  90

  
	
  9.02.

  	
   

  	
  Rights as a Lender

  	
  90

  
	
  9.03.

  	
   

  	
  Exculpatory Provisions

  	
  90

  
	
  9.04.

  	
   

  	
  Reliance by
  Administrative Agent

  	
  91

  
	
  9.05.

  	
   

  	
  Delegation of Duties

  	
  91

  
	
  9.06.

  	
   

  	
  Resignation of
  Administrative Agent

  	
  92

  
	
  9.07.

  	
   

  	
  Non-Reliance
  on Administrative Agent and Other Lenders

  	
  92

  
	
  9.08.

  	
   

  	
  No Other Duties, Etc

  	
  93

  
	
  9.09.

  	
   

  	
  Collateral and Guaranty
  Matters

  	
  93

  
	
  ARTICLE X. MISCELLANEOUS

  	
  94

  
	
  10.01.

  	
   

  	
  Amendments, Etc.

  	
  94

  
	
  10.02.

  	
   

  	
  Notices;
  Effectiveness; Electronic Communication.

  	
  96

  
	
  10.03.

  	
   

  	
  No Waiver; Cumulative
  Remedies

  	
  97

  
	
  10.04.

  	
   

  	
  Expenses; Indemnity;
  Damage Waiver.

  	
  97

  
	
  10.05.

  	
   

  	
  Payments Set Aside

  	
  99

  
	
  10.06.

  	
   

  	
  Successors and Assigns.

  	
  100

  
	
  10.07.

  	
   

  	
  Treatment
  of Certain Information; Confidentiality

  	
  104

  
	
  10.08.

  	
   

  	
  Right of Setoff

  	
  105

  
	
  10.09.

  	
   

  	
  Interest Rate Limitation

  	
  105

  
	
  10.10.

  	
   

  	
  Counterparts;
  Integration; Effectiveness

  	
  105

  
	
  10.11.

  	
   

  	
  Survival of
  Representations and Warranties

  	
  106

  
	
  10.12.

  	
   

  	
  Severability

  	
  106

  
	
  10.13.

  	
   

  	
  Replacement of Lenders

  	
  106

  
	
  10.14.

  	
   

  	
  Governing Law;
  Jurisdiction; Etc.

  	
  107

  
	
  10.15.

  	
   

  	
  Waiver of Jury Trial

  	
  108

  
	
  10.16.

  	
   

  	
  Arbitration Reference

  	
  108

  
	
  10.17.

  	
   

  	
  USA PATRIOT Act Notice

  	
  109

  
	
  10.18.

  	
   

  	
  Time of the Essence

  	
  109

  
	
  10.19.

  	
   

  	
  Designation as Senior Debt

  	
  109

  



 


iii





















 


SCHEDULES


 


	
  1.01

  	
   

  	
  Casino Leases

  
	
  2.01

  	
   

  	
  Commitments and Revolving Percentages

  
	
  5.05

  	
   

  	
  Supplement to Interim Financial
  Statements

  
	
  5.06

  	
   

  	
  Litigation

  
	
  5.09

  	
   

  	
  Environmental Matters

  
	
  5.13

  	
   

  	
  Subsidiaries

  
	
  5.17

  	
   

  	
  Intellectual Property Matters

  
	
  7.01

  	
   

  	
  Existing Liens

  
	
  7.03

  	
   

  	
  Existing Indebtedness

  
	
  10.02

  	
   

  	
  Administrative
  Agent’s Office; Certain Addresses for Notices

  



 


EXHIBITS


 


	
  A

  	
   

  	
  Assignment and Assumption

  
	
  B

  	
   

  	
  Compliance Certificate

  
	
  C

  	
   

  	
  Loan Notice

  
	
  D

  	
   

  	
  Pledge Agreement

  
	
  E

  	
   

  	
  Form of Revolving Note

  
	
  F

  	
   

  	
  Swing Line Loan Notice

  
	
  G

  	
   

  	
  Form of Term Note

  



 


iv





















 


AMENDED AND RESTATED CREDIT AGREEMENT


 


This AMENDED AND RESTATED
CREDIT AGREEMENT (“Agreement”) is entered into as of September 30, 2004, among HERBST GAMING, INC., a Nevada corporation (the
“Borrower”), each lender listed on the signature pages hereto or which from
time to time becomes a party hereto (collectively, the “Lenders” and
individually, a “Lender”), and BANK OF AMERICA, N.A., as
Administrative Agent, Swing Line Lender and L/C Issuer with referenced to the
following facts:


 


A.                                   Pursuant to a Credit Agreement dated as
of June 10, 2004 (as heretofore amended, the “Existing Credit Agreement”),
the lenders party thereto made credit facilities available to the Borrower
consisting of a $90,000,000 revolving credit facility and a $60,000,000 term
loan facility.


 


B.                                     In connection with the proposed Grace
Asset Purchase, Borrower has requested that (i) the term loans provided under
the existing Credit Agreement be converted to revolving credit facilities, (ii)
the Aggregate Revolving Commitments be increased to $175,000,000, and (iii) the
Existing Loan Agreement be amended and restated in its entirety as set forth
herein.


 


C.                                     Each of the Lenders party to the Existing
Loan Agreement which has accepted these requests is a signatory hereto and has
a Revolving Commitment as set forth herein.


 


D.                                    Those of the Lenders party to the
Existing Loan Agreement which have elected not to continue as Lenders hereunder
(the “Exiting Lenders”) have executed an agreement with the Borrower and the
Administrative Agent consenting to the termination of their status as Lenders
concurrently with the Effective Date.


 


E.                                      By executing this Agreement, certain new
Lenders have agreed to assume a portion of the Aggregate Revolving Commitments
of $175,000,000, effective as of the Effective Date.


 


F.                                      Pursuant to Section 2.16, the Borrower
may hereafter request the extension of Term Loans in an aggregate principal
amount not to exceed $100,000,000, the proceeds of which shall be used to
finance (in combination with other funds available to the Borrower) the Grace
Asset Purchase.


 


NOW, THEREFORE, in
consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:


 


ARTICLE
I.

DEFINITIONS AND ACCOUNTING TERMS


 


1.01.                        Defined
Terms.  As used in this Agreement, the following
terms shall have the meanings set forth below:


 


“Acquisition
Subsidiaries” means, collectively, HGI - Mark Twain (d\b\a HGI – Mark
Twain, Inc.), HGI- Lakeside (d\b\a HGI – Lakeside, Inc.), and HGI – St. Jo
(d\b\a HGI – St. Jo.,


 


1





















 


Inc.), each of which is a Nevada corporation wholly
owned, as of the Effective Date, by the Borrower, and any Subsidiary of the
Borrower owning the equity interests of such entities.


 


“Administrative Agent”
means Bank of America in its capacity as administrative agent under any of the
Loan Documents, or any successor administrative agent.


 


“Administrative
Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address
or account as the Administrative Agent may from time to time notify to the
Borrower and the Lenders.


 


“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.


 


“Affiliate” means,
with respect to any Person, another Person that directly, or indirectly through
one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.


 


“Aggregate Revolving
Commitments” means the commitments of the Revolving Lenders to make
Revolving Loans and to participate in Swing Line Loans and the issuance of
Letters of Credit, in an aggregate amount not to exceed $175,000,000, provided
that prior to the satisfaction of the conditions set forth in Section 4.03, the
Borrower shall not request any Revolving Loan, Swing Line Loan or Letter of
Credit which would result in the Aggregate Revolving Outstandings being in
excess of $150,000,000 minus the Reserve Amount.  The Aggregate Revolving Commitments are
subject to being decreased pursuant to Sections 2.07 and 2.08.


 


“Aggregate Revolving
Outstandings” means the aggregate Outstanding Amount of all Revolving Loans
and all L/C Obligations.


 


“Aggregate Term
Commitments” means any term lending commitments hereafter arranged,
pursuant to Section 2.16, for Term Loans in an aggregate principal amount
not to exceed $100,000,000, which term lending commitments may subsequently be
decreased pursuant to Section 2.09.


 


“Agreement” means
this Credit Agreement.


 


“Applicable Rate”
means, with respect to the Revolving Loans, during each subsequent Pricing
Period, the rates per annum set forth opposite the Total Debt to EBITDA Ratio
in effect as of the Fiscal Quarter ending approximately two months prior to the
first day of that Pricing Period, provided that (i) if the Borrower
fails to deliver a Compliance Certificate in respect of any Fiscal Quarter
prior to the first day of the related Pricing Period, then Pricing Level I
shall apply as of the first Business Day of such Pricing Period until the date
upon which the required Compliance Certificate is delivered, and (ii) in
respect of each calendar quarter during which the arithmetic average of the
Unused Revolver Availability for each date during such calendar quarter is in
excess of two thirds of the Aggregate Revolving Commitments (as in effect from
time to time during that calendar quarter), the commitment fee rates per annum
set forth in the matrix below shall be reduced by 0.10% per annum:


 


2





















 


	
  Pricing

  Level

  	
   

  	
  Total Debt to EBITDA

  Ratio

  	
   

  	
  Base Rate +

  	
   

  	
  Eurodollar

  Rate+

  Letters of

  Credit

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Letter of Credit

  Risk

  Participation

  Fee

  	
   

  
	
  I

  	
   

  	
  Equal to or greater than 4.50:1.00

  	
   

  	
  1.750

  	
  %

  	
  3.000

  	
  %

  	
  0.500

  	
  %

  	
  3.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Equal to or greater than 4.00:1.00 but less than 4.50:1.00

  	
   

  	
  1.500

  	
  %

  	
  2.750

  	
  %

  	
  0.500

  	
  %

  	
  2.750

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Equal to or greater than 3.50:1.00 but less than 4.00:1.00

  	
   

  	
  1.125

  	
  %

  	
  2.375

  	
  %

  	
  0.450

  	
  %

  	
  2.375

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Equal to or greater than 3.00:1.00 but less than 3.50:1.00

  	
   

  	
  0.750

  	
  %

  	
  2.000

  	
  %

  	
  0.400

  	
  %

  	
  2.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V

  	
   

  	
  Less than 3.00:1.00, but greater than or equal to 2.50:1.00

  	
   

  	
  0.500

  	
  %

  	
  1.750

  	
  %

  	
  0.350

  	
  %

  	
  1.750

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI

  	
   

  	
  Less than 2.50:1.00

  	
   

  	
  0.250

  	
  %

  	
  1.500

  	
  %

  	
  0.300

  	
  %

  	
  1.500

  	
  %

  



 


With respect to the Term Loans, the Applicable Rate shall be as set
forth in the Term Joinder Agreement.


 


“Approved Fund”
means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.


 


“Architect” means
an architect selected by Borrower and approved by the Administrative Agent
(which approval shall not be unreasonably withheld).


 


“Architect Contract”
means a contract between Borrower and the Architect approved by the
Administrative Agent relating to the design and construction of any Significant
Capital Project.


 


“Architect’s
Certificate and Consent” means a written certificate and consent executed
by the Architect in a form acceptable to the Administrative Agent.


 


“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an Eligible Assignee (with the consent of any party whose consent is required
by Section 10.06(b)), and accepted by the Administrative Agent, in substantially
the form of Exhibit A or any other form approved by the Administrative
Agent.


 


3





















 


“Attributable
Indebtedness” means, on any date, (a) in respect of any capital lease
of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, and
(b) in respect of any Synthetic Lease Obligation, the capitalized amount
of the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP
if such lease were accounted for as a capital lease.


 


“Audited Financial
Statements” means the audited consolidated balance sheet of the Borrower
and its Subsidiaries for the fiscal year ended December 31, 2003 and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.


 


“Availability Period”
means the period from and including the Effective Date to the earliest of
(a) the Revolving Maturity Date, (b) the date of termination of the
Aggregate Revolving Commitments pursuant to Section 2.07, and (c) the
date of termination of the commitment of each Revolving Lender to make Loans
and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant
to Section 8.02.


 


“Bank of America”
means Bank of America, N.A. and its successors.


 


“BAS” means Banc
of America Securities LLC.


 


“Base Rate”  means for any day a fluctuating
rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2
of 1% and (b) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America as its “prime rate.”  The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.  Any change in such
rate announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change.


 


“Base Rate Loan”
means a Loan that bears interest based on the Based Rate.


 


“Borrower” has the
meaning specified in the introductory paragraph hereto.


 


“Borrowing” means
a borrowing consisting of simultaneous Loans of the same Type and, in the case
of Eurodollar Rate Loans, having the same Interest Period made by each of the
Lenders pursuant to Article II.


 


“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the
state where the Administrative Agent’s Office is located and, if such day
relates to any Eurodollar Rate Loan, means any such day on which dealings in
Dollar deposits are conducted by and between banks in the London interbank
eurodollar market.


 


“Cash Collateralize”
has the meaning specified in Section 2.04(g).


 


4





















 


“Casino Lease”
means each of the leases described on Schedule 1.01.


 


“Change in Law”
means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental
Authority.


 


“Change of Control”
means the occurrence of any of the following:


 


(a) the direct or
indirect sale, lease, transfer conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the Property of Borrower and its Subsidiaries,
taken as a whole, to any Person other than a Principal, members of the
immediate families of the Principals, or trusts for their respective benefit;


 


(b) the Principals,
members of the immediate families of the Principals, or trusts for their
respective benefit cease to collectively own, beneficially and of record, more
than 70% of the Equity Interests of Borrower having ordinary voting power.


 


“Closing Date”
means June 10, 2004.


 


“Code” means the
Internal Revenue Code of 1986.


 


“Co-Lead Arrangers”
means each of BAS, U.S. Bank, National Association (for the Revolving Loans),
Lehman Commercial Paper Inc. (for the Term Loans), in their capacities as
co-lead arrangers.


 


“Collateral” means
all of the collateral which is subject to the Liens granted by the Collateral
Documents.


 


“Collateral Documents”
means, collectively, the Security Agreement, the Pledge Agreement, the Deeds of
Trusts, and any other security agreement, pledge agreement, deed of trust,
mortgage, ship mortgage or other collateral security agreement hereafter
executed and delivered by Borrower or the Subsidiaries to secure the
Obligations.


 


“Commitments”
means, collectively, the Revolving Commitments and the Term Commitments.


 


“Compliance
Certificate” means a certificate substantially in the form of
Exhibit B.


 


“Construction Budget”
means a line item construction budget for any Significant Capital Project to be
delivered to the Administrative Agent and the Lenders.


 


“Construction Contract”
means the construction contract between Borrower and the Contractor relating to
any Significant Capital Project.


 


5





















 


“Contingent Obligation”
means, as to any Person, any (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the
“primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into
for the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or
other obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien).  The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the obligor
thereunder in good faith.  The term
“Contingent Obligation” as a verb has a corresponding meaning.


 


“Contractor” means
a general contractor selected by Borrower and approved by the Administrative
Agent (which approval shall not be unreasonably withheld).


 


“Contractor’s
Certificate and Consent” means a written certificate and consent executed
by the Contractor in a form acceptable to the Administrative Agent.


 


“Contractual Obligation”
means, as to any Person, any provision of any security issued by such Person or
of any agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.


 


“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.


 


“Credit Extension”
means each of the following: (a) a Borrowing and (b) an L/C Credit
Extension.


 


“Debtor Relief Laws”
means the Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.


 


6





















 


“Deeds of Trust”
means (a) the deeds of trust executed on the Closing Date by Flamingo Paradise,
Market Gaming, E-T-T, Inc. and E-T-T Enterprises, L.L.C., each as amended,
encumbering their respective interests in the four hotel, resort and\or casino
properties owned or leased by them in Las Vegas, Nevada, Pahrump, Nevada (two
locations), and Henderson, Nevada, and the office and warehouse space located
on Russell Road in Las Vegas to secure their respective Guarantees, (b) the
deed of trust executed by Borrower as of the Closing Date, as amended, in
respect of the training facility on Russell Road, Las Vegas adjacent to the
warehouse and office space, and (c) any future deeds of trust executed by
Borrower or its relevant Subsidiaries in accordance with Section 6.12(d) and
7.17.


 


“Default” means
any event or condition that constitutes an Event of Default or that, with the
giving of any notice, the passage of time, or both, would be an Event of
Default.


 


“Default Rate”
means (a) when used with respect to Obligations other than Letter of
Credit Fees, an interest rate equal to (i) the Base Rate plus
(ii) the Applicable Rate, if any, applicable to Base Rate Loans plus
(iii) 3% per annum; provided, however, that with respect to
a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the
interest rate (including any Applicable Rate) otherwise applicable to such Loan
plus 3% per annum, and (b) when used with
respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus
3% per annum.


 


“Defaulting Lender”
means any Lender that (a) has failed to fund any portion of the Loans,
participations in L/C Obligations or participations in Swing Line Loans
required to be funded by it hereunder within one Business Day of the date
required to be funded by it hereunder, (b) has otherwise failed to pay
over to the Administrative Agent or any other Lender any other amount required
to be paid by it hereunder within one Business Day of the date when due, unless
the subject of a good faith dispute, or (c) has been deemed insolvent or
become the subject of a bankruptcy or insolvency proceeding.


 


“Disposition” or “Dispose”
means the sale, transfer, license, lease or other disposition (including any
sale and leaseback transaction) of any property by any Person, including any
sale, assignment, transfer or other disposal, with or without recourse, of any
notes or accounts receivable or any rights and claims associated therewith.


 


“Documentation Agent”
means Lehman Commercial Paper Inc., in its capacity as Documentation Agent.


 


“Dollar” and “$”
mean lawful money of the United States.


 


“EBITDA” means,
with respect to any Person and with respect to any fiscal period (and without
duplication as to items (b) though (g):


 


(a)                                  Net Income of such Person for that
period; plus


 


(b)                                 an amount equal to any extraordinary loss
plus any net loss realized by such Person and its Subsidiaries in connection
with any Disposition to the extent such losses were deducted in computing Net
Income; minus


 


7





















 


(c)                                  any extraordinary gain reflected in such
Net Income; plus


 


(d)                                 Interest Charges for that period to the
extent deducted in computing such Net Income; plus


 


(e)                                  pre-opening expenses for that period to
the extent deducted in computing such Net Income;  plus


 


(f)                                    depreciation, amortization and all other
non-cash expenses for that period to the extent such deducted in computing such
Net Income; plus


 


(g)                                 any non-cash losses associated with the
prepayment of Indebtedness;


 


provided, that the EBITDA of any Person (as
calculated pursuant to clauses (a) through (g) above) shall include, on a pro
forma basis, the results of operation of each other Person (or attributable to
any assets), acquired by such Person or any of its Subsidiaries during that
period as if such Person or assets had been acquired on the first day of the
period, and including any pro forma expense and cost reductions, in each case
calculated on a basis consistent with Regulation S-X under the Securities Act.


 


“Effective Date”
means the first date all the conditions precedent in Section 4.01 are
satisfied or waived in accordance with Section 10.01.


 


“Eligible Assignee”
means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent, the L/C Issuer and the Swing
Line Lender, and (ii) unless an Event of Default has occurred and is
continuing, the Borrower (each such approval not to be unreasonably withheld or
delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or
Subsidiaries.


 


“Environmental Laws”
means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.


 


“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower, any other Loan Party or any of their respective
Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release
or threatened release of any Hazardous Materials into the environment or
(e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.


 


8





















 


“Equity Interests”
means, with respect to any Person, all of the shares of capital stock of (or
other ownership or profit interests in) such Person, all of the warrants,
options or other rights for the purchase or acquisition from such Person of
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are outstanding on any date of
determination.


 


“ERISA” means the
Employee Retirement Income Security Act of 1974.


 


“ERISA Affiliate”
means any trade or business (whether or not incorporated) under common control
with the Borrower within the meaning of Section 414(b) or (c) of the Code
(and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).


 


“ERISA Event”
means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Sections 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e) an event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.


 


“Escrow Account”
means an escrow account containing cash and cash equivalents in an amount not
to exceed the amount required to fund a redemption of the New Senior
Subordinated Notes at 101% of the principal amount thereof in the event that
the Grace Asset Purchase is not consummated prior to March 31, 2005 plus
the amount of interest payable in respect of such Indebtedness through such
date.


 


“E-T-T Enterprises
L.L.C.” means E-T-T Enterprises, L.L.C., a Nevada limited liability
company, its successors and permitted assigns.


 


“E-T-T Enterprises,
L.L.C. Guaranty” means the Guaranty executed on the Closing Date by E-T-T
Enterprises, L.L.C. in favor of the Administrative Agent and the Lenders, as at
any time amended.


 


“E-T-T, Inc.”
means E-T-T, Inc., a Nevada corporation, its successors and permitted assigns.


 


9





















 


“E-T-T, Inc. Guaranty”
means the Guaranty executed on the Closing Date by E-T-T, Inc. in favor of the
Administrative Agent and the Lenders, as at any time amended.


 


“Eurodollar Rate”
means for any Interest Period with respect to a Eurodollar Rate Loan, the rate
per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as
published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as designated by the Administrative Agent from time to
time) at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period.  If such rate is not available at
such time for any reason, then the “Eurodollar Rate” for such Interest Period
shall be the rate per annum determined by the Administrative Agent to be the
rate at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the Eurodollar
Rate Loan being made, continued or converted by Bank of America and with a term
equivalent to such Interest Period would be offered by Bank of America’s London
Branch to major banks in the London interbank eurodollar market at their
request at approximately 11:00 a.m. (London time) two Business Days prior to
the commencement of such Interest Period.


 


“Eurodollar Rate Loan”
means a Loan that bears interest at a rate based on the Eurodollar Rate.


 


“Event of Default”
has the meaning specified in Section 8.01.


 


“Excess Cash”
means, as of each date of determination, the amount by which the unrestricted
cash and cash equivalents owned by Borrower and its Subsidiaries as of that
date, exceeds $25,000,000.


 


“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender, the L/C Issuer or
any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) taxes imposed on or measured by
its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable Lending Office is located, (b) any branch profits taxes
imposed by the United States or any similar tax imposed by any other jurisdiction
in which the Borrower is located and (c) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower under
Section 10.13), any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new Lending Office) or is attributable to such Foreign Lender’s
failure or inability (other than as a result of a Change in Law) to comply with
Section 3.01(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new Lending
Office (or assignment), to receive additional amounts from the Borrower with
respect to such withholding tax pursuant to Section 3.01(a).


 


“Existing Credit
Agreement” is defined in the preamble hereto.


 


10





















 


“Existing Senior
Secured Notes” means Borrower’s 10-3⁄4% Senior Secured Notes due 2008, issued
pursuant to the Indenture dated as of August 24, 2001 between the Borrower and
The Bank of New York, as Trustee.  As of
the Effective Date, the outstanding principal balance of the Existing Senior
Secured Notes is $4,071,000.


 


“Exiting Lender”
has the meaning set forth for that term in the recitals to this Agreement.


 


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


 


“Fee Letter” means
the letter agreement, dated as of the Effective Date, among the Borrower, the
Administrative Agent and BAS relating to certain fees.


 


“Fiscal Quarter”
means the fiscal quarter of Borrower ending on each March 31,
June 30, September 30 and December 31.


 


“Fiscal Year”
means the fiscal year of Borrower ending on each December 31.


 


“Fixed Charge Coverage
Ratio” means, as of each date of determination, the ratio of:


 


(a)                                  EBITDA for the twelve month period ending
on that date less Maintenance Capital Expenditures made during that
period less the amount of cash taxes paid by Borrower and its
Subsidiaries in respect of their income during that period less cash
dividends paid by Borrower to its shareholders during that period pursuant to
Sections 7.06 (other than subsection 7.06(d)); to


 


(b)                                 Interest Charges during that period plus
the scheduled amortization of Indebtedness of Borrower and its Subsidiaries for
that period (which, in the case of any revolving credit facility, shall equal
the amount which is the positive difference, if any, between the highest
outstanding principal balance of that revolving credit facility during the
period and the committed amount of that revolving credit facility on the last
day of that period), provided that no payments of principal and call
premiums in respect of the Existing Senior Secured Notes shall be included.


 


“Flamingo
Paradise” means Flamingo Paradise Gaming, LLC a Nevada limited liability
company, and its successors and permitted assigns.


 


11





















 


“Flamingo
Paradise Guaranty” means the Guaranty executed on the Closing Date by
Flamingo Paradise Gaming, LLC, in favor of the Administrative Agent and the
Lenders, as at any time amended.


 


“Foreign Lender”
means any Lender that is organized under the laws of a jurisdiction other than
that in which the Borrower is resident for tax purposes.  For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.


 


“FRB” means the
Board of Governors of the Federal Reserve System of the United States.


 


“Fund” means any
Person (other than a natural person) that is (or will be) engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business.


 


“Funded Debt”
means, as of each date of determination, for the Borrower and its Subsidiaries
on a consolidated basis, (a) the outstanding principal amount of all
obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures,
notes, loan agreements or other similar instruments, plus (b) all purchase
money Indebtedness, plus (c) all direct obligations arising under letters
of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments, plus (d) all obligations
in respect of the deferred purchase price of property or services (other than
trade accounts payable in the ordinary course of business), plus
(e) Attributable Indebtedness in respect of capital leases and Synthetic
Lease Obligations, plus (f) without duplication, all Contingent
Obligations with respect to outstanding Indebtedness of the types specified in
clauses (a) through (e) above of Persons other than the Borrower or any
Subsidiary, plus (g) all Indebtedness of the types referred to in clauses
(a) through (f) above of any partnership or joint venture (other than a joint
venture that is itself a corporation or limited liability company) in which the
Borrower or a Subsidiary is a general partner or joint venturer, unless such
Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary,
minus (h) Excess Cash.


 


“GAAP” means
generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied.


 


“Gaming Board”
means, collectively, (a) the Nevada Gaming Commission, (b) the Nevada
State Gaming Control Board, (c) Iowa Gaming and Racing Commission, (d) the Iowa
Gaming Enforcement Bureau, (e) the Missouri Gaming Commission and (d) any other Governmental Authority that holds
regulatory, licensing or permit authority over gambling, gaming or casino
activities conducted by Borrower and the Subsidiaries within its jurisdiction.


 


12





















 


“Gaming Laws”
means all Laws pursuant to which any Gaming Board possesses regulatory,
licensing or permit authority over gambling, gaming or casino activities
conducted by Borrower and the Subsidiaries within its jurisdiction.


 


“General Subsidiary
Guaranty” means the Guaranty executed by each Subsidiary of the Borrower
other than E-T-T, Inc., E-T-T Enterprises, L.L.C., Market Gaming, Flamingo
Paradise and any Issuance Subsidiary in favor of the Administrative Agent and
the Lenders, as at any time amended.


 


“Governmental
Authority” means the government of the United States or any other nation,
or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).


 


“Grace Asset Purchase”
means the purchase of the Grace Assets and consummation of related transactions
(including any assumption of liabilities) pursuant to the Grace Purchase
Agreements, or any other similar agreement.


 


“Grace Assets”
means, collectively (a) the Mark Twain Casino, a non-documented gaming
excursion riverboat operating in LaGrange, Missouri, and related real and
personal property assets, (b) the USS Osceola, a documented gaming excursion
riverboat operating in Osceola, Iowa, and related real and personal property
assets, (c) the Biloxi Bell II (Official No. 1023167), a documented gaming
excursion riverboat operating in St. Joseph, Missouri, and related real and
personal property assets, in each case as more fully described in the Grace
Purchase Agreements.


 


“Grace Capital Project”
means the maintenance and improvement of the Grace Assets during the first
fifteen months following the consummation of the Grace Asset Purchase.


 


“Grace Purchase
Agreements” means, collectively (a) the Asset Purchase and Sale Agreement
referred to as the “Mark Twain Gaming Contract” dated as of July 20, 2004
between Borrower and Mark Twain Casino, L.L.C., a Missouri limited liability
company, (b) the Asset Purchase and Sale Agreement referred to as the “Southern
Iowa Gaming Contract” dated as of July 20, 2004 between Borrower and Southern
Iowa Gaming Co., an Iowa corporation, (c) the Asset Purchase and Sale Agreement
referred to as the “St. Joseph Riverboat Gaming Contract” dated as of July 20,
2004 between Borrower and St. Joseph Riverboat Partners, a Missouri general
partnership, and each material instrument, document and agreement executed by
Borrower or any of the Acquisition Subsidiaries in connection therewith.


 


“Growth Capital
Expenditures” means any Capital Expenditure which is not a Maintenance
Capital Expenditure, and in any event includes all Capital Expenditures
associated with the design, development and construction of any Significant
Capital Project.


 


13





















 


“Guaranties”
means, collectively, (a) the Market Gaming Guaranty, (b) the Flamingo Paradise
Guaranty, (c) the E-T-T, Inc. Guaranty, (d) the E-T-T Enterprises, L.L.C.
Guaranty, (e) the General Subsidiary Guaranty, and (f) each other Guaranty of
the Obligations executed by a Subsidiary in favor of the Administrative Agent
and the Lenders, including as executed by the Acquisition Subsidiaries on the
Effective Date, as at any time amended.


 


“Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.


 


“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:


 


(a)                                  all obligations of such Person for
borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments;


 


(b)                                 all direct or contingent obligations of
such Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;


 


(c)                                  net obligations of such Person under any
Swap Contract;


 


(d)                                 all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business and, in each case, not past due for more than 60 days after the date on
which such trade account payable was created);


 


(e)                                  indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse;


 


(f)                                    capital leases and Synthetic Lease
Obligations;


 


(g)                                 all obligations of such Person to
purchase, redeem, retire, defease or otherwise make any payment in respect of
any Equity Interest in such Person or any other Person, valued, in the case of
a redeemable preferred interest, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends; and


 


(h)                                 all Contingent Obligations of such Person
in respect of any of the foregoing.


 


For all purposes hereof,
the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a
general partner or a joint venturer, unless such


 


14





















 


Indebtedness is expressly
made non-recourse to such Person.  The
amount of any net obligation under any Swap Contract on any date shall be
deemed to be the Swap Termination Value thereof as of such date.  The amount of any capital lease or Synthetic
Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.


 


“Indemnified Taxes”
means Taxes other than Excluded Taxes.


 


“Indemnitees” has
the meaning specified in Section 10.04(b).


 


“Interest Charges”
means, for any period, for the Borrower and its Subsidiaries on a consolidated
basis, the sum of (a) all interest, premium payments, debt discount, fees,
charges and related expenses of the Borrower and its Subsidiaries in connection
with borrowed money (including capitalized interest) or in connection with
the deferred purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP, and (b) the portion of rent expense of
the Borrower and its Subsidiaries with respect to such period under capital
leases that is treated as interest in accordance with GAAP.


 


“Interest Payment Date”
means, (a) as to any Loan other than a Base Rate Loan, the last day of
each Interest Period applicable to such Loan and the applicable Maturity Date; provided,
however, that if any Interest Period for a Eurodollar Rate Loan exceeds
three months, the respective dates that fall every three months after the
beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan (including a Swing Line Loan), the first
Business Day of each calendar month and the applicable Maturity Date.


 


“Interest Period”
means, as to each Eurodollar Rate Loan, the period commencing on the date such
Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar
Rate Loan and ending on the date one, two, three or six months thereafter, as
selected by the Borrower in its Loan Notice; provided that:


 


(a)                                  any Interest Period that would otherwise
end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day;


 


(b)                                 any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and


 


(c)                                  no Interest Period for any Revolving Loan
shall extend beyond the Revolving Maturity Date.


 


(d)                                 no Interest Period for any Term Loan
shall extend beyond the Term Maturity Date


 


“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance
or capital contribution to, Contingent Obligation


 


15





















 


or assumption of debt of,
or purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person and any arrangement pursuant to which the investor issues
Contingent Obligations or accepts Indebtedness of such other Person, or
(c) the purchase or other acquisition (in one transaction or a series of
transactions) of assets of another Person that constitute a business
unit.  For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.


 


“IP Rights” has
the meaning specified in Section 5.17.


 


“IRS” means the
United States Internal Revenue Service.


 


“ISP” means, with
respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice (or such
later version thereof as may be in effect at the time of issuance).


 


“Issuance Subsidiary”
means a wholly-owed direct Subsidiary of the Borrower, formed for the sole
purpose of issuing the New Senior Subordinated Notes.


 


“Issuer Documents”
means with respect to any Letter of Credit, the Letter Credit Application, and
any other document, agreement and instrument entered into by the L/C Issuer and
the Borrower (or any Subsidiary) or in favor the L/C Issuer and relating to any
such Letter of Credit.


 


“Laws” means,
collectively, all international, foreign, Federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes and administrative
or judicial precedents or authorities, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authority, in each case whether or not having
the force of law.


 


“L/C Advance”
means, with respect to each Lender, such Lender’s funding of its participation
in any L/C Borrowing in accordance with its Revolving Percentage.


 


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


 


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


 


“L/C Issuer” means
Bank of America in its capacity as issuer of Letters of Credit hereunder, or
any successor issuer of Letters of Credit hereunder.


 


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


 


16





















 


all L/C Borrowings. For
purposes of computing the amount available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.06.  For all purposes of
this Agreement, if on any date of determination a Letter of Credit has expired
by its terms but any amount may still be drawn thereunder by reason of the
operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be
“outstanding” in the amount so remaining available to be drawn.


 


“Lender” has the
meaning specified in the introductory paragraph hereto and, as the context
requires, includes the Swing Line Lender.


 


“Lending Office”
means, as to any Lender, the office or offices of such Lender described as such
in such Lender’s Administrative Questionnaire, or such other office or offices
as a Lender may from time to time notify the Borrower and the Administrative
Agent.


 


“Letter of Credit”
means any standby letter of
credit issued hereunder and shall include the Existing Letters of Credit.


 


“Letter of Credit
Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.


 


“Letter of Credit
Expiration Date” means the day that is seven days prior to the Revolving
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).


 


“Letter of Credit Fee”
has the meaning specified in Section 2.04(i).


 


“Letter of Credit
Sublimit” means an amount equal to the lesser of (a) $10,000,000 or
(b) the Aggregate Revolving Commitments.  The Letter of Credit Sublimit is part of, and
not in addition to, the Aggregate Revolving Commitments.


 


“License Revocation”
means the revocation, failure to renew or suspension of, or the appointment of
a receiver, supervisor or similar official with respect to, any casino,
gambling or gaming license issued by any Gaming Board covering any casino or
gaming facility of Borrower or any of its Subsidiaries.


 


“Lien” means any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge, or preference, priority or other security
interest or preferential arrangement in the nature of a security interest of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other encumbrance on title
to real property, and any financing lease having substantially the same
economic effect as any of the foregoing).


 


“Loan” means an
extension of credit by a Lender to the Borrower under Article II in the form of
a Loan or a Swing Line Loan.


 


“Loan Documents”
means this Agreement, each Note, each Issuer Document, each Secured Swap
Contract, the Fee Letter, each Guaranty, and each Collateral Document.


 


17





















 


“Loan Notice”
means a notice of (a) a Borrowing, (b) a conversion of Loans from one
Type to the other, or (c) a continuation of Eurodollar Rate Loans,
pursuant to Section 2.03(a), which, if in writing, shall be substantially
in the form of Exhibit C.


 


“Loan Parties”
means, collectively, the Borrower and each Subsidiary.


 


“Maintenance Capital
Expenditures” means, collectively (a) any Capital Expenditures for the
maintenance, repair, restoration or refurbishment of any of the hotel, resort
or casino properties of Borrower or any of its Subsidiaries, (b) any Capital
Expenditures associated with the slot route operations of the Borrower and its
Subsidiaries in respect of any one or more capital projects which are not in
excess of $1,000,000, but excluding any Capital Expenditure which
materially adds to or further improves the hotel, resort or casino properties
of Borrower and its Subsidiaries.


 


“Market Gaming”
means Market Gaming, Inc., a Nevada corporation, its successors and permitted
assigns.


 


“Market Gaming
Guaranty” means the Guaranty executed on the Closing Date by Market Gaming
in favor of the Administrative Agent and the Lenders, as at any time amended.


 


“Material Adverse
Effect” means (a) a material adverse change in, or a material adverse
effect upon, the operations, business, properties, liabilities (actual or
contingent), condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Loan Party to perform its obligations under
any Loan Document to which it is a party; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against any Loan
Party of any Loan Document to which it is a party.


 


“Maturity Date”
means, as the context requires, either the Revolving Maturity Date or the Term
Maturity Date.


 


“Multiemployer Plan”
means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.


 


“Negative Pledge”
means a Contractual Obligation that contains a covenant binding on Borrower or
any of the Subsidiaries that prohibits Liens on any of its or their Property,
other than (a) any such covenant contained in a Contractual Obligation
granting a Lien permitted under Section 7.01 which affects only the
Property that is the subject of such permitted Lien and (b) any such covenant
that does not apply to Liens securing the Obligations.


 


“Net Income”
means, for any period, with respect to any Person and its Subsidiaries, the
consolidated net income of such Person and its Subsidiaries for that period
determined in accordance with GAAP, consistently applied.


 


18





















 


“New Senior
Subordinated Notes” means Senior Subordinated Notes issued on or prior to
the date of the consummation of the Grace Asset Purchase in an aggregate
principal amount not to exceed $180,000,000.


 


“Notes” means,
collectively, the Revolving Notes and the Term Notes.


 


“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under the Revolving Commitments, the Term
Commitments or under any Loan Document (including without limitation any
Secured Swap Contract) or otherwise with respect to any Loan or Letter of
Credit, whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest and fees that accrue after the commencement by or
against any Loan Party or any Affiliate thereof of any proceeding under any
Debtor Relief Laws naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such
proceeding.


 


“Organization
Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or
articles of formation or organization and operating agreement; and
(c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement
of formation or organization and any agreement, instrument, filing or notice
with respect thereto filed in connection with its formation or organization
with the applicable Governmental Authority in the jurisdiction of its formation
or organization and, if applicable, any certificate or articles of formation or
organization of such entity.


 


“Other Taxes”
means all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made
hereunder or under any other Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document.


 


“Outstanding Amount”
means (i) with respect to Loans and Swing Line Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Loans and Swing Line Loans, as the
case may be, occurring on such date; and (ii) with respect to any L/C
Obligations on any date, the amount of such L/C Obligations on such date after
giving effect to any L/C Credit Extension occurring on such date and any other
changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements by the Borrower of Unreimbursed
Amounts.


 


“Overall Commitments”
means, collectively, the Aggregate Revolving Commitments and the Aggregate Term
Commitments.


 


“Participant” has
the meaning specified in Section 10.06(d).


 


“PBGC” means the
Pension Benefit Guaranty Corporation.


 


19





















 


“Pension Plan”
means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject
to Title IV of ERISA and is sponsored or maintained by the Borrower or any
ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or
has an obligation to contribute, or in the case of a multiple employer or other
plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.


 


“Percentage” means
with respect to any Lender at any time, the percentage (carried out to the
ninth decimal place) of the Overall Commitments, or, as the context
requires, the percentage of the Aggregate Revolving Commitments or Aggregate
Term Commitments, represented by that Lender’s Commitment of the same Type at
such time.  In respect of the Revolving
Commitments, if the Revolving Commitments have been terminated pursuant to
Section 8.02, then the Percentage of each Lender shall be determined based
on the Percentage of that Lender most recently in effect, giving effect to any
subsequent assignments.  The initial
Percentages of each Lender are set forth opposite the name of that Lender on
Schedule 2.01 or in the Assignment and Assumption pursuant to which that
Lender becomes a party hereto, as applicable.


 


“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.


 


“Plan” means any
“employee benefit plan” (as such term is defined in Section 3(3) of ERISA)
established by the Borrower or, with respect to any such plan that is subject
to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.


 


“Pledge Agreement”
means a pledge agreement executed and delivered by Borrower and its
Subsidiaries (other than the Issuance Subsidiary), substantially in the form of
Exhibit D, with respect to all Equity Interests held by them in their
respective direct Subsidiaries (other than the Issuance Subsidiary and except
to the extent that the Gaming Laws of the relevant jurisdiction do not permit
the pledge of the Equity Interests in any Person which is the holder of a
gaming license), either as originally executed or as it may from time to time
be supplemented, modified, amended, extended or supplanted.


 


“Pricing Period”
means the period of three months beginning on the first day of each March,
June, September and December during the term of this Agreement.


 


“Principals” means
Edward J. Herbst, Timothy P. Herbst and Troy D. Herbst.


 


“Quarterly Payment
Date” means the last Business Day of each March, June, September and
December.


 


“Register” has the
meaning specified in Section 10.06(c).


 


“Related Parties”
means, with respect to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents and advisors of such Person and of such
Person’s Affiliates.


 


20





















 


“Reportable Event”
means any of the events set forth in Section 4043(c) of ERISA, other than
events for which the 30 day notice period has been waived.


 


“Request for Credit
Extension” means (a) with respect to a Borrowing, conversion or
continuation of Loans, a Loan Notice, (b) with respect to an L/C Credit
Extension, a Letter of Credit Application, and (c) with respect to a Swing
Line Loan, a Swing Line Loan Notice.


 


“Requisite Lenders”
means, as of any date of determination, Lenders having more than 50% of the
Overall Commitments or, if the commitment of each Lender to make Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02, Lenders holding in the aggregate more than 50%
of the Total Outstandings (with the aggregate amount of each Lender’s risk
participation and funded participation in L/C Obligations and Swing Line Loans
being deemed “held” by that Lender for purposes of this definition); provided
that the Commitment of, and the portion of the Total Outstandings held or
deemed held by, any Defaulting Lender shall be excluded for purposes of making
a determination of Requisite Lenders.


 


“Reserve Amount”
means, as of each date of determination, $5,000,000 or any lesser amount which
the Administrative Agent agrees is equal to the sum of (a) the outstanding
principal amount of the Existing Senior Secured Notes, (b) Interest Charges
with respect to the Existing Senior Secured Notes which have then accrued and
remain unpaid, (c) Interest Charges which are scheduled to accrue in respect of
such unpaid Existing Senior Secured Notes through September 1, 2005, and
(d) any call premium required to be paid in respect of any Existing Senior
Secured Notes upon their repayment on September 1, 2005.


 


“Responsible Officer”
means the chief executive officer, president, chief financial officer,
treasurer or assistant treasurer of a Loan Party.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.


 


“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other Equity Interest of the
Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such capital stock or other Equity Interest, or on account of any return
of capital to the Borrower’s stockholders, partners or members (or the
equivalent Person thereof).


 


“Revolver Reduction
Amount” means as to each Quarterly Payment Date, the amount set forth below
opposite that Quarterly Payment Date:


 


	
  Quarterly Payment Date

  	
   

  	
  Revolver Reduction

  Amount

  	
   

  
	
  Effective
  Date through and including March 31, 2007

  	
   

  	
  $

  	
  0

  	
   

  
	
  June 30,
  2007 through and including March 31, 2008

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  June 30,
  2008 through and including March 31, 2009

  	
   

  	
  $

  	
  6,250,000

  	
   

  



 


21





















 


“Revolving Commitment”
means, as to each Lender, its obligation to (a) make Loans to the Borrower
pursuant to Section 2.01, (b) purchase participations in L/C
Obligations, and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite that Lender’s name on Schedule 2.01 or in the
Assignment and Assumption pursuant to which that Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement.


 


“Revolving Lenders”
means, those of the Lenders having Revolving Commitments.


 


“Revolving Loans”
means each Loan made under the Revolving Commitment.


 


“Revolving Maturity
Date” means June 10, 2009.


 


“Revolving Note”
means a promissory note made by the Borrower in favor of a Revolving Lender
evidencing Revolving Loans made by that Lender, substantially in the form of
Exhibit E.


 


“Revolving Percentage”
means with respect to any Lender at any time, the percentage (carried out to
the ninth decimal place) of the Aggregate Revolving Commitments represented by
that Lender’s Revolving Commitment at such time.  If the commitment of each Lender to make
Revolving Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02 or if the
Revolving Commitments have expired, then the Revolving Percentage of each
Lender shall be determined based on the Revolving Percentage of that Lender
most recently in effect, giving effect to any subsequent assignments.  The initial Revolving Percentage of each
Lender is set forth opposite the name of that Lender on Schedule 2.01 or
in the Assignment and Assumption pursuant to which that Lender becomes a party
hereto, as applicable.


 


“Route Agreements”
means written agreements entered into by Borrower or any of its Subsidiaries
with another Person that provide for the installation and operation of slot
machines, video poker machines or other electronic gaming devises at premises
owned or operated by such Person.


 


“SEC” means the
Securities and Exchange Commission, or any Governmental Authority succeeding to
any of its principal functions.


 


“Secured Swap Contract”
means each Swap Contract to which the Borrower is now or hereafter a party with
any Lender or its Affiliates.


 


22





















 


“Security Agreement”
means the amended and restated security agreement executed and delivered by
Borrower and each of its Subsidiaries, either as originally executed or as it
may from time to time be supplemented, modified, amended, extended or
supplanted.


 


“Senior Debt”
means, as of each date of determination, Funded Debt as of that date minus
Subordinated Debt as of that date.


 


“Senior Debt to EBITDA
Ratio” means, as of any date of determination, the ratio of (a) the
outstanding principal amount of the Senior Debt as of that date, to (b) EBITDA for the four Fiscal Quarter period then
ended.


 


“Senior Subordinated
Notes” means, collectively, (a) Borrower’s 8-1/8% Senior Subordinated Notes
due 2012 in the aggregate principal amount of $160,000,000 issued as of the
Closing Date pursuant to the Senior Subordinated Indenture, (b) as and when
issued, any New Senior Subordinated Notes, and (c) any additional senior
subordinated notes which may thereafter be issued pursuant to Section 7.03(c).


 


“Senior Subordinated
Indenture” means the Indenture dated as of June 11, 2004 between the
Borrower and U.S. Bank, National Association, as Trustee as in effect on the
Effective Date.


 


“Significant Capital
Project” means each capital project hereafter commenced by Borrower or any
of its Subsidiaries having an associated Capital Expenditures budget which is
in excess of $15,000,000, provided, however, that neither the Grace Capital
Project nor the Terrible’s Expansion Project shall be deemed to be “Significant
Capital Project.”


 


“Subordinated Debt”
means the Senior Subordinated Notes and any additional or replacement
Indebtedness that is contractually subordinated to the Loans and that is
permitted by Section 7.03(c).


 


“Subsidiary” of a
Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person.  Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Borrower.


 


“Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing),


 


23





















 


whether or not any such
transaction is governed by or subject to any master agreement, and (b) any
and all transactions of any kind, and the related confirmations, which are
subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master
Agreement.


 


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


 


“Swing Line” means
the revolving credit facility made available by the Swing Line Lender pursuant
to Section 2.05.


 


“Swing Line Borrowing”
means a borrowing of a Swing Line Loan pursuant to Section 2.05.


 


“Swing Line Lender”
means Bank of America in its capacity as provider of Swing Line Loans, or any
successor swing line lender hereunder.


 


“Swing Line Loan”
has the meaning specified in Section 2.05(a).


 


“Swing Line Loan
Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.05(b),
which, if in writing, shall be substantially in the form of Exhibit F.


 


“Swing Line Sublimit”
means an amount equal to the lesser of (a) $10,000,000 and (b) the
Aggregate Revolving Commitments.  The
Swing Line Sublimit is part of, and not in addition to, the Aggregate Revolving
Commitments.


 


“Syndication Agent”
means Wells Fargo Bank, National Association, in its capacity as Syndication
Agent.


 


“Synthetic Lease
Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do
not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of
such Person (without regard to accounting treatment).


 


“Taxes” means all
present or future taxes, levies, imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by any Governmental Authority, including
any interest, additions to tax or penalties applicable thereto.


 


24





















 


“Term Commitments”
means, as to each Lender, the commitment of that Lender to make Term Loans to
the Borrower pursuant to Section 2.02.


 


“Term Effective Date”
is defined in Section 2.16.


 


“Term Joinder
Agreement” means an agreement entered into by Borrower, the Term Lenders,
and the Administrative Agent, in a form approved by the Administrative Agent
and the Documentation Agent and their respective counsel, pursuant to which
each Term Lender agrees to become a party to this Agreement as a Lender and as
a Term Lender under the conditions set forth in Section 2.16, provided that
such agreement shall include, without limitation, (a) the terms of any and all
required interest and other yield payments, including all associated fees, (b)
the amortization schedule of principal payments, (c) the terms of any optional
or mandatory prepayment provisions, (d) the use of proceeds from the Terms Loans,
(e) the Term Maturity Date, which shall conform to Section 2.16(a)(iv), and (e)
such other information as shall be required to be included in the notice
provided by the Borrower pursuant to Section 2.16(a).


 


“Term Lenders”
means those of the Lenders having Term Commitments.


 


“Term Loans” means
each Loan made under the Term Commitments.


 


“Term Maturity Date”
means the maturity date of the Term Loans and the Term Commitments established
pursuant to Section 2.16 which, without the consent of each of the Revolving
Lenders, shall not be earlier than the Revolving Maturity Date.


 


“Term Note” means
a promissory note made by the Borrower in favor of a Term Lender evidencing
Term Loans made by that Lender, substantially in the form of Exhibit G, provided
that the Term Note shall mature no earlier than the Revolving Maturity Date.


 


“Terrible’s Hotel
& Casino” means Terrible’s Hotel and Casino, located at 4100 Paradise
Road, Las Vegas, Nevada.


 


“Terrible’s Expansion
Project” means the design, development and construction of a three level
450-space parking structure attached to Terrible’s Hotel & Casino, the
acquisition of approximately 100 additional slot machines for the casino floor
at Terrible’s Hotel & Casino, and related improvements.


 


“to the best knowledge
of” means, when modifying a representation, warranty or other statement of
any Person, that the fact or situation described therein is known by the Person
(or, in the case of a Person other than a natural Person, known by a
Responsible Officer of that Person) making the representation, warranty or
other statement, or with the exercise of reasonable due diligence under the
circumstances (in accordance with the standard of what a reasonable Person in
similar circumstances would have done) would have been known by the Person (or,
in the case of a Person other than a natural Person, would have been known by a
Responsible Officer of that Person).


 


“Total Debt to EBITDA
Ratio” means, as of the last day of any Fiscal Quarter, the ratio of
(a) Funded Debt as of that date, to (b) EBITDA
for the four Fiscal Quarter period then ended.


 


25




















 


“Total Outstandings”
means the aggregate Outstanding Amount of all Loans and all L/C Obligations.


 


“Trademark License
Agreement” means the Trademark License Agreement dated as of August 24,
2001 between Terrible Herbst, Inc., a Nevada corporation, and Borrower, as
Licensee.


 


“Type” means, with
respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.


 


“Unfunded Pension
Liability” means the excess of a Pension Plan’s benefit liabilities under
Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s
assets, determined in accordance with the assumptions used for funding the
Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.


 


“United States” and “U.S.”
mean the United States of America.


 


“Unreimbursed Amount”
has the meaning specified in Section 2.04(c)(i).


 


“Unused Revolver
Availability” means, for each date of determination, the actual daily
amount by which the Aggregate Revolving Commitments exceed the sum of
(i) the Outstanding Amount of Revolving Loans (but not the Swing Line
Loans) and (ii) the Outstanding Amount of L/C Obligations.


 


1.02.                        Other Interpretive Provisions.  With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan Document:


 


(a)                                  The definitions
of terms herein shall apply equally to the singular and plural forms of the
terms defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,”
“hereof” and “hereunder,” and words of similar import when used
in any Loan Document, shall be construed to refer to such Loan Document in its
entirety and not to any particular provision thereof, (iv) all references
in a Loan Document to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules
to, the Loan Document in which such references appear, (v) any reference
to any law shall include all statutory and regulatory provisions consolidating,
amending replacing or interpreting such law and any reference to any law or
regulation shall, unless


 


26





















 


otherwise
specified, refer to such law or regulation as amended, modified or supplemented
from time to time, and (vi) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.


 


(b)                                 In the computation
of periods of time from a specified date to a later specified date, the word “from”
means “from and including;” the words “to” and “until”
each mean “to but excluding;” and the word “through” means “to
and including.”


 


(c)                                  Section
headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.


 


1.03.                        Accounting Terms.


 


(a)                                  Generally.  All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed
herein.


 


(b)                                 Changes in GAAP.  If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and either the Borrower or the Requisite Lenders shall so
request, the Administrative Agent, the Lenders and the Borrower shall negotiate
in good faith to amend such ratio or requirement to preserve the original
intent thereof in light of such change in GAAP (subject to the approval of the
Requisite Lenders); provided  that, until so amended,
(i) such ratio or requirement shall continue to be computed in accordance
with GAAP prior to such change therein and (ii) the Borrower shall provide
to the Administrative Agent and the Lenders financial statements and other
documents required under this Agreement or as reasonably requested hereunder
setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.


 


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


 


1.05.                        Times of Day.  Unless otherwise specified, all references
herein to times of day shall be references to Pacific Saving Daylight time
(daylight or standard, as applicable).


 


1.06.                        Letter of Credit Amounts.  Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to mean
the maximum face amount


 


27





















 


of
such Letter of Credit after giving effect to all increases thereof contemplated
by such Letter of Credit or the Issuer Documents related thereto, whether or
not such maximum face amount is in effect at such time.


 


28





















 


ARTICLE
II.

THE COMMITMENTS AND CREDIT EXTENSIONS


 


2.01.                        Revolving Loans.  Subject to the terms and conditions set forth
herein, each Revolving Lender severally agrees to make Revolving Loans to the
Borrower from time to time, on any Business Day during the Availability Period,
in an aggregate amount not to exceed at any time outstanding the amount of that
Revolving Lender’s Revolving Commitment; provided, that after giving
effect to any Borrowing, (i) the Aggregate Revolving Outstandings shall
not exceed the Aggregate Revolving Commitments minus the Reserve Amount,
(ii) the aggregate Outstanding Amount of the Revolving Loans of any
Revolving Lender, plus that Revolving Lender’s Revolving Percentage of
the Outstanding Amount of all L/C Obligations, plus that Revolving
Lender’s Revolving Percentage of the Outstanding Amount of all Swing Line Loans
shall not exceed that Lender’s Revolving Commitment, and (iii) prior to the
satisfaction of the conditions set forth in Section 4.03, the Borrower shall
not request any Revolving Loan, Swing Line Loan or Letter of Credit which would
result in the Aggregate Revolving Outstandings being in excess of $150,000,000 minus
the Reserve Amount.  Within the limits of
each Revolving Lender’s Revolving Commitment, and subject to the other terms
and conditions hereof, the Borrower may borrow under this Section 2.01,
prepay under Section 2.06, and reborrow under this Section 2.01.  Revolving Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.


 


2.02.                        Term Loans.  Provided the
Borrower has properly exercised its option to add additional Term Commitments
pursuant to Section 2.16, and subject to the terms and conditions set forth
herein and in the Term Notes, each Term Lender becoming a party to this
Agreement pursuant to Section 2.16 severally agrees to make a Term Loan to the
Borrower on the Term Effective Date in the amount of its Term Commitment.  Term Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.  No Term Loan which is at any time prepaid or
repaid may be reborrowed, but each Term Loan may be converted, in whole or in
part, to a Term Loan of another Type, or continued from time to time, in the
manner contemplated by Section 2.03.


 


2.03.                        Borrowings, Conversions and Continuations of
Loans.


 


(a)                                  Each Borrowing,
each conversion of Loans from one Type to the other, and each continuation of
Eurodollar Rate Loans (whether such Borrowing consists of Revolving Loans or
Term Loans) shall be made upon the Borrower’s irrevocable notice to the
Administrative Agent, which may be given by telephone.  Each such notice must be received by the
Administrative Agent not later than 11:00 a.m. (i) three Business Days
prior to the requested date of any Borrowing of, conversion to or continuation
of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base
Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate
Loans.  Each telephonic notice by the
Borrower pursuant to this Section 2.03(a) must be confirmed promptly by
delivery to the Administrative Agent of a written Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower.  Each Borrowing of, conversion to or
continuation of Eurodollar Rate Loans shall be in a principal amount of


 


29





















 


$2,000,000
or a whole multiple of $1,000,000 in excess thereof.  Except as provided in Sections 2.04(c)
and 2.05(c), each Borrowing of or conversion to Base Rate Loans shall be in a
principal amount of $2,000,000 or a whole multiple of $1,000,000 in excess
thereof.  Each Loan Notice (whether telephonic
or written) shall specify (i) whether the Loan Notice relates to the
Revolving Commitments or the Term Commitments, (ii) whether the Borrower
is requesting a Borrowing, a conversion of Loans from one Type to the other, or
a continuation of Eurodollar Rate Loans, (iii) the requested date of the
Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iv) the principal amount of Loans to be borrowed,
converted or continued, (v) the Type of Loans to be borrowed or to which
existing Loans are to be converted, and (vi) if applicable, the duration
of the Interest Period with respect thereto. 
If the Borrower fails to specify a Type of Loan in a Loan Notice or if
the Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Loans shall be made as, or converted to, Base
Rate Loans.  Any such automatic
conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate
Loans.  If the Borrower requests a
Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any
such Loan Notice, but fails to specify an Interest Period, it will be deemed to
have specified an Interest Period of one month.


 


(b)                                 Following
receipt of a Loan Notice, the Administrative Agent shall promptly notify each
relevant Lender of the amount of its Percentage of the applicable Loans, and if
no timely notice of a conversion or continuation is provided by the Borrower,
the Administrative Agent shall notify each Lender of the details of any
automatic conversion to Base Rate Loans described in the preceding
subsection.  In the case of a Borrowing,
each Lender having a Percentage of the relevant Commitments shall make the amount
of its Loan available to the Administrative Agent in immediately available
funds at the Administrative Agent’s Office not later than 1:00 p.m. on the
Business Day specified in the applicable Loan Notice.  Upon satisfaction of the applicable conditions
set forth in Section 4.02 (and, if such Borrowing is the initial Credit
Extension, Section 4.01), the Administrative Agent shall make all funds so
received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower
on the books of Bank of America with the amount of such funds or (ii) wire
transfer of such funds, in each case in accordance with instructions provided
to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided,
however, that if, on the date the Loan Notice with respect to such
Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then
the proceeds of such Borrowing, first, shall be applied to the payment
in full of any such L/C Borrowings, and second, shall be made available
to the Borrower as provided above.


 


(c)                                  Except as
otherwise provided herein, a Eurodollar Rate Loan may be continued or converted
only on the last day of an Interest Period for such Eurodollar Rate Loan.  During the existence of a Default, no Loans
may be requested as, converted to or continued as Eurodollar Rate Loans without
the consent of the Requisite Lenders.


 


(d)                                 The
Administrative Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate


 


30





















 


Loans
upon determination of such interest rate. 
At any time that Base Rate Loans are outstanding, the Administrative
Agent shall notify the Borrower and the Lenders of any change in Bank of
America’s prime rate used in determining the Base Rate promptly following the
public announcement of such change.


 


(e)                                  After giving
effect to all Borrowings, all conversions of Loans from one Type to the other,
and all continuations of Loans as the same Type, there shall not be more than
ten Interest Periods in effect with respect to Loans.


 


2.04.                        Letters of Credit.


 


(a)                                  The Letter of
Credit Commitment.


 


(i)                                     Each Letter of
Credit heretofore issued and remaining outstanding under the Existing Credit
Agreement shall be deemed to be outstanding hereunder as of the Effective
Date.  Subject to the terms and
conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon
the agreements of the Revolving Lenders set forth in this Section 2.04,
(1) from time to time on any Business Day during the period from the
Effective Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of the Borrower, and to amend or extend Letters of
Credit previously issued by it, in accordance with subsection (b) below, and
(2) to honor drawings under the Letters of Credit; and (B) the
Revolving Lenders severally agree to participate in Letters of Credit issued
for the account of the Borrower and any drawings thereunder; provided
that after giving effect to any L/C Credit Extension with respect to any Letter
of Credit, (w) the Aggregate Revolving Outstanding shall not be in excess of
$150,000,000 minus the Reserve Amount prior to the satisfaction of the
conditions set forth in Section 4.03, (x) the Aggregate Revolving
Outstandings shall not exceed the Aggregate Revolving Commitments minus
the Reserve Amount, (y) the aggregate Outstanding Amount of the Revolving
Loans of any Revolving Lender, plus that Revolving Lender’s Revolving
Percentage of the Outstanding Amount of all L/C Obligations, plus that
Revolving Lender’s Revolving Percentage of the Outstanding Amount of all Swing
Line Loans shall not exceed that Revolving Lender’s Revolving Commitment, and
(z) the Outstanding Amount of the L/C Obligations shall not exceed the
Letter of Credit Sublimit. Each request by the Borrower for the issuance or
amendment of a Letter of Credit shall be deemed to be a representation by the
Borrower that the L/C Credit Extension so requested complies with the
conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to
the terms and conditions hereof, the Borrower’s ability to obtain Letters of
Credit shall be fully revolving, and accordingly the Borrower may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed.


 


(ii)                                  The L/C Issuer
shall not issue any Letter of Credit, if:


 


31





















 


(A)                              subject to
Section 2.04(b)(iii), the expiry date of such requested Letter of Credit
would occur more than twelve months after the date of issuance or last
extension, unless all of the Revolving Lenders have approved such expiry date;
or


 


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


 


(iii)                               The L/C Issuer
shall not be under any obligation to issue any Letter of Credit if:


 


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


 


(B)                                the issuance of
such Letter of Credit would violate one or more policies of the L/C Issuer;


 


(C)                                except as
otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of
Credit is in an initial face amount less than $100,000, in the case of a
commercial Letter of Credit, or $500,000, in the case of a standby Letter of
Credit;


 


(D)                               such Letter of
Credit is to be denominated in a currency other than Dollars; or


 


(E)                                 a default of
any Revolving Lender’s obligations to fund under Section 2.04(c) exists or
any Revolving Lender is at such time a Defaulting Lender hereunder, unless the
L/C Issuer has entered into satisfactory arrangements with the Borrower or such
Revolving Lender to eliminate the L/C Issuer’s risk with respect to such
Revolving Lender.


 


(iv)                              The L/C Issuer
shall not amend any Letter of Credit if the L/C Issuer would not be permitted
at such time to issue such Letter of Credit in its amended form under the terms
hereof.


 


32





















 


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


 


(vi)                              The L/C Issuer
shall act on behalf of the Revolving Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and the L/C Issuer
shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken or
omissions suffered by the L/C Issuer in connection with Letters of Credit
issued by it or proposed to be issued by it and Issuer Documents pertaining to
such Letters of Credit as fully as if the term “Administrative Agent” as used
in Article IX included the L/C Issuer with respect to such acts or
omissions, and (B) as additionally provided herein with respect to the L/C
Issuer.


 


(b)                                 Procedures for
Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.


 


(i)                                     Each Letter of
Credit shall be issued or amended, as the case may be, upon the request of the
Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent)
in the form of a Letter of Credit Application, appropriately completed and
signed by a Responsible Officer of the Borrower.  Such Letter of Credit Application must be
received by the L/C Issuer and the Administrative Agent not later than 11:00
a.m. at least two Business Days (or such later date and time as the Administrative
Agent and the L/C Issuer may agree in a particular instance in their sole
discretion) prior to the proposed issuance date or date of amendment, as the
case may be.  In the case of a request
for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the L/C Issuer:
(A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date
thereof; (D) the name and address of the beneficiary thereof; (E) the
documents to be presented by such beneficiary in case of any drawing
thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G) such other matters
as the L/C Issuer may require.  In the
case of a request for an amendment of any outstanding Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to
the L/C Issuer (A) the Letter of Credit to be amended; (B) the
proposed date of amendment thereof (which shall be a Business Day);
(C) the nature of the proposed amendment; and (D) such other matters
as the L/C Issuer may require. 
Additionally, the Borrower shall furnish to the L/C Issuer and the
Administrative Agent such other documents and information pertaining to
such requested Letter of Credit issuance or amendment, including any Issuer
Documents, as the L/C Issuer or the Administrative Agent may require.


 


33





















 


(ii)                                  Promptly after
receipt of any Letter of Credit Application, the L/C Issuer will confirm with
the Administrative Agent (by telephone or in writing) that the Administrative
Agent has received a copy of such Letter of Credit Application from the
Borrower and, if not, the L/C Issuer will provide the Administrative Agent with
a copy thereof.  Unless the L/C Issuer
has received written notice from any Revolving Lender, the Administrative Agent
or any Loan Party, at least one Business Day prior to the requested date of
issuance or amendment of the applicable Letter of Credit, that one or more
applicable conditions contained in Article IV shall not then be satisfied,
then, subject to the terms and conditions hereof, the L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the Borrower or
enter into the applicable amendment, as the case may be, in each case in
accordance with the L/C Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letter
of Credit, each Revolving Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Revolving
Lender’s Revolving Percentage times the amount of such Letter of Credit.


 


(iii)                               If the Borrower
so requests in any applicable Letter of Credit Application, the L/C Issuer may,
in its sole and absolute discretion, agree to issue a Letter of Credit that has
automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided
that any such Auto-Extension Letter of Credit must permit the L/C Issuer to
prevent any such extension at least once in each twelve-month period
(commencing with the date of issuance of such Letter of Credit) by giving prior
notice to the beneficiary thereof not later than a day (the “Non-Extension
Notice Date”) in each such twelve-month period to be agreed upon at the time
such Letter of Credit is issued.  Unless
otherwise directed by the L/C Issuer, the Borrower shall not be required to
make a specific request to the L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require) the L/C Issuer to permit the extension of such Letter of Credit at any
time to an expiry date not later than the Letter of Credit Expiration Date; provided,
however, that the L/C Issuer shall not permit any such extension if
(A) the L/C Issuer has determined that it would not be permitted, or would
have no obligation, at such time to issue such Letter of Credit in its revised
form (as extended) under the terms hereof (by reason of the provisions of
clause (ii) or (iii) of Section 2.04(a) or otherwise), or (B) it has received
notice (which may be by telephone or in writing) on or before the day that is
five Business Days before the Non-Extension Notice Date (1) from the
Administrative Agent that the Requisite Lenders have elected not to permit such
extension or (2) from the Administrative Agent, any Lender or the Borrower
that one or more of the applicable conditions specified in Section 4.02 is
not then satisfied, and in each such case directing the L/C Issuer not to
permit such extension.


 


34





















 


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


 


(c)                                  Drawings and
Reimbursements; Funding of Participations.


 


(i)                                     Upon receipt
from the beneficiary of any Letter of Credit of any notice of a drawing under
such Letter of Credit, the L/C Issuer shall notify the Borrower and the
Administrative Agent thereof.  Not later
than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of
Credit (each such date, an “Honor Date”), the Borrower shall reimburse the L/C
Issuer through the Administrative Agent in an amount equal to the amount of
such drawing.  If the Borrower fails to
so reimburse the L/C Issuer by such time, the Administrative Agent shall
promptly notify each Revolving Lender of the Honor Date, the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such
Revolving Lender’s Revolving Percentage thereof.  In such event, the Borrower shall be deemed
to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor
Date in an amount equal to the Unreimbursed Amount, without regard to the
minimum and multiples specified in Section 2.04 for the principal amount
of Base Rate Loans, but subject to the amount of the unutilized portion of the
Aggregate Revolving Commitments and the conditions set forth in
Section 4.02 (other than the delivery of a Loan Notice).  Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this Section 2.04(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of
such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice.


 


(ii)                                  Each Lender
shall upon any notice pursuant to Section 2.04(c)(i) make funds available
to the Administrative Agent for the account of the L/C Issuer at the
Administrative Agent’s Office in an amount equal to its Revolving Percentage of
the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified
in such notice by the Administrative Agent, whereupon, subject to the
provisions of Section 2.04(c)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to the Borrower in such
amount.  The Administrative Agent shall
remit the funds so received to the L/C Issuer.


 


(iii)                               With respect to
any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base
Rate Loans because the conditions set forth in Section 4.02 cannot be
satisfied or for any other reason, the Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the Default
Rate.  In such event, each Revolving Lender’s
payment to the


 


35





















 


Administrative
Agent for the account of the L/C Issuer pursuant to Section 2.04(c)(ii)
shall be deemed payment in respect of its participation in such L/C Borrowing
and shall constitute an L/C Advance from such Revolving Lender in satisfaction
of its participation obligation under this Section 2.04.


 


(iv)                              Until each
Revolving Lender funds its Loan or L/C Advance pursuant to this
Section 2.04(c) to reimburse the L/C Issuer for any amount drawn under any
Letter of Credit, interest in respect of such Revolving Lender’s Revolving
Percentage of such amount shall be solely for the account of the L/C Issuer.


 


(v)                                 Each Revolving
Lender’s obligation to make Loans or L/C Advances to reimburse the L/C Issuer
for amounts drawn under Letters of Credit, as contemplated by this
Section 2.04(c), shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the L/C
Issuer, the Borrower or any other Person for any reason whatsoever;
(B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Revolving Lender’s obligation to
make Loans pursuant to this Section 2.04(c) is subject to the conditions
set forth in Section 4.02 (other than delivery by the Borrower of a Loan
Notice).  No such making of an L/C
Advance shall relieve or otherwise impair the obligation of the Borrower to
reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer
under any Letter of Credit, together with interest as provided herein.


 


(vi)                              If any
Revolving Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Revolving
Lender pursuant to the foregoing provisions of this Section 2.04(c) by the
time specified in Section 2.04(c)(ii), the L/C Issuer shall be entitled to
recover from such Revolving Lender (acting through the Administrative Agent),
on demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds
Rate and a rate determined by the L/C Issuer in accordance with banking
industry rules on interbank compensation. 
A certificate of the L/C Issuer submitted to any Revolving Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.


 


(d)                                 Repayment of
Participations.


 


(i)                                     At any time
after the L/C Issuer has made a payment under any Letter of Credit and has
received from any Revolving Lender such Revolving Lender’s L/C Advance in
respect of such payment in accordance with Section 2.04(c), if the
Administrative Agent receives for the account of the L/C


 


36





















 


Issuer
any payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Borrower or otherwise, including proceeds of Cash
Collateral applied thereto by the Administrative Agent), the Administrative
Agent will distribute to such Revolving Lender its Revolving Percentage thereof
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Revolving Lender’s L/C Advance was
outstanding) in the same funds as those received by the Administrative Agent.


 


(ii)                                  If any payment
received by the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.04(c)(i) is required to be returned under any of the
circumstances described in Section 10.05 (including pursuant to any
settlement entered into by the L/C Issuer in its discretion), each Revolving
Lender shall pay to the Administrative Agent for the account of the L/C Issuer
its Revolving Percentage thereof on demand of the Administrative Agent, plus
interest thereon from the date of such demand to the date such amount is
returned by such Revolving Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect. 
The obligations of the Revolving Lenders under this clause shall survive
the payment in full of the Obligations and the termination of this Agreement.


 


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


 


(i)                                     any lack of
validity or enforceability of such Letter of Credit, this Agreement, or any
other Loan Document;


 


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


 


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


 


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


 


37





















 


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


 


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


 


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


 


(f)                                    Role of L/C
Issuer.  Each
Revolving Lender and the Borrower agree that, in paying any drawing under a
Letter of Credit, the L/C Issuer shall not have any responsibility to obtain
any document (other than any sight draft, certificates and documents expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document.  None of
the L/C Issuer, the Administrative Agent, any of their respective Related
Parties nor any correspondent, participant or assignee of the L/C Issuer shall
be liable to any Revolving Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the
Requisite Lenders, as applicable; (ii) any action taken or omitted in the
absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Issuer Document.  The Borrower hereby assumes all risks of the
acts or omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit; provided, however, that this assumption is
not intended to, and shall not, preclude the Borrower’s pursuing such rights
and remedies as it may have against the beneficiary or transferee at law or
under any other agreement.  None of the
L/C Issuer, the Administrative Agent, any of their respective Related Parties
nor any correspondent, participant or assignee of the L/C Issuer shall be
liable or responsible for any of the matters described in clauses (i)
through (v) of Section 2.04(e); provided, however, that
anything in such clauses to the contrary notwithstanding, the Borrower may have
a claim against the L/C Issuer, and the L/C Issuer may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by the L/C Issuer’s willful misconduct or gross negligence
or the L/C Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit.  In furtherance and
not in limitation of the foregoing, the L/C Issuer may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the


 


38





















 


contrary,
and the L/C Issuer shall not be responsible for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.


 


(g)                                 Cash Collateral.  Upon the request of the Administrative Agent,
(i) if the L/C Issuer has honored any full or partial drawing request
under any Letter of Credit and such drawing has resulted in an L/C Borrowing,
or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation
for any reason remains outstanding, the Borrower shall, in each case,
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations.  Sections 2.06 and
8.02(c) set forth certain additional requirements to deliver Cash Collateral
hereunder.  For purposes of this
Section 2.04, Section 2.06 and
Section 8.02(c), “Cash Collateralize” means to pledge and deposit with or
deliver to the Administrative Agent, for the benefit of the L/C Issuer and the
Revolving Lenders, as collateral for the L/C Obligations, cash or deposit
account balances pursuant to documentation in form and substance satisfactory
to the Administrative Agent and the L/C Issuer (which documents are hereby
consented to by the Revolving Lenders). 
Derivatives of such term have corresponding meanings.  The Borrower hereby grants to the
Administrative Agent, for the benefit of the L/C Issuer and the Revolving
Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all proceeds of the foregoing.  Cash Collateral shall be maintained in
blocked, non-interest bearing deposit accounts at Bank of America.


 


(h)                                 Applicability
of ISP and UCP.  Unless otherwise expressly agreed
by the L/C Issuer and the Borrower when a Letter of Credit is issued (including
any such agreement applicable to an Existing Letter of Credit), the rules of
the ISP shall apply to each Letter of Credit.


 


(i)                                     Letter of
Credit Fees.  The
Borrower shall pay to the Administrative Agent for the account of each Lender
in accordance with its Revolving Percentage a Letter of Credit fee (the “Letter
of Credit Fee”) for each Letter of Credit equal
to the Applicable Rate times the daily maximum amount available to be
drawn under such Letter of Credit (whether or not such maximum amount is then
in effect under such Letter of Credit). 
Letter of Credit Fees shall be (i) computed on a quarterly basis in
arrears and (ii) due and payable on the first Business Day after the end
of each March, June, September and December, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Letter
of Credit Expiration Date and thereafter on demand.  If there is any change in the Applicable Rate
during any quarter, the daily maximum amount of each Letter of Credit shall be
computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect.   Notwithstanding anything to the contrary
contained herein, upon the request of the Requisite Lenders, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the Default Rate.


 


(j)                                     Fronting Fee
and Documentary and Processing Charges Payable to L/C Issuer.  The Borrower shall pay directly to the L/C
Issuer for its own account a


 


39





















 


fronting
fee with respect to each Letter of Credit, at the rate per annum specified in
the Fee Letter, computed on the actual daily maximum amount available to be
drawn under such Letter of Credit (whether or not such maximum amount is then
in effect under such Letter of Credit) and on a quarterly basis in arrears, and
due and payable on the first Business Day after the end of each March, June,
September and December, commencing with the first such date to occur after
the issuance of such Letter of Credit, on the Letter of Credit Expiration Date
and thereafter on demand.  In addition,
the Borrower shall pay directly to the L/C Issuer for its own account the
customary issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the L/C Issuer relating to letters of
credit as from time to time in effect. 
Such customary fees and standard costs and charges are due and payable
on demand and are nonrefundable.


 


(k)                                  Conflict with
Issuer Documents.  In the event
of any conflict between the terms hereof and the terms of any Issuer Document,
the terms hereof shall control.


 


2.05.                        Swing Line Loans.


 


(a)                                  The Swing Line.  Subject to the terms and conditions set forth
herein, the Swing Line Lender agrees, in reliance upon the agreements of the
other Revolving Lenders set forth in this Section 2.05, to make loans
(each such loan, a “Swing Line Loan”) to the Borrower from time to time on any
Business Day during the Availability Period in an aggregate amount outstanding
not to exceed at any time the amount of the Swing Line Sublimit; provided,
however, that after giving effect to any Swing Line Loan, (i) the
Aggregate Revolving Outstandings shall not exceed the Aggregate Revolving
Commitments minus the Reserve Amount, (iii) unless the conditions
precedent set forth in Section 4.03 have been satisfied, the Aggregate
Revolving Outstandings shall not exceed $150,000,000 minus the Reserve
Amount, and (iii) the aggregate Outstanding Amount of the Revolving Loans
of any Revolving Lender, plus that Revolving Lender’s Revolving
Percentage of the Outstanding Amount of all L/C Obligations, plus that
Revolving Lender’s Revolving Percentage of the Outstanding Amount of all Swing
Line Loans shall not exceed that Revolving Lender’s Revolving Commitment, and provided,
further, that the Borrower shall not use the proceeds of any Swing Line
Loan to refinance any outstanding Swing Line Loan.  The Swing Line Loans shall be evidenced by
the note delivered by the Borrower to evidence the Swing Line Loans on the
Closing Date.  Within the foregoing
limits, and subject to the other terms and conditions hereof, the Borrower may
borrow under this Section 2.05, prepay under Section 2.06, and
reborrow under this Section 2.05. 
Each Swing Line Loan shall be a Base Rate Loan.  Immediately upon the making of a Swing Line
Loan, each Revolving Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swing Line Lender a risk participation
in such Swing Line Loan in an amount equal to the product of that Revolving
Lender’s Revolving Percentage times the amount of such Swing Line Loan.


 


(b)                                 Borrowing
Procedures.  Each Swing
Line Borrowing shall be made upon the Borrower’s irrevocable notice to the
Swing Line Lender and the Administrative


 


40





















 


Agent,
which may be given by telephone.  Each
such notice must be received by the Swing Line Lender and the Administrative
Agent not later than 1:00 p.m. on the requested borrowing date, and shall
specify (i) the amount to be borrowed, which shall be a minimum of
$100,000, and (ii) the requested borrowing date, which shall be a Business
Day.  Each such telephonic notice must be
confirmed promptly by delivery to the Swing Line Lender and the Administrative
Agent of a written Swing Line Loan Notice, appropriately completed and signed
by a Responsible Officer of the Borrower. 
Promptly after receipt by the Swing Line Lender of any telephonic Swing
Line Loan Notice, the Swing Line Lender will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has also
received such Swing Line Loan Notice and, if not, the Swing Line Lender will
notify the Administrative Agent (by telephone or in writing) of the contents
thereof.  Unless the Swing Line Lender
has received notice (by telephone or in writing) from the Administrative Agent
(including at the request of any Lender) prior to 2:00 p.m. on the date of the
proposed Swing Line Borrowing (A) directing the Swing Line Lender not to
make such Swing Line Loan as a result of the limitations set forth in the
proviso to the first sentence of Section 2.05(a), or (B) that one or
more of the applicable conditions specified in Article V is not then
satisfied, then, subject to the terms and conditions hereof, the Swing Line
Lender will, not later than 3:00 p.m. on the borrowing date specified in such
Swing Line Loan Notice, make the amount of its Swing Line Loan available to the
Borrower at its office by crediting the account of the Borrower on the books of
the Swing Line Lender in immediately available funds.


 


(c)                                  Refinancing of
Swing Line Loans.


 


(i)                                     The Swing Line
Lender at any time in its sole and absolute discretion may request, on behalf
of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to
so request on its behalf), that each Revolving Lender make a Base Rate Loan in
an amount equal to the product of that Revolving Lender’s Revolving
Percentage times the amount of Swing Line Loans then outstanding.  Such request shall be made in writing (which
written request shall be deemed to be a Loan Notice for purposes hereof) and in
accordance with the requirements of Section 2.03, without regard to the
minimum and multiples specified therein for the principal amount of Base Rate
Loans, but subject to the unutilized portion of the Revolving Commitments and
the conditions set forth in Section 4.02. 
The Swing Line Lender shall furnish the Borrower with a copy of the
applicable Loan Notice promptly after delivering such notice to the
Administrative Agent.  Each Revolving
Lender shall make an amount equal to its Revolving Percentage of the amount
specified in such Loan Notice available to the Administrative Agent in immediately
available funds for the account of the Swing Line Lender at the Administrative
Agent’s Office not later than 1:00 p.m. on the day specified in such Loan
Notice, whereupon, subject to Section 2.05(c)(ii), each Revolving Lender
that so makes funds available shall be deemed to have made a Base Rate Loan to
the Borrower in such amount.  The
Administrative Agent shall remit the funds so received to the Swing Line
Lender.


 


41





















 


(ii)                                  If for any
reason any Swing Line Loan cannot be refinanced by such a Borrowing in
accordance with Section 2.05(c)(i), the request for Base Rate Loans
submitted by the Swing Line Lender as set forth herein shall be deemed to be a
request by the Swing Line Lender that each of the Revolving Lenders fund its
risk participation in the relevant Swing Line Loan and each Revolving Lender’s
payment to the Administrative Agent for the account of the Swing Line Lender
pursuant to Section 2.05(c)(i) shall be deemed payment in respect of such
participation.


 


(iii)                               If any
Revolving Lender fails to make available to the Administrative Agent for the
account of the Swing Line Lender any amount required to be paid by that
Revolving Lender pursuant to the foregoing provisions of this
Section 2.05(c) by the time specified in Section 2.05(c)(i), the
Swing Line Lender shall be entitled to recover from that Revolving Lender
(acting through the Administrative Agent), on demand, such amount with interest
thereon for the period from the date such payment is required to the date on
which such payment is immediately available to the Swing Line Lender at a rate
per annum equal to the greater of the Federal Funds Rate and a rate determined
by the Swing Line Lender in accordance with banking industry rules on interbank
compensation.  A certificate of the Swing
Line Lender submitted to any Revolving Lender (through the Administrative
Agent) with respect to any amounts owing under this clause (iii) shall be
conclusive absent manifest error.


 


(iv)                              Each Revolving
Lender’s obligation to make Loans or to purchase and fund risk participations
in Swing Line Loans pursuant to this Section 2.05(c) shall be absolute and
unconditional and shall not be affected by any circumstance, including
(A) any setoff, counterclaim, recoupment, defense or other right which
that Revolving Lender may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
that each Revolving Lender’s obligation to make Loans pursuant to this
Section 2.05(c) is subject to the conditions set forth in
Section 4.02.  No such funding of
risk participations shall relieve or otherwise impair the obligation of the
Borrower to repay Swing Line Loans, together with interest as provided herein.


 


(d)                                 Repayment of
Participations.


 


(i)                                     At any time
after any Revolving Lender has purchased and funded a risk participation in a
Swing Line Loan, if the Swing Line Lender receives any payment on account of
such Swing Line Loan, the Swing Line Lender will distribute to that Revolving
Lender its Revolving Percentage of such payment (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which that
Revolving Lender’s risk participation was funded) in the same funds as those
received by the Swing Line Lender.


 


42





















 


(ii)                                  If any payment
received by the Swing Line Lender in respect of principal or interest on any
Swing Line Loan is required to be returned by the Swing Line Lender under any
of the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by the Swing Line Lender in its discretion), each
Revolving Lender shall pay to the Swing Line Lender its Revolving Percentage
thereof on demand of the Administrative Agent, plus interest thereon from the
date of such demand to the date such amount is returned, at a rate per annum
equal to the Federal Funds Rate.  The Administrative
Agent will make such demand upon the request of the Swing Line Lender.  The obligations of the Revolving Lenders
under this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.


 


(e)                                  Interest for Account
of Swing Line Lender.  The Swing
Line Lender shall be responsible for invoicing the Borrower for interest on the
Swing Line Loans.  Until each Revolving
Lender funds its Base Rate Loan or risk participation pursuant to this
Section 2.05 to refinance that Revolving Lender’s Revolving Percentage of
any Swing Line Loan, interest in respect of such Revolving Percentage shall be
solely for the account of the Swing Line Lender.


 


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


 


2.06.                        Prepayments.


 


(a)                                  The Borrower
may, upon notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Loans in whole or in part without premium or penalty; provided
that (i) such notice must be received by the Administrative Agent not
later than 11:00 a.m. (A) three Business Days prior to any date of
prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of
Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in
a principal amount of $2,000,000 or a whole multiple of $1,000,000 in excess
thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $2,000,000 or a whole multiple of $1,000,000 in excess
thereof or, in each case, if less, the entire principal amount thereof then
outstanding.  Each such notice shall
specify the date and amount of such prepayment and the Type(s) of Loans to be
prepaid.  The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of the
amount of that Lender’s Percentage of such prepayment.  If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest on the amount prepaid, together
with any additional amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the
Loans of the Lenders in accordance with their respective Percentages.


 


(b)                                 The Borrower
may, upon notice to the Swing Line Lender (with a copy to the Administrative
Agent), at any time or from time to time, voluntarily prepay


 


43





















 


Swing
Line Loans in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 1:00 p.m. on the date of the prepayment,
and (ii) any such prepayment shall be in a minimum principal amount of
$500,000.  Each such notice shall specify
the date and amount of such prepayment. 
If such notice is given by the Borrower, the Borrower shall make such prepayment
and the payment amount specified in such notice shall be due and payable on the
date specified therein.


 


(c)                                  If for any
reason the Total Outstandings at any time exceed the Overall Commitments then
in effect minus the Reserve Amount, the Borrower shall immediately
prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate
amount equal to such excess; provided, however, that the Borrower
shall not be required to Cash Collateralize the L/C Obligations pursuant to
this Section 2.06(c) unless after the prepayment in full of the Loans the
Total Outstandings exceed the Overall Commitments then in effect minus
the Reserve Amount.


 


2.07.                        Voluntary Termination or
Reduction of the Revolving Commitments.  The Borrower may, upon notice to the Administrative
Agent, terminate the Aggregate Revolving Commitments, or from time to time
permanently ratably reduce the Aggregate Revolving Commitments; provided
that (i) any such notice shall be received by the Administrative Agent not
later than 11:00 a.m. five Business Days prior to the date of termination or
reduction, (ii) any such partial reduction shall be in an aggregate amount
of $2,000,000 or any whole multiple of $1,000,000 in excess thereof,
(iii) the Borrower shall not terminate or reduce the Aggregate Revolving
Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Outstanding Amounts under the Aggregate Revolving Commitments
would exceed the Aggregate Revolving Commitments, and (iv) if, after
giving effect to any reduction of the Aggregate Revolving Commitments, the
Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the
Aggregate Revolving Commitments, such Sublimit shall be automatically reduced
by the amount of such excess.  The Administrative
Agent will promptly notify the Revolving Lenders of any such notice of
termination or reduction of the Aggregate Revolving Commitments.  Any reduction of the Aggregate Revolving
Commitments shall be applied to the Revolving Commitment of each Revolving
Lender according to its Revolving Percentage. 
All fees accrued until the effective date of any termination of the
Aggregate Revolving Commitments shall be paid on the effective date of such
termination.  Any voluntary reduction of
the Revolving Commitments under this Section 2.07 shall be applied to reduce
the Revolver Reduction Amounts due in respect of the Revolving Commitments in
the inverse order of their occurrence.


 


2.08.                        Scheduled Reductions of the
Revolving Commitments.  On each Quarterly Payment Date, the Revolving
Commitments shall automatically be ratably reduced by the applicable Revolver Reduction Amount.  If after giving effect to
the applicable Revolver Reduction Amount, the sum of (i) the aggregate
principal amount under the Revolving Notes, (ii) the Swing Line Outstandings
and (iii) the Letters of Credit Usage shall exceed the then effective Revolving
Commitment, Borrower shall immediately repay the outstanding Advances under the
Revolving Commitment to the extent in excess of the Revolving Commitment.


 


44





















 


2.09.                        Amortization of the Term Loans;
Mandatory Repayment of the Obligations.


 


(a)                                  The Borrower
shall make principal payments on the Term Loans on the dates and in the amounts
as set forth in the Term Joinder Agreement


 


(b)                                 In any event,
the Borrower shall repay to the Lenders on the Revolving Maturity Date the
aggregate principal amount of the Revolving Loans outstanding on such date.


 


(c)                                  The Borrower
shall repay each Swing Line Loan on the earlier to occur of (i) the date
ten Business Days after such Loan is made, or (ii) the Revolving Maturity
Date.


 


(d)                                 In any event,
the Borrower shall repay to the Lenders on the Term Maturity Date the aggregate
principal amount of the Term Loans outstanding on such date.


 


2.10.                        Interest.


 


(a)                                  Subject to the
provisions of subsection (b) below, (i) each Eurodollar Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; (ii) each Base Rate Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on
the outstanding principal amount thereof from the applicable borrowing date at
a rate per annum equal to the Base Rate plus the Applicable Rate.


 


(b)                                 (i)                                     If any amount
of principal of any Loan is not paid when due (without regard to any applicable
grace periods), whether at stated maturity, by acceleration or otherwise, such
amount shall thereafter bear interest at a fluctuating interest rate per annum
at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.


 


(ii)                                  If any amount
(other than principal of any Loan) payable by the Borrower under any Loan
Document is not paid when due (without regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, then upon the request
of the Requisite Lenders, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.


 


(iii)                               Upon the request of the Requisite Lenders, while any Event of Default
exists, the Borrower shall pay interest on the principal amount of all
outstanding Obligations hereunder at a fluctuating interest rate per annum at
all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.


 


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(iv)                              Accrued and
unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.


 


(c)                                  Interest on
each Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable
in accordance with the terms hereof before and after judgment, and before and after
the commencement of any proceeding under any Debtor Relief Law.


 


2.11.                        Fees.                    In addition to
certain fees described in subsections (i) and (j) of Section 2.04:


 


(a)                                  Commitment Fee.  The Borrower shall
pay to the Administrative Agent for the account of each Revolving Lender in
accordance with its Revolving Percentage, a commitment fee equal to the
Applicable Rate times Unused Revolver Availability for each day.  The commitment fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in Article IV is not met, and shall be due and payable
quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after
the Effective Date, and on the Revolving Maturity Date.  The commitment fee shall be calculated
quarterly in arrears, and if there is any change in the Applicable Rate during
any quarter, the actual daily amount shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect.


 


(b)                                 Upfront Fees.  On the Effective Date, the Borrower shall pay
to each Lender through the Administrative Agent certain upfront fees in the
amounts specified in the Fee Letter; each Lender having been heretofore advised
of the amount of the upfront fees to which it is entitled.


 


(c)                                  Arrangement Fee.  On the Effective Date, the Borrower shall pay
to BAS, for the account of Co-Lead Arrangers and Syndication Agent, certain
arrangement fees in the amounts specified in the Fee Letter; each of the
aforementioned Lenders having been heretofore advised by BAS and the Borrower
of the amount of the arrangement fees to which it is entitled.


 


(d)                                 Other Fees.  The Borrower shall pay
to the BAS and the Administrative Agent for their own respective accounts fees
in the amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.


 


2.12.                        Computation of Interest and Fees.  All computations of interest for Base Rate
Loans when the Base Rate is determined by Bank of America’s “prime rate” shall
be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed.  All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the


 


46





















 


basis of a 365-day
year).  Interest shall accrue on each
Loan for the day on which the Loan is made, and shall not accrue on a Loan, or
any portion thereof, for the day on which the Loan or such portion is paid, provided
that any Loan that is repaid on the same day on which it is made shall, subject
to Section 2.14(a), bear interest for one day.  Each determination by the Administrative
Agent of an interest rate or fee hereunder shall be conclusive and binding for
all purposes, absent manifest error.


 


2.13.                        Evidence of Debt.


 


(a)                                  The Credit
Extensions made by each Lender shall be evidenced by one or more accounts or
records maintained by such Lender and by the Administrative Agent in the
ordinary course of business.  The
accounts or records maintained by the Administrative Agent and each Lender
shall be conclusive absent manifest error of the amount of the Credit
Extensions made by the Lenders to the Borrower and the interest and payments
thereon.  Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to the
Obligations.  In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters,
the accounts and records of the Administrative Agent shall control in the
absence of manifest error.  Upon the
request of any Lender made through the Administrative Agent, the Borrower shall
execute and deliver to such Lender (through the Administrative Agent) a Note,
which shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable),
amount and maturity of its Loans and payments with respect thereto.


 


(b)                                 In addition to
the accounts and records referred to in subsection (a), each Lender and the
Administrative Agent shall maintain in accordance with its usual practice
accounts or records evidencing the purchases and sales by such Lender of
participations in Letters of Credit and Swing Line Loans.  In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts
and records of any Lender in respect of such matters, the accounts and records
of the Administrative Agent shall control in the absence of manifest error.


 


2.14.                        Payments Generally;
Administrative Agent’s Clawback.


 


(a)                                  General.  All payments to be made by the Borrower shall
be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein.  The Administrative
Agent will promptly distribute to each Lender its Revolving Percentage (or
other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative
Agent after 2:00 p.m. shall be deemed received on the next succeeding


 


47





















 


Business
Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrower
shall come due on a day other than a Business Day, payment shall be made on the
next following Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.


 


(b)                                 (i)                                     Funding by
Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing that
such Lender will not make available to the Administrative Agent such Lender’s
share of such Borrowing, the Administrative Agent may assume that such Lender
has made such share available on such date in accordance with Section 2.03
and may, in reliance upon such assumption, transfer or make available to the
Borrower a corresponding amount.  In such
event, if a Lender has not in fact made its share of the applicable Borrowing available
to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount in immediately available funds with interest thereon, for
each day from and including the date such amount is transferred or made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (A) in the case of a payment to be made by such
Lender, the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation and (B) in the case of a payment to be made by the Borrower,
the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay
such interest to the Administrative Agent for the same or an overlapping
period, the Administrative Agent shall promptly remit to the Borrower the
amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the
applicable Borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lender’s Loan included in such Borrowing.  Any payment by the Borrower shall be without
prejudice to any claim the Borrower may have against a Lender that shall have
failed to make such payment to the Administrative Agent.


 


(ii)                                  Payments by
Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders or the L/C Issuer
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the L/C Issuer, as the case may be, the amount due.  In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the L/C Issuer, as the case
may be, severally agrees to repay to the Administrative Agent forthwith on demand
the amount so distributed to such Lender or the L/C Issuer, in immediately
available funds with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Rate and


 


48





















 


a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.


 


A notice of the
Administrative Agent to any Lender or the Borrower with respect to any amount
owing under this subsection (b) shall be conclusive, absent manifest error.


 


(c)                                  Failure to
Satisfy Conditions Precedent.  If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided
in the foregoing provisions of this Article II, and such funds are not
made available to the Borrower by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV are
not satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.


 


(d)                                 Obligations of
Lenders Several.  The
obligations of the Lenders hereunder to make Loans, to fund participations in
Letters of Credit and Swing Line Loans and to make payments pursuant to
Section 10.04(c) are several and not joint.  The failure of any Lender to make any Loan,
to fund any such participation or to make any payment under
Section 10.04(c) on any date required hereunder shall not relieve any
other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Loan, to purchase its participation or to make its payment under
Section 10.04(c).


 


(e)                                  Funding Source.  Nothing herein shall be deemed to obligate
any Lender to obtain the funds for any Loan in any particular place or manner
or to constitute a representation by any Lender that it has obtained or will
obtain the funds for any Loan in any particular place or manner.


 


2.15.                        Sharing of Payments by Lenders.  If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of the Loans made by it, or the participations in L/C
Obligations or in Swing Line Loans held by it resulting in such Lender’s
receiving payment of a proportion of the aggregate amount of such Loans or
participations and accrued interest thereon greater than its pro  rata
share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the Administrative Agent of such fact, and
(b) purchase (for cash at face value) participations in the Loans and
subparticipations in L/C Obligations and Swing Line Loans of the other Lenders,
or make such other adjustments as shall be equitable, so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and other amounts owing them, provided that:


 


(i)                                     if any such
participations or subparticipations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and


 


49





















 


(ii)                                  the provisions
of this Section shall not be construed to apply to (x) any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or (y) any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans or subparticipations
in L/C Obligations or Swing Line Loans to any assignee or participant, other
than to the Borrower or any Subsidiary thereof (as to which the provisions of
this Section shall apply).


 


Each Loan Party consents to
the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Loan Party rights of setoff
and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of such Loan Party in the amount of such participation.


 


2.16.                        Addition of the Term Commitments.


 


(a)                                  Request for
Term Commitments.  Provided
that no Default or Event of Default has occurred and remains continuing (or
would result therefrom), upon notice to the Administrative Agent (which shall
promptly notify the Lenders), the Borrower may request the extension of Term
Commitments in an aggregate principal amount not to exceed $100,000,000 either
by willing Lenders or by other Persons constituting Eligible Assignees who are
acceptable to the Administrative Agent; provided that any such request
for an addition shall be in a minimum amount of $10,000,000
and an integral multiple of $5,000,000. 
At the time of sending such notice, the Borrower (in consultation with
the Administrative Agent) shall specify:


 


(i)                                     the amount of
any upfront fees, if any, payable in connection with such additional Term
Commitments (which fees may be variable depending on the amount of the Term
Commitments offered by a prospective Lender);


 


(ii)                                  the rates of
interest to be paid in respect of the Term Loans (it being understood that, in
the relevant circumstances set forth in Section 2.10(b), the Default Rate may
hereafter apply in addition thereto);


 


(iii)                               the rate at
which the Term Loans will amortize (provided that without the consent of each
of the Revolving Lenders, the Terms Loans shall not amortize at rate which is
greater than 5% per annum of the initial principal amount thereof);


 


(iv)                              the Term Maturity
Date (provided that without the consent of each of the Revolving Lenders, the
Term Maturity Date may not be earlier than the Revolving Maturity Date); and


 


50





















 


(v)                                 the proposed
Term Effective Date (which may be a range of dates during which the Grace Asset
Purchase is expected to concurrently occur).


 


(b)                                 Lenders Not
Obligated to Extend Term Loans.  No Lender shall be obligated to subscribe for
any Term Loans or any Term Commitments.


 


(c)                                  Effective Date
and Allocations.  If Term
Commitments are extended pursuant to this Section, the Administrative Agent and
the Borrower shall determine (i) the effective date, which date shall be no
earlier than the consummation date of the Grace Asset Purchase (the “Term Effective
Date”), and (ii) the final allocations of the Term Loans.  The Administrative Agent shall promptly
notify the Borrower and the Lenders of the final allocation of the Term Loans
and the Term Effective Date.


 


(d)                                 Conditions to
Effectiveness of Term Commitments.  As a condition precedent to the extension of
Term Commitments, the Borrower shall:


 


(i)                                     Cause each
Person which assumes any Term Commitment to execute the Term Joinder Agreement
in form and substance satisfactory to the Administrative Agent and its counsel
with respect thereto, pursuant to which such Person agrees to become a party to
this Agreement as a Lender and as a Term Lender;


 


(ii)                                  Pay to each
such Person any fees associated with the Term Commitment contemplated by clause
(a) of this Section that are required to be paid as a condition precedent to
the extension of the Term Commitments pursuant to a separate agreement between
the Borrower and such Person;


 


(iii)                               deliver to the
Administrative Agent a certificate of each Loan Party dated as of the Term
Effective Date (in sufficient copies for each Lender) signed by a Responsible
Officer of such Loan Party (A) certifying and attaching the resolutions
adopted by such Loan Party approving or consenting to such increase, and
(B) in the case of the Borrower, certifying that, before and after giving
effect to such increase, (1) the representations and warranties contained
in Article V and the other Loan Documents are true and correct on and as
of the Term Effective Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and except that for purposes of this
Section 2.16 the representations and warranties contained in subsections (a)
and (b) of Section 5.05 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01, and (2) no Default exists or would result therefrom;


 


(iv)                              deliver to the
Administrative Agent Term Notes executed by the Borrower in favor of each Term
Lender reflecting its Term Commitment;


 


51





















 


(v)                                 deliver such
(a) amendments to the Loan Documents as shall be reasonably requested or
required by the Administrative Agent, which shall provide, among other things,
that the Liens and guaranties granted thereunder shall be in favor of the
Revolving Lenders and Term Lenders on an equal, ratable and pari passu basis,
(b) consents of the Loan Parties, and (c) favorable opinions of counsel from
counsel to the Loan Parties reasonably requested by the Administrative Agent
to, among other things, assure the continued priority and perfection of the
Administrative Agent’s Liens in respect of the Term Loans and the effectiveness
of the Guaranties to guarantee the Term Commitments;


 


(vi)                              deliver to the
Administrative Agent such endorsements to title insurance policies as the
Administrative Agent may reasonably request;


 


(vii)                           deliver to the
Administrative Agent a Certificate of a Responsible Official of Borrower
stating that, concurrently with the Term Effective Date, the Grace Asset
Purchase shall be consummated in accordance with (and without any waiver of any
term or provision or closing condition of) the Grace Purchase Agreements and in
material compliance with all applicable Laws, and that all approvals of
Governmental Agencies required for the consummation of such transactions have
been obtained;


 


(viii)                        provide
evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect with respect to the assets which
are the subject of the Grace Asset Purchase; and


 


(ix)                                provide such
other assurances, certificates, documents, consents or opinions as the
Administrative Agent or the Requisite Lenders reasonably may require.


 


(e)                                  Conflicting
Provisions.  This
Section shall supersede any provisions in Sections 2.15 or 10.01 to
the contrary.


 


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ARTICLE
III.

TAXES, YIELD PROTECTION AND ILLEGALITY


 


3.01.                        Taxes.


 


(a)                                  Payments Free
of Taxes.  Any and all
payments by or on account of any obligation of the Borrower hereunder or under
any other Loan Document shall be made free and clear of and without reduction
or withholding for any Indemnified Taxes or Other Taxes, provided that
if the Borrower shall be required by applicable law to deduct any Indemnified
Taxes (including any Other Taxes) from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent, Lender or L/C Issuer, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall timely pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.


 


(b)                                 Payment of
Other Taxes by the Borrower.  Without limiting the provisions of subsection
(a) above, the Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.


 


(c)                                  Indemnification
by the Borrower.  The
Borrower shall indemnify the Administrative Agent, each Lender and the L/C
Issuer, within 10 days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Administrative Agent, such Lender or the L/C Issuer, as the case
may be, and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to the Borrower by a Lender or
the L/C Issuer (with a copy to the Administrative Agent), or by the Administrative
Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be
conclusive absent manifest error.


 


(d)                                 Evidence of
Payments.  As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.


 


(e)                                  Status of
Lenders.  Any Foreign Lender that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is resident for tax purposes, or any
treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall


 


53





















 


deliver
to the Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the
Borrower or the Administrative Agent, shall deliver such other documentation
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements.


 


Without limiting the
generality of the foregoing, in the event that the Borrower is resident for tax
purposes in the United States, any Foreign Lender shall deliver to the Borrower
and the Administrative Agent (in such number of copies as shall be requested by
the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the request
of the Borrower or the Administrative Agent, but only if such Foreign Lender is
legally entitled to do so), whichever of the following is applicable:


 


(i)                                     duly completed
copies of Internal Revenue Service Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States is a party,


 


(ii)                                  duly completed
copies of Internal Revenue Service Form W-8ECI,


 


(iii)                               in the case of
a Foreign Lender claiming the benefits of the exemption for portfolio interest
under section 881(c) of the Code, (x) a certificate to the effect that
such Foreign Lender is not (A) a “bank” within the meaning of section
881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and
(y) duly completed copies of Internal Revenue Service Form W-8BEN, or


 


(iv)                              any other form
prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed together with
such supplementary documentation as may be prescribed by applicable law to
permit the Borrower to determine the withholding or deduction required to be
made.


 


(f)                                    Treatment of
Certain Refunds.  If the
Administrative Agent, any Lender or the L/C Issuer determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent, such
Lender or the L/C Issuer, as


 


54





















 


the
case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the
Borrower, upon the request of the Administrative Agent, such Lender or the L/C
Issuer, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or the L/C Issuer in the
event the Administrative Agent, such Lender or the L/C Issuer is required to
repay such refund to such Governmental Authority.  This subsection shall not be construed to
require the Administrative Agent, any Lender or the L/C Issuer to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to the Borrower or any other Person.


 


3.02.                        Illegality.  If
any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or
to determine or charge interest rates based upon the Eurodollar Rate, or any
Governmental Authority has imposed material restrictions on the authority of
such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by such Lender to the Borrower through the
Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrower that the circumstances giving rise to such determination no longer
exist.  Upon receipt of such notice, the
Borrower shall, upon demand from such Lender (with a copy to the Administrative
Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such
Lender to Base Rate Loans, either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate
Loans to such day, or immediately, if such Lender may not lawfully continue to
maintain such Eurodollar Rate Loans. 
Upon any such prepayment or conversion, the Borrower shall also pay
accrued interest on the amount so prepaid or converted.


 


3.03.                        Inability to Determine Rates.   If the
Requisite Lenders determine that for any reason in connection with any request
for a Eurodollar Rate Loan or a conversion to or continuation thereof that
(a) Dollar deposits are not being offered to banks in the London interbank
eurodollar market for the applicable amount and Interest Period of such
Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for
determining the Eurodollar Rate
for any requested Interest Period with respect to a proposed Eurodollar Rate
Loan, or (c) the Eurodollar Rate
for any requested Interest Period with respect to a proposed Eurodollar Rate
Loan does not adequately and fairly reflect the cost to that Lenders of funding
such Loan, the Administrative Agent will promptly so notify the Borrower and
each Lender.  Thereafter, the obligation
of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended
until the Administrative Agent (upon the instruction of the Requisite
Lenders) revokes such notice.  Upon
receipt of such notice, the Borrower may revoke any pending request for a
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for
a Borrowing of Base Rate Loans in the amount specified therein.


 


55




















 


3.04.                        Increased Costs; Reserves on Eurodollar Rate Loans.


 


(a)                                  Increased Costs
Generally.  If any
Change in Law shall:


 


(1)                                  impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement contemplated by
Section 3.04(e)) or the L/C Issuer;


 


(2)                                  subject any Lender or the L/C Issuer to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any participation in a
Letter of Credit or any Eurodollar Loan made by it, or change the basis of
taxation of payments to that Lender or the L/C Issuer in respect thereof
(except for Indemnified Taxes or Other Taxes covered by Section 3.01 and
the imposition of, or any change in the rate of, any Excluded Tax payable by
that Lender or the L/C Issuer); or


 


(3)                                  impose on any Lender or the L/C Issuer or the London interbank market
any other condition, cost or expense affecting this Agreement or Eurodollar
Loans made by that Lender or any Letter of Credit or participation therein;


 


and the result of any of the
foregoing shall be to increase the cost to that Lender of making or maintaining
any Eurodollar Loan (or of maintaining its obligation to make any such Loan),
or to increase the cost to that Lender or the L/C Issuer of participating in,
issuing or maintaining any Letter of Credit (or of maintaining its obligation
to participate in or to issue any Letter of Credit), or to reduce the amount of
any sum received or receivable by that Lender or the L/C Issuer hereunder
(whether of principal, interest or any other amount) then, upon request of
that Lender or the L/C Issuer, the Borrower will pay to that Lender or the L/C
Issuer, as the case may be, such additional amount or amounts as will
compensate that Lender or the L/C Issuer, as the case may be, for such
additional costs incurred or reduction suffered.


 


(b)                                 Capital
Requirements.  If any
Lender or the L/C Issuer determines that any Change in Law affecting that
Lender or the L/C Issuer or any Lending Office of that Lender or that Lender’s
or the L/C Issuer’s holding company, if any, regarding capital requirements has
or would have the effect of reducing the rate of return on that Lender’s or the
L/C Issuer’s capital or on the capital of that Lender’s or the L/C Issuer’s
holding company, if any, as a consequence of this Agreement, the Commitments of
that Lender or the Loans made by, or participations in Letters of Credit held
by, that Lender, or the Letters of Credit issued by the L/C Issuer, to a level
below that which that Lender or the L/C Issuer or that Lender’s or the L/C
Issuer’s holding company could have achieved but for such Change in Law (taking
into consideration that Lender’s or the L/C Issuer’s policies and the policies
of that Lender’s or the L/C Issuer’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to that Lender or the
L/C Issuer, as the case may be, such additional amount or amounts as will


 


56






















 


compensate
that Lender or the L/C Issuer or that Lender’s or the L/C Issuer’s holding
company for any such reduction suffered.


 


(c)                                  Certificates
for Reimbursement.  A
certificate of a Lender or the L/C Issuer setting forth the amount or amounts
necessary to compensate that Lender or the L/C Issuer or its holding company,
as the case may be, as specified in subsection (a) or (b) of this
Section and delivered to the Borrower shall be conclusive absent manifest
error.  The Borrower shall pay that
Lender or the L/C Issuer, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.


 


(d)                                 Delay in
Requests.  Failure or
delay on the part of any Lender or the L/C Issuer to demand compensation
pursuant to the foregoing provisions of this Section shall not constitute
a waiver of that Lender’s or the L/C Issuer’s right to demand such
compensation, provided that the Borrower shall not be required to
compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of
this Section for any increased costs incurred or reductions suffered more
than nine months prior to the date that that Lender or the L/C Issuer, as the case
may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of that Lender’s or the L/C Issuer’s
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
nine-month period referred to above shall be extended to include the period of
retroactive effect thereof).


 


(e)                                  Reserves on
Eurodollar Rate Loans.  The
Borrower shall pay to each Lender, as long as that Lender shall be required to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each
Eurodollar Rate Loan equal to the actual costs of such reserves allocated to
such Loan by that Lender (as determined by that Lender in good faith, which
determination shall be conclusive), which shall be due and payable on each date
on which interest is payable on such Loan, provided the Borrower shall
have received at least 10 days’ prior notice (with a copy to the Administrative
Agent) of such additional interest from that Lender.  If a Lender fails to give notice 10 days
prior to the relevant Interest Payment Date, such additional interest shall be
due and payable 10 days from receipt of such notice.


 


3.05.                        Compensation for Losses.  Upon demand of
any Lender (with a copy to the Administrative Agent) from time to time,
the Borrower shall promptly compensate that Lender for and hold that Lender
harmless from any loss, cost or expense incurred by it as a result of:


 


(a)                                  any
continuation, conversion, payment or prepayment of any Loan other than a Base
Rate Loan on a day other than the last day of the Interest Period for such Loan
(whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise);


 


(b)                                 any failure by the Borrower
(for a reason other than the failure of that Lender to make a Loan) to
prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the
date or in the amount notified by the Borrower; or


 


57






















 


(c)                                  any assignment of a Eurodollar Rate Loan on a day other than the last day
of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 10.13;


 


(d)                                 including any
loss of anticipated profits and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were
obtained.  The Borrower shall also pay
any customary administrative fees charged by that Lender in connection with the
foregoing.


 


For purposes of calculating
amounts payable by the Borrower to the Lenders under this Section 3.05, each
Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at
the Eurodollar Rate  for such Loan by a matching deposit or
other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan
was in fact so funded.


 


3.06.                        Mitigation Obligations; Replacement of Lenders.


 


(a)                                  Designation of a Different Lending Office.  If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 3.01, or if any Lender gives a notice
pursuant to Section 3.02, then that Lender shall use reasonable efforts to
designate a different Lending Office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of that Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Section 3.01 or 3.04, as the case may be, in the future, or eliminate the
need for the notice pursuant to Section 3.02, as applicable, and
(ii) in each case, would not subject that Lender to any unreimbursed cost
or expense and would not otherwise be disadvantageous to that Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.


 


(b)                                 Replacement of
Lenders.  If any Lender requests
compensation under Section 3.04, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 3.01, the Borrower may replace that
Lender in accordance with Section 10.13.


 


3.07.                        Survival.  All of the
Borrower’s obligations under this Article III shall survive termination of
the Overall Commitments and repayment of all other Obligations hereunder.


 


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ARTICLE
IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS


 


4.01.                        Conditions of Initial Credit Extension.  The obligation of the L/C Issuer and each Lender to make its
initial Credit Extension hereunder is subject to satisfaction of the following
conditions precedent:


 


(a)                                  The Administrative
Agent’s receipt of the following, each of which shall be originals or
telecopies (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the signing Loan Party, each
dated the Effective Date (or, in the case of certificates of governmental
officials, a recent date before the Effective Date) and each in form and
substance satisfactory to the Administrative Agent and each of the Lenders:


 


(i)                                     executed
counterparts of this Agreement, sufficient in number for distribution to the
Administrative Agent, each Lender and the Borrower;


 


(ii)                                  Revolving Notes
executed by the Borrower in favor of each Revolving Lender;


 


(iii)                               reaffirmations
of the Flamingo Paradise Guaranty, the Market Gaming Guaranty, the E-T-T, Inc.
Guaranty, the E-T-T Enterprise, L.L.C. Guaranty, and the General Subsidiary
Guaranty, executed by each Subsidiary of the Borrower party to such Guaranties
prior to the Effective Date;


 


(iv)                              a joinder to
the General Subsidiary Guaranty, executed by each of the Acquisition
Subsidiaries;


 


(v)                                 the Security
Agreement executed by Borrower and each of the Subsidiaries of Borrower (other
than any Issuance Subsidiary);


 


(vi)                              such
certificates of resolutions or other action, incumbency certificates and/or other
certificates of Responsible Officers of each Loan Party as the Administrative
Agent may require evidencing the identity, authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer in
connection with this Agreement and the other Loan Documents to which such Loan
Party is a party;


 


(vii)                           such documents
and certifications as the Administrative Agent may reasonably require to
evidence that each Loan Party is duly organized or formed, and that the
Borrower and  each Loan Party is validly existing, in good standing and
qualified to engage in business in each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification, except to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect;


 


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(viii)                        favorable
opinions of Gibson, Dunn & Crutcher and Kummer Kaempfer Bonner &
Renshaw, counsel to the Loan Parties, addressed to the Administrative Agent and
each Lender, as to such matters concerning the Loan Parties and the Loan
Documents as the Administrative Agent or the Requisite Lenders may reasonably
request;


 


(ix)                                a certificate
of a Responsible Officer of each Loan Party either (A) attaching copies of
all consents, licenses and approvals required in connection with the execution,
delivery and performance by such Loan Party and the validity against such Loan
Party of the Loan Documents to which it is a party, and such consents, licenses
and approvals shall be in full force and effect, or (B) stating that no
such consents, licenses or approvals are so required;


 


(x)                                   a certificate
signed by a Responsible Officer of the Borrower certifying (A) that the
conditions specified in Sections 4.02(a) and (b) have been
satisfied, and (B) that there has been no event or circumstance since the
Closing Date that has had or could be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect;


 


(xi)                                a Certificate
executed by a Responsible Officer of the Borrower attaching executed copies of
the Grace Purchase Agreements executed prior to the Effective Date; and


 


(xii)                             such other
assurances, certificates, documents, consents or opinions as the Administrative
Agent, the L/C Issuer, the Swing Line Lender or the Requisite Lenders
reasonably may require.


 


(b)                                 Any fees
required to be paid on or before the Effective Date shall have been paid.


 


(c)                                  Unless waived
by the Administrative Agent, the Borrower shall have paid all fees, charges and
disbursements of counsel to the Administrative Agent to the extent invoiced
prior to or on the Effective Date, plus such additional amounts of such fees,
charges and disbursements as shall constitute its reasonable estimate of such
fees, charges and disbursements incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not thereafter preclude
a final settling of accounts between the Borrower and the Administrative
Agent).


 


(d)                                 Each of the
Exiting Lenders shall concurrently receive the payment of all of the
outstanding Obligations owed to that Exiting Lender.


 


Without limiting the
generality of the provisions of Section 9.04, for purposes of determining
compliance with the conditions specified in this Section 4.01, each Lender
that has signed this Agreement shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Lender unless the


 


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Administrative Agent shall
have received notice from such Lender prior to the proposed Effective Date
specifying its objection thereto.


 


4.02.                        Conditions to all Credit Extensions.  The obligation of each Lender to honor any Request for Credit
Extension (other than a Loan Notice requesting only a conversion of Loans to
the other Type, or a continuation of Eurodollar Rate Loans) is subject to the
following conditions precedent:


 


(a)                                  The
representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document, or which are contained
in any document furnished at any time under or in connection herewith or
therewith, shall be true and correct on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date, and except that for purposes of this
Section 4.02, the representations and warranties contained in subsections
(a) and (b) of Section 5.05 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.


 


(b)                                 No Default
shall exist, or would result from such proposed Credit Extension or from the
application of the proceeds thereof.


 


(c)                                  The
Administrative Agent and, if applicable, the L/C Issuer or the Swing Line
Lender shall have received a Request for Credit Extension in accordance with
the requirements hereof.


 


Each Request for Credit
Extension (other than a Loan Notice requesting only a conversion of Loans to
the other Type or a continuation of Eurodollar Rate Loans) submitted by the
Borrower shall be deemed to be a representation and warranty that the
conditions specified in Sections 4.02(a) and (b) have been satisfied on
and as of the date of the applicable Credit Extension.


 


4.03.                        Reserved Portion of the
Revolving Commitments.  The obligation of the L/C Issuer and each
Lender to make any Credit Extension which results in the sum of the Aggregate
Revolving Obligations greater than $150,000,000 minus the Reserve Amount
is subject to Administrative Agent’s receipt of the following, each of which
shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, and each in form and substance satisfactory to the
Administrative Agent:


 


(a)                                  an amendment to
the Deed of Trust executed by Flamingo Paradise with respect to the real
property and improvements constituting Terrible’s Hotel & Casino to secure
the Flamingo Paradise Guaranty increasing the amount of the secured obligations
thereunder to reflect the increase of the Revolving Commitment to $175,000,000
and to secure the Term Loans in an amount which is not less than $100,000,000;


 


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(b)                                 an amendment to
the Deed of Trust executed by Market Gaming with respect to the real property
and improvements constituting its Henderson, Nevada casino to secure the Market
Gaming Guaranty increasing the amount of the secured obligations thereunder to
reflect the increase of the Revolving Commitment to $175,000,000 and to secure
the Term Loans in an amount which is not less than $100,000,000;


 


(c)                                  amendments to
the Deeds of Trust executed by E-T-T, Inc. in respect of its interests in the
casino properties located at Town Center, Pahrump and Lakeside, Pahrump and its
interest in the office and warehouse space on Russell Road to secure the E-T-T,
Inc. Guaranty increasing the amount of the secured obligations thereunder to
reflect the increase of the Revolving Commitment to $175,000,000 and to secure
the Term Loans in an amount which is not less than $100,000,000;


 


(d)                                 amendments to
the Deeds of Trust executed by E-T-T Enterprises, L.L.C. in respect of its
interest the Lakeside, Pahrump casino property and its interest in the Russell
Road office and warehouse space increasing the amount of the secured
obligations thereunder to reflect the increase of the Revolving Commitment to
$175,000,000 and to secure the Term Loans in an amount which is not less than
$100,000,000


 


(e)                                  an amendment to
the Deed of Trust executed by Borrower in respect of its leasehold interest in
the “training facility” adjacent to the Russell Road office and warehouse space
to secure the obligations under this Agreement increasing the amount of the
secured obligations thereunder to reflect the increase of the Revolving Commitment
to $175,000,000 and to secure the Term Loans in an amount which is not less
than $100,000,000; and


 


(f)                                    the commitment
of United Title of Nevada, as agent for Chicago Title Company to issue such
endorsements with respect to the title insurance policies issued in connection
with the Existing Credit Agreement as the Administrative Agent may reasonably
require in connection with such increases; and


 


(g)                                 a Deed of Trust
in respect of all interests of the Borrower and its Subsidiaries in the
Searchlight location, and an ALTA policy of title insurance insuring such Deed
of Trust.


 


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ARTICLE
V.

REPRESENTATIONS AND WARRANTIES


 


The Borrower represents and
warrants to the Administrative Agent and the Lenders that:


 


5.01.                        Existence, Qualification and Power; Compliance with Laws.  Each Loan Party (a) is duly organized or formed, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority
and all requisite governmental licenses, authorizations, consents and approvals
to (i) own its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, (c) is duly qualified and is licensed and in good standing under
the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or
license, and (d) is in compliance with all Laws; except in each case
referred to in clause (b)(i), (c) or (d), to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect.


 


5.02.                        Authorization; No Contravention.  The execution, delivery and performance by each Loan Party of
each Loan Document to which such Person is party, have been duly authorized by
all necessary corporate or other organizational action, and do not and will not
(a) contravene the terms of any of such Person’s Organization Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, or require any payment to be made under
(i) any Contractual Obligation to which such Person is a party or
affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject; or (c) violate any Law.  Each Loan Party is in compliance with all Contractual Obligations
referred to in clause (b)(i), except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect.


 


5.03.                        Governmental Authorization; Other Consents.  No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any Governmental Authority or any other
Person is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, any Loan Party of this Agreement or any
other Loan Document.


 


5.04.                        Binding Effect.  This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. 
This Agreement constitutes, and each other Loan Document when so delivered
will constitute, a legal, valid and binding obligation of such Loan Party,
enforceable against each Loan Party that is party thereto in accordance with
its terms.


 


5.05.                        Financial Statements; No Material Adverse Effect.


 


(a)                                  The Audited
Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present the financial condition of
the


 


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Borrower
and its Subsidiaries as of the date thereof and their results of operations for
the period covered thereby in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Borrower and its Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and
Indebtedness.


 


(b)                                 The unaudited
consolidated balance sheet of the Borrower and its Subsidiaries dated June 30,
2004 and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for the fiscal quarter ended on that date
(i) were prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein, and
(ii) fairly present the financial condition of the Borrower and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments.  Schedule 5.05 sets forth all material
indebtedness and other liabilities, direct or contingent, of the Borrower and
its consolidated Subsidiaries as of the date of such financial statements,
including liabilities for taxes, material commitments and Indebtedness.


 


(c)                                  Since the date
of the Audited Financial Statements, there has been no event or circumstance,
either individually or in the aggregate, that has had or could reasonably be
expected to have a Material Adverse Effect.


 


(d)                                 The
consolidated forecasted balance sheet and statements of income and cash flows
of the Borrower and its Subsidiaries delivered pursuant to Section 6.01(c)
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were fair in light of the conditions existing at the time of
delivery of such forecasts, and represented, at the time of delivery, the
Borrower’s best estimate of its future financial performance.


 


5.06.                        Litigation.  There are no actions, suits, proceedings,
claims or disputes pending or, to the best knowledge of the Borrower and its
Subsidiaries after due and diligent investigation, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, by or
against the Borrower or any of its Subsidiaries or against any of their
properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) except as specifically disclosed in Schedule 5.06,
either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect, and there has been no
adverse change in the status, or financial effect on any Loan Party or any
Subsidiary thereof, of the matters described on Schedule 5.06.


 


5.07.                        No Default.  Neither the
Borrower nor any Subsidiary is in default under or with respect to any
Contractual Obligation including any Route Agreements that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  No Default has occurred
and is continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.


 


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5.08.                        Ownership of Property; Liens.  Each of the Borrower and each Subsidiary has good record and
marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its business, except for
such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  The property of the Borrower and its
Subsidiaries is subject to no Liens, other than Liens permitted by
Section 7.01.


 


5.09.                        Environmental Compliance.  The Borrower and its Subsidiaries conduct in the ordinary course
of business a review of the effect of existing Environmental Laws and claims
alleging potential liability or responsibility for violation of any
Environmental Law on their respective businesses, operations and properties,
and as a result thereof the Borrower has reasonably concluded that, except as
specifically disclosed in Schedule 5.09, such Environmental Laws and
claims could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.


 


5.10.                        Insurance.  The
properties of the Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrower, in such
amounts with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar
properties in localities where the Borrower or the applicable Subsidiary
operates.


 


5.11.                        Taxes.  The
Borrower and its Subsidiaries have filed all Federal, state and other material
tax returns and reports required to be filed, and have paid all Federal, state
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable, except those which are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP. 
Neither any Loan Party nor any Subsidiary thereof is party to any tax
sharing agreement.


 


5.12.                        ERISA Compliance.


 


(a)                                  Each Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other Federal or state Laws. 
Each Plan that is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS or an application
for such a letter is currently being processed by the IRS with respect thereto
and, to the best knowledge of the Borrower and its Subsidiaries, nothing has
occurred which would prevent, or cause the loss of, such qualification.  The Borrower and each ERISA Affiliate have
made all required contributions to each Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.


 


(b)                                 There are no
pending or, to the best knowledge of the Borrower and its Subsidiaries,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could reasonably be expected to have a
Material Adverse Effect.  There has been
no prohibited transaction or violation of


 


65






















 


the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.


 


(c)                                  (i) No
ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA);
(iv) neither the Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate
has engaged in a transaction that could be subject to Sections 4069 or
4212(c) of ERISA.


 


5.13.                        Subsidiaries; Equity Interests.  As of the Effective Date, the Borrower has no Subsidiaries other
than those specifically disclosed in Schedule 5.13, and all of the
outstanding Equity Interests in such Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by a Loan Party in the amounts
specified on Schedule 5.13 free and clear of all Liens.  The Borrower has no equity investments in
any other corporation or entity other than those specifically disclosed in
Schedule 5.13.  All of the
outstanding Equity Interests in the Borrower have been validly issued and are
fully paid and nonassessable, and are, as of the Effective Date, owned by the
Principals.


 


5.14.                        Margin Regulations; Investment Company Act; Public Utility
Holding Company Act.


 


(a)                                  The Borrower is
not engaged and will not engage, principally or as one of its important
activities, in the business of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the FRB), or extending credit for the purpose
of purchasing or carrying margin stock.


 


(b)                                 None of the
Borrower, any Person Controlling the Borrower, or any Subsidiary (i) is a
“holding company,” or a “subsidiary company” of a “holding company,” or an
“affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company,” within the meaning of the Public Utility Holding Company Act of 1935,
or (ii) is or is required to be registered as an “investment company”
under the Investment Company Act of 1940.


 


5.15.                        Disclosure.  No report, financial statement, certificate
or other information furnished (whether in writing or orally) by or on behalf
of any Loan Party to the Administrative Agent or any Lender in connection with
the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such


 


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information
was prepared in good faith based upon assumptions believed to be reasonable at
the time.


 


5.16.                        Compliance with Laws.  Each of the
Borrower and each Subsidiary is in compliance in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which
(a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or
(b) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.


 


5.17.                        Intellectual Property; Licenses, Etc. 
The Borrower and its Subsidiaries own, or possess the right to use, all
of the trademarks, service marks, trade names, copyrights, patents, patent
rights, franchises, licenses and other intellectual property rights
(collectively, “IP Rights”) that are reasonably necessary for the operation of
their respective businesses, without conflict with the rights of any other
Person.  To the best knowledge of the
Borrower and its Subsidiaries, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes upon
any rights held by any other Person. 
Except as specifically disclosed in Schedule 5.17, no claim or
litigation regarding any of the foregoing is pending or, to the best knowledge
of the Borrower and its Subsidiaries, threatened, which, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.  The Trademark License Agreement
is in full force and effect, and Borrower and its Subsidiaries are not in
material breach of the Trademark License Agreement.


 


5.18.                        Route Agreements; Casino Leases.


 


(a)                                  As of the
Effective Date Borrower and its Subsidiaries are party to Route Agreements
providing for the operation of not less than 6800 slot machines, video poker
machines or other electronic gaming devises at premises owned or operated by
the counterparties thereto.  There is no
default on behalf of Borrower or any of its Subsidiaries in respect of any Route
Agreements accounting, in the aggregate, for more than 5% of the EBITDA of
Borrower and its Subsidiaries which would entitle the counterparties to such
Route Agreements to terminate the same.


 


(b)                                 As of the
Effective Date, no default on behalf of the Borrower or any of its Subsidiaries
exists under any of the Casino Leases which would entitle the landlords under
any of the Casino Leases to terminate the same.


 


5.19.                        Existing Senior Secured Notes.


 


(a)  As of the Effective Date, the principal
balance of the Existing Senior Secured Notes is $4,071,000.


 


(b)  Substantially all of the restrictive
covenants of Borrower and its Subsidiaries in respect of the Existing Senior
Secured Notes (other than the covenant to make payments in


 


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respect thereof when due and
certain other minor informational covenants and the like) are no longer binding
upon the Borrower (it being acknowledged that the trustee for the holders of
the Existing Senior Secured Notes shall retain its security therefor until the
payment in full of the remaining balance of the Existing Senior Secured Notes
and all amounts accrued in respect thereof).


 


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ARTICLE
VI.

AFFIRMATIVE COVENANTS


 


So long as any Lender shall
have any Commitment hereunder, any Loan or other Obligation hereunder shall
remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding,
the Borrower shall, and shall (except in the case of the covenants set forth in
Sections 6.01, 6.02, and 6.03) cause each Subsidiary to:


 


6.01.                        Financial Statements.  Deliver to
the Administrative Agent and each Lender, in form and detail satisfactory to
the Administrative Agent and the Requisite Lenders:


 


(a)                                  as soon as
available, but in any event within 90 days after the end of each fiscal year of
the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such fiscal year, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be
audited and accompanied by a report and opinion of an independent certified
public accountant of nationally recognized standing reasonably acceptable to
the Requisite Lenders, which report and opinion shall be prepared in accordance
with generally accepted auditing standards and shall not be subject to any
“going concern” or like qualification or exception or any qualification or
exception as to the scope of such audit; and


 


(b)                                 as soon as available, but in
any event within two calendar months after the end of each fiscal quarter
(including the fourth Fiscal Quarter in each fiscal year of the Borrower), a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal quarter, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal quarter and for
the portion of the Borrower’s fiscal year then ended, setting forth in each
case in comparative form the figures for the corresponding fiscal quarter of
the previous fiscal year and the corresponding portion of the previous fiscal
year, all in reasonable detail, such
consolidated statements to be certified by a Responsible Officer of the
Borrower as fairly presenting the financial condition, results of operations,
shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance
with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes;


 


(c)                                  as soon as
available, but in any event at least 15 days before the end of each fiscal year
of the Borrower, forecasts prepared by management of the Borrower, in form
satisfactory to the Administrative Agent and the Requisite Lenders, of
consolidated balance sheets and statements of income or operations of the
Borrower and its Subsidiaries on a quarterly basis for the immediately
following fiscal year (including the fiscal year in which the last Maturity
Date occurs) and by Fiscal Year for each of the next succeeding Fiscal Years
through the last Maturity Date, substantially in the form of the financial
projections delivered to the Administrative Agent and the Lenders prior to the
Effective Date.


 


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(d)                                 in the event
that a Significant Capital Project is hereafter commenced at Terrible’s Hotel
& Casino, then concurrently with the requirements of 6.01 (a) and (b), a
quarterly profit and loss statement for Terrible’s Hotel and Casino,
substantially in the form of the financial projections delivered to the
Administrative Agent and the Lenders prior to the Effective Date.


 


As to any information
contained in materials furnished pursuant to Section 6.02(c), the Borrower
shall not be separately required to furnish such information under clause (a)
or (b) above, but the foregoing shall not be in derogation of the obligation of
the Borrower to furnish the information and materials described in clauses (a)
and (b) above at the times specified therein.


 


6.02.                        Certificates; Other Information.  Deliver to the Administrative Agent and each Lender, in form and
detail satisfactory to the Administrative Agent and the Requisite Lenders:


 


(a)                                  concurrently
with the delivery of the financial statements referred to in
Sections 6.01(a) and (b),
a duly completed Compliance Certificate signed by a Responsible Officer of the
Borrower;


 


(b)                                 promptly after
any request by the Administrative Agent or any Lender, copies of any detailed
audit reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of the
Borrower by independent accountants in connection with the accounts or books of
the Borrower or any Subsidiary, or any audit of any of them;


 


(c)                                  promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to the stockholders of the Borrower, and, within 5
days of their filing with the SEC, copies of all annual, regular, periodic and
special reports and registration statements which the Borrower may file or be
required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to
the Administrative Agent pursuant hereto;


 


(d)                                 promptly, and in any event
within five Business Days after receipt thereof by any Loan Party or any
Subsidiary thereof, copies of each notice or other correspondence received from
the SEC (or comparable agency in any applicable non-United States
jurisdiction) concerning any investigation or possible investigation or
other inquiry by such agency regarding financial or other operational results
of any Loan Party or any Subsidiary thereof;


 


(e)                                  promptly after request by
the Administrative Agent, copies of the Nevada “Regulation 6.090 Report” and
“6-A Report”, and copies of any written communication to Borrower or any of the
Subsidiaries from any Gaming Board advising it of a material violation of or
non-compliance with any Gaming Law by Borrower or any of the Subsidiaries; and


 


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(f)                                    concurrently with the
payment thereof, a certificate signed by a Responsible Officer of the Borrower
certifying that all of the outstanding Indebtedness in respect of the Existing
Senior Notes has been indefeasibly paid in full.


 


Documents required to be
delivered pursuant to Section 6.01(a) or (b) or Section 6.02(c) (to
the extent any such documents are included in materials otherwise filed with
the SEC) may be delivered electronically and if so delivered, shall be deemed
to have been delivered on the date (i) on which the Borrower posts such
documents, or provides a link thereto on the Borrower’s website on the Internet
at the website address listed on Schedule 10.02; or (ii) on which
such documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that: (i) the Borrower shall
deliver paper copies of such documents to the Administrative Agent or any
Lender that requests the Borrower to deliver such paper copies until a written
request to cease delivering paper copies is given by the Administrative Agent
or such Lender and (ii) the Borrower shall notify the Administrative Agent
and each Lender (by telecopier or electronic mail) of the posting of any such
documents and provide to the Administrative Agent by electronic mail electronic
versions (i.e., soft copies) of such documents.  Notwithstanding anything contained herein,
in every instance the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Section 6.02(b) to the Administrative
Agent.  Except for such Compliance
Certificates, the Administrative Agent shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by the Borrower with
any such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.


 


The Borrower hereby
acknowledges that (a) certain portions of the Information (the “Borrower
Materials”) will be made available by the Administrative Agent and/or the
Arranger to the Lenders and the L/C Issuer by posting the Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”) and
(b) certain of the Lenders may be “public-side” Lenders (i.e.,
Lenders that do not wish to receive material non-public information with
respect to the Borrower or its securities) (each, a “Public Lender”).  The Borrower hereby agrees that
(w) Borrower will clearly and conspicuously mark all Borrower Materials
that are to be made available to Public Lenders “PUBLIC” (which, at a minimum,
shall mean that the word “PUBLIC” shall appear prominently on the first page
thereof); (x) by marking Borrower Materials “PUBLIC,” the Borrower shall
be deemed to have authorized the Administrative Agent, the Arranger, the L/C
Issuer and the Lenders to treat such Borrower Materials as either publicly
available information or not material information (although it may be sensitive
and proprietary) with respect to the Borrower or its securities for purposes of
United States Federal and state securities laws; (y) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Investor;” and (z) the Administrative
Agent and the Arranger shall be entitled to treat any Borrower Materials that
are not marked “PUBLIC” as being suitable only for posting on a portion of the
Platform not designated “Public Investor.” 
While the use of Platforms is an approved method of distributing
information, the use of Platforms by the Administrative Agent, the Arranger,
the L/C Issuer and the Lenders shall be subject to their obligations under
Section 10.7.


 


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6.03.                        Notices.  Promptly
notify the Administrative Agent and each Lender:


 


(a)                                  of the
occurrence of any Default;


 


(b)                                 Promptly upon a
Responsible Officer becoming aware that (i) any Person has commenced a legal
proceeding with respect to a claim against Borrower or any of the Subsidiaries
that is $1,000,000 or more in excess of the amount thereof that is fully
covered by insurance, (ii) any creditor or lessor under a written credit agreement
or material lease has asserted a default thereunder on the part of Borrower or
any of the Subsidiaries, (iii) any Person has commenced a legal proceeding with
respect to a claim against Borrower or any of the Subsidiaries under a contract
that is not a credit agreement or material lease in excess of $1,000,000 or
which otherwise may reasonably be expected to result in a Material Adverse
Effect, (iv) any labor union has notified Borrower of its intent to strike
Borrower or any of the Subsidiaries on a date certain and such strike would
involve more than 100 employees of Borrower and the Subsidiaries, or (v) any
Gaming Board has indicated its intent to consider or act upon a License
Revocation affecting locations generating, in the aggregate, 5% or more of the
Borrower’s EBITDA or a fine or penalty of $100,000 or more with respect to
Borrower or any of the Subsidiaries, a written notice describing the pertinent
facts relating thereto and what action Borrower or the Subsidiaries are taking
or propose to take with respect thereto;


 


(c)                                  of the
occurrence of any ERISA Event; and


 


(d)                                 of any material
change in accounting policies or financial reporting practices by the Borrower
or any Subsidiary thereof.


 


Each notice pursuant to this
Section shall be accompanied by a statement of a Responsible Officer of
the Borrower setting forth details of the occurrence referred to therein and
stating what action the Borrower has taken and proposes to take with respect
thereto.  Each notice pursuant to
Section 6.03(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.


 


6.04.                        Payment of Obligations.  Pay and
discharge as the same shall become due and payable, all its obligations and
liabilities, including (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by
the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid,
would by law become a Lien upon its property; and (c) all Indebtedness, as
and when due and payable, but subject to any subordination provisions contained
in any instrument or agreement evidencing such Indebtedness.


 


6.05.                        Preservation of Existence, Etc. 
(a) Preserve, renew and maintain in full force and effect its
legal existence and good standing under the Laws of the jurisdiction of its
organization except in a transaction permitted by Section 7.04 or 7.05;
(b) take all reasonable action to maintain all rights, privileges,
permits, licenses and franchises necessary or desirable in the normal conduct
of its business, except to the extent that failure to do so could not
reasonably


 


72






















 


be
expected to have a Material Adverse Effect; and (c) preserve or renew all
of its registered patents, trademarks, trade names and service marks, the
non-preservation of which could reasonably be expected to have a Material
Adverse Effect.


 


6.06.                        Maintenance of Properties.  (a) Maintain, preserve and protect all of its material
properties and equipment necessary in the operation of its business in good
working order and condition, ordinary wear and tear excepted; (b) make all
necessary repairs thereto and renewals and replacements thereof except where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (c) use the standard of care typical in the industry
in the operation and maintenance of its facilities.


 


6.07.                        Maintenance of Insurance.


 


(a)                                  Maintain with
financially sound and reputable insurance companies not Affiliates of the
Borrower, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons  and providing for not less
than 30 days’ prior notice to the Administrative Agent of termination, lapse or
cancellation of such insurance.


 


(b)                                 Without
limitation on the foregoing, the Borrower and its Subsidiaries shall maintain
liability, casualty and other insurance which is consistent with the coverages
(including all deductibles and retentions) maintained by Borrower and its
Subsidiaries as of the Effective Date. 
All such insurance shall be carried through insurance companies rated A+
or better by A.M. Best.


 


(c)                                  In any event,
Borrower shall maintain and keep in force the following insurance:


 


(i)                                     at all times
during any period of construction of any material capital projects (including
the Terrible’s Expansion Project and each Significant Capital Project), and
with respect to any Property affected by such construction, a policy or
policies of builder’s “all risk” insurance in nonreporting form in an amount
not less than the full insurable completed value of such portion of the
affected Property on a replacement cost basis;


 


(ii)                                  a policy or
policies of fire and hazards “all risk” insurance providing extended coverage
in an amount not less the amount of the related Construction Budget, calculated
on a replacement cost basis;


 


(iii)                               business
interruption insurance (including insurance against income loss during a period
of at least one year);


 


(iv)                              comprehensive
liability insurance naming on an “occurrence” basis, against claims for
“personal injury” liability, including bodily injury, death or property damage
liability, with an aggregate limit of not less than $25,000,000;


 


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(v)                                 policies of
worker’s compensation insurance as may be required by applicable laws
(including employer’s liability insurance, if required by the Administrative
Agent), covering all employees of Borrower, its Subsidiaries and each relevant
contractor and subcontractor; and


 


(vi)                              If any Property
is required to be insured pursuant to the Flood Disaster Protection Act of 1973
or the National Flood Insurance Act of 1968, and the regulations promulgated
thereunder, because it is located in an area which has been identified by the
Secretary of Housing and Urban Development as a Flood Hazard Area, then
Borrower shall provide, maintain and keep in force at all times a flood insurance
policy covering the Property in limits that would exceed the damage caused by
what is expected to be the most severe flood (or any greater limits to the
extent required by applicable law from time to time).


 


(c)                                  Each such
policy shall name the Administrative Agent as an additional insured, and shall
to the extent relevant, include a waiver of subrogation against the
Administrative Agent and the Lenders, contain a provision that provides for a
severability of interests, and shall provide that an act or omission by one of
the insured shall not reduce or avoid coverage with respect to the other
insureds, insure against loss or damage by hazards customarily included within
“all risk” and “extended coverage” policies and any other risks or hazards
which the Administrative Agent or the Majority Lenders may reasonably specify
(and shall include boiler and machinery insurance), shall contain a Lender’s
Loss Payable Endorsement in a form acceptable to the Administrative Agent in
favor of the Administrative Agent and shall be primary and noncontributory with
any other insurance carried by the Administrative Agent or the Lenders.


 


(d)                                 Borrower shall
supply the Administrative Agent with certificates of each policy required
hereunder and any other policy of insurance maintained in connection with any
of the Property, and, if requested, an original or underlyer of each such
policy and all endorsements thereto. 
When any insurance policy required hereunder expires, Borrower shall
furnish the Administrative Agent with proof acceptable to the Administrative
Agent that the policy has been reinstated, renewed or a new policy issued,
continuing in force the insurance covered by the policy which expired.  If Borrower fails to pay any such premium,
the Administrative Agent shall have the right, but not the obligation, to
obtain reasonable replacement coverage and advance funds to pay the premiums
for it on behalf of the Lenders. 
Borrower shall repay the Administrative Agent immediately on demand for
any advance for such premiums, which shall be considered to be an additional
Loan bearing interest from the date of demand at the Default Rate.


 


6.08.                        Compliance with Laws.  Comply in all material respects with the requirements of all Laws
and all orders, writs, injunctions and decrees applicable to it or to its
business or property, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (b) the
failure to comply therewith could not reasonably be expected to have a Material
Adverse Effect.


 


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6.09.                        Books and Records.  Maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower or such Subsidiary,
as the case may be.


 


6.10.                        Inspection Rights.  Permit representatives and
independent contractors of the Administrative Agent and each Lender to visit
and inspect any of its properties, to examine its corporate, financial and
operating records, and (subject to Section 10.07) to make copies thereof or
abstracts therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants, all at the expense of
the Borrower and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Borrower; provided, however, that when an Event of Default exists
the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.  The Administrative
Agent acknowledge that the provisions of the Borrower’s Route Agreements are of
a confidential and proprietary nature.


 


6.11.                        Use of Proceeds.  Use the proceeds of the Credit Extensions
for proper working capital and general corporate purposes of the Borrower and
its Subsidiaries not in contravention of any Law or of any Loan Document and
(c) with respect to the Term Commitments added pursuant to Section 2.16, for
the acquisition of the Grace Assets and the operation of the Acquisition
Subsidiaries.


 


6.12.                        Additional Subsidiaries and Collateral.


 


(a)                                  Diligently
pursue the approval of the Nevada Gaming Commission to the pledge of the Equity
Interests in each of its applicable Subsidiaries to the Administrative Agent
pursuant to the Pledge Agreement and, promptly upon receipt thereof and in any
event prior to November 1, 2004, execute and deliver the Pledge Agreement to
the Administrative Agent, together with stock certificates representing 100% of
the Equity Interests held by Borrower and its Subsidiaries in their respective
direct Subsidiaries (to the extent certificated, but in any event excluding any
Issuance Subsidiary), together with appropriate stock powers (which stock
certificates shall be maintained by the Administrative Agent in the State of
Nevada);


 


(b)                                 Notify the
Administrative Agent at the time that any Person becomes a Subsidiary, and
promptly thereafter (and in any event within thirty days), cause such Person
(except to the extent that the Gaming Laws of the relevant jurisdiction do not
permit the same and except for the Issuance Subsidiary); to (i) execute
and deliver to the Administrative Agent a Guaranty or a joinder to a Guaranty,
as the Administrative Agent shall deem appropriate for such purpose, and
(ii) deliver to the Administrative Agent Collateral Documents of the types
referred to in Section 4.01(a) and favorable opinions of counsel to
such Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to in clauses (i) and
(ii));


 


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(c)                                  Notify the
Administrative Agent at the time of acquisition or the formation of any
Subsidiary, cause to be delivered to the Administrative Agent a pledge all of
the Equity Interests held by Borrower and its Subsidiaries in each such
Subsidiary other than the Issuance Subsidiary (except to the extent that the
Gaming Laws of the relevant jurisdiction do not permit the pledge of the Equity
Interests in any Person which is the holder of a gaming license);


 


(d)                                 Notify the
Administrative Agent at the time of the acquisition by Borrower or any of its
Subsidiaries of any fee or leasehold interest in real property, notice thereof
and, if requested by the Administrative Agent, a Deed of Trust and other
Collateral Documents in relation thereto.


 


(e)                                  Notwithstanding
the foregoing provisions of this Section, at any time prior to the consummation
of the Grace Asset Purchase when no Default or Event of Default has occurred
and remains continuing, the Borrower may form an Issuance Subsidiary, which
shall not be required to guarantee the Obligations or to grant Liens securing
the Obligation in respect of any of its Property until the date of the
consummation of the Grace Asset Purchase or its merger or consolidation with
the Borrower or any Subsidiary of the Borrower, provided that the
Issuance Subsidiary shall not engage in any business other than the issuance of
Senior Subordinated Notes, the investment of the proceeds thereof (and any
additional amounts contributed to the Issuance Subsidiary by the Borrower in
accordance with Section 7.02(d)) in the Escrow Account, and activities
ancillary thereto pending the consummation of the Grace Asset Purchase.


 


6.13.                        Capital Projects.  Prior to the commencement of any Significant
Project, Borrower shall provide to Administrative Agent (a) if applicable, the
final Construction Budget, (b) if applicable, the Architect Contract, along
with the Architect’s Certificate and Consent, (c) if applicable, the
Construction Contract, along with the Contractor’s Certificate and Consent, and
(d) an acceptable policy of builder’s all-risk insurance as required by Section
6.07.


 


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ARTICLE
VII.

NEGATIVE COVENANTS


 


So long as any Lender shall
have any Commitment hereunder, any Loan or other Obligation hereunder shall
remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding,
the Borrower shall not, nor shall it permit any Subsidiary to, directly or
indirectly:


 


7.01.                        Liens.  Create,
incur, assume or suffer to exist any Lien or Negative Pledge upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:


 


(a)                                  Liens and
Negative Pledges pursuant to any Loan Document;


 


(b)                                 Liens and
Negative Pledges existing on the date hereof and listed on Schedule 7.01
and any renewals or extensions thereof, provided that (i) the
property covered thereby is not changed, (ii) the amount secured or
benefited thereby is not increased, (iii) the direct or any contingent
obligor with respect thereto is not changed, and (iv) any renewal or
extension of the obligations secured or benefited thereby is permitted by Section 7.03(b);


 


(c)                                  Liens and
Negative Pledges on or with respect to Property acquired by Borrower or any
Subsidiaries that were in existence at the time of the acquisition of such
Property and were not created in contemplation of such acquisition;


 


(d)                                 any Lien or
Negative Pledge created by an agreement or instrument entered into by Borrower
or any Subsidiary in the ordinary course of its business which consists of a
restriction on the assignability, transfer or hypothecation of such agreement
or instrument;


 


(e)                                  Liens for taxes
not yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP;


 


(f)                                    carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period
of more than 30 days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;


 


(g)                                 pledges or
deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation,
other than any Lien imposed by ERISA;


 


(h)                                 deposits to
secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety bonds (other than bonds


 


77






















 


related
to judgments or litigation), performance bonds and other obligations of a like
nature incurred in the ordinary course of business;


 


(i)                                     easements,
rights-of-way, restrictions and other similar encumbrances affecting real
property which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business of
the applicable Person;


 


(j)                                     Liens securing
judgments for the payment of money not constituting an Event of Default under
Section 8.01(h) or securing appeal or other surety bonds related to such
judgments;


 


(k)                                  Liens securing
Indebtedness permitted under Section 7.03(g) and Negative Pledges with
respect to the property financed by such Indebtedness;  provided that (i) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness and (ii) the Indebtedness secured thereby does not exceed the
cost or fair market value, whichever is lower, of the property being acquired
on the date of acquisition;


 


(l)                                     Liens securing
Indebtedness permitted under Section 7.03(h), provided that the same are
released promptly following the repayment of such Indebtedness;


 


(m)                               Liens securing
the New Senior Subordinated Notes; provided that such Liens shall not encumber
any Property other than the Escrow Account;


 


(n)                                 A Negative
Pledge benefiting the holders of the New Senior Subordinated Notes which are
consistent with those contained in the Senior Subordinated Indenture, and such
Negative Pledge may provide that the holders of the New Senior Subordinated
Notes shall be entitled to an exclusive Lien upon the Escrow Account; and


 


(o)                                 Other Liens on
Property having an aggregate value not in excess of $1,000,000.


 


7.02.                        Investments.  Make any Investments, except:


 


(a)                                  Investments
consisting of the Grace Asset Purchase made through wholly-owed (whether
directly or indirectly) Acquisition Subsidiaries;


 


(b)                                 Investments
held by the Borrower or any of its Subsidiaries in the form of cash equivalents
or short-term marketable debt securities (including without limitation any
Investment of funds contained in the Escrow Account);


 


(c)                                  advances to
officers, directors and employees of the Borrower and Subsidiaries (other than
the Issuance Subsidiary) in the ordinary course of business for travel,
entertainment, relocation and analogous ordinary business purposes;


 


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(d)                                 Investments of
the Borrower in any Subsidiary and Investments of any Subsidiary in the
Borrower or in another Subsidiary, provided that the Borrower and its
Subsidiaries shall not make any Investment in an Issuance Subsidiary which is
in excess of the amount required (after the receipt by the Issuance Subsidiary
of the net proceeds of any New Senior Subordinated Notes) to provide for the
funding of the Escrow Account;


 


(e)                                  Investments
consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course
of business, and Investments received in satisfaction or partial satisfaction
thereof from financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss;


 


(f)                                    Contingent
Obligations permitted by Section 7.03;


 


(g)                                 Investments
made in the ordinary course of business by Borrower and its Subsidiaries in
Persons with whom they are parties to Route Agreements; and


 


(h)                                 other
Investments made when no Default or Event of Default has occurred and remains
continuing in an aggregate amount not to exceed $60,000,000 during the term of
this Agreement.


 


7.03.                        Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness, except:


 


(a)                                  Existing Senior
Notes in a principal amount not to exceed $4,071,000,  but not any refinancings or
refundings thereof.


 


(b)                                 Indebtedness
under the Loan Documents;


 


(c)                                  Indebtedness
under the Senior Subordinated Notes and under additional or replacement
Subordinated Debt having a maturity which is at least one year following the
last to occur of (A) Revolving Maturity Date, (B) any then established Term
Maturity Date, or (C) or, in the case of any replacement Subordinated Debt, not
earlier than that of the Senior Subordinated Notes refinanced, and in each case
having representations, warranties, covenants, defaults and other provisions
(other than economic terms) which are either (i) substantively identical to
those contained in the Indenture for the Senior Subordinated Notes outstanding
as of the Effective Date, or (ii) on terms and conditions no less favorable to
the Lenders nor more onerous to the Borrower than those contained in the
Indenture for the Senior Subordinated Notes outstanding as of the Effective
Date, in each case as determined by Administrative Agent, provided that
any New Senior Subordinated Notes may contain provisions requiring their
prepayment or redemption using amounts contained in the Escrow Account;


 


(d)                                 Indebtedness
outstanding on the date hereof and listed on Schedule 7.03 and any
refinancings, refundings, renewals or extensions thereof; provided that
(i) the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or


 


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other
reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing
commitments unutilized thereunder, and (ii) the terms relating to
principal amount, amortization, maturity, collateral (if any) and
subordination (if any), and other material terms taken as a whole, of any such
refinancing, refunding, renewing or extending Indebtedness, and of any
agreement entered into and of any instrument issued in connection therewith,
are no less favorable in any material respect to the Loan Parties or the
Lenders than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended and the interest
rate applicable to any such refinancing, refunding, renewing or extending
Indebtedness does not exceed the then applicable market interest rate;


 


(e)                                  Contingent
Obligations of the Borrower and its Subsidiaries in respect of Indebtedness
otherwise permitted hereunder of the Borrower;


 


(f)                                    obligations
(contingent or otherwise) of the Borrower or any Subsidiary existing or arising
under any Swap Contract, provided that (i) such obligations are (or
were) entered into by such Person in the ordinary course of business for the
purpose of directly mitigating risks associated with liabilities, commitments,
investments, assets, or property held or reasonably anticipated by such Person,
or changes in the value of securities issued by such Person, and not for
purposes of speculation or taking a “market view;” and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;


 


(g)                                 Indebtedness in
respect of capital leases, Synthetic Lease Obligations and purchase money
obligations for fixed or capital assets within the limitations set forth in
Section 7.01(k); provided, however, that the aggregate
amount of all such Indebtedness at any one time outstanding shall not exceed
$10,000,000;


 


(h)                                 Indebtedness in
respect of the Existing Senior Notes in an aggregate principal amount not to
exceed $4,071,000, provided that such Existing Senior Notes shall be
repaid not later than September 15, 2005;


 


(i)                                     unsecured
Indebtedness in an aggregate principal amount not to exceed $10,000,000 at any
time outstanding; and


 


(j)                                     Indebtedness
assumed in connection with the Grace Asset Purchase provided that the aggregate
consideration paid in connection with the Grace Asset Purchase including
assumption of Indebtedness shall not exceed $310,000,000.


 


7.04.                        Fundamental Changes. Merge, dissolve, liquidate, consolidate with or
into another Person, or Dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:


 


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(a)                                  any Subsidiary
may merge with the Borrower, provided that the Borrower shall be the
continuing or surviving Person; and


 


(b)                                 any Subsidiary
may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or to another Subsidiary; provided
that if the transferor in such a transaction is a wholly-owned Subsidiary, then
the transferee must either be the Borrower or a wholly-owned Subsidiary.


 


7.05.                        Dispositions.  Make any Disposition or enter into any
agreement to make any Disposition, except:


 


(a)                                  Dispositions of
obsolete or worn out property, whether now owned or hereafter acquired, in the
ordinary course of business;


 


(b)                                 Dispositions of
inventory in the ordinary course of business;


 


(c)                                  Dispositions of
equipment or real property to the extent that (i) such property is
exchanged for credit against the purchase price of similar replacement property
or (ii) the proceeds of such Disposition are reasonably promptly applied
to the purchase price of such replacement property;


 


(d)                                 Dispositions of
property by Borrower or any Subsidiary to the Borrower or to any Subsidiary;


 


(e)                                  Dispositions
permitted by Section 7.04; and


 


(f)                                    Other
Dispositions of Property having an aggregate value, during the term of this
Agreement, not to exceed $5,000,000, provided that no Default or Event
of Default shall have occurred and remain continuing or result from such
Disposition.


 


provided, however,
that each Disposition pursuant to this Section shall be for fair market value.


 


7.06.                        Restricted Payments.  Declare or
make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except that, so long as no Default shall
have occurred and be continuing at the time of any action described below or
would result therefrom:


 


(a)                                  each Subsidiary
may make Restricted Payments to the Borrower, the Subsidiaries and any other
Person that owns an Equity Interest in such Subsidiary, ratably according to
their respective holdings of the type of Equity Interest in respect of which
such Restricted Payment is being made;


 


(b)                                 the Borrower
and each Subsidiary may declare and make dividend payments or other
distributions payable solely in the common stock or other common Equity
Interests of such Person;


 


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(c)                                  the Borrower
and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests
issued by it with the proceeds received from the substantially concurrent issue
of new shares of its common stock or other common Equity Interests; and


 


(d)                                 the Borrower
may declare and pay cash dividends to its stockholders in an aggregate amount
not to exceed, as of any date of determination, 60% of Net Income of the
Borrower for the period (taken as one accounting period) beginning July 1, 2004
to the end of the Borrower’s then most recently ended Fiscal Quarter for which
a Compliance Certificate has then been delivered to the Administrative Agent, provided
that giving pro  forma effect to the making of such payment as of
the last day of such Fiscal Quarter, Borrower is in pro  forma
compliance with the Fixed Charge Coverage Ratio.


 


7.07.                        Prepayment of Subordinated Obligations.  Pay any (a) scheduled interest on any Subordinated Debt unless
the payment thereof is then permitted pursuant to the terms of the indenture or
other agreement governing such Subordinated Debt, or (b) principal (including
sinking fund payments) or any other amount (other than scheduled interest
payments) with respect to any Subordinated Debt, or purchase or redeem (or
offer to purchase or redeem) any Subordinated Debt, or deposit any monies,
securities or other Property with any trustee or other Person to provide
assurance that the principal or any portion thereof of any Subordinated Debt
will be paid when due or otherwise to provide for the defeasance of any
Subordinated Debt except to the extent that the source of such payment,
purchase or redemption consists entirely of proceeds from the issuance of
Equity Interests in Borrower or new Subordinated Debt provided, in each
case, that (y) in no event shall Borrower make any such payment, purchase or
redemption if any Default or Event of Default has occurred and remains
continuing or would result therefrom, and (z) the prepayment of New Senior
Subordinated Notes in the event that the Grace Asset Purchase has not occurred
on or prior to March 31, 2005 shall not be prohibited by this Section to the
extent that such prepayment is made using the proceeds of the Escrow Account.


 


7.08.                        Change in Nature of Business.  Engage in any material line of business substantially different
from those lines of business conducted by the Borrower and its Subsidiaries on
the date hereof or any business substantially related or incidental thereto.


 


7.09.                        Transactions with Affiliates.  Enter into any transaction of any kind with any Affiliate of the
Borrower, whether or not in the ordinary course of business, other than on fair
and reasonable terms substantially as favorable to the Borrower or such
Subsidiary as would be obtainable by the Borrower or such Subsidiary at the
time in a comparable arm’s length transaction with a Person other than an
Affiliate, provided that this covenant shall not apply to any
transactions amongst the Borrower and any wholly-owned Subsidiary of the
Borrower, or amongst such Subsidiaries (other than transactions involving the
Issuance Subsidiary).


 


7.10.                        Burdensome Agreements.  Enter into
any Contractual Obligation (other than this Agreement or any other Loan
Document) that limits the ability (a) of any Subsidiary to make Restricted
Payments to the Borrower or any Subsidiary or to otherwise transfer property to
the


 


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Borrower
or any Subsidiary, or (b) of any Subsidiary to guarantee the Indebtedness
of the Borrower, provided that this Section shall not apply to the
Issuance Subsidiary.


 


7.11.                        Use of Proceeds.  Use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of Regulation
U of the FRB) or to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund indebtedness originally incurred for such
purpose.


 


7.12.                        Senior Debt to EBITDA Ratio.  Permit the Senior Debt to EBITDA Ratio as of the last day of any
Fiscal Quarter ending during a period set forth below to exceed the ratio set
forth below opposite that period:


 


	
  Period

  	
   

  	
  Maximum
  Senior Debt to

  EBITDA Ratio

  
	
  Effective Date through and including September 30, 2006

  	
   

  	
  2.75:1.00

  
	
  December 31, 2006 and thereafter

  	
   

  	
  2.25:1.00

  



 


7.13.                        Total Debt to EBITDA Ratio.  Permit the Total Debt to EBITDA Ratio as of the last day of any
Fiscal Quarter ending during a period set forth below to exceed the ratio set
forth below opposite that period, provided that in respect of the Fiscal
Quarter immediately following the consummation of the Grace Asset Purchase and
any subsequent Fiscal Quarters ending through and including March 31, 2006, the
maximum permitted Total Debt to EBITDA Ratio shall be 5.30:1.00:


 


	
  Period

  	
   

  	
  Maximum
  Total Debt to

  EBITDA Ratio

  
	
  Effective Date through and including March 31, 2008

  	
   

  	
  5.00:1.00

  
	
  June 30, 2008 and thereafter

  	
   

  	
  4.50:1.00

  



 


 


7.14.                        Fixed Charge Coverage Ratio.  Permit the Fixed Charge Coverage Ratio as of the last day of any
Fiscal Quarter ending during a period set forth below to be less than the ratio
set forth below opposite that period:


 


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  Period

  	
   

  	
  Minimum
  Fixed

  Charge Coverage Ratio

  
	
  Effective Date through and including June 30, 2007

  	
   

  	
  1.25:1.00

  
	
  September 30, 2007 through and including September 30, 2008

  	
   

  	
  1.15:1.00

  
	
  December 31,
  2008 and thereafter

  	
   

  	
  1.10:1.00

  



 


7.15.                        Capital Expenditures.  Make or
become legally obligated to make any Capital Expenditure other than:


 


(a)                                  to the extent
construed as a Capital Expenditure, the Grace Asset Purchase in an amount not
to exceed $310,000,000;


 


(b)                                 Maintenance
Capital Expenditures in an aggregate principal amount not to exceed $25,000,000
in any Fiscal Year;


 


(c)                                  Growth Capital
Expenditures in an aggregate principal amount not to exceed $100,000,000 during
the term of this Agreement, provided that all Growth Capital Expenditures
associated with the Terrible’s Expansion Project, whether incurred before or
after the Effective Date, shall be included in determining compliance with this
provision; and


 


(d)                                 to the extent
construed as Capital Expenditures, any amount expended to consummate an
Investment permitted by Section 7.02(h).


 


7.16.                        Hostile Acquisitions.  Directly or
indirectly use the proceeds of any Loan in connection with the acquisition of
part or all of a voting interest of five percent or more in any corporation or
other business entity if such acquisition is opposed by the board of directors
or management of such corporation or business entity.


 


7.17.                        Grace Asset Purchase.  Consummate
the Grace Asset Purchase, unless each of the following conditions have been met
either prior to or concurrently with the Grace Asset Purchase:


 


(a)                                  The
transactions contemplated to occur on the Effective Date by the Grace Purchase
Agreement shall be in a position to concurrently close in compliance with all
applicable Laws, and without material variance from the terms of the Grace
Purchase Agreement;


 


(b)                                 Borrower or an
Issuance Subsidiary shall have issued additional Senior Subordinated Notes in
an aggregate principal amount of not less than $150,000,000, and having a
maturity date which is not less than six months following any then established
Term Maturity Date;


 


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(c)                                  Borrower shall
execute and deliver to Administrative Agent Deeds of Trust in respect of all
material interests in real property acquired pursuant to the Grace Purchase
Agreements, and such other additional Collateral Documents in respect of the
Grace Assets as may be required by Administrative Agent, together with any
landlord consents and estoppel certificates or other similar documents as the
Administrative Agent may request;


 


(d)                                 the
Administrative Agent shall have received commitments for the issuance of such
title insurance policies in respect of the Deeds of Trust referred to in clause
(c) and related endorsements as may be required by Administrative Agent;


 


(f)                                    the
Administrative Agent shall have received opinions of counsel acceptable to the
Administrative Agent; and


 


(g)                                 such other
matters relating to the Grace Asset Purchase as may reasonably be required by
the Administrative Agent.


 


7.18.                        Certain Post-Effective Date
Matters.  Fail to deliver to the Administrative Agent,
within 90 days after the Effective Date, the following:


 


(a)                                  the Pledge
Agreement executed by Borrower and each Subsidiary of Borrower (other than any
Issuance Subsidiary), together with stock certificates representing 100% of the
Equity Interests held by Borrower and its Subsidiaries in their respective
direct United States domestic Subsidiaries (to the extent certificated and in
any event excluding any Issuance Subsidiary), together with appropriate stock
powers (except to the extent that the Gaming Laws of the relevant jurisdiction
do not permit the pledge of the Equity Interests in any Person which is the
holder of a gaming license); and


 


(b)                                 Landlord
consents executed by each of the landlords in respect of Deeds of Trust which
encumber leaseholds located in Nevada, including without limitation (i) a
landlord consent and non-disturbance agreements from Centennial Acquisitions
and Terrible Herbst, Inc. in respect of the Searchlight location; and (ii) a
landlord consent and non-disturbance agreement from the 1993 Samuel Josephson
Revocable Trust in respect of the Henderson location.


 


85

























ARTICLE
VIII.

EVENTS OF DEFAULT AND REMEDIES


 


8.01.                        Events of Default. 
Any of the following shall constitute an Event of Default:


 


(a)                                  Non-Payment. 
The Borrower or any other Loan Party fails to pay (i) when and as
required to be paid herein, any amount of principal of any Loan or any L/C
Obligation, or (ii) within three days after the same becomes due, any
interest on any Loan or on any L/C Obligation, or any fee due hereunder, or
(iii) within five days after the same becomes due, any other amount
payable hereunder or under any other Loan Document; or


 


(b)                                 Specific Covenants. 
The Borrower fails to perform or observe any term, covenant or agreement
contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.11 or 6.12 or
Article VII; or


 


(c)                                  Other Defaults. 
Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in subsection (a) or (b) above) contained in any Loan
Document on its part to be performed or observed and such failure continues for
30 days; or


 


(d)                                 Representations and Warranties. 
Any representation, warranty, certification or statement of fact made or
deemed made by or on behalf of the Borrower or any other Loan Party herein, in
any other Loan Document, or in any document delivered in connection herewith or
therewith shall be incorrect or misleading when made or deemed made; or


 


(e)                                  Cross-Default. 
(i) The Borrower or any Subsidiary (A) fails to make any payment
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) in respect of any Indebtedness or Contingent Obligation
(other than Indebtedness hereunder and Indebtedness under Swap Contracts)
having an aggregate principal amount (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $10,000,000, or (B) fails to
observe or perform any other agreement or condition relating to any such
Indebtedness or Contingent Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event is to cause, or to permit the holder or holders
of such Indebtedness or the beneficiary or beneficiaries of such Contingent
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to
repurchase, prepay, defease or redeem such Indebtedness to be made, prior to
its stated maturity, or such Contingent Obligation to become payable or cash
collateral in respect thereof to be demanded; or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to


 


86






















 


which the Borrower or any Subsidiary is the Defaulting
Party (as defined in such Swap Contract) or (B) any Termination Event (as
so defined) under such Swap Contract as to which the Borrower or any Subsidiary
is an Affected Party (as so defined) and, in either event, the Swap Termination
Value owed by the Borrower or such Subsidiary as a result thereof is greater
than $10,000,000; or


 


(f)                                    Insolvency Proceedings, Etc. 
Any Loan Party or any of its Subsidiaries institutes or consents to the
institution of any proceeding under any Debtor Relief Law, or makes an assignment
for the benefit of creditors; or applies for or consents to the appointment of
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or for all or any material part of its property; or any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar
officer is appointed without the application or consent of such Person and the
appointment continues undischarged or unstayed for 60 calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or
any material part of its property is instituted without the consent of such
Person and continues undismissed or unstayed for 60 calendar days, or an order
for relief is entered in any such proceeding; or


 


(g)                                 Inability to Pay Debts; Attachment. 
(i) The Borrower or any Subsidiary becomes unable or admits in
writing its inability or fails generally to pay its debts as they become due,
or (ii) any writ or warrant of attachment or execution or similar process
is issued or levied against all or any material part of the property of any
such Person and is not released, vacated or fully bonded within 30 days after
its issue or levy; or


 


(h)                                 Judgments.  There is
entered against the Borrower or any Subsidiary (i) a final judgment or
order for the payment of money in an aggregate amount exceeding $10,000,000 to
the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage), or (ii) any one or more non-monetary
final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either
case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of 10 consecutive days during
which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or


 


(i)                                    ERISA.  (i) An
ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which
has resulted or could reasonably be expected to result in liability of the
Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan
or the PBGC in an aggregate amount in excess of $10,000,000, or (ii) the
Borrower or any ERISA Affiliate fails to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $10,000,000; or


 


(j)                                    Invalidity of Loan Documents. 
Any provision of any Loan
Document, at any time after its execution and delivery and for any reason other
than as


 


87






















 


expressly permitted hereunder or thereunder or
satisfaction in full of all the Obligations, ceases to be in full force and
effect; or any Loan Party or any other Person contests in any manner the
validity or enforceability of any provision
of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any provision of
any Loan Document; or


 


(k)                                Change of Control. 
Any Change of Control occurs;


 


(l)                                    License Revocation. 
Any License Revocation in respect of locations accounting, in the
aggregate, for more than 5% of the Borrower’s EBITDA occurs and remains
continuing for more than three Business Days.


 


8.02.                     Remedies Upon Event of Default.  If any Event
of Default occurs and is continuing, the Administrative Agent shall, at the
request of, or may, with the consent of, the Requisite Lenders, take any or all
of the following actions:


 


(a)                                  declare the commitment of each Lender to
make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions
to be terminated, whereupon such commitments and obligation shall be
terminated;


 


(b)                                  declare the unpaid principal amount of
all outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;


 


(c)                                  require that the Borrower Cash
Collateralize the L/C Obligations (in an amount equal to the then Outstanding
Amount thereof); and


 


(d)                                  exercise on behalf of itself and the
Lenders all rights and remedies available to it and the Lenders under the Loan
Documents;


 


provided, however, that upon the
occurrence of an actual or deemed entry of an order for relief with respect to
the Borrower under the Bankruptcy Code of the United States, the obligation of
each Lender to make Loans and any obligation of the L/C Issuer to make L/C
Credit Extensions shall automatically terminate, the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and the obligation of the Borrower to
Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any
Lender. Each of the Administrative Agent and the Lenders acknowledges that its
ability to pursue the remedies described above is subject to, and limited by,
the terms of applicable Gaming Laws.


 


8.03.                     Application of Funds. 
After the exercise of remedies provided for in Section 8.02 (or
after the Loans have automatically become immediately due and payable and the
L/C Obligations have automatically been required to be Cash Collateralized as
set forth in the


 


88






















 


proviso to Section 8.02), any amounts received on
account of the Obligations shall be applied by the Administrative Agent in the
following order:


 


First, to payment of that portion of the Obligations
constituting fees, indemnities, expenses and other amounts (including fees,
charges and disbursements of counsel to the Administrative Agent and amounts
payable under Article III) payable to the Administrative Agent in its capacity
as such;


 


Second, to payment of that portion of the Obligations
constituting fees, indemnities and other amounts (other than principal and
interest) payable to the Lenders and the L/C Issuer (including fees, charges
and disbursements of counsel to the respective Lenders and the L/C Issuer (including fees and time charges for
attorneys who may be employees of any Lender or the L/C Issuer) and
amounts payable under Article III), ratably among them in proportion to the
amounts described in this clause Second payable to them;


 


Third, to payment of that portion of the Obligations
constituting accrued and unpaid interest on the Loans, L/C Borrowings and other
Obligations (including without limitation Secured Swap Contracts, ratably among
the Lenders and the L/C Issuer (and, in the case of any Secured Swap Contracts,
any relevant Affiliate of any Lender counterparties thereto)), ratably among
the Lenders and the L/C Issuer in proportion to the respective amounts
described in this clause Third payable to them;


 


Fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders and
the L/C Issuer in proportion to the respective amounts described in this clause
Fourth held by them;


 


Fifth, to the Administrative Agent for the account of the
L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of
the aggregate undrawn amount of Letters of Credit; and


 


Last, the balance, if any, after all of the Obligations
have been indefeasibly paid in full, to the Borrower or as otherwise required
by Law.


 


Subject to
Section 2.04(c), amounts used to Cash Collateralize the aggregate undrawn
amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash
Collateral after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other Obligations, if any, in the
order set forth above.


 


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ARTICLE IX.

ADMINISTRATIVE AGENT


 


9.01.                     Appointment and Authority.  Each of the
Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act
on its behalf as the Administrative Agent hereunder and under the other Loan
Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto.  The provisions
of this Article are solely for the benefit of the Administrative Agent, the
Lenders and the L/C Issuer, and neither
the Borrower nor any other Loan Party shall have rights as a third party
beneficiary of any of such provisions.


 


9.02.                     Rights as a Lender. 
The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent and the term
“Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Administrative
Agent hereunder in its individual capacity. 
Such Person and its Affiliates may accept deposits from, lend money to,
act as the financial advisor or in any other advisory capacity for and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.


 


9.03.                     Exculpatory Provisions.  The
Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing,
the Administrative Agent:


 


(a)                                  shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing;


 


(b)                                  shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents
that the Administrative Agent is required to exercise as directed in writing by
the Requisite Lenders (or such other number or percentage of the Lenders as
shall be expressly provided for herein or in the other Loan Documents), provided
that the Administrative Agent shall not be required to take any action that, in
its opinion or the opinion of its counsel, may expose the Administrative Agent
to liability or that is contrary to any Loan Document or applicable law; and


 


(c)                                  shall not, except as expressly set forth
herein and in the other Loan Documents, have any duty to disclose, and shall
not be liable for the failure to disclose, any information relating to the
Borrower or any of its Affiliates that is communicated to or obtained by the
Person serving as the Administrative Agent or any of its Affiliates in any
capacity.


 


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The Administrative Agent shall not be liable for any
action taken or not taken by it (i) with the consent or at the request of
the Requisite Lenders (or such other number or percentage of the Lenders as
shall be necessary, or as the Administrative Agent shall believe in good faith
shall be necessary, under the circumstances as provided in Sections 10.01
and 8.02) or (ii) in the absence of its own gross negligence or willful
misconduct.  The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower, a
Lender or the L/C Issuer.


 


The Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty
or representation made in or in connection with this Agreement or any other
Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative
Agent.


 


9.04.                     Reliance by Administrative Agent.  The Administrative
Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including any electronic message, Internet or
intranet website posting or other distribution) believed by it to be genuine
and to have been signed, sent or otherwise authenticated by the proper
Person.  The Administrative Agent also
may rely upon any statement made to it orally or by telephone and believed by
it to have been made by the proper Person, and shall not incur any liability
for relying thereon.  In determining
compliance with any condition hereunder to the making of a Loan, or the
issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or the L/C Issuer, the Administrative Agent may
presume that such condition is satisfactory to such Lender or the L/C Issuer
unless the Administrative Agent shall have received notice to the contrary from
such Lender or the L/C Issuer prior to the making of such Loan or the issuance
of such Letter of Credit.  The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.


 


9.05.                     Delegation of Duties. 
The Administrative Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties.  The exculpatory provisions of this Article
shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.


 


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9.06.                     Resignation of Administrative Agent.  The
Administrative Agent may at any time give notice of its resignation to the
Lenders, the L/C Issuer and the Borrower. 
Upon receipt of any such notice of resignation, the Requisite Lenders
shall have the right, in consultation with the Borrower, to appoint a
successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States.  If no such successor shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting
the qualifications set forth above; provided that if the Administrative
Agent shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any collateral security held by the
Administrative Agent on behalf of the Lenders or the L/C Issuer under any of
the Loan Documents, the retiring Administrative Agent shall continue to hold
such collateral security until such time as a successor Administrative Agent is
appointed) and (2) all payments, communications and determinations
provided to be made by, to or through the Administrative Agent shall instead be
made by or to each Lender and the L/C Issuer directly, until such time as the
Requisite Lenders appoint a successor Administrative Agent as provided for
above in this Section.  Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and
the retiring Administrative Agent shall be discharged from all of its duties
and obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section).  The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the retiring
Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 10.04 shall continue
in effect for the benefit of such retiring Administrative Agent, its sub-agents
and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while the retiring Administrative Agent was acting
as Administrative Agent.


 


Any resignation by Bank of America as Administrative
Agent pursuant to this Section shall also constitute its resignation as
L/C Issuer and Swing Line Lender.  Upon
the acceptance of a successor’s appointment as Administrative Agent hereunder,
(a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line
Lender, (b) the retiring L/C Issuer and Swing Line Lender shall be
discharged from all of their respective duties and obligations hereunder or
under the other Loan Documents, and (c) the successor L/C Issuer shall
issue letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangement
satisfactory to the retiring L/C Issuer to effectively assume the obligations
of the retiring L/C Issuer with respect to such Letters of Credit.


 


9.07.                     Non-Reliance on Administrative Agent and Other
Lenders. 
Each Lender and the L/C Issuer acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender or any
of their Related Parties and based on such


 


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documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender and the L/C
Issuer also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender or any of their Related Parties
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.


 


9.08.                     No
Other Duties, Etc.  Anything herein to the
contrary notwithstanding, none of the Co-Lead Arrangers or Syndication Agent
listed on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Loan Documents,
except in its capacity, as applicable, as the Administrative Agent, a Lender or
the L/C Issuer hereunder.


 


9.09.                     Collateral and Guaranty Matters.  The Lenders and the L/C Issuer irrevocably authorize
the Administrative Agent, at its option and in its discretion:


 


(a)                                  to release any Lien on any property
granted to or held by the Administrative Agent under any Loan Document
(i) upon termination of the Overall Commitments and payment in full of all
Obligations (other than contingent indemnification obligations) and the expiration
or termination of all Letters of Credit, (ii) that is sold or to be sold
as part of or in connection with any sale permitted hereunder or under any
other Loan Document, or (iii) subject to Section 10.01, if approved,
authorized or ratified in writing by the Requisite Lenders;


 


(b)                                 to subordinate any Lien on any property
granted to or held by the Administrative Agent under any Loan Document to the
holder of any Lien on such property that is permitted by Section 7.01(k);
and


 


(c)                                  to release any Subsidiary from its
Guaranty if such Person ceases to be a Subsidiary as a result of a transaction
permitted hereunder.


 


Upon request by the Administrative Agent at any time,
the Requisite Lenders will confirm in writing the Administrative Agent’s
authority to release or subordinate its interest in particular types or items
of property, or to release any Subsidiary from its Guaranty pursuant to this
Section 9.09.


 


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ARTICLE X.

MISCELLANEOUS


 


10.01.              Amendments, Etc.  (a) No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Requisite Lenders and the Borrower or the applicable Loan
Party, as the case may be, and acknowledged by the Administrative Agent, provided
that:


 


(i)  interest rates and other monetary amounts
payable in respect of the Revolving Commitments may be reduced, and the
Revolving Maturity Date may be extended, by the Revolving Lenders directly
affected thereby, without the approval of the Term Lenders;  and


 


(ii)  interest rates and other monetary amounts
payable in respect of the Term Loans and the Term Commitments may be reduced,
and the date upon which any installment of principal under the Term Loan or the
Term Maturity Date may be extended, by those of the Term Lenders directly
affected thereby without the approval of the Revolving Lenders.


 


(b)
Notwithstanding any other provision of this Agreement or the other Loan
Documents to the contrary, no amendment, waiver or consent of this Agreement or
the other Loan Documents shall:


 


(i)                                    waive any condition set forth in
Section 4.01(a) without the written consent of each Lender;


 


(ii)                                extend or increase the Commitments of any
Lender (or reinstate any Commitments terminated pursuant to
Section 8.02) without the written consent of that Lender;


 


(iii)                            postpone any date fixed by this Agreement
or any other Loan Document for any payment or mandatory prepayment of
principal, interest, fees or other amounts due to the Lenders (or any of
them) or any scheduled or mandatory reduction of any of the Commitments
hereunder or under any other Loan Document, without the written consent of each
Lender directly affected thereby;


 


(iv)                               reduce the principal of, or the rate of
interest specified herein on, any Loan or L/C Borrowing, or (subject to clause
(c)(v) below regarding the Fee Letter) any fees or other amounts payable
hereunder or under any other Loan Document, without the written consent of each
Lender directly affected thereby; provided, however, that only
the consent of the Requisite Lenders shall be necessary (i) to amend the
definition of “Default Rate” or to waive any obligation of the Borrower to pay
interest or Letter of Credit Fees at the Default Rate or (ii) to amend any
financial covenant hereunder (or any defined term used therein) even if
the effect of such amendment would be to reduce the rate of interest on any
Loan or L/C Borrowing or to reduce any fee payable hereunder;


 


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(v)                                   change Section 2.15 or
Section 8.03 in a manner that would alter the pro rata sharing of payments
required thereby without the written consent of each Lender;


 


(vi)                               change any provision of this
Section or the definition of “Requisite Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to amend, waive
or otherwise modify any rights hereunder or make any determination or grant any
consent hereunder, without the written consent of each Lender;


 


(vii)                           impose any greater restriction on the
ability of any Lender to assign any of its rights or obligations under any
Commitment of that Lender hereunder without the written consent of Lenders
having more than 50% of the same class of Commitment;


 


(viii)                       release any Subsidiary from its Guaranty
without the written consent of each Lender (except in the case of any permitted
sale or disposition of that Subsidiary);


 


(ix)                              release any Collateral having a value
which is in excess of $5,000,000 from the Lien of the Collateral Documents
without the written consent of each Lender (except in connection with the
permitted sale, transfer or other disposition of that Collateral to a Person
other than Borrower or a Subsidiary); or


 


(x)                                  waive the requirement of the imposition
of the Reserve Amount;


 


(c)                                  Notwithstanding the foregoing provisions
of this Section, (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any
Issuer Document relating to any Letter of Credit issued or to be issued by it;
(ii) no amendment, waiver or consent shall, unless in writing and signed
by the Swing Line Lender in addition to the Lenders required above, affect the
rights or duties of the Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iv) Section 10.06(h) may not be amended,
waived or otherwise modified without the consent of each Granting Lender all or
any part of whose Loans are being funded by an SPC at the time of such
amendment, waiver or other modification; and (v) the Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed only by the
parties thereto.


 


(d)                                 Each such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.


 


(e)                                  Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the Commitments of that
Lender may not be increased or extended without the consent of that Lender.


 


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10.02.              Notices; Effectiveness; Electronic Communication.


 


(a)                                  Notices Generally. 
Except in the case of notices and other communications expressly
permitted to be given by telephone (and except as provided in subsection (b)
below), all notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopier as follows, and all notices
and other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number, as follows:


 


(i)                                     if to the Borrower, the Administrative
Agent, the L/C Issuer or the Swing Line Lender, to the address, telecopier
number, electronic mail address or telephone number specified for such Person
on Schedule 10.02; and


 


(ii)                                  if to any other Lender, to the address,
telecopier number, electronic mail address or telephone number specified in its
Administrative Questionnaire.


 


Notices sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices sent by telecopier shall be deemed to have been given when
sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
business day for the recipient). 
Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).


 


(b)                                  Electronic Communications. 
Notices and other communications to the Lenders and the L/C Issuer
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
the Administrative Agent, provided that the foregoing shall not apply to
notices to any Lender or the L/C Issuer pursuant to Article II if such Lender
or the L/C Issuer, as applicable, has notified the Administrative Agent that it
is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.


 


Unless the Administrative
Agent otherwise prescribes, (i) notices and other communications sent to
an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or
communications posted to an Internet or intranet


 


96






















 


website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address
therefor.


 


(c)                                  Change of Address, Etc. 
Each of the Borrower, the Administrative Agent, the L/C Issuer and the
Swing Line Lender may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties
hereto.  Each other Lender may change
its address, telecopier or telephone number for notices and other
communications hereunder by notice to the Borrower, the Administrative Agent,
the L/C Issuer and the Swing Line Lender.


 


(d)                                  Reliance by Administrative Agent, L/C
Issuer and Lenders.  The Administrative Agent, the L/C Issuer and the
Lenders shall be entitled to rely and act upon any notices (including
telephonic Loan Notices and Swing Line Loan Notices) purportedly given by or on
behalf of the Borrower even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other
form of notice specified herein, or (ii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof.  The Borrower shall indemnify the
Administrative Agent, the L/C Issuer, each Lender and the Related Parties of
each of them from all losses, costs, expenses and liabilities resulting from
the reliance by such Person on each notice purportedly given by or on behalf of
the Borrower.  All telephonic notices to
and other telephonic communications with the Administrative Agent may be
recorded by the Administrative Agent, and each of the parties hereto hereby
consents to such recording.


 


10.03.              No Waiver; Cumulative Remedies.  No failure
by any Lender, the L/C Issuer or the Administrative Agent to exercise, and no
delay by any such Person in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege.  The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.


 


10.04.              Expenses; Indemnity; Damage Waiver.


 


(a)                                  Costs and Expenses. 
The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent), in connection with the syndication of the credit facilities provided
for herein, the preparation, negotiation, execution, delivery and
administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the
L/C Issuer in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, any Lender or the
L/C Issuer (including


 


97






















 


the fees, charges and disbursements of any counsel for
the Administrative Agent, any Lender or the L/C Issuer), and shall pay all fees and time charges for attorneys who may be
employees of the Administrative Agent, any Lender or the L/C Issuer, in
connection with the enforcement or protection of its rights (A) in
connection with this Agreement and the other Loan Documents, including its
rights under this Section, or (B) in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.


 


(b)                                  Indemnification by the Borrower. 
The Borrower shall indemnify the Administrative Agent, the Co-Lead
Arrangers and the Syndication Agent (and any sub-agents of such persons), each
Lender and the L/C Issuer, and each Related Party of any of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses (including the fees, charges and disbursements of any counsel
for any Indemnitee), and shall
indemnify and hold harmless each Indemnitee from all fees and time charges and
disbursements for attorneys who may be employees of any Indemnitee,
incurred by any Indemnitee or asserted against any Indemnitee by any third
party or by the Borrower or any other Loan Party arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the L/C Issuer
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release
of Hazardous Materials on or from any property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrower or any other Loan Party, and
regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by the Borrower or any
other Loan Party against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if the
Borrower or such Loan Party has obtained a final and nonappealable judgment in
its favor on such claim as determined by a court of competent jurisdiction.


 


(c)                                  Reimbursement by Lenders. 
To the extent that the Borrower for any reason fails to indefeasibly pay
any amount required under subsection (a) or (b) of this
Section to be paid by it to the Administrative Agent (or any sub-agent
thereof), the L/C Issuer or any Related Party of any of the foregoing, each
Lender severally agrees to


 


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pay to the Administrative Agent (or any such
sub-agent), the L/C Issuer or such Related Party, as the case may be, such
Lender’s Revolving Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity
as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) or L/C Issuer in connection with
such capacity.  The obligations of the
Lenders under this subsection (c) are subject to the provisions of
Section 2.14(d).


 


(d)                                  Waiver of Consequential Damages, Etc. 
To the fullest extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Loan
or Letter of Credit or the use of the proceeds thereof.  No Indemnitee referred to in subsection (b)
above shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.


 


(e)                                  Payments.  All amounts
due under this Section shall be payable not later than ten Business Days
after demand therefor.


 


(f)                                    Survival.  The
agreements in this Section shall survive the resignation of the
Administrative Agent and the L/C Issuer,
the replacement of any Lender, the termination of the Overall Commitments and
the repayment, satisfaction or discharge of all the other Obligations.


 


10.05.              Payments Set Aside. 
To the extent that any payment by or on behalf of the Borrower is made
to the Administrative Agent, the L/C Issuer or any Lender, or the
Administrative Agent, the L/C Issuer or any Lender exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the
Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each
Lender and the L/C Issuer severally agrees to pay to the Administrative Agent
upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon
from the date of such demand to the date such payment is made at a rate per
annum equal to the Federal Funds Rate from time to time in effect.  The obligations of


 


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the Lenders and the L/C Issuer under clause (b) of the
preceding sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.


 


10.06.              Successors and Assigns.


 


(a)                                  Successors and Assigns Generally. 
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that neither
the Borrower nor any other Loan Party may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of subsection (b) of this
Section, (ii) by way of participation in accordance with the provisions of
subsection (d) of this Section, (iii) by way of pledge or assignment of a
security interest subject to the restrictions of subsection (f) of this
Section, or (iv) to an SPC in accordance with the provisions of subsection
(h) of this Section 10.06 and any other attempted assignment or transfer by any
party hereto shall be null and void). 
Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective successors
and assigns permitted hereby, Participants to the extent provided in subsection
(d) of this Section and, to the extent expressly contemplated hereby, the
Related Parties of each of the Administrative Agent, the L/C Issuer and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.


 


(b)                                  Assignments by Lenders. 
Any Lender may at any time assign to one or more Eligible Assignees all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitments and the Loans (including for purposes of this
subsection (b), participations in L/C Obligations and in Swing Line Loans) at
the time owing to it); provided that:


 


(i)                                     except in the case of an assignment of
the entire remaining amount of the assigning Lender’s Commitments and the Loans
at the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund with respect to a Lender, the
aggregate amount of the Commitments (which for this purpose includes Loans
outstanding thereunder) or, if the Commitments are not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than, with respect to (A) Revolving Commitments or
Revolving Loans, $5,000,000 and (B) Term Commitments or Term Loans, $1,000,000,  unless
each of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing, the Borrower otherwise consents (each such consent
not to be unreasonably withheld or delayed);


 


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(ii)                                  each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitments
assigned, except that this clause (iii) shall not apply to rights in respect of
Swing Line Loans;


 


(iii)                               each assignment must be approved by the
Administrative Agent, the L/C Issuer and the Swing Line Lender unless the
Person that is the proposed assignee is itself a Lender (whether or not the proposed
assignee would otherwise qualify as an Eligible Assignee); and


 


(iv)                              the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500, and the Eligible
Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.


 


Subject to acceptance and
recording thereof by the Administrative Agent pursuant to subsection
(c) of this Section, from and after the effective date specified in each
Assignment and Assumption, the Eligible Assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall
continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and
10.04 with respect to facts and circumstances occurring prior to the effective
date of such assignment.  Upon request,
the Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender.  Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance
with subsection (d) of this Section.


 


(c)                                  Register.  The
Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be
available for inspection by each of the Borrower and the L/C Issuer at any
reasonable time and from time to time upon reasonable prior notice.  In addition, at any time that a request for
a consent for a material or substantive change to the Loan Documents is pending,
any Lender wishing to consult with other Lenders in connection therewith may
request and receive from the Administrative Agent a copy of the Register.


 


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(d)                                  Participations. 
Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person (other
than a natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of
that Lender’s rights and/or obligations under this Agreement (including all or
a portion of any of its Commitments and/or the Loans (including that Lender’s
participations in L/C Obligations and/or Swing Line Loans) owing to it); provided
that (i) that Lender’s obligations under this Agreement shall remain
unchanged, (ii) that Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent, the Lenders and the L/C Issuer shall
continue to deal solely and directly with that Lender in connection with that
Lender’s rights and obligations under this Agreement.


 


Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant,
agree to any amendment, waiver or other modification described in the first
proviso to Section 10.01 that affects such Participant.  Subject to subsection (e) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to subsection (b) of this
Section.  To the extent permitted by
law, each Participant also shall be entitled to the benefits of
Section 10.08  as though it were a Lender, provided such
Participant agrees to be subject to Section 2.13 as though it were a
Lender.


 


(e)                                  Limitations upon Participant Rights. 
A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04  than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower’s prior written consent. 
A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 3.01 unless the Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as
though it were a Lender.


 


(f)                                    Certain Pledges. 
Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank; provided that no such
pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.


 


(g)                                 Electronic Execution of Assignments. 
The words “execution,” “signed,” “signature,” and words of like import
in any Assignment and Assumption shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually


 


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executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records
Act, or any other similar state laws based on the Uniform Electronic
Transactions Act.


 


(h)                                 Special Purpose Funding Vehicles. 
Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a special purpose funding vehicle identified as
such in writing from time to time by the Granting Lender to the Administrative
Agent and the Borrower (an “SPC”) the option to provide all or any part of any
Loan that such Granting Lender would otherwise be obligated to make pursuant to
this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to
exercise such option or otherwise fails to make all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof or, if it fails to do so, to make such payment to the Administrative
Agent as is required under Section 2.14(b)(ii).  Each party hereto hereby agrees that (i) neither the grant
to any SPC nor the exercise by any SPC of such option shall increase the costs
or expenses or otherwise increase or change the obligations of the Borrower
under this Agreement (including its obligations under Section 3.04),
(ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, and
(iii) the Granting Lender shall for all purposes, including the approval
of any amendment, waiver or other modification of any provision of any Loan
Document, remain the lender of record hereunder.  The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if, such Loan were
made by such Granting Lender.  In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that
is one year and one day after the payment in full of all outstanding commercial
paper or other senior debt of any SPC, it will not institute against, or join
any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceeding under the
laws of the United States or any State thereof.  Notwithstanding anything to the contrary contained herein, any
SPC may (i) with notice to, but without prior consent of the Borrower and
the Administrative Agent and with the payment of a processing fee of $3,500,
assign all or any portion of its right to receive payment with respect to any
Loan to the Granting Lender and (ii) disclose on a confidential basis any
non-public information relating to its funding of Loans to any rating agency,
commercial paper dealer or provider of any surety or Contingent Obligation or
credit or liquidity enhancement to such SPC.


 


(i)                                    Resignation as L/C Issuer or Swing Line
Lender after Assignment.  Notwithstanding anything to
the contrary contained herein, if at any time Bank of America assigns all of
its Commitment and Loans pursuant to subsection (b) above, Bank of America may,
(i) upon 30 days’ notice to the Borrower and the Lenders, resign as L/C
Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as Swing
Line Lender.  In the event of any such
resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled
to appoint from among the Lenders a successor L/C Issuer or Swing Line


 


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Lender hereunder; provided, however,
that no failure by the Borrower to appoint any such successor shall affect the
resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case
may be.  If Bank of America resigns as
L/C Issuer, it shall retain all the rights and obligations of the L/C Issuer
hereunder with respect to all Letters of Credit outstanding as of the effective
date of its resignation as L/C Issuer and all L/C Obligations with respect
thereto (including the right to require the Lenders to make Base Rate Loans or
fund risk participations in Unreimbursed Amounts pursuant to
Section 2.04(c)).  If Bank of
America resigns as Swing Line Lender, it shall retain all the rights of the
Swing Line Lender provided for hereunder with respect to Swing Line Loans made
by it and outstanding as of the effective date of such resignation, including
the right to require the Lenders to make Base Rate Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section 2.05(c).


 


10.07.              Treatment of Certain Information; Confidentiality.  Each of the
Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’
respective partners, directors, officers, employees, agents, advisors and
representatives (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent
requested by any regulatory authority purporting to have jurisdiction over it
(including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations, (g) with the
consent of the Borrower or (h) to the extent such Information
(x) becomes publicly available other than as a result of a breach of this
Section or (y) becomes available to the Administrative Agent, any
Lender, the L/C Issuer or any of their respective Affiliates on a
nonconfidential basis from a source other than the Borrower.


 


For purposes of this Section, “Information”
means all information received from the Borrower or any Subsidiary relating to
the Borrower or any Subsidiary or any of their respective businesses, other
than any such information that is available to the Administrative Agent, any
Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by the
Borrower or any Subsidiary.  Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information, provided that the use of the IntraLinks system (or
any other similar Platform described in Section 6.02) in the manner described
in that Section shall be consistent with the obligations of the Administrative
Agent, the Lenders and the L/C Issuer under this sentence.


 


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10.08.              Right
of Setoff. 
If an Event of Default shall have occurred and be continuing, each
Lender, the L/C Issuer and each of their respective Affiliates is hereby
authorized at any time and from time to time, but only after obtaining the
prior written consent of the Administrative Agent, to the fullest extent permitted by applicable law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by such Lender, the L/C Issuer or any such
Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any
and all of the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement
or any other Loan Document to such Lender or the L/C Issuer, irrespective of
whether or not such Lender or the L/C Issuer shall have made any demand under
this Agreement or any other Loan Document and although such obligations of the
Borrower or such Loan Party may
be contingent or unmatured or are owed to a branch or office of such Lender or
the L/C Issuer different from the branch or office holding such deposit or
obligated on such indebtedness.  The
rights of each Lender, the L/C Issuer and their respective Affiliates under
this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender, the L/C Issuer or their respective
Affiliates may have.  Each Lender and
the L/C Issuer agrees to notify the Borrower and the Administrative Agent
promptly after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and
application.


 


10.09.              Interest Rate Limitation. 
Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable Law
(the “Maximum Rate”).  If the
Administrative Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
of the Loans or, if it exceeds such unpaid principal, refunded to the
Borrower.  In determining whether the
interest contracted for, charged, or received by the Administrative Agent or a
Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate,
and spread in equal or unequal parts the total amount of interest throughout
the contemplated term of the Obligations hereunder.


 


10.10.              Counterparts; Integration; Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof that,
when taken together, bear the signatures of each of the other parties
hereto.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.


 


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10.11.              Survival of Representations and Warranties.  All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith
or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have
been or will be relied upon by the Administrative Agent and each Lender,
regardless of any investigation made by the Administrative Agent or any Lender
or on their behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default at the time of any
Credit Extension, and shall continue in full force and effect as long as any
Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or
any Letter of Credit shall remain outstanding.


 


10.12.              Severability.  If any provision of this
Agreement or the other Loan Documents is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not
be affected or impaired thereby and (b) the parties shall endeavor in good
faith negotiations to replace the illegal, invalid or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible
to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.


 


10.13.              Replacement of Lenders.  If any
Lender requests compensation under Section 3.04, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01, if any
Lender is a Defaulting Lender or if any
other circumstance exists hereunder that gives the Borrower the right to
replace a Lender as a party hereto, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in, and consents required by,
Section 10.06), all of its interests, rights and obligations under this
Agreement and the related Loan Documents to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that:


 


(a)                                  the Borrower shall have paid to the
Administrative Agent the assignment fee specified in Section 10.06(b);


 


(b)                                  such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and L/C Advances,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder and under the other Loan Documents (including any amounts under
Section 3.05) from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts);


 


(c)                                  in the case of any such assignment
resulting from a claim for compensation under Section 3.04 or payments
required to be made pursuant to Section 3.01, such assignment will result
in a reduction in such compensation or payments thereafter; and


 


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(d)                                  such assignment does not conflict with
applicable Laws.


 


A Lender shall not be required to make any such
assignment or delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.


 


10.14.              Governing Law; Jurisdiction; Etc.


 


(a)                                  GOVERNING LAW. 
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEVADA.


 


(b)                                  SUBMISSION TO JURISDICTION. 
THE BORROWER AND EACH OTHER LOAN
PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEVADA
SITTING IN CLARK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE DISTRICT
OF NEVADA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
NEVADA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN
SUCH FEDERAL COURT.  EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW. 
NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY
RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AGAINST THE BORROWER OR
ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.


 


(c)                                  WAIVER OF VENUE. 
THE BORROWER AND EACH OTHER LOAN
PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.


 


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(d)                                  SERVICE OF PROCESS. 
EACH LOAN PARTY IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 10.02. 
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.


 


10.15.              Waiver of Jury Trial. 
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.


 


10.16.              Arbitration Reference.


 


(a)                                  At the option of the Administrative Agent
from time to time (exercised in accordance with consent of the Requisite
Lenders) or of Borrower, any controversy or claim between or among the parties
arising out of or relating to this Agreement or any agreements or instruments
relating hereto or delivered in connection herewith and any claim based on or
arising from an alleged tort, shall be determined by arbitration.  The arbitration shall be conducted in
accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision in this Agreement, and under the
Commercial Rules of the American Arbitration Association (“AAA”).  The arbitrators shall give effect to
statutes of limitation in determining any claim.  Any controversy concerning whether an issue is arbitrable shall
be determined by the arbitrators. 
Judgment upon the arbitration award may be entered in any court having
jurisdiction.  The institution and
maintenance of an action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to arbitration if
any other party contests such action for judicial relief.


 


(b)                                 No provision of this section shall limit
the right of any party to this Agreement to exercise self-help remedies such as
setoff, to foreclose against or sell any real or personal property collateral
or security or to obtain provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any arbitration
or other proceeding.  The exercise of a
remedy does not waive the right of either party to resort to arbitration or
reference.  At the Administrative
Agent’s option,


 


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foreclosure under a deed of trust or mortgage may be
accomplished either by exercise of power of sale under the deed of trust or
mortgage or by judicial foreclosure.


 


10.17.              USA PATRIOT Act Notice. 
Each Lender that is subject to the Act (as hereinafter defined) and the
Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies the Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
“Act”), it is required to obtain, verify and record information that identifies
the Borrower, which information includes the name and address of the Borrower
and other information that will allow such Lender or the Administrative Agent,
as applicable, to identify the Borrower in accordance with the Act.


 


10.18.              Time of the Essence. 
Time is of the essence of the Loan Documents.


 


10.19.              Designation as Senior Debt.  All
Obligations are hereby certified and designated to be “Designated Senior
Indebtedness” for purposes of and as defined in that the Indenture dated as of
June 11, 2004, between the Borrower and U.S. Bank National Association, as trustee,  and all supplemental indentures thereto.


 


10.20.              Waiver re Landlord
Consents and Pledge.  The Administrative Agent and the Lenders
hereby waive any failure of the Borrower and its Subsidiaries to comply with
the terms of the Existing Loan Agreement and the Loan Documents (as in effect
prior to this Agreement) in respect of the failure of the Borrower and its
Subsidiaries to make timely delivery of landlord consents and the pledge of the
stock of those of the Subsidiaries of Borrower which are Nevada gaming
licensees.


 


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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.


 


	
   

  	
  HERBST GAMING, INC., a Nevada

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward Herbst

  	
   

  
	
   

  	
  Edward Herbst, President
  and Chief Executive

  Officer

  



 


 


1






















 


	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter J. Vitale

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
						



 


 


 


2

















 


	
   

  	
  BANK OF AMERICA, N.A., as a Lender, L/C

  Issuer and Swing Line Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter J. Vitale,
  Senior Vice President

  	
   

  
	
   

  	
   

  	
  Peter J. Vitale, Senior
  Vice President

  



 


 


3

















 


	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Denette Corrales, Vice
  President

  	
   

  
	
   

  	
   

  	
  Denette Corrales, Vice
  President

  



 


4

















 


	
   

  	
  WELLS FARGO BANK, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cathy Santoro, Vice
  President

  	
   

  
	
   

  	
   

  	
  Cathy Santoro, Vice
  President

  



 


5

















 


 


	
   

  	
  THE CIT GROUP/EQUIPMENT FINANCING,

  INC., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carl E. Myrick, SVP

  	
   

  
	
   

  	
   

  	
  Carl E. Myrick, SVP

  



 


 


6

















 


	
   

  	
  COMERICA WEST INCORPORATED,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eoin Collins,
  President

  	
   

  
	
   

  	
   

  	
  Eoin Collins, President

  



 


 


7

















 


	
   

  	
  LEHMAN COMMERCIAL PAPER INC.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Francis Chang,
  Authorized Signatory

  	
   

  
	
   

  	
   

  	
  Francis Chang, Authorized
  Signatory

  



 


 


 


8

















 


	
   

  	
  NEVADA STATE BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steve A. Strunk, Vice
  President

  	
   

  
	
   

  	
   

  	
  Steven A. Strunk, Vice
  President

  



 


9

























SCHEDULE 1.01


 


CASINO
LEASES


 


 


 


SEE ATTACHED


 


 


 


 


10

















 


LEASE
AGREEMENT


 


THIS LEASE, made
this 1st day of August, 1998, by and between E-T-T Enterprises, L.L.C.
(hereinafter “Lessor”), and E-T-T, Inc.(Hereinafter “Lessee”).


 


WITNESSETH: that
the Lessor in consideration of the rent herein specified to be paid by the
Lessee, and the covenants and conditions herein mentioned, does hereby lease,
let and demise, unto Lessee, and the Lessee does hereby rent from the Lessor
that certain real property and personal property along with all
improvements thereto, to wit, a casino building consisting of approximately
15,300 square feet and 32 acres of unimproved land (Hereinafter
the ”Property”) situated in the County of Nye, State of Nevada, whose
street address is 5870 Homestead Road, Pahrump, Nevada. A legal description of
the land, along with a floorplan and site plan, is attached hereto as
Exhibit “A” and incorporated herein by reference. A complete list of the
personal property, furniture, fixtures and equipment which Lessor shall
lease to Lessee pursuant to this Lease is attached hereto as “Exhibit B”
and incorporated herein by reference.


 


TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.


 


THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terms and conditions, namely:


 


1.                                       TERM:     This
Lease shall be a twenty (20) year lease commencing on August 1, 1998.


 


2.                                       RENTAL:     The
Lessee agrees to pay to the Lessor as rental for the Property the sum of One
Hundred Thousand Dollars ($100,000.00) per month on the first of each month for
the duration of said lease.


 


1

















 


3.                                       RIGHTS
& TITLE:     Lessee agrees that buildings and
improvements hereafter located or erected on premises at any time during the
term of his Lease, or extension thereof, shall be and remain property of Lessor
and Lessee shall have no title, rights or interest in said buildings and
improvements other than such interest granted hereby.


 


4.                                       QUIET
POSSESSION:     Lessor hereby covenants, warrants,
and agrees that at all times during the term hereof, provided Lessee is
not in default hereunder, Lessee shall have the full, peaceful and quite
possession of the Property, and, further that Lessor has full right and
power to make and enter into this lease.


 


5.                                       TAXES
AND UTILITY CHARGES:     Lessee agrees to pay all
real taxes, and assessments which may be levied against the improvements
thereon and any personal property and trade fixtures located therein and will
pay charges for light, power and other public utilities used by it in
connection with the use of the Property.


 


6.                                       ALTERATIONS:     The
Lessee agrees that before commencing any construction work on said premises or
making any alterations on improvements placed upon the Property that he
will notify Lessor in order that a notice of non-responsibility may be
posted on the Property and recorded in accordance with the provisions of
the Mechanic’s Lien Law of the State of Nevada.


 


7.                                       REQUIREMENTS
FOR ALTERATIONS:     Lessee covenants and agrees
that such alterations and/or changes shall be at his sole cost and expense and
that prior written consent of the Lessor shall be obtained therefore; and
provided that such changes and alterations shall conform with building codes
and zoning regulations now or hereinafter legally effective, and
promulgated by the State, County or Municipal authorities.


 


8.                                       REPAIRS:     Lessee
agrees, at his cost and expense, to maintain and keep in good order, condition
and repair the casino and all ancillary buildings or improvements to be


 


2

















 


constructed thereon by Lessee and all fixtures and equipment, including
visible plumbing and electrical fixtures. 
The Lessee agrees to keep the Property clean and to have no nuisance,
unsightly rubbish, or to commit or cause to be committed by its employees,
and/or sub- tenants, any violation of the laws, rules or regulations of
the State, County or Municipal Board of Health or appropriate
sanitary agency.


 


9.                                       TITLE
TO FIXTURES:     All fixtures and other property
and materials installed in the building on the Property by the Lessee shall be
and remain the property of the Lessee, and at the expiration of the
Lease, the Lessee may, within thirty (30) days, remove from said premises
all of such fixtures, property, and materials, provided that all expenses
connected with the removal thereof shall be at the expense of the Lessee. The
Lessee further agrees to repair at his sole expense all damage that may result
from the removal of such building, fixtures and other property and to
restore the Property to the condition in which they were prior to the
start of construction and that no building or improvements placed upon
said premises by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.


 


10.                                 LIABILITY
AND FIRE INSURANCE:     The Lessor shall require
the Lessee to carry, maintain and have in full force and effect fire,
workmen’s compensation, public liability, and product liability insurance with
a recognized insurance company authorized to transact business in the State of
Nevada for the benefit of the Lessor and Lessee, and for the protection of all
persons who may suffer injury while in, on or about the Property.  Said policy shall carry an amount of
coverage for injury to one person in any one accident in the sum of One
Hundred Thousand Dollars ($100,000.00) and for more injury to more than one
person in any one accident in the sum of Three Hundred Thousand Dollars
($300,000.00).  Lessor shall be furnished
with copies of said policies and all endorsements thereto.


 


3

















 


The Lessee shall
carry insurance against loss by destruction of the Property caused by fire,
explosion or other action of the elements, except loss caused by earthquake,
equal to ninety per cent (90%) of the value of the improvements.


 


11.                                 COMPLIANCE
WITH THE LAW:                The
Lessee shall conduct his business in such manner as will comply with all
requirements of all State, Federal, County and Municipal authorities,
appertaining to the business conducted upon the Property, and Lessee shall
not permit the Property to be used for any unlawful purposes.


 


12.                                 DEFAULT:     In
the event Lessee shall be in default in the payment of any rent herein
reserved, or in the performance of any of the covenants or conditions of this
Lease to be kept and performed by the Lessee, and such default shall
continue for thirty (30) days from and after service upon the Lessee of
written notice of such default, signed by the Lessor or their duly authorized
agents, then and in any such event, the Lessor may, at their option declare
this Lease terminated and repossess themselves of the Property and take such
action or pursue such remedy as may be permitted under the law of the
State of Nevada.  However,
if Lessee commences the necessary work to cure said default before the
expiration of the thirty (30) days, but the work takes in excess of thirty
days, then Lessor shall not be allowed to declare this Lease terminated.


 


13.                                 LIENS:     The
Lessee agrees that he will, at all times, save the Lessor and keep it blameless
and the Property free and harmless of and from any liability on account of
or in respect to any mechanic’s liens or liens in the nature thereof,
for work and labor done, or materials furnished at the instance and
request of the Lessee, in, on or about the Property; provided, however, that
the Lessee shall have the right to contest the claim of such lien, in
which event the Lessee shall, at his expense, furnish to the Lessor a
sufficient surety bond executed by a reputable and responsible surety company,
in at least double the amount of


 


4

















 


such claim of such lien, conditioned upon the diligent prosecution of
such defense, and to hold the Lessor from and clear of all loss, costs,
damages, and expenses of every kind and nature, arising either directly or
indirectly out of said contest, and to pay any judgment that may be
obtained forthwith upon the same being entered.


 


14.                                 ATTORNEY
FEE:     In the event of litigation arising from
default in performance of any of the provisions of this Lease by either the
Lessor or Lessee, the prevailing party in such litigation shall be
entitled to receive from the other party reasonable attorney fees and costs of
action incurred in connection with said litigation.  In the event that either Lessor or Lessee shall by reason of acts
of omission or commission in violation of the terms of the Lease, be made a
party to any litigation commenced by a person other than the parties hereto,
then such party performing the said act or suffering the said omission shall
pay all costs, expenses and reasonable attorney fees incurred by the
other party which arise from or are in connection with such litigation.


 


15.                                 INDEMNIFICATION:     Lessee
shall indemnify and hold harmless Lessor and its agents, servants, employees
and representatives from and against all claims, damages, losses and expenses,
including attorneys’ fees arising out of or resulting from Lessee’s occupancy,
provided however, that Lessor, its agents, employees representatives,
successors, or assigns are not negligent with regards to same.  This Paragraph shall have full force and
effect upon execution of this Lease Agreement.


 


16.                                 ASSIGNMENT:     The
Lessee shall not have the right to assign this Lease or hypothecate the same
without first receiving the written consent of the Lessor, which
consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any portion of the Property,
providing that the tenancy of such sub-tenant shall be subject to all the
terms, covenants and conditions of this Lease.


 


5

















 


17.                                 WAIVER:     The
waiver of either party of any of the covenants herein contained shall not
be deemed a waiver of such party’s right to enforce the same or any other
covenant contained herein.


 


18.                                 HOLDING
OVER:     If the Lessee shall hold over the
Property beyond the term herein specified, or any renewal thereof, with
the consent, express or implied of the Lessor such holding over shall be
construed to be a month-to-month tenancy, unless otherwise mutually agreed
upon.


 


19.                                 PHRASE
INTERPRETATION:     The term “Lessor” shall
include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.


 


20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:     Any and all
notices shall be forwarded to the following addresses:


 


	
  Lessor:

  
	
   

  
	
   

  	
  E-T-T Enterprises, L.L.C.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Edward J. Herbst, Member

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Timothy Herbst, Vice President

  



 


21.                                 NO
OTHER AGREEMENTS:     Both parties hereby certify
and declare that neither party has made any representations nor agreements
to or with any other party in addition to, or in conflict with the terms,
covenants and conditions hereof, and this Lease contains all of the terms,
covenants and conditions and representations between the parties upon the
subject matter hereof.


 


6

















 


22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED:     If, at
any time during the term hereof, proceedings in bankruptcy shall be
instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file,
or any person shall file any Petition in Bankruptcy under Chapters 10 or
11 of the Bankruptcy Act of the United States of America as such act
is now in force or as same may be amended, and shall be judicially
approved, or if a Receiver of the business or assets of the Lessee shall
be appointed and if such appointment be not vacated within sixty (60) days
after notice thereof to Lessee, or if a general assignment is made by the
Lessee for the benefit of creditors, or any sheriff, Marshall, constable,
or other duly constituted public official take possession thereof by authority
of any attachment or execution proceedings, and offer same for sale publicly,
the Lessor may, at its option, in either or any of such events,
without notice to Lessee or any other person or persons, immediately
recapture and take possession of the Property and terminate this Lease with or
without the process of law, such process being expressly waived by Lessee.


 


23.                                 CARE
OF PREMISES:     Lessee agrees that it will water,
cultivate, trim and keep in a neat condition any shrubs, plants or lawn planted
on the Property and will keep the parking areas and black top in a neat and clean
condition and will use for parking.


 


24.                                 OPTION
TO RENEW:     Lessee upon giving written notice to
Lessor, at least sixty (60) days prior to the date of the expiration of
the term aforesaid, provided he has faithfully complied with the terms hereof,
shall have the option of renewing this Lease for up to five (5) additional
ten (10) year terms, subject to the same terms, covenants and conditions
and agreements as contained herein other than this paragraph.  The monthly rental for each renewal term
shall be determined at the time of each renewal.


 


7

















 


25.                                 TIME
IS OF ESSENCE:     Time is of the essence in this
Lease and of each and every one of the provisions herein contained.


 


26.                                 BINDING
EFFECT:     The covenants and agreements contained
in this Lease shall be binding upon the parties hereto and upon their
respective heirs, executors, administrators, successors and assigns.


 


IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly authorized
officers as of the day and year first herein written.


 


 


	
  LESSOR:

  
	
  E-T-T Enterprises, L.L.C.

  
	
   

  
	
   

  
	
    /s/ Edward J. Herbst

  	
   

  
	
   

  	
  Edward J. Herbst, Member

  
	
   

  
	
   

  
	
  LESSEE:

  
	
  E-T-T, Inc.

  
	
   

  
	
   

  
	
    /s/ Timothy P. Herbst

  	
   

  
	
   

  	
  Timothy P. Herbst

  
	
   

  	
  Vice President

  
			



 


8

















 


LEASE AGREEMENT


 


THIS LEASE, made this 27th day of November 2002, by and between
Herbst Grandchildren’s Trust (hereinafter “Lessor”), and Herbst Gaming, Inc.
(Hereinafter


 


“Lessee”).


 


WITNESSETH: that the Lessor in consideration of the rent herein
specified to be paid by the Lessee, and the covenants and conditions herein
mentioned, does hereby lease, let and demise, unto Lessee, and the Lessee does
hereby rent from the Lessor that certain real property along with all
improvements thereto, which include a warehouse and office building, as well
as, a convenience store, situated in the County of Clark, State of Nevada,
whose street addresses are 5775 S. Polaris and 3475 W. Russell Road, Las Vegas,
Nevada 89118, as well as, that certain piece of unimproved property whose
street address is 3560 W. Russell Road, Las Vegas, Nevada 89118 (Hereinafter
collectively the “Property”) and whose legal descriptions are attached hereto
as Exhibit “A” & “B”.


 


TO HAVE AND TO HOLD the same unto the said Lessee, its successors and
assigns for the period and upon the terms and conditions hereinafter set forth.


 


THIS INDENTURE OF LEASE is made by the Lessor and accepted by the
Lessee upon each of the following terms and conditions, namely:


 


1.                                       TERM:  This Lease shall be a ten (10) year lease
commencing on November 27, 2002.


 


2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for the Property  the sum of Forty-three Thousand Five Hundred
Twenty-five ($43,525) per month on the first of each month for the duration of
said lease.


 


1

















 


3.                                       RIGHTS
& TITLE:  Lessee agrees that
buildings and improvements hereafter located or erected on premises at any time
during the term of his Lease, or extension thereof, shall be and remain
property of Lessor and Lessee shall have no title, rights or interest in said
buildings and improvements other than such interest granted hereby.


 


4.                                       QUIET
POSSESSION:  Lessor hereby
covenants, warrants, and agrees that at all times during the term hereof,
provided Lessee is not in default hereunder, Lessee shall  have the full, peaceful and quiet possession
of the Property, and, further that Lessor has full  right and power to make and enter into this lease.


 


5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal 
property and trade fixtures located therein and will pay charges for
light, power and other  public  utilities used by it in connection with the
use of the Property.


 


6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon the Property  that he will
notify Lessor in order that a notice of non-responsibility may be posted on the
Property and recorded in accordance with the provisions of the Mechanic’s Lien
Law of the  State of Nevada.


 


7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that  such alterations and/or
changes shall be at his sole cost and expense and that prior written consent of
the Lessor shall be obtained therefore; and provided that such changes and  alterations shall conform with building
codes and zoning regulations now or hereinafter  legally effective, and promulgated by the State, County or
Municipal authorities.


 


2

















 


8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in  good order,
condition and repair the service station and all ancillary buildings or  improvements to be constructed thereon by
Lessee and all fixtures and equipment, including visible plumbing and
electrical fixtures.  The Lessee agrees
to keep the Property clean and to have no nuisance, unsightly rubbish, or to
commit or cause to be committed by its employees, and/or sub-tenants, any
violation of the laws, rules or regulations of the State, County or Municipal
Board of Health or appropriate sanitary agency.


 


9.                                       TITLE
TO FIXTURES:  All fixtures and other
property and materials  installed in the
building on the Property by the Lessee shall be and remain the property  of the Lessee, and at the expiration of the
Lease, the Lessee may, within thirty (30) days,  remove from said premises all of such fixtures, property, and
materials, provided that all  expenses
connected with the removal thereof shall be at the expense of the Lessee.  The Lessee further agrees to repair at his
sole expense all damage that may result from the removal of  such building, fixtures and other property
and to restore the Property to the condition in  which they were prior to the start of construction and that no
building or improvements  placed upon
said premises by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.


 


10.                                 LIABILITY
AND FIRE INSURANCE:  The Lessor
shall require the Lessee to carry, maintain and have in full force and effect
fire, workmen’s compensation, public 
liability, and product liability insurance with a recognized insurance
company authorized to transact business in the State of Nevada for the benefit
of the Lessor and Lessee, and for the protection of all persons who may suffer
injury while in, on or about the Property. 
Said


 


3

















 


policy shall carry an amount of coverage for injury to one person in
any one accident in the  sum of One
Hundred Thousand Dollars ($100,000.00) and for more injury to more than one
person in any one accident in the sum of Three Hundred Thousand Dollars ($300,000.00).
Lessor shall be furnished with copies of said policies and all endorsements
thereto.


 


The Lessee shall carry insurance against loss by destruction of the
Property caused by fire, explosion or other action of the elements, except loss
caused by earthquake, equal to ninety per cent (90%) of the value of the
improvements.


 


11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in  such manner as
will comply with all requirements of all State, Federal, County and  Municipal authorities, appertaining to the
business conducted upon the Property, and Lessee  shall not permit the Property to be used for any unlawful
purposes.


 


12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to 
be kept and performed by the Lessee, and such default shall continue for
thirty (30) days from and after service upon the Lessee of written notice of
such default, signed by the Lessor  or
their duly authorized agents, then and in any such event, the Lessor may, at
their option  declare this Lease
terminated and repossess themselves of the Property and take such action  or pursue such remedy as may be permitted
under the law of the State of Nevada. 
However,  if Lessee commences the
necessary work to cure said default before the expiration of the  thirty (30) days, but the work takes in
excess of thirty days, then Lessor shall not be allowed  to declare this Lease terminated.


 


4

















 


13.                                 LIENS:  The Lessee agrees that he will, at all
times, save the Lessor and keep it blameless and the Property free and harmless
of and from any liability on account of or in 
respect to any mechanic’s liens or liens in the nature thereof, for work
and labor done, or materials furnished at the instance and request of the
Lessee, in, on or about the Property; 
provided, however, that the Lessee shall have the right to contest the
claim of such lien, in  which event the
Lessee shall, at his expense, furnish to the Lessor a sufficient surety bond
executed by a reputable and responsible surety company, in at least double the
amount of  such claim of such lien,
conditioned upon the diligent prosecution of such defense, and to hold the Lessor
from and clear of all loss, costs, damages, and expenses of every kind and
nature, arising either directly or indirectly out of said contest, and to pay
any judgment that may be obtained forthwith upon the same being entered.


 


14.                                 ATTORNEYS
FEES:  In the event of litigation
arising from default in performance of any of the provisions of this Lease by
either the Lessor or Lessee, the 
prevailing party in such litigation shall be entitled to receive from
the other party reasonable attorney fees and costs of action incurred in
connection with said litigation.  In the
event that either Lessor or Lessee shall by reason of acts of omission or
commission in violation of the  terms of
the Lease, be made a party to any litigation commenced by a person other than
the parties hereto, then such party performing the said act or suffering the
said omission shall  pay all costs,
expenses and reasonable attorney fees incurred by the other party which arise  from or are in connection with such
litigation.


 


15.                                 INDEMNIFICATION:  Lessee shall indemnify and hold harmless
Lessor  and its agents, servants,
employees and representatives from and against all claims, damages, 


 


5

















 


losses and expenses, including attorneys’ fees arising out of or
resulting from Lessee’s  occupancy,
provided however, that Lessor, its agents, employees, representatives,
successors, or assigns are not negligent with regards to same.  This Paragraph shall have full force
and  effect upon execution of this Lease
Agreement.


 


16.                                 ASSIGNMENT:  The Lessee shall not have the right to
assign this Lease or hypothecate the same without first receiving the written
consent of the Lessor, which consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
portion  of the Property, providing that
the tenancy of such sub-tenant shall be subject to all the  terms, covenants and conditions of this
Lease.


 


17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s right
to enforce the same or any other covenant contained herein.


 


18.                                 HOLDING
OVER:  If the Lessee shall hold over
the Property beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor 
such holding over shall be construed to be a month-to-month tenancy,
unless otherwise mutually agreed upon.


 


19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular,  if
necessary.  The term “Lessee” or the
phrase “the term hereof” shall include any renewal or renewal thereof where
permitted by the context hereof.


 


6

















 


20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:


 


	
  Lessor:

  
	
   

  
	
   

  	
  Herbst Grandchildren’s Trust

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Jerry E. Herbst, Trustee

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  Herbst Gaming, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Timothy Herbst, Vice President

  



 


21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that  neither
party has made any representations nor agreements to or with any other party
in  addition to, or in conflict with the
terms, covenants and conditions hereof, and this Lease  contains all of the terms, covenants and
conditions and representations between the parties  upon the subject matter hereof.


 


22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy shall
be instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor  shall file, or any person shall file any
Petition in Bankruptcy under Chapters 10 or 11 of the  Bankruptcy Act of the United States of America as such act is now
in force or as same may be amended, and shall be judicially approved, or if a
Receiver of the business or assets of the 
Lessee shall be appointed and if such appointment be not vacated within
sixty (60) days after 


 


7

















 


notice thereof to Lessee, or if a general assignment is made by the
Lessee for the benefit of  creditors, or
any sheriff, Marshall, constable, or other duly constituted public official
take possession thereof by authority of any attachment or execution
proceedings, and offer same  for sale
publicly, the Lessor may, at its option, in either or any of such events,
without notice to Lessee or any other person or persons, immediately recapture
and take possession of the Property and terminate this Lease with or without
the process of law, such process being 
expressly waived by Lessee.


 


23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and  keep in
a neat condition any shrubs, plants or lawn planted on the Property and will
keep the parking areas and black top in a neat and clean condition and will use
for parking.


 


24.                                 OPTION
TO RENEW:  Lessee upon giving
written notice to Lessor, at least 
sixty (60) days prior to the date of the expiration of the term
aforesaid, provided he has  faithfully
complied with the terms hereof, shall have the option of renewing this Lease
for up to five (5) additional ten (10) year terms, subject to the same terms,
covenants and conditions and agreements as contained herein other than this
paragraph.  The monthly rental for each
renewal term shall be determined at the time of each renewal.


 


25.                                 TIME
IS OF THE ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.


 


8

















 


26.                                 BINDING
EFFECT:  The covenants and
agreements contained in this Lease shall be binding upon the parties hereto and
upon their respective heirs, executors, administrators, successors and assigns.


 


IN WITNESS WHEREOF, the parties have caused this Lease to be executed
by their duly authorized officers as of the day and year first herein written.


 


 


	
  LESSOR:

  	
   

  
	
  HERBST GRANDCHILDREN’S TRUST

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/ Timothy P. Herbst

  	
   

  	
   

  
	
   

  	
  Timothy P. Herbst, Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LESSEE:

  	
   

  
	
  HERBST GAMING, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/ Edward J. Herbst

  	
   

  	
   

  
	
   

  	
  Edward J. Herbst

  	
   

  
	
   

  	
  President

  	
   

  
				



 


 


9

















 


LEASE AGREEMENT


 


THIS LEASE, made
this 1st day of July, 1997, by and between The Herbst Family Limited Partnership
II(hereinafter “Lessor”), and E-T-T Enterpprises, L.L.C. (Hereinafter
“Lessee”).


 


WITNESSETH: that
the Lessor in consideration of the rent herein specified to be paid
by the Lessee, and the covenants and conditions herein mentioned,
does hereby lease, let and demise, unto Lessee, and the Lessee does
hereby rent from the Lessor that certain real property(Hereinafter the
“Property”) situated in the County of Clark, State of Nevada, whose legal
descriptions are attached hereto as Exhibit “A”, and incorporated herein by
reference.


 


TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the period
and upon the terms and conditions hereinafter set forth.


 


THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terms and conditions, namely:


 


1.                                       TERM:  This Lease shall be a twenty (20) year lease
commencing on July 1, 1997.


 


2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for said demised premises the sum of Fourteen Thousand Four Hundred
Sixteen Dollars ($14,416.00) per month on the first of each month for the
duration of said lease.


 


3.                                       SECURITY:  Lessee agrees that buildings and
improvements hereafter located or erected on premises at  any 
time  during  the 
term  of his Lease, or extension
thereof, shall be and remain charged with the lien in favor of Lessor as
security for the enforcement of all


 


1

















 


agreements of this lease by Lessee to be kept and performed.  Such lien shall be prior to all other
contracts, liens and other encumbrances whatsoever effecting the demised
premises provided however that Lessor agrees that it will subordinate such lien
for the actual cost of financing the erection of any improvements required by
the Lessee in order to finance same, as well as, any lien required by Chevron
U.S.A., Inc.


 


4.                                       QUIET
POSSESSION:  Lessor hereby
covenants, warrants, and agrees that at all times during the term hereof,
provided Lessee is not in default hereunder, Lessee shall have the full,
peaceful and quiet possession of the demised premises, and, further that Lessor
has full right and power to make and enter into this lease.


 


5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities used
by it in connection with the use of the demised premises.


 


6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon said premises by him that he will notify Lessor in order that a
notice of non-responsibility may be posted on said premises and recorded in
accordance with the provisions of the Mechanic’s Lien Law of the State of
Nevada.


 


7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and alterations shall conform with
building codes and zoning regulations now or hereinafter


 


2

















 


legally effective, and promulgated by the State, County or Municipal
authorities.


 


8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the service station and
all ancillary buildings or improvements to be constructed thereon by Lessee and
all fixtures and equipment, including visible plumbing and electrical
fixtures.  The Lessee agrees to keep the
premises clean and to have no nuisance, unsightly rubbish, or to commit or
cause to be committed by its employees, and/or sub-tenants, any violation of
the laws, rules or regulations of the State, County or Municipal Board of
Health or appropriate sanitary agency.


 


9.                                       TITLE
TO FIXTURES:  All buildings,
fixtures and other property and materials installed in the demised premises by
the Lessee shall be and remain the property of the Lessee, and at the
expiration of the Lease, the Lessee may, within thirty (30) days, remove from
said premises all of such fixtures, property, and materials, provided that all
expenses connected with the removal thereof shall be at the expense of the
Lessee.  The Lessee further agrees to
repair at his sole expense all damage that may result from the removal of such
building, fixtures and other property and to restore said premises to the
condition in which they were prior to the start of construction and that no
building or improvements placed upon said premises by Lessee shall be removed
during the term of this Lease or extension thereof without the consent of
Lessor first had and obtained.


 


10.                                 LIABILITY
AND FIRE  INSURANCE:  The Lessor shall require the Lessee to
carry, maintain and have in full force and effect fire, workmen’s compensation,
public liability, and product liability insurance with a recognized insurance
company authorized to transact business in the State of Nevada for the benefit
of the Lessor and Lessee, and for the


 


3

















 


protection of all persons who may suffer injury while in, on or about
said premises.  Said policy shall carry
an amount of coverage for injury to one person in any one accident in the sum
of One Hundred Thousand Dollars ($100,000.00) and for more injury to more than
one person in any one accident in the sum of Three Hundred Thousand Dollars
($300,000.00).  Lessor shall be furnished
with copies of said policies and all endorsements thereto.


 


The Lessee shall
carry insurance against loss by destruction of the demised premises caused by
fire, explosion or other action of the elements, except loss caused by
earthquake, equal to ninety per cent (90%) of the value of the improvements.


 


11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of all
State, Federal, County and Municipal authorities, appertaining to the business
conducted upon the demised premises, and Lessee shall not permit the demised
premises to be used for any unlawful purposes.


 


12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the Lessee,
and such default shall continue for thirty (30) days from and after service
upon the Lessee of written notice of such default, signed by the Lessor or
their duly authorized agents, then and in any such event, the Lessor may, at
their option declare this Lease terminated and repossess themselves of said
premises and take such action or pursue such remedy as may be permitted under
the law of the State of Nevada. 
However, if Lessee commences the necessary work to cure said default
before the expiration of the thirty (30) days, but the work takes in
excess of thirty days, then Lessor shall not be allowed to declare this Lease
terminated.


 


4

















 


13.                                 LIENS:  The Lessee agrees that he will, at all
times, save the Lessor and keep it blameless and the demised premises free and
harmless of and from any liability on account of or in respect to any
mechanic’s liens or liens in the nature thereof, for work and labor done, or
materials furnished at the instance and request of the Lessee, in, on or about
the demised premises; provided, however, that the Lessee shall have the right
to contest the claim of such lien, in which event the Lessee shall, at his
expense, furnish to the Lessor a sufficient surety bond executed by a reputable
and responsible surety company, in at least double the amount of such claim of
such lien, conditioned upon the diligent prosecution of such defense, and to
hold the Lessor from and clear of all loss, costs, damages, and expenses of
every kind and nature, arising either directly or indirectly out of said
contest, and to pay any judgment that may be obtained forthwith upon the same
being entered.


 


14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease by
either the Lessor or Lessee, the prevailing party in such litigation shall be
entitled to receive from the other party reasonable attorney fees and costs of
action incurred in connection with said litigation.  In the event that either Lessor or Lessee shall by reason of acts
of omission or commission in violation of the terms of the Lease, be made a
party to any litigation commenced by a person other than the parties hereto,
then such party performing the said act or suffering the said omission shall
pay all costs, expenses and reasonable attorney fees incurred by the other
party which arise from or are in connection with such litigation.


 


15.                                 INDEMNIFICATION:  Lessee shall indemnify and hold harmless
Lessor and its agents, servants, employees and representatives from and against
all claims, damages, losses


 


5

















 


and expenses, including attorneys’ fees arising out of or resulting
from Lessee’s occupancy, provided, however, that Lessor, its agents, employees,
representatives, successors, or assigns are not negligent with regards to
same.  This Paragraph shall have full
force and effect upon execution of this Lease Agreement.


 


16.                                 ASSIGNMENT:  The Lessee shall not have the right to
assign this Lease or hypothecate the same without first receiving the written
consent of the Lessor, which consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
portion of the Property, providing that the tenancy of such sub-tenant shall be
subject to all the terms, covenants and conditions of this Lease.


 


17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall  not be
deemed a waiver of such party’s right to enforce the same or any other covenant
contained herein.


 


18.                                 HOLDING
OVER:  If the Lessee shall hold over
the premises beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor such holding over shall be construed
to be a month-to-month tenancy, unless otherwise mutually agreed upon.


 


19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.


 


20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:


 


6

















 


	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T Enterprises, L.L.C.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Edward
  J. Herbst

  
	
   

  
	
  Lessor:

  
	
   

  
	
   

  	
  Herbst Family Limited Partnership II

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Jerry
  Herbst

  



 


21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations nor
agreements to or with any other party in addition to, or in conflict with the
terms, covenants and conditions hereof, and this Lease contains all of the
terms, covenants and conditions and representations between the parties upon
the subject matter hereof.


 


22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy shall
be instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10 or 11 of the
Bankruptcy Act of the United States of America as such act is now in force or
as same may be amended, and shall by judicially approved, or if a Receiver of
the business or assets of the Lessee shall be appointed and if such appointment
be not vacated within sixty (60) days after notice thereof to Lessee, or if a
general assignment is made by the Lessee for the benefit of creditors, or any
sheriff, Marshall, constable, or other duly constituted public official take
possession thereof by authority of any attachment or execution proceedings, and
offer same


 


7

















 


for sale publicly, the Lessor may, at its option, in either or any of
such events, without notice to Lessee or any other person or persons,
immediately recapture and take possession of the demised premises and terminate
this Lease with or without the process of law, such process being expressly
waived by Lessee.


 


23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs, plants or
lawn planted on said premises and will keep the parking areas and black top in
a neat and clean condition and will use for parking.


 


24.                                 OPTION
TO RENEW:  The Lessee upon giving
written notice to Lessor, at least sixty (60) days prior to the date of the
expiration of the term aforesaid, provided he has faithfully complied with the
terms hereof, shall have the option of renewing this Lease for up to five (5)
additional ten (10) year terms subject to the same terms, covenants and
conditions and agreements as contained herein other than this paragraph.  The monthly rental for each renewal term
shall be determined at the time of each renewal.


 


25.                                 RIGHT
OF FIRST REFUSAL:  In the event of a
contemplated sale of the premises during the demised term, the Lessor agrees to
give Lessee a notice in writing at least ten (10) days before the contemplated
sale of substance of terms on which it is proposed to be made, which notice
shall be registered mail directed to Lessee at his principal place of business
for notices; and thereupon within ten (10) days from the date of mailing of
notice the Lessee shall have the right to purchase premises upon the terms and
conditions proposed, and on the failure of the Lessee to exercise such option
within the time aforesaid the option hereby granted to Lessee shall be and
stand canceled.


 


26.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every


 


8

















 


one of the
provisions herein contained.


 


27.                                 BINDING
EFFECT:  The covenants and
agreements contained in this Lease shall be binding upon the parties hereto and
upon their respective heirs, executors, administrators, successors and assigns.


 


IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.


 


 


	
  LESSOR:

  
	
  The Herbst Family Limited Partnership II

  
	
   

  
	
    /s/ Jerry Herbst

  	
   

  
	
   

  	
  Jerry Herbst, Partner

  
	
   

  
	
   

  
	
  LESSEE:

  
	
   

  
	
  E-T-T Enterprises, L.L.C.

  
	
   

  
	
    /s/ Timothy P. Herbst

  	
   

  
	
   

  	
  Timothy P. Herbst, Member

  
			



 


9

















 


LEASE AGREEMENT


 


THIS LEASE, made
this 1st day of July, 1997, by and between E-T-T Enterprises,
L.L.C.(hereinafter “Lessor”), and Terrible Herbst, Inc.(Hereinafter “Lessee”).


 


WITNESSETH: that
the Lessor in consideration of the rent herein specified to be paid by the
Lessee, and the covenants and conditions herein mentioned, does hereby lease,
let and demise, unto Lessee, and the Lessee does hereby rent from the Lessor
that certain real property along with all improvements thereto, to wit,
all property and buildings used in the operation of a gasoline station and
mini-market and 15,000 square feet of warehouse space (Hereinafter the
“Property”) situated in County of Clark, State of Nevada, whose street
address is and which is set forth in the floorplan and site plan,
both of which are attached hereto as Exhibit “A”.


 


TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.


 


THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terms and conditions, namely:


 


1.                                       TERM:  This Lease shall be a twenty (20) year lease
commencing on July 1, 1997.


 


2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for the Property the sum of Nineteen Thousand Dollars ($19,000.00)
per month on the first of each month for the duration of said lease.


 


3.                                       RIGHTS
& TITLE:  Lessee agrees that
buildings and improvements hereafter located or erected on premises at any time
during the term of this Lease, or extension thereof, shall be and remain
property of Lessor and Lessee shall have no title, rights or interest in said
buildings and improvements other than such interest granted hereby.


 


1

















 


4.                                       QUIET
POSSESSION:  Lessor hereby
covenants, warrants, and agrees that at all times during the term hereof,
provided Lessee is not in default hereunder, Lessee shall
have the full, peaceful and quiet possession of the Property, and,
further that Lessor has full right and power to make and enter into this
lease.


 


5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities
used by it in connection with the use of the Property.


 


6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon the Property that he will notify Lessor in order that a notice
of non-responsibility may be posted on the Property and recorded in accordance
with the provisions of the Mechanic’s Lien Law of the State of Nevada.


 


7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and alterations shall confirm
with building codes and zoning regulations now or hereinafter
legally effective, and promulgated by the State, County or Municipal
authorities.


 


8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the service station
and all ancillary buildings or improvements to be constructed thereon by
Lessee and all fixtures and equipment, including visible plumbing and
electrical fixtures.  The Lessee agrees
to keep the Property clean and to have no nuisance, unsightly rubbish, or to
commit or cause to be committed by its employees, and/or sub-tenants, any
violation of the laws, rules or regulations of the State, County or


 


2

















 


Municipal Board of Health or appropriate sanitary agency.


 


9.                                       TITLE
TO FIXTURES:  All fixtures and other
property and materials installed in the building on the Property by
the Lessee shall be and remain the property of the Lessee, and at the
expiration of the Lease, the Lessee may, within thirty (30) days,
remove from said premises all of such fixtures, property, and materials,
provided that all expenses connected with the removal thereof shall be at the
expense of the Lessee.  The Lessee
further agrees to repair at his sole expense all damage that may result from
the removal of such building, fixtures and other property and to restore
the Property to the condition in which they were prior to the start of
construction and that no building or improvements placed upon said
premises by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.


 


10.                                 LIABILITY
AND FIRE INSURANCE:  The Lessor
shall require the Lessee to carry, maintain and have in full force and effect
fire, workmen’s compensation, public liability, and product liability insurance
with a recognized insurance company authorized to transact business in the
State of Nevada for the benefit for the Lessor and Lessee, and for the
protection of all persons who may suffer injury while in, on or about the
Property.  Said policy shall carry
an amount of coverage for injury to one person in any one accident in the
sum of One Hundred Thousand Dollars ($100,000.00) and for more injury to
more than one person in any one accident in the sum of Three Hundred Thousand
Dollars ($300,000.00).  Lessor shall be
furnished with copies of said policies and all endorsements thereto.


 


 


3

















 


11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of all
State, Federal, County and Municipal authorities, appertaining to the
business conducted upon the Property, and Lessee shall not permit the Property
to be used for any unlawful purposes.


 


12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the Lessee,
and such default shall continue for thirty (30) days from and after
service upon the Lessee of written notice of such default, signed by the Lessor
or their duly authorized agents, then and in any such event, the Lessor
may, at their option declare this Lease terminated and repossess themselves of
the Property and take such action or pursue such remedy as may be
permitted under the law of the State of Nevada.  However, if Lessee commences the necessary work to cure said
default before the expiration of the thirty (30) days, but the work takes
in excess of thirty days, then Lessor shall not be allowed to declare this
Lease terminated.


 


13.                                 LIENS:  The Lessee agrees that he will, at all
times, save the Lessor and keep it blameless and the Property free and harmless
of and from any liability on account of or in respect to any mechanic’s liens
or liens in the nature thereof, for work and labor done, or materials furnished
at the instance and request of the Lessee, in, on or about the Property;
provided, however, that the Lessee shall have the right to contest the claim of
such lien, in which event the Lessee shall, at his expense, furnish to the
Lessor a sufficient surety bond executed by a reputable and responsible surety
company, in at least double the amount of such claim of such lien,
conditioned upon the diligent prosecution of such defense, and to hold the
Lessor from and clear of all loss, costs, damages, and expenses of every kind
and nature, arising either directly or indirectly out of said contest, and
to pay any judgment that


 


4

















 


may be obtained forthwith upon the same being entered.


 


14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease
by either the Lessor or Lessee, the prevailing party in such litigation
shall be entitled to receive from the other party reasonable attorney fees and
costs of action incurred in connection with said litigation.  In the event that either Lessor or Lessee
shall by reason of acts of omission or commission in violation of the terms of
the Lease, be made a party to any litigation commenced by a person other than
the parties hereto, then such party performing the said act or suffering the
said omission shall pay all costs, expenses and reasonable attorney
fees incurred by the other party which arise from or are in connection
with such litigation.


 


15.                                 INDEMNIFICATION:                            Lessee
shall indemnity and hold harmless Lessor and its agents, servants,
employees and representatives from and against all claims, damages, losses and
expenses, including attorneys’ fees arising out of or resulting from Lessee’s
occupancy, provided however, that Lessor, its agents, employees,
representatives, successors, or assigns are not negligent with regards to
same.


 


Additionally,
Lessee shall indemnify, defend and hold harmless Lessor from and
against any and all expenses (including attorney’s fees), liabilities and
claims of whatsoever kind and nature including, but not limited to , those
for damage to property (including) property of Lessee), or for injury to
or death of any person, directly or indirectly arising out of or in
any way connected with the storage, handling, distribution, sale or use of any
petroleum products on the Property, or in the operation of any vehicle or
vehicles in connection with Lessee’s business.


 


This Paragraph
shall have full force and effect upon execution of this Lease Agreement.


 


5

















 


16.                                 ASSIGNMENT:  The Lessee shall not have the right to
assign this Lease or hypothecate the same without first receiving the written
consent of the Lessor, which consent shall not unreasonably be
withheld.  Lessee shall have the right
to sublet any portion of the Property, providing that the tenancy of such
sub-tenant shall be subject to all the terms, covenants and conditions of
this Lease.


 


17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s right
to enforce the same or any other covenant contained herein.


 


18.                                 HOLDING
OVER:  If the Lessee shall hold over
the Property beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor such holding over shall be
construed to be a month-to-month tenancy, unless otherwise mutually agreed
upon.


 


19.                                 PHRASE
INTERPREATION:  The term “Lessor”
shall include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.


 


20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:


 


	
  Lessor:

  
	
   

  
	
   

  	
  E-T-T Enterprises, L.L.C.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Edward
  J. Herbst, Member

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  Terrible Herbst, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Jerry
  E. Herbst, President

  



 


6

















 


21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations nor
agreements to or with any other party in addition to, or in conflict with
the terms, covenants and conditions hereof, and this Lease contains all of the
terms, covenants and conditions and representations between the parties
upon the subject matter hereof.


 


22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy shall
be instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10 or 11 of the
Bankruptcy Act of the United States of America as such act is now in force or
as same may be amended, and shall be judicially approved, or if a Receiver of
the business or assets of the Lessee shall be appointed and if such
appointment be not vacated within sixty (60) days after notice thereof to
Lessee, or if a general assignment is made by the Lessee for the benefit of
creditors, or any sheriff, Marshall, constable, or other duly constituted
public official take possession thereof by authority of any attachment or
execution proceedings, and offer same for sale publicly, the Lessor may, at its
option, in either or any of such events, without notice to Lessee or any
other person or persons, immediately recapture and take possession of the
Property and terminate this Lease with or without the process of Law, such
process being expressly waived by Lessee.


 


23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs,
plants or lawn planted on the Property and will keep the parking areas and
black top in a neat and clean condition and will use for parking.


 


24.                                 OPTION
TO RENEW:  Lessee understand and
acknowledges that Lessor holds interest in the Property through that
certain lease, which is attached hereto as Exhibit


 


7

















 


“B” and that Lessee’s option to renew this Agreement is subject to and
conditioned upon Lessor renewing Exhibit “B”.  So long as Lessor renews, then the Lessee upon giving written
notice to Lessor, at least sixty (60) days prior to the date of the expiration
of the term aforesaid, provided he has faithfully complied with the terms
hereof, shall have the option of renewing this Lease for up to five (5)
additional ten (10) year terms, subject to the same terms, covenants and
conditions and agreements as contained herein other than this paragraph.  The
monthly rental for each renewal term shall be determined at the time of each
renewal.


 


25.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.


 


26.                                 BINDING
EFFECT:  The covenants and
agreements contained in this Lease shall be binding upon the parties
hereto and upon their respective heirs, executors, administrators, successors
and assigns.


 


IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.


 


 


	
  LESSOR:

  
	
  E-T-T Enterprises, L.L.C.

  
	
   

  
	
   

  
	
  /s/ Edward J. Herbst, Member

  	
   

  
	
  Edward J. Herbst, Member

  
	
   

  
	
   

  
	
  LESSEE:

  
	
  Terrible Herbst, Inc.

  
	
   

  
	
   

  
	
  /s/ Jerry E. Herbst

  	
   

  
	
  Jerry E. Herbst

  
	
  President

  
			



 


8

















 


LEASE AGREEMENT


 


THIS LEASE, made
this 1st day of July, 1997, by and between E-T-T Enterprises,
L.L.C.(hereinafter “Lessor”), and E-T-T, Inc.(Hereinafter “Lessee”).


 


WITNESSETH: that
the Lessor in consideration of the rent herein specified to be paid by the
Lessee, and the covenants and conditions herein mentioned, does hereby lease,
let and demise, unto Lessee, and the Lessee does hereby rent from the Lessor
that certain real property along with all improvements thereto, to wit,
approximately 19,000 square feet of office space and 35,000 square feet of
warehouse space(Hereinafter the “Property”) situated in the County of
Clark, State of Nevada, whose street address is 3440 W. Russell Road, Las
Vegas, Nevada and which is set forth in the floorplan, both of which are
attached hereto as Exhibit “A”.


 


TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.


 


THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terms and conditions, namely:


 


1.                                       TERM:  This Lease shall be a twenty (20) year lease
commencing on July 1, 1997.


 


2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for the Property the sum of Thirty-two Thousand One Hundred Dollars
($32,100.00) per month on the first of each month for the duration of said
lease.


 


3.                                       RIGHTS
& TITLE:  Lessee agrees that
buildings and improvements hereafter located or erected on premises at any time
during the term of this Lease, or extension thereof, shall be and remain
property of Lessor and Lessee shall have no title, rights or interest in said
buildings and improvements other than such interest granted hereby.


 


1

















 


4.                                       QUIET
POSSESSION:  Lessor hereby
covenants, warrants, and agrees that at all times during the term hereof,
provided Lessee is not in default hereunder, Lessee shall have the full,
peaceful and quiet possession of the Property, and, further that Lessor has
full right and power to make and enter into this lease.


 


5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities
used by it in connection with the use of the Property.


 


6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon the Property that he will notify Lessor in order that a notice
of non-responsibility may be posted on the Property and recorded in accordance
with the provisions of the Mechanic’s Lien Law of the State of Nevada.


 


7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and alterations shall confirm
with building codes and zoning regulations now or hereinafter
legally effective, and promulgated by the State, County or Municipal
authorities.


 


8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the service station
and all ancillary buildings or improvements to be constructed thereon by
Lessee and all fixtures and equipment, including visible plumbing and
electrical fixtures.  The Lessee agrees
to keep the Property clean and to have no nuisance, unsightly rubbish, or to
commit or cause to be committed by its employees, and/or sub-tenants, any
violation of the laws, rules or regulations of the State, County or


 


2

















 


Municipal Board of
Health or appropriate sanitary agency.


 


9.                                       TITLE
TO FIXTURES:  All fixtures and other
property and materials installed in the building on the Property by
the Lessee shall be and remain the property of the Lessee, and at the
expiration of the Lease, the Lessee may, within thirty (30) days,
remove from said premises all of such fixtures, property, and materials,
provided that all expenses connected with the removal thereof shall be at the
expense of the Lessee.  The Lessee further
agrees to repair at his sole expense all damage that may result from the
removal of such building, fixtures and other property and to restore the
Property to the condition in which they were prior to the start of
construction and that no building or improvements placed upon said premises
by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.


 


10.                                 LIABILITY
AND FIRE INSURANCE:  The Lessor
shall require the Lessee to carry, maintain and have in full force and effect
fire, workmen’s compensation, public liability, and product liability insurance
with a recognized insurance company authorized to transact business in the
State of Nevada for the benefit for the Lessor and Lessee, and for the
protection of all persons who may suffer injury while in, on or about the
Property.  Said policy shall carry
an amount of coverage for injury to one person in any one accident in the
sum of One Hundred Thousand Dollars ($100,000.00) and for more injury to
more than one person in any one accident in the sum of Three Hundred Thousand
Dollars ($300,000.00).  Lessor shall be
furnished with copies of said policies and all endorsements thereto.


 


 


3

















 


11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of all
State, Federal, County and Municipal authorities, appertaining to the business
conducted upon the Property, and Lessee shall not permit the Property to be
used for any unlawful purposes.


 


12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the
Lessee, and such default shall continue for thirty (30) days from and
after service upon the Lessee of written notice of such default, signed by
the Lessor or their duly authorized agents, then and in any such event,
the Lessor may, at their option declare this Lease terminated and repossess
themselves of the Property and take such action or pursue such remedy as
may be permitted under the law of the State of Nevada.  However, if Lessee commences the necessary
work to cure said default before the expiration of the thirty (30) days,
but the work takes in excess of thirty days, then Lessor shall not be allowed
to declare this Lease terminated.


 


13.                                 LIENS:  The Lessee agrees that he will, at all
times, save the Lessor and keep it blameless and the Property free and harmless
of and from any liability on account of or in respect to any mechanic’s liens
or liens in the nature thereof, for work and labor done, or materials furnished
at the instance and request of the Lessee, in, on or about the Property;
provided, however, that the Lessee shall have the right to contest the claim of
such lien, in which event the Lessee shall, at his expense, furnish to the
Lessor a sufficient surety bond executed by a reputable and responsible surety
company, in at least double the amount of such claim of such lien, conditioned
upon the diligent prosecution of such defense, and to hold the Lessor from
and clear of all loss, costs, damages, and expenses of every kind and
nature, arising either directly or indirectly out of said contest, and to
pay any judgment that


 


4

















 


may be obtained forthwith upon the same being entered.


 


14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease
by either the Lessor or Lessee, the prevailing party in such litigation
shall be entitled to receive from the other party reasonable attorney fees and
costs of action incurred in connection with said litigation.  In the event that either Lessor or Lessee
shall by reason of acts of omission or commission in violation of the
terms of the Lease, be made a party to any litigation commenced by a
person other than the parties hereto, then such party performing the said
act or suffering the said omission shall pay all costs, expenses
and reasonable attorney fees incurred by the other party which arise from
or are in connection with such litigation.


 


15.                                 INDEMNIFICATION:                            Lessee
shall indemnity and hold harmless Lessor and its agents, servants,
employees and representatives from and against all claims, damages, losses
and expenses, including attorneys’ fees arising out of or resulting from
Lessee’s occupancy, provided however, that Lessor, its agents, employees,
representatives, successors, or assigns are not negligent with regards to
same.  This Paragraph shall have full
force and effect upon execution of this Lease Agreement.


 


16.                                 ASSIGNMENT:  The Lessee shall not have the right to
assign this Lease or hypothecate the same without first receiving the
written consent of the Lessor, which consent shall not unreasonably be
withheld.  Lessee shall have the right
to sublet any portion of the Property, providing that the tenancy of such
sub-tenant shall be subject to all the terms, covenants and conditions of
this Lease.


 


17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s
right to enforce the same or any other covenant contained herein.


 


5

















 


18.                                 HOLDING
OVER:  If the Lessee shall hold over
the Property beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor such holding over shall be
construed to be a month-to-month tenancy, unless otherwise mutually agreed
upon.


 


19.                                 PHRASE
INTERPREATION:  The term “Lessor”
shall include the singular, if necessary.  The term “Lessee” or the
phrase “the term hereof” shall include any renewal or renewal thereof where
permitted by the context hereof.


 


20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:


 


	
  Lessor:

  
	
   

  
	
   

  	
  E-T-T Enterprises, L.L.C.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Edward
  J. Herbst, Member

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: 
  Timothy Herbst, Vice President

  



 


21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations
nor agreements to or with any other party in addition to,
or in conflict with the terms, covenants and conditions hereof, and
this Lease contains all of the terms, covenants and conditions and
representations between the parties upon the subject matter hereof.


 


22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy
shall be instituted by or against the Lessee and result in an adjudication
of bankruptcy, or if the Lessee shall file or any creditor shall


 


6

















 


file, or any person shall file any Petition in Bankruptcy
under Chapters 10 or 11 of the Bankruptcy Act of the United States of America
as such act is now in force or as same may be amended, and shall be judicially
approved, or if a Receiver of the business or assets of the Lessee shall be
appointed and if such appointment be not vacated within sixty (60) days after
notice thereof to Lessee, or if a general assignment is made by the Lessee for
the benefit of creditors, or any sheriff, Marshall, constable, or other duly
constituted public official take possession thereof by authority of any
attachment or execution proceedings, and offer same for sale publicly, the
Lessor may, at its option, in either or any of such events, without notice
to Lessee or any other person or persons, immediately recapture and take
possession of the Property and terminate this Lease with or without the process
of Law, such process being expressly waived by Lessee.


 


23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs,
plants or lawn planted on the Property and will keep the parking areas and
black top in a neat and clean condition and will use for parking.


 


24.                                 OPTION
TO RENEW:  Lessee understand and
acknowledges that Lessor holds interest in the Property through that
certain lease, which is attached hereto as Exhibit “B” and that Lessee’s
option to renew this Agreement is subject to and conditioned upon Lessor
renewing Exhibit “B”.  So long as Lessor
renews, then the Lessee upon giving written notice to Lessor, at least
sixty (60) days prior to the date of the expiration of the term aforesaid,
provided he has faithfully complied with the terms hereof, shall have the
option of renewing this Lease for up to five (5) additional ten (10) year
terms, subject to the same terms, covenants and conditions and agreements
as contained herein other than this paragraph.  The monthly rental
for each renewal term shall be determined at the time of each renewal.


 


7

















 


25.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.


 


26.                                 BINDING
EFFECT:  The covenants and
agreements contained in this Lease shall be binding upon the parties
hereto and upon their respective heirs, executors, administrators, successors
and assigns.


 


IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.


 


 


	
  LESSOR:

  
	
  E-T-T Enterprises, L.L.C.

  
	
   

  
	
   

  
	
  /s/ Edward J. Herbst, Member

  	
   

  
	
  Edward J. Herbst, Member

  
	
   

  
	
  LESSEE:

  
	
  E-T-T, Inc.

  
	
   

  
	
   

  
	
  /s/ Timothy P. Herbst

  	
   

  
	
  Timothy P. Herbst

  
	
  Vice President

  
			



 


8

















 


LEASE


 


1.                                       PARTIES. 
This Lease (this “Lease”)
is made and entered into as of the 9th day of February, 1994, by and between THE 1993 SAMUEL JOSEPHSON REVOCABLE FAMILY TRUST under
Declaration of Trust dated September 13, 1993 (“Landlord”) and PHOENIX ASSOCIATES, a Nevada limited partnership (“Tenant”).  This Lease is made in furtherance of the sale (the “Sale”) of the “Premises” (as hereinbelow defined) by Tenant
to Landlord effective concurrently with the effectiveness hereof.


 


2.                                       PREMISES. 
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord,
on the terms and conditions hereinafter set forth, the building currently known
as “Lucky Strike Casino & Bowl,”
formerly known as “Henderson Bowl,”
and commonly described as 642 South Boulder Highway, Henderson, Nevada (the “Premises”), together with any and all
related realty conveyed to Landlord by Tenant pursuant to the Sale.  Tenant accepts the Premises “as is.”


 


3.                                       TERM. 
The term (the “Term”) of
the leasehold interest granted herein shall be for twenty (20) years effective
upon the consummation of the Sales; provided, however, that Tenant shall have
five (5) consecutive extension options thereafter to extend the Term for an
additional ten (10) years per each such extension option upon written notice to
Landlord prior to expiration of the Term as then in effect and under the
terms and conditions as provided in this Lease except that the Basic Rent
in respect of such option periods shall be equal to the amount thereof
immediately prior to commencement of each such option period plus the
additional sum of $2,500 monthly and that such Basic Rent shall again increase
by $2,500 monthly after the completion of the fifth year of each such option
period.


 


4.                                       RENT. 
Tenant shall pay to Landlord as basic rent (the “Basic Rent”) for the Premises, monthly in
arrears on the last day of each month during the Term, the following
sums:  during the first five years of the Term, $25,000 monthly,
during the sixth through tenth years of the Term, $27,500 monthly, during the
eleventh through fifteenth years of the Term, $30,000 monthly, and during the
sixteenth through twentieth years of the Term, $32,500 monthly.  Rent for any period during the Term of this
Lease which is for less than one (1) month shall be a pro rata portion of
the monthly installation paid on the last day of the month
in question.  Rent shall be payable
without notice or demand and without any deduction, off-set, or abatement in
lawful money of the United States to the Landlord at the address stated herein
for notices or to such other persons or such other places as Landlord may
designate to Tenant in writing.


 


5.                                       INTENTIONALLY LEFT BLANK.


 


6.                                       USE. 
Tenant may utilize the Premises in any manner it determines and for any
purpose not wholly inconsistent with its present use unless it receives
Landlord’s consent to such other purpose (which consent shall not be
unreasonably withheld and shall only be withheld for good cause upon a
reasonable basis) provided that it does not breach any
applicable governmental laws, rules, and regulations.  Landlord covenants to cooperate in all


 


1

















 


may seek with respect to the Property, any operations thereat, any
adjacent property, and/or any operations thereat.  Landlord expressly acknowledges that there is no express or
implied covenant of continuous operation of Tenant hereunder.


 


7.                                       TAXES. 
Tenant shall pay all real property taxes and general assessments levied
and assessed against the Premises during the Term of this Lease.  Tenant shall pay prior to the delinquency
all taxes assessed against and levied upon the trade fixtures, furnishings,
equipment, and other personal property of Tenant contained in the
Premises.  Tenant shall endeavor to
cause such trade fixtures, furnishings, and equipment and all other personal
property to be assessed and billed separately from the property of
Landlord.  If any of Tenant’s sole
personal property shall be assessed with Landlord’s property, Tenant shall pay
to Landlord the taxes attributable to Tenant within ten (10) days after receipt
of a written statement from Landlord setting forth the taxes applicable to
Tenant’s property.


 


8.                                       UTILITIES. 
Tenant shall make all arrangements and pay for all water, gas,
heat, light, power, telephone, and other utility services supplied to the
Premises together with any taxes thereon and for all connection
charges.  If any such services are not
separately metered to Tenant, the Tenant shall pay a reasonable
proportion, to be determined by Landlord, of all charges jointly metered with
other premises.


 


9.                                       MAINTENANCE AND REPAIRS.  Landlord shall have no obligations to
maintain or repair the Premises.


 


10.                                 ALTERATIONS AND ADDITIONS.  Tenant may, without Landlord’s consent, make
any alterations, improvements, or additions in or about the Premises as Tenant
may determine.  Before commencing any
work relating to the alterations, additions, or improvements affecting the
Premises, Tenant shall notify Landlord in writing of the expected date of the
commencement of such work so that Landlord can post and record the appropriate
notices of non-responsibility to protect Landlord from any mechanic’s liens,
materialman liens, or any other liens. 
In any event, Tenant shall pay, when due, all claims for labor and
materials furnished to or for Tenant at or for use in the Premises.  Tenant shall not permit any
mechanic’s liens or materialmen’s liens to be levied against the Premises
for any labor or material furnished to Tenant or claims to have been furnished
to Tenant or Tenant’s agents or contractor in connection with work or any character
performed or claimed to have been performed on the Premises by or at the
direction of Tenant; provided, however, that Tenant shall have the right
to contest the validity of any such lien if, immediately on demand by Landlord,
Tenant procures and records a lien release bond meeting the requirements of
Landlord and shall provide for the payment of any sum that the claimant
may recover on the claim (together with the costs of suit, if it is recovered
in the action).


 


11.                                 FIRE INSURANCE.  Tenant at its cost shall maintain during the Term of this Lease
on the Premises a policy or policies of standard fire and extended coverage
insurance from an insurer acceptable to Landlord to the extent of at least
full replacement value thereof or such greater amount as set forth
below.  Said insurance policies shall be
issued in the names of Landlord and Tenant, as their interests may appear
and shall be in such form and amount as are satisfactory to Landlord, in
its sole reasonable discretion.  Tenant
at its cost shall maintain during the Term of this Lease on all its
personal property, Tenant’s improvements and


 


2

















 


alterations in or about the Premises, a policy of standard fire and
extended coverage insurance, with vandalism and malicious mischief
enforcements, to the extent of their full replacement value.  The proceeds from any such policy shall be
used by Tenant for the replacement of personal property or the restoration of
Tenant’s improvements or alterations.


 


12.                                 LIABILITY INSURANCE.  Tenant at its sole cost and expense shall
maintain during the Term of this Lease public liability and property damage
insurance, from an insurer and in form acceptable to Landlord, with a single
combined liability limit of One Million and 00/100 Dollars ($1,000,000.00) and
property damage limits of not less than One Million and 00/100 Dollars
($1,000,000.00), insuring against all liability of Tenant and its authorized
representatives arising out of and in connection with Tenant’s use or occupancy
of the Premises.  Both public liability insurance and property damage
insurance shall insure performance by Tenant of the indemnity provisions below,
but the limits of such insurance shall not, however, limit the liability
of Tenant hereunder.  Both Landlord and
Tenant shall be named as additional insureds, and the policies shall contain
cross-liability endorsements.  If Tenant
shall fail to procure and maintain such insurance, Landlord may, but shall not
be required to, procure and maintain same at the expense of Tenant and the
cost thereof shall become due and payable as additional rental to Landlord
together with Tenant’s next rental installment.


 


13.                                 INDEMNITY, ETC.


 


(a)                                  Hold Harmless. 
Tenant shall indemnify and hold Landlord harmless from and
against any and all claims arising from Tenant’s use or occupancy of the
Premises or from the conduct of its business or from any activity, work, or
things which may be permitted or suffered by Tenant in or about the Premises
including all damage, costs, attorney fees, expenses, and liabilities
incurred in the defense of any claim or action or proceeding arising
therefrom.  Except for Landlord’s
willful or negligent conduct, Tenant hereby assumes all risk of damage to
property or injury to person in or about the Premises from any cause and Tenant
hereby waives all claims in respect thereof against Landlord.


 


(b)                                 Waiver of Subrogation.  Tenant and Landlord each waives any and all
rights of recovery against the other or against the officers, employees, agents,
and representatives of the other, for loss of or damage to such waiving
party or its property or the property of others under its control where such
loss or damage is insured against under any insurance policy in force at the
time of such loss or damage.  Each party
shall cause each insurance policy obtained by it hereunder to provide that the
insurance company waives all right of recovery by way of subrogation
against either party in connection with any damage covered by any such policy.


 


(c)                                  Exemption
of Landlord from Liability.  Tenant
hereby agrees that Landlord shall not be liable for any injury to Tenant’s
business or loss of income therefrom or for damage to the goods, wares,
merchandise, or other property of Tenant, Tenant’s employees, invitees, customers,
or any other person in or about the Premises, nor shall Landlord be liable
for injury to the person of Tenant, Tenant’s employees, agents, contractors,
or invitees, whether such damage or injury is caused by or results from
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction, or other defect of pipes,


 


3

















 


sprinklers, wires, appliances, plumbing, air-conditioning, or lighting
fixtures, or from any other cause, whether such damage results from conditions
arising upon the Premises or upon other portions of the building in which the
Premises are a part, or from any other sources or places.  Landlord shall not be liable to Tenant for
any damages arising from any act or neglect of any other tenant, if any, of the
building in which the Premises are located.


 


14.                                 DAMAGE OR DESTRUCTION.


 


(a)                                  Damage - Insured.  If, during the Term of this Lease, the
Premises and/or the building and other improvements in which the Premises are
located are totally or partially destroyed rendering the Premises totally or
partially inaccessible or unusable, and such damage or destruction was caused
by a casualty covered under and insurance policy required to be maintained
hereunder, Landlord shall restore the Premises and/or the building and other
improvements in which the Premises are located into substantially the same
condition as they were in immediately before such damage or destruction,
provided that the restoration can be made under the existing laws and can be
completed within one hundred eighty (180) working days after the date of such
destruction or damage.  Such destruction
or damage shall not terminate this Lease. 
If the restoration cannot be made in said 180 day period, then within
fifteen (15) days after the parties hereto determine that the restoration
cannot be made in the time stated in this paragraph, Tenant may terminate
this Lease and immediately by giving notice to Landlord and the Lease will be
deemed canceled as of the date of such damage or destruction.  If
Tenant fails to terminate this Lease and the restoration is permitted under the
existing laws, Landlord, at its option, may terminate this Lease or restore the
Premises and/or any other improvements in which the Premises are located within
a reasonable time and this Lease shall continue in full force and effect.  If the existing laws do not permit the
restoration, either party can terminate this Lease immediately by giving notice
to the other party.  Notwithstanding the
above, if the Tenant is the insuring party and if the insurance proceeds
received by Landlord are not sufficient to effect such repair, Landlord shall
give notice to Tenant of the amount required in addition to the insurance
proceeds to effect such repair.  Tenant may,
at Tenant’s option, contribute the required amount, but upon failure to do so
within forty-five (45) days following such notice, Landlord’s sole remedy
shall be, at Landlord’s option and with no liability to Tenant, to cancel
and terminate this Lease.  If Tenant
shall contribute such amount to Landlord within said forty-five (45) day
period, Landlord shall make such repairs as soon as reasonably possible and
this Lease shall continue in full force and effect.  Tenant shall in no event have any right to reimbursement of any
amount so contributed.


 


(b)                                 Damage – Uninsured.  In the event that the Premises are damaged
or destroyed by a casualty which is not covered by the fire and extended
coverage insurance which is required to be carried by Tenant pursuant to
Article 11(a) above, the Landlord shall restore the same; provided that if
the damage or destruction is to any extent greater than ten percent (10%) of
the then replacement cost of the improvements on the Premises (exclusive
of Tenant’s trade fixtures and equipment and exclusive of foundations and
footings), then Landlord may elect not to restore and to terminate this
Lease.  Landlord must give to Tenant
written notice of its intention not to restore within thirty (30) days from the
date of such damage or destruction and, if not given, Landlord shall be
deemed to have elected to restore and in such event shall repair any
damage as soon as reasonably possible. 
In the event that Landlord elects to give such notice of Landlord’s
intention to cancel and terminate this Lease


 


4

















 


Tenant shall have the right, within ten (10) days after receipt of such
notice, to give written notice to Landlord of Tenant’s intention to repair such
damage at Tenant’s expense, without reimbursement from Landlord, in which event
the Lease shall continue in full force and effect and Tenant shall proceed to
make such repairs as soon as reasonably possible.  If Tenant does not give such notice within such 10 day
period, this Lease shall be canceled and be deemed terminated as the date of
the occurrence of such damage or destruction.


 


(c)                                  Damage Near the End of the Term.  If the Premises are totally or
partially destroyed or damaged during the last twelve (12) months of the Term
of this Lease, Landlord may, at Landlord’s option, cancel and terminate this
Lease as of the date of the cause of such damage by giving written notice to
Tenant of Landlord’s election to do so within 30 days after the date of the
occurrence of such damage; provided, however, that, if the damage or
destruction occurs within the last 12 months of the term and if within ten
(10) days after the date of such damage or destruction Tenant exercise any
option to extend the term provided herein, Landlord shall restore the Premises
if obligated to do so as provided in subparagraph (a) or (b) above.


 


(d)                                 Abatement of Rent.  If the Premises are partially or totally
destroyed or damaged and Landlord or Tenant repairs or restores them pursuant
to the provisions of this Article 14, the rent payable hereunder for the
period during which such damage, repair or restoration continues shall be
abated in proportion to the degree to which Tenant’s reasonable use of the
Premises is impaired.


 


(e)                                  Trade Fixtures and Equipment.  If Landlord is required or elects to
restore the Premises as provided in this Article, Landlord shall not be
required to restore Tenant’s improvements, trade fixtures, interior
improvements, or equipment except to the extent such is a part of the Premises
upon the commencement hereof, or to restore any alterations made by Tenant
and restoration of such excluded items shall be the sole responsibility of
Tenant.


 


15.                                 CONDEMNATION.  If the Premises or any portion thereof are taken by the power of
eminent domain, or sold by Landlord under the threat of exercise of said power
(all of which is herein referred to as “condemnation”),
this Lease shall terminate as to the part so taken as of the date the
condemning authority takes title or possession, whichever occurs first.  If more than twenty percent (20%) of
the floor area of any building on the Premises, or more than twenty percent
(20%) of the land area of the Premises not covered with buildings is taken by
condemnation, either Landlord or Tenant may terminate this Lease as of the date
the condemning authority takes possession, by notice in writing of such
election within twenty (20) days after Landlord shall have notified Tenant of
such taking or, in the absence of such notice, then within twenty (20) days
after the condemning authority shall have taken possession.  If this Lease is not terminated by
either Landlord or Tenant as provided hereinabove, then it shall remain in full
force and effect as to the portion of the Premises remaining, provided that the
rental shall be reduced in proportion to the floor area of the building taken
within the Premises as bears to the total floor area of all buildings
located on the Premises to a complete unit of like quality and character
as existed prior to the condemnation. 
Rent shall be abated or reduced during the period from the date of
taking until the completion of restoration by Landlord, but all other
obligations of Tenant under this Lease shall remain in full force and


 


5

















 


effect.  The abatement or
reduction of the rent shall be based on the extent to which the restoration
interferes with Tenant’s use of the Premises.


 


16.                                 ASSIGNMENT AND SUBLETTING; FINANCING.  Tenant may on one or more occasion assign or
sublet all or any portion of the Premises to any party, without any consent of
Landlord being required in connection therewith; provided, however, that no
such assignment(s) or sublease(s) shall in any way relieve Tenant of any of its
obligations under this Lease.  In
addition, Tenant shall have the right to place such financing as it may elect
secured by its rights under this Lease and/or any of Tenant’s equipment,
fixtures, or other personalty located at the Premises and Landlord shall
cooperate with any such financing by Tenant and execute such reasonable
agreements of attornment, access, and/or consent as any such lender(s) to
Tenant may request.


 


17.                                 DEFAULT. 
The occurrence of any one or more of the following shall constitute a
default and breach of this Lease by Tenant: 
failure to pay rent within ten (1) days of the date due, or failure to
perform any other provision of this Lease if the failure to perform is not
cured within thirty (30) days after written notice thereof has been given to
Tenant by Landlord; provided, however that if the default cannot reasonably be
cured within said thirty (30) day period, Tenant shall not be in default under
this Lease if Tenant commences to cure the default within the thirty (30) day
period and diligently prosecutes the same to completion.


 


Landlord shall have the following remedies if Tenant commits a default
under this Lease.  These remedies
are not exclusive but are cumulative and in addition to any remedies now
or hereafter allowed by law.  During the
period that Tenant is in default, Landlord can enter the Premises and
relet them, or any part of them, to third parties for
Tenant’s account.  Tenant shall be
liable immediately to Landlord for all costs Landlord incurs in reletting
the Premises, including, without limitation, brokers’ commissions, expenses of
remodeling the Premises required by the reletting, and like costs.  Reletting can be for a period shorter or
longer than the remaining Term of this Lease. 
Tenant shall pay to Landlord the rent due under the Lease on the dates
the rent is due, less the rent Landlord received from any reletting.  No act by Landlord allowed by this paragraph
shall terminate this Lease unless Landlord notifies Tenant that Landlord elects
to terminate this Lease.  If Landlord
elects to relet the Premises as provided in this paragraph, any rent that
Landlord receives from such reletting shall apply first to the payment of any
indebtedness from Tenant to Landlord other than the rent due from Tenant
to Landlord; secondly, to all costs, including maintenance, incurred by
Landlord in such reletting; and third, to any rent due and unpaid under this
Lease.  After deducting the payments
referred to in this paragraph, any sum remaining from the rent Landlord
receives from such reletting shall be held by Landlord and applied in payment
of future rent as rent becomes due under this Lease.  In no event shall Tenant be entitled to any
excess rent received by Landlord.  If,
on the date rent is due under this Lease, the rent received from reletting is
less than the rent due on that date, Tenant shall pay to Landlord, in addition
to the remaining rent due, all costs, including maintenance, that Landlord
shall have incurred in reletting that remain after applying the rent
received from the reletting as provided in this paragraph.  No act by Landlord other than giving written
notice to Tenant shall terminate this Lease. 
In the event that Landlord suffers any damages for late fees or any
other costs or charges under indebtedness secured by the Premises as a
result of any late payment of rent by Tenant, Tenant shall pay to Landlord as
additional rent an amount equal to such late fees owed


 


6

















 


by Landlord.  Acts of
maintenance, efforts t relet the Premises, or the appointment of a receiver on
Landlord’s initiative to protect Landlord’s interest in this Lease shall not
constitute a termination of Tenant’s right to possession.  In the event of such termination, Landlord
has the right to recover from Tenant: 
(i) the worth, at the time of the award, of the unpaid rent
that had been earned at the time of the termination of this Lease; (ii)the
worth, at the time of the award of the amount by which the unpaid rent
that would have been earned after the date of the termination of this
Lease until the time of the award exceeds the amount of the loss of
rent that Tenant proves could have been reasonably avoided; (iii) the
worth, at the time of the award of the amount by which the unpaid rent for the
balance of the term after the time of the award exceeds the amount of the loss
of rent that Tenant proves could have been reasonably avoided; and (iv) any
other amount, including court costs, necessary to compensate Landlord
for all detriment proximately caused by Tenant’s default.  “The
worth at the time of the award” as referred to in this paragraph is
to be computed by discounting the amount at the “prime rate” of interest of First Interstate Bank of
Nevada, N.A. in effect from time to time plus four percent (4%).  If Landlord at any time, by reason of Tenant’s
default, pays any sum or does any act that requires the payment of any
sum, the sum paid by Landlord shall be due immediately from Tenant to
Landlord at the time the sum is paid, and if paid by a later date
shall bear interest at the “prime rate”
of interest of First Interstate bank of Nevada, N.A. in effect from time
to time plus four percent (4%) until Landlord is reimbursed by Tenant.  The sum, together with interest thereon,
shall be considered additional rent.


 


18.                                 SIGNS. 
Tenant shall have the right to place, construct, or maintain any sign,
advertisement, awning, banner, or other exterior decorations on the building or
other improvements that are a part of the Premises without Landlord’s consent.


 


19.                                 EFFECTIVE DATE.  This Lease is effective immediately upon and shall commence upon
the date of the consummation of the Sale.


 


20.                                 SUBORDINATION.  This Lease, at Landlord’s option from time to time, shall be
subordinated to any mortgage, deed of trust, ground lease or any other
hypothecation for security hereafter placed upon the real property of which the
Premises are a part or the lease therefor and to any and all advances made on
the security thereof and to all renewals, modifications, and extensions
thereof.  In connection with any such
subordination, upon Tenant’s request, Landlord shall obtain from the lender or
other secured party in question an agreement of non-disturbance providing, in
substance, that Tenant’s right to quiet possession of the Premises shall not be
disturbed if Tenant is not in default and so long as Tenant shall
pay the rent and observe and perform all the other provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms.


 


21.                                 SURRENDER. 
On the last day of the Term hereof, or on any sooner termination, Tenant
shall surrender the Premises to Landlord in good condition, broom clean,
ordinary wear and tear accepted.  Tenant
shall repair any damage to the Premises occasioned by its use thereof or
by the removal of Tenant’s trade fixtures, furnishings, and equipment
which repair shall include the patching and filling of holes and repair of
structural damage.  Tenant shall remove
all of its personal property and fixtures on the Premises prior to the expiration
of the term of this Lease and if required by Landlord pursuant to
Article 10 above, any alterations, improvements, or additions made by
Tenant to the Premises.  If Tenant fails


 


7

















 


to surrender the Premises to Landlord on the expiration of the Lease as
required by this paragraph, Tenant shall hold Landlord harmless from all
damages resulting from Tenant’s failure to vacate the Premises, including,
without limitation, claims made by any succeeding tenant resulting from
Tenant’s failure to surrender the Premises.


 


22.                                 HOLDING OVER.  If Tenant, with Landlord’s consent, remains in possession
of the Premises after the expiration or termination of the term of this
Lease, such possession by Tenant shall be deemed to be a tenancy from month-to-month
at a rental in the amount of the last monthly rental plus all other
charges payable hereunder, upon all the provisions of this Lease applicable to
month-to-month tenancy.


 


23.                                 BINDING ON SUCCESSORS AND ASSIGNS.  The terms, conditions, and covenants of the
Lease shall be binding upon and shall inure to the benefit of each of the
parties hereto, their heirs, personal representatives, successors, and
assigns.


 


24.                                 NOTICES. 
Whenever under this Lease a provision is made for any demand, notice, or
declaration of any kind, it shall be in writing and served either personally or
sent by registered or certified United States mail, postage prepaid, addressed
at the address as set forth below:


 


	
  TO LANDLORD AT:

  	
   

  	
  THE 1993 SAMUEL JOSEPHSON REVOCABLE

  FAMILY TRUST under Declaration of Trust dated

  September 3, 1993

  
	
   

  	
   

  	
  C/o Mr. Charles L. Chrein, C.P.A.

  
	
   

  	
   

  	
  P.O. box 6967

  
	
   

  	
   

  	
  Yorkville Station

  
	
   

  	
   

  	
  New York, New York 
  10128

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  R. Gardner Jolley, Esq.

  
	
   

  	
   

  	
  Jolley, Urga, Wirth & Woodbury

  
	
   

  	
   

  	
  300 South Fourth Street, #800

  
	
   

  	
   

  	
  Las Vegas, Nevada 
  89101

  
	
   

  	
   

  	
   

  
	
  TO TENANT AT:

  	
   

  	
  Phoenix Associates, a Nevada limited partnership

  
	
   

  	
   

  	
  c/o Consolidated Management, Inc.

  
	
   

  	
   

  	
  4650 West Oakey, #2220

  
	
   

  	
   

  	
  Las Vegas, Nevada 
  89108

  
	
   

  	
   

  	
  Attn:  Mr.
  Eli Applebaum

  



 


Such notice shall
be deemed to be received within forty-eight (48) hours from the time
of mailing, if mailed as provided for in this paragraph.


 


25.                                 CHOICE OF LAW.  This Lease shall be governed by the laws of the State of Nevada
without regard to its principles of conflicts of laws.


 


8

















 


26.                                 ATTORNEY FEES.  If litigation or arbitration concerning this Lease, the Premises,
or the building or other improvements in which the Premises are located arises
between Landlord and Tenant, the prevailing party shall be liable to the other
party hereto for reasonable attorney fees and costs of suit.


 


27.                                 WAIVERS. 
No waiver by Landlord of any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by
Tenant of the same or any other provision.  Landlord’s consent to or approval of any act shall not be deemed
to render unnecessary the obtaining of Landlord’s consent to or approval
of any subsequent act by Tenant. 
The acceptance of rent hereunder by Landlord shall not be a waiver of
any proceeding breach by Tenant of any provision hereof, other than the failure
of Tenant to pay the particular rent so accepted, regardless of Landlord’s
knowledge of such preceding breach at the time of its acceptance of such
rent.


 


28.                                 INCORPORATION OF PRIOR AGREEMENTS; CONSTRUCTION OF
THIS LEASE.  This Lease
contains all agreements of parties with respect to any matter mentioned
herein.  No prior agreement or
understanding pertaining to any such matter shall be effective.  This Lease may be modified only in writing,
and signed by the parties in interest at the time of such
modification.  Each party to this Lease
and its counsel have reviewed and revised this Lease.  The normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Lease or of any amendments or
exhibits to this Lease.


 


29.                                 SEVERABILITY.  The unenforceability, invalidity, or illegality of any
provision of this Lease shall not render the other provisions hereof
unenforceable, invalid, or illegal.


 


30.                                 ESTOPPEL CERTIFICATES.  Tenant, within ten (10) days after notice
from Landlord, shall execute and deliver to Landlord, addressed to any party
directed by Landlord and on form prescribed by Landlord, a certificate
stating that this Lease is unmodified and in full force and effect, or in
full force and effect as modified, and stating the modification(s).  The certificate shall further state the
amount of minimum monthly rent, the dates of which rent has been paid in
advance, the amount of any security deposit. 
The certificate shall also acknowledge that there are not, to Tenant’s
knowledge, any uncured defaults on the part of Landlord, or it shall specify
such defaults, if any, which are claimed, and shall state such
further matters (and be from any or all of the Guarantors if requested by
Landlord) as Landlord may reasonably request.


 


31.                                 COVENANTS AND CONDITIONS.  Each provision of this Lease performable by
Tenant shall be deemed both a covenant and a condition.


 


32.                                 SINGULAR AND PLURAL.  When required by the context of this Lease,
the singular shall include the plural.


 


33.                                 JOINT AND SEVERAL OBLIGATIONS.  “Party”
shall mean Landlord and Tenant and if more than one person or entity is the
Landlord or Tenant, the obligations imposed on that party shall be joint
and several.


 


9

















 


34.                                 PURCHASE OPTION.  During the Term hereof (which for all purposes is deemed
terminated upon eviction of Tenant), as may be extended from time to time,
Tenant shall have the right to reacquire the fee simple interest in and to
the Premises, on such notice and on such schedule as it may deem
appropriate for a price equal to the greater of (i) 120 times the amount
of monthly Basic Rent in effect at the time of notice of such reacquisition
or (ii) during the first year of the Term $3,050,000 and thereafter
$3,100,000.  Such reacquisition of
the Premises shall be made with the Premises to be subject only to such
encumbrances as are in effect upon or in connection with consummation of the
Sale (with a credit to Tenant for the amount secured by such encumbrances) and
shall provide for Tenant to receive title insurance substantially in the
form as was provided to Landlord in connection with the Sale and allocation of
the expenses (e.g., escrow fees, title insurance, etc.) of the reacquisition in
the same manner as was provided for in the Sale (i.e., with Landlord to pay
the ”Seller’s” costs
thereunder and Tenant to pay the “Buyer’s”
costs thereunder).  Payments to the
Landlord under the purchase option shall be in cash or by certified funds.


 


35.                                 MEMORANDUM OF LEASE AND PURCHASE OPTION.  Concurrently with the effectiveness hereof
(i.e., the closing of the Sale), Landlord and Tenant shall execute, deliver,
acknowledge, and record with the Recorder of the County of Clark a Memorandum
substantially in the form attached as Appendix i attached hereto and
incorporated herein by this reference.


 


36.                                 CONFLICT OF INTEREST: 
DISCLOSURE AND WAIVER. 
Landlord understands, acknowledges, agrees, and does hereby represent
and warrant (which representation and warranty shall survive the Closing),
that:  (i) it has been disclosed to
Landlord that Alan C. Sklar, a partner in Tenant and a shareholder, officer,
and Director of Tenant’s general partner, is also a shareholder of Gordon &
Silver, Ltd., which has served as counsel to Landlord with respect to certain
matters; (ii) Gordon & Silver, Ltd., has not acted as counsel to
Landlord in connection herewith, the Sale, or any related or ancillary
instruments, other documents, or matters; (iii) Rule 158 of the Nevada Supreme
Court Rules prohibits a lawyer from entering into a business transaction with a
client except in accordance with the provisions thereof, which provisions are
embodied in this Section 36; (iv) the transaction and terms upon which
Landlord is acquiring and leasing back the Property are fair and reasonable
to Landlord, inasmuch as, among other matters, Tenant, upon advice of
experts, is satisfied that the purchase price to be paid for and terms of the
purchase of the Premises and the rates, terms, and purchase option price
of the Premises hereunder are fair and reasonable; (v) the transaction and
terms upon which Landlord is purchasing, financing, leasing, and conveying
to Tenant an option to repurchase the Premises have been fully disclosed
and transmitted in writing to Landlord in a manner which can be reasonably
understood by Landlord; (vi) Tenant has been given a reasonable opportunity to
seek the advice of independent counsel in the transaction and has in fact
sought and received the advice of such independent counsel in connection
herewith; and (vii) Landlord, by its execution of this Agreement, hereby
consents to the indirect entry into a business transaction with a
shareholder of Gordon & Silver, Ltd., and waives any actual, apparent,
or purported conflict of interest with respect thereto.


 


37.                                 OBLIGATION OF TENANT OT CAUSE REFINANCING OF DEBT
SECURED BY THE PREMISES; MODIFICATIONS TO RENT BASED UPON FLUCTUATIONS IN DEBT
SERVICE.  Landlord and Tenant
acknowledge that certain


 


10

















 


indebtedness is secured by deeds of trust (the “Deeds of Trust”) upon the Premises.  Tenant covenants that, during the entire
Term, it shall cause such indebtedness to be extended or to be refinanced
at Tenant’s sold cost and expense (e.g., payment of all loan fees, other costs
of refinancing or loan extension costs, etc.) and Landlord shall cooperate
therewith.  Notwithstanding anything
provided to the contrary, including, without limitation, Paragraph 4
hereinabove, in the event that the sum due upon any new or extended financing
would cause the monthly income to Landlord after payment of all debt
service upon indebtedness secured by the Premises (“Landlord’s Net Income”) to be less than or
more than the sum of $9,166.67, plus all increases in effect above the initial
Basic Rent of $25,000 (the “Rent Increases”)
then the Basic Rent shall be increased (i.e., if the annual payments upon
such indebtedness are greater than 10% of the principal amount thereof) or
decreased (i.e., if the annual payments upon such indebtedness are less
than 10% of the principal amount thereof), as the case may be, such that the
Landlord’s Net Income shall be the sum of $9,166.67 plus the Rent Increases,
monthly; provided, however, that to the extent any such indebtedness is being
amortized, then the aggregate sum of all such amortized amounts shall be
credited for the benefit of Tenant upon its exercise of the purchase
option provided for herein.


 


The parties hereto
have executed this Lease on the date first above written.


 


	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  THE 1993 SAMUEL JOSEPHSON

  	
   

  	
  PHOENIX ASSOCIATES, a Nevada limited

  
	
  REVOCABLE FAMILY TRUST

  	
   

  	
  partnership

  
	
  under Declaration of Trust dated

  	
   

  	
   

  
	
  September 3, 1993

  	
   

  	
  By:

  	
  Consolidated Management, Inc., a

  
	
   

  	
   

  	
   

  	
  Nevada corporation, General Partner

  
	
  By:

  	
  T.D.C.R. Associates, Inc., a

  	
   

  	
   

  
	
   

  	
  Nevada corporation, Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Eli Applebaum

  	
   

  
	
   

  	
   

  	
   

  	
  Eli Applebaum, President

  
	
  By:

  	
  /s/

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  	
   

  	
   

  
										



 


GUARANTEE


 


The undersigned
hereby personally unconditionally guarantees the timely performance
of each of the obligations of Tenant hereinabove.


 


 


	
   

  	
   

  	
  /s/ Eli Applebaum

  	
   

  
	
   

  	
   

  	
  ELI APPLEBAUM

  



 


11

















 


FIRST AMENDMENT LEASE


 


THIS FIRST AMENDMENT OF LEASE (this “Amendment”), dated and effective
as of January 18, 2002, by and between THE 1993 SAMUEL JOSEPHSON REVOCABLE
FAMILY TRUST, under Declaration of Trust dated September 3, 1993
(“Landlord”), and MARKET GAMING, INC., a Nevada corporation (“Tenant”), is made
with reference to the following recited facts:


 


A.              Landlord
is the Landlord under, and Tenant is the Tenant under, that certain Lease (the
“Lease”), dated as of February 9, 1994, of the building commonly described
as 642 South Boulder Highway, Henderson, Nevada, and currently known as
“Lucky Strike Casino & Bowl”(the ”Premises”). Capitalized terms used
in this Amendment and defined in the Lease, shall have the meaning as set forth
in the Lease.


 


B.                By
reason of mutual mistake, Tenant did not pay, and Landlord did not demand
collection of, increased Basic Rent that became due and owing for the month of
February 1999, through and including December 2001, in the amount of
$2,500.00 for each such calendar month, being a total of $87,500.00 (the “Rent
Underpayment”).


 


C.                Landlord
and Tenant desire to amend the Lease to provide for the payment of the Rent
Underpayment and otherwise as provided in this Amendment, and this Amendment shall
be, and be deemed to constitute, an amendment of the Lease.


 


NOW, THEREFORE,
for good, valuable and adequate consideration, the receipt and adequacy of
which is hereby acknowledged, Landlord and Tenant agree as follows:


 


1.                                       Payment
of Rent Underpayment.  The prior
failure to pay the Rent Underpayment shall not be, nor be deemed to be, a
default under the Lease.  Beginning with
the rent payment that is due on April 30, 2002, and on the last
calendar day of each of the months May, June, July, August and September 2002,
Tenant shall pay to Landlord, along with the Basic Rent that is otherwise then
due, the additional sum of $14,583.33 (1/6th of $87,500.00), with the intent
and effect that the Rent Underpayment shall be fully paid by September 30,
2002.  Each such additional payment
shall be deemed to be in satisfaction of Tenant’s rent obligations under the
Lease, and failure to timely pay any such additional payment shall be
deemed to be a default in the payment of Basic Rent under the Lease, giving
Landlord the same rights and remedies as a non- payment of Basic Rent under the
Lease.


 


2.                                       Notices:  Section 24 of the Lease is amended to
read as follows:  All notices, requests,
demands, and other communications required or permitted to be given by either
party to the other under the Lease shall be in writing and shall be
conclusively deemed to have been duly given and received (a) when hand
delivered to the addressee, or (b) on the third business day after the same
has been deposited in the United States mail, first class or certified
mail, return receipt requested, postage prepaid, addressed to the party to whom
the notice is to be given at the address shown


 


1

















 


below, or to such other address as either party may designate from time
to time to the other in writing, or (c) on the next business day after the same
has been deposited with a national overnight delivery service, postage or
delivery charge prepaid, addressed to the party to whom the notice, request, demand
or communication is to be given at the address shown below, or to such other
address as either party may designate from time to time to the other in
writing.  Until further
notice, notices, demands and other communications to the respective
parties shall be addressed as follows:


 


If to Landlord to:


 


Mr. Richard Josephson, Trustee


2118 Wilshire Boulevard, Suite 798


Santa Monica, CA 90403


 


With a copy to:


 


Lawrence T. Dougherty, Esq.


Turner, Lampel & Dougherty, LLP


2515 Camino Del Rio South, Suite 324


San Diego, CA 92108


 


If to Tenant to:


 


Market Gaming, Inc.


5195 Las Vegas Blvd. S.


Las Vegas, Nevada 89119


 


With a copy to:


 


Sean T. Higgins, Esq.


5195 Las Vegas Blvd. S.


Las Vegas, Nevada 89119


 


3.                                       Confirmation
of Lease.  The Lease, as amended by
this Amendment, is hereby confirmed. 
The Lease, as amended by this Amendment, shall be construed as one,
integrated document, enforceable as provided in the Lease as amended by this
Amendment.


 


4.                                       Warranty
of Authority.  Tenant is a Nevada
corporation, and each individual executing this Amendment on behalf of
Tenant represents and warrants that such individual is duly authorized to
execute and deliver this Amendment on behalf of Tenant, in accordance with a
duly adopted corporate resolution or the general provisions of the bylaws of
Tenant.


 


5.                                       General
Provisions.  This Amendment contains
the entire agreement between Landlord and


 


2

















 


Tenant relating to the terms and transactions contemplated hereby, and
all prior or contemporaneous agreements, understandings, representations
and statements, oral or written, are merged herein.  Captions of sections in this Amendment are for convenience of
reference only, and are not part of the terms of this Amendment.


 


6.                                       Counterparts.  This Amendment may be executed in two or
more counterparts, each of which shall be deemed an original and all of
which, when taken together, shall constitute one and the same document.  The signature of any party to any
counterpart shall be deemed a signature to, and may be appended to, any other
counterpart.


 


IN WITNESS
WHEREOF, Landlord and Tenant have executed this Amendment as of the date first
above set forth.


 


	
  Landlord:

  	
  Tenant:

  
	
   

  	
   

  
	
  THE 1993 SAMUEL JOSEPHSON

  	
  MARKET GAMING INC.,

  
	
  REVOCABLE FAMILY TRUST a Nevada corporation

  	
   

  
	
  under Declaration of Trust dated

  	
   

  
	
  September 3, 1993

  	
  By:

  	
   /s/ Edward J. Herbst

  	
   

  
	
   

  	
   

  	
  Edward J. Herbst, President

  
	
  By:

  	
   /s/ Richard Josephson

  	
   

  	
   

  
	
   

  	
  Richard Josephson, Trustee

  	
  By:

  	
   /s/ Troy D. Herbst

  	
   

  
	
   

  	
   

  	
  Troy D. Herbst, Secretary

  
						



 


3

















 


Assessor’s Parcel No.:       


 


	
   

  	
  When recorded mail to:

  
	
   

  	
   

  
	
   

  	
  Gary A. Kashar

  
	
   

  	
  Latham & Watkins

  
	
   

  	
  633 West Fifth Street

  
	
   

  	
  Suite 4000

  
	
   

  	
  Los Angeles, CA 90071

  



 


LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,


 


SECURITY AGREEMENT AND FIXTURE FILING


 


Market Gaming, Inc., a Nevada corporation

Trustor


 


National Title Co., a Nevada corporation

Trustee


 


and


 


The Bank of New York, a New York banking corporation

Beneficiary


 


Dated August 24, 2001


 


Exhibit C


 

















 


LEASE
AGREEMENT


 


THIS LEASE, made this 1st day of July, 2002, by and between Terrible
Herbst, Inc. (hereinafter “Lessor”), and E-T-T, Inc. (Hereinafter “Lessee”).


 


WHEREAS, Lessor leases the Property described below pursuant to that
certain Lease dated June 30, 2002 between Lessor and Centennial
Acquisitions, LLC (hereinafter “Property Owner”), a copy of which is attached
hereto as Exhibit “A” and incorporated 
herein by reference.


 


WITNESSETH: that the Lessor in consideration of the rent herein
specified to be paid by the Lessee, and the covenants and conditions herein
mentioned, does hereby lease, let and demise, unto Lessee, and the Lessee does
hereby rent from the Lessor that certain real 
property necessary for parking, along with improvements thereto, to wit,
approximately 4,000 square feet of building space to be used as and for a
casino, bar and related uses (Hereinafter the “Property”) situated in the
County of Clark, State of Nevada, whose street address is 670 US Highway 95,
Searchlight, Nevada 89046 and which is set forth in the floorplan and site
plan, both of which are attached hereto as Exhibit “A”.


 


TO HAVE AND TO HOLD the same unto the said Lessee, its successors and
assigns for the period and upon the terms and conditions hereinafter set forth.


 


THIS INDENTURE OF LEASE is made by the Lessor and accepted by the
Lessee upon each of the following terms and conditions, namely:


 


1.                                       TERM:  This Lease shall be a twenty (20) year lease
commencing on the first day of operations at the casino by the Lessee.


 


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2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for the Property the sum of Fifteen Thousand Dollars ($15,000.00) per
month on the first of each month for 
the duration of said lease.


 


3.                                       RIGHTS
& TITLE:  Lessee agrees that
buildings and improvements hereafter located or erected on premises at any time
during the term of his Lease, or extension thereof, shall be and remain
property of Lessor and Lessee shall have no title, rights or interest in said
buildings and improvements other than such interest granted hereby.


 


4.                                       QUIET
POSSESSION:  Lessor hereby
covenants, warrants, and agrees that at all times during the term hereof,
provided Lessee is not in default hereunder, Lessee shall  have the full, peaceful and quiet possession
of the Property, and, further that Lessor has full right and power to make and
enter into this lease.


 


5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal 
property and trade fixtures located therein and will pay charges for
light, power and other public utilities used by it in connection with the use
of the Property.


 


6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon the Property that he will notify Lessor in order that a notice of
non-responsibility may be posted on the Property and recorded in accordance
with the provisions of the Mechanic’s Lien Law of the State of Nevada.


 


7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written


 


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consent of the Lessor shall be obtained therefore; and provided that
such changes and alterations shall conform with building codes and zoning
regulations now or hereinafter  legally
effective, and promulgated by the State, County or Municipal authorities.


 


8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the service station and
all ancillary buildings or improvements to be constructed thereon by Lessee and
all fixtures and equipment, including visible plumbing and electrical
fixtures.  The Lessee agrees to keep the
Property clean and to have no nuisance, unsightly rubbish, or to commit or
cause to be committed by its employees, and/or sub-tenants, any violation of
the laws, rules or regulations of the State, County or Municipal Board of
Health or appropriate sanitary agency.


 


9.                                       TITLE
TO FIXTURES:  All fixtures and other
property and materials  installed in the
building on the Property by the Lessee shall be and remain the property of the
Lessee, and at the expiration of the Lease, the Lessee may, within thirty (30)
days, remove from said premises all of such fixtures, property, and materials,
provided that all expenses connected with the removal thereof shall be at the
expense of the Lessee.  The Lessee
further agrees to repair at his sole expense all damage that may result from
the removal of such building, fixtures and other property and to restore the
Property to the condition in  which they
were prior to the start of construction and that no building or improvements
placed upon said premises by Lessee shall be removed during the term of this
Lease or extension thereof without the consent of Lessor first had and
obtained.


 


10.                                 LIABILITY
AND FIRE INSURANCE:  The Lessor
shall require the Lessee to carry, maintain and have in full force and effect
fire, workmen’s compensation, public


 


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liability, and product liability insurance with a recognized insurance
company authorized to transact business in the State of Nevada for the benefit
of the Lessor and Lessee, and for the protection of all persons who may suffer
injury while in, on or about the Property. 
Said  policy shall carry an
amount of coverage for injury to one person in any one accident in the sum of
One Hundred Thousand Dollars ($100,000.00) and for more injury to more than one
person in any one accident in the sum of Three Hundred Thousand Dollars
($300,000.00).  Lessor shall be furnished
with copies of said policies and all endorsements thereto.


 


The Lessee shall carry insurance against loss by destruction of the
Property caused by fire, explosion or other action of the elements, except loss
caused by earthquake, equal to ninety per cent (90%) of the value of the
improvements.


 


11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of all
State, Federal, County and  Municipal
authorities, appertaining to the business conducted upon the Property, and
Lessee shall not permit the Property to be used for any unlawful purposes.


 


12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to 
be kept and performed by the Lessee, and such default continue for
thirty (30) days from and after service upon the Lessee of written notice of
such default, signed by the Lessor or their duly authorized agents, then and in
any such event, the Lessor may, at their option declare this Lease terminated
and repossess themselves of the Property and take such action  or pursue such remedy as may be permitted
under the law of the State of Nevada. 
However,  if Lessee commences the
necessary work to cure said default before the expiration of the


 


4

















 


thirty (30) days, but the work takes in excess of thirty days, then
Lessor shall not be allowed  to declare
this Lease terminated.


 


13.                                 LIENS:  The Lessee agrees that he will, at all times,
save the Lessor and keep it blameless and the Property free and harmless of and
from any liability on account of or in respect to any mechanic’s liens or liens
in the nature thereof, for work and labor done, or materials furnished at the
instance and request of the Lessee, in, on or about the Property; provided,
however, that the Lessee shall have the right to contest the claim of such
lien, in which event the Lessee shall, at his expense, furnish to the Lessor a
sufficient surety bond executed by a reputable and responsible surety company,
in at least double the amount of  such
claim of such lien, conditioned upon the diligent prosecution of such defense,
and to  hold the Lessor from and clear
of all loss, costs, damages, and expenses of every kind and nature, arising
either directly or indirectly out of said contest, and to pay any judgment that
may be obtained forthwith upon the same being entered.


 


14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease by
either the Lessor or Lessee, the prevailing party in such litigation shall be
entitled to receive from the other party reasonable attorney fees and costs of
action incurred in connection with said litigation.  In the event that either Lessor or Lessee shall by reason of acts
of omission or commission in violation of the terms of the Lease, be made a
party to any litigation commenced by a person other than the parties hereto,
then such party performing the said act or suffering the said omission
shall  pay all costs, expenses and
reasonable attorney fees incurred by the other party which arise from or are in
connection with such litigation.


 


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15.                                 INDEMNIFICATION:                            Lessee
shall indemnify and hold harmless Lessor 
and its agents, servants, employees and representatives from and against
all claims, damages, losses and expenses, including attorneys’ fees arising out
of or resulting from Lessee’s occupancy, provided however, that Lessor, its
agents, employees, representatives, successors, or assigns are not negligent
with regards to same.  This Paragraph
shall have full force and effect upon execution of this Lease Agreement.


 


16.                                 ASSIGNMENT:  The Lessee shall not have the right to
assign this Lease or hypothecate the same without first receiving the written
consent of the Lessor, which  consent
shall not unreasonably be withheld. 
Lessee shall have the right to sublet any portion  of the Property, providing that the tenancy
of such sub-tenant shall be subject to all the 
terms, covenants and conditions of this Lease.


 


17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s right
to enforce the same or any other covenant contained herein.


 


18.                                 HOLDING
OVER:  If the Lessee shall hold over
the Property beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor such holding over shall be construed
to be a month-to-month tenancy, unless otherwise mutually agreed upon.


 


19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular,  if
necessary.  The term “Lessee” or the
phrase “the term hereof” shall include any renewal or renewal thereof where
permitted by the context hereof.


 


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20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:


 


	
  Lessor:

  
	
   

  
	
   

  	
  Terrible Herbst, Inc.

  
	
   

  	
  Jerry Herbst

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Timothy Herbst, Vice
  President

  



 


21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations nor
agreements to or with any other party in 
addition to, or in conflict with the terms, covenants and conditions
hereof, and this Lease contains all of the terms, covenants and conditions and
representations between the parties upon the subject matter hereof.


 


22.                                 TERMINATION OF
LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy shall
be instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10 or 11 of the
Bankruptcy Act of the United States of America as such act is now in force or
as same may be amended, and shall be judicially approved, or if a Receiver of the
business or assets of the Lessee shall be appointed and if such appointment be
not vacated within sixty (60) days after


 


7

















 


notice thereof to Lessee, or if a general assignment is made by the
Lessee for the benefit of creditors, or any sheriff, Marshall, constable, or
other duly constituted public official take possession thereof by authority of
any attachment or execution proceedings, and offer same  for sale publicly, the Lessor may, at its
option, in either or any of such events, without notice  to Lessee or any other person or persons,
immediately recapture and take possession of the Property and terminate this
Lease with or without the process of law, such process being expressly waived
by Lessee.


 


23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs, plants or
lawn planted on the Property and will keep the 
parking areas and black top in a neat and clean condition and will use
for parking.


 


24.                                 OPTION
TO RENEW:  Lessee understands and
acknowledges that Lessor holds interest in the Property through that certain
lease, which is attached hereto as Exhibit 
“B” and that Lessee’s option to renew this Agreement is subject to and
conditioned upon Lessor renewing Exhibit “B”. 
So long as Lessor renews, then the Lessee upon giving written notice to
Lessor, at least sixty (60) days prior to the date of the expiration of the
term  aforesaid, provided he has
faithfully complied with the terms hereof, shall have the option of renewing
this Lease for up to five (5) additional ten (10) year terms, subject to the
same  terms, covenants and conditions
and agreements as contained herein other than this  paragraph.  The monthly
rental for each renewal term shall be determined at the time of each renewal.


 


25.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each  and
every one of the provisions herein contained.


 


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26.                                 BINDING
EFFECT:  The covenants and
agreements contained in this Lease shall be binding upon the parties hereto and
upon their respective heirs, executors, administrators, successors and assigns.


 


IN WITNESS WHEREOF, the parties have caused this Lease to be executed
by their duly authorized officers as of the day and year first herein written.


 


 


	
  LESSOR:

  
	
  TERRIBLE HERBST, INC.

  
	
   

  
	
   

  
	
   /s/ Jerry E. Herbst

  	
   

  
	
   JERRY E. HERBST

  
	
   President

  
	
   

  
	
   

  
	
  LESSEE:

  
	
  E-T-T, INC.

  
	
   

  
	
   

  
	
   /s/ Timothy P. Herbst

  	
   

  
	
   TIMOTHY P. HERBST

  
	
   Vice President

  



 


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EXHIBIT A


 


LEGAL
DESCRIPTION


 


THAT PORTION OF
GOVERNMENT LOT 4 SITUATE IN THE SOUTHWEST QUARTER (SW 1⁄4) OF THE
SOUTHWEST QUARTER (SW 1/4) OF SECTION 19, TOWNSHIP 21 SOUTH,
RANGE 61 EAST, M.D.M., CLARK COUNTY, NEVADA, MORE PARTICULARLY
DESCRIBED AS FOLLOWS:


 


COMMENCING AT THE
SOUTHEAST CORNER OF THE SOUTHWEST QUARTER (SW 1⁄4) OF THE SOUTHWEST QUARTER (SW
1⁄4) OF SAID SECTION 19, SAID CORNER ALSO BEING THE CENTERLINE
INTERSECTION OF TROPICANA AVENUE (PRESENTLY 100 FEET IN WIDTH) AND CAMERON
STREET (PRESENTLY 60 FEET IN WIDTH);


THENCE ALONG THE
EAST LINE THEREOF AND THE CENTERLINE OF SAID CAMERON STREET NORTH 00
34’29” WEST, 216.25 FEET; THENCE DEPARTING SAID EAST LINE AND CENTERLINE SOUTH
89 25’31” WEST, 30.00 FEET TO THE POINT OF BEGINNING;


THENCE SOUTH 89
53’19” WEST, 241.80 FEET;


THENCE SOUTH 00
34’28” EAST, 166.00 FEET TO A POINT ON THE NORTH RIGHT-OF-WAY LINE OF SAID
TROPICANA AVENUE;


THENCE ALONG SAID
NORTH RIGHT-OF-WAY LINE, NORTH 89 53’20” EAST, 216.59 FEET TO THE BEGINNING
OF A CURVE CONCAVE NORTHWESTERLY, HAVING A RADIUS OF 25.00 FEET; THENCE
NORTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGEL OF 90 27’49”, AN ARC
DISTANCE OF 39.47 FEET TO A POINT ON THE WEST RIGHT OF WAY LINE OF SAID CAMERON
STREET;


THENCE ALONG SAID
WEST RIGHT-OF-WAY LINE NORTH 00 34’29” WEST, 141.00 FEET TO THE POINT OF
BEGINNING.


 

















 


LEASE Searchlight Truck Stop.


 


THIS LEASE (the
“Lease” is entered into as of the
          day of June, 2002,
between Centennial Acquisitions, LLC, a Nevada limited liability company
(“Landlord”), and Terrible Herbst, Inc., a Nevada corporation (“Tenant”).


 


WITNESSETH:


 


FOR AND IN
CONSIDERATION of the mutual covenants contained in this Lease, Landlord and
Tenant hereby agree as follows:


 


1.                                       Definitions.  The following words and phrases shall have
the meanings set forth below:


 


1.1                                 “Commencement
Date” means the later of the date as of which this Lease is entered into
and the date Landlord acquires the Premises.


 


1.2                                 “Expiration
Date” means twenty (20) years after the Commencement Date.


 


1.3                                 “Term”
means the period commencing on 12:01 a.m. of the Commencement Date and expiring
on midnight of the Expiration Date, together with the period of any extension
or renewal of this Lease to which Landlord and Tenant agree in writing.


 


1.4                                 “Basic
Monthly Rent” means $48,333.33 per calendar month, as the same may be
increased from time to time pursuant to the provisions of Paragraph 4.2.


 


1.5                                 “Additional
Rent” means all amounts payable as rent by Tenant to the
Landlord pursuant to this Lease (other than Basic Monthly Rent),
regardless of the manner of computation or timing of the payment.


 


1.6                                 “Permitted
Use” means use of the Premises for an automotive fuel and service station,
convenience store, fast food restaurant and casino (provided that Landlord
makes no representation or warranty that such uses are permitted under
applicable law).


 


1.7                                 “Premises”
means the approximately 7.43 acres of land (the “Land”), together with the
Building (the “Building”) and all other improvements located on the Land,
situated at City of Searchlight, County of Clark, State of Nevada, more
particularly described on the attached Exhibit A.  (The Building and all other improvements
located on the Land are hereinafter collectively referred to as the
“Improvements.”)  The Building consists
of approximately
             
square feet and includes, without limitation, all heating, air conditioning,
mechanical, electrical, elevator and plumbing systems, the roof and all walls,
foundations, fixtures and equipment above the suspended ceiling or beneath the
level of the foundation which serve the Premises, constituting a part
thereof.  The Land includes all
easements and rights-of-way appurtenant thereto.  Landlord’s reservation includes the right to install, inspect,
maintain, use, repair and replace those areas and items and to enter the
Premises in order to do so.


 


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1.8                                 “Tenant”
means each person executing this document as a Tenant under this Lease.  If there is more than one person set forth
on the signature line as Tenant, their liability under this Lease shall be
joint and several.  If there is more
than one Tenant, any notice required or permitted by the terms of this
Lease may be given by or to any one Tenant, and shall have the same force and
effect as if given by or to all persons comprising Tenant.


 


2.                                       Agreement
of Lease; Improvement.  Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for
the Term, in accordance with the provisions set forth in this Lease, and
subject to all matters now or hereafter of record or enforceable at law or in
equity.  The Tenant acknowledges that
the Premises are ready for occupancy as-is. 
Landlord shall not be obligated to make any improvements or repairs
thereto.  Tenant has had an opportunity
to, and to have its architects, engineers and other consultants, inspect the
Premises and Tenant has found the Premises fit for Tenant’s use.  Tenant accepts the Premises with all systems
(roof, walls, foundation, heating, ventilating, air conditioning, telephone,
sewer, electrical, mechanical, elevator, utility and plumbing) in good working
order and repair.


 


3.                                       Term;
Commencement Date; Option to Extend Term. 
Tenant’s obligation to pay rent under this Lease shall commence on the
Commencement Date and shall be for the Term. 
Upon Landlord’s request, Landlord and Tenant shall execute a written
acknowledgment of the Commencement Date, which acknowledgment shall be deemed
to be a part of this Lease.


 


Tenant (but not a
successor, assignee or subtenant of Tenant) shall have the option to extend
the Term for four (4) periods of five (5) additional years (the “Option
Term”) by delivering written notice of exercise of such option not later than
180 days prior to the expiration of the original Term; provided, Tenant shall
not be in default when the Option is exercised or as of the date the Option
Term commences or the right to extend the term shall be null and
void.  In the event Tenant timely
exercises the option granted by this Paragraph 3 and extends the Term, this
Lease shall continue on the same terms and conditions as set forth in this
Lease except that the Base Rent for each Lease Year during the Option Term
shall escalate annually as provided in Paragraph 4.2 below.


 


4.                                       Rent;
Consumer Escalation; Net Lease.


 


4.1                                 Basic
Monthly Rent.  Tenant covenants to
pay to Landlord without abatement, deduction, offset, prior notice or demand
the Basic Monthly Rent in lawful money of the United States in equal
consecutive monthly installments at such place as Landlord may designate, in
advance on or before the first day of each calendar month during the Term,
commencing on the Commencement Date.  If the Commencement Date occurs
on a day other than the first day of a calendar month, on the Commencement Date
the Basic Monthly Rent shall be paid for the initial fractional calendar month
prorated on a per-diem basis and for the first full calendar month occurring
after the Commencement Date.


 


4.2                                 Basic
Monthly Rent Escalation.  The Basic
Monthly Rent shall be increased on each anniversary of the Commencement
Date to the product obtained by multiplying the Basic Monthly Rent then in
effect by 1.02.  Landlord shall invoice
Tenant retroactively for the increased portion of the Basic Monthly Rent due
for the period between each such anniversary and the date of such invoice.  The 
delay  or failure  of 
Landlord  to  compute or to bill Tenant for the
adjustments to be


 


2

















 


made pursuant to this Paragraph 4.2 shall not impair
the continuing obligation of Tenant to pay the increased portion of the Basic
Monthly Rent resulting from such adjustments. 
In no event shall the Basic Monthly Rent be decreased as a result of
this Paragraph 4.2.


 


4.3                                 Net
Rent.  It is the intent of Landlord
and Tenant that the Basic Monthly Rent and all other rent and sums payable by
Tenant to Landlord under this Lease be absolutely net to Landlord and that
Tenant shall, except as expressly hereinafter provided, pay (either directly or
by payment to Landlord of Tenant’s share of any expenses or costs pursuant to
any provision of this Lease) for all insurance, taxes, utilities, repairs,
operating expenses, maintenance and all other services and costs relating to
the Premises and to Tenant’s use thereof.


 


4.4                                 Place
of Payment.  All payments made by
Tenant under this Lease shall be made at Landlord’s place of business
designated on the signature page of this Lease, or at such other places as
Landlord may designate from time to time by written notice to Tenant.


 


4.5                                 Late
Charges.  Any payment of Basic
Monthly Rent or Additional Rent not made when due, shall at Landlord’s
sole option, bear late charges thereon calculated at the rate of one
and one-half percent (11⁄2%) per month, but in no event greater than the
highest rate permitted by applicable law.


 


4.6                                 Retention
of payments by Landlord.  Any
payment of Basic Monthly Rent or Additional Rent then accrued shall be fully
earned by Landlord when due under terms of this Lease.


 


4.7                                 Prepaid
Rent.  Concurrent with the execution
of this Agreement, Tenant shall pay Landlord the sum of $145,000
representing the first three months rent due hereunder.  On the first day of the fourth month of
the term of this Lease, Tenant shall commence making monthly rental payments in
the amount set forth in Paragraph 1.4 above.


 


5.                                       Property
Taxes.  Tenant shall pay all real
property taxes applicable to the Premises during the Term.  All such payments shall be made at least ten
(10) days prior to the delinquency date of such payment.  Upon payment thereof, Tenant shall promptly
furnish Landlord with satisfactory evidence that such taxes have been
paid.  Notwithstanding the foregoing
provisions of this Paragraph 5, if the holder of any mortgage then
affecting Landlord’s interest in the Premises requires that Landlord make
monthly or other periodic payments to an escrow or reserve for use in paying
real property taxes as they fall due, Tenant shall, upon being so advised
by Landlord and at the time of its making the monthly payments of Basic Monthly
Rent required under Paragraph 4, remit to Landlord the monthly or other
periodic payments required to be paid by Landlord to such holder, and Landlord
shall in turn remit such amount to such holder.  As used herein, the term “real property taxes” shall include any
form of general or special assessment, license fee, commercial rental or gross
receipts tax, levy, penalty, duty, charge or tax (other than inheritance
or estates taxes) imposed by an authority having the direct or indirect
power to tax, including any city, county, state or federal government, or any
school, agricultural, lighting, drainage, sewer or other improvement district
against any legal or equitable interest of Landlord in the Premises or in the
real property of which the Premises are a part, against Landlord’s right to
rent or other income therefrom, against the use, occupancy or possession of the
Premises by Landlord or Tenant or against Landlord’s business of leasing the
Premises or any tax imposed in substitution, partially or totally, of any tax
previously included within the definition of real property taxes, or any  additional tax the  nature of  which was  previously included within the definition


 


3

















 


of real property taxes.  All
expenses, including attorney’s fees and disbursements, experts’ and other
witnesses’ fees, incurred in contesting the validity or amount of any taxes or
in obtaining a refund of taxes will be considered as part of the taxes for the
tax year in which such expenses are incurred. 
If the Premises are not separately assessed, Tenant’s liability shall be
an equitable proportion of the real property taxes for all of the land and
improvements included within the tax parcel assessed, such proportion to be
determined by Landlord from the respective valuations assigned in the
assessor’s work sheets or such other information as may be reasonably
available.  Landlord’s reasonable
determination thereof, in good faith, shall be conclusive.  Tenant shall pay prior to delinquency all
taxes assessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Tenant contained in the Premises or
elsewhere.  When possible, Tenant shall
cause said trade fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of
Landlord.


 


6.                                       Use
and Operation.


 


6.1                                 Use;
Suitability.  Tenant shall not use
or occupy or permit the Premises to be used or occupied for any purpose other
than for the Permitted Use, and shall not do or permit anything to be done by
its employees, agents, licensees or invitees (collectively, “Occupants”) which
may (a) increase the existing rate or violate the provisions of any insurance
carried with respect to the Premises; (b) create a public or private nuisance,
commit waste or interfere with, annoy or disturb any other tenant or occupant
of the Building or Landlord in its operation of the Building; (c) overload the
floors or otherwise damage the structure of the Building; (c) constitute an
improper, immoral or objectionable purpose; (e) subject Landlord to any
liability to any third party; or (f) lower the first-class character of the
Building.  Tenant shall, at its sole
cost, (t) operate its business on the Premises; (u) use the Premises in a
careful, safe and proper manner; (v) comply with all present and future
governmental or quasi-governmental laws, ordinances, regulations and
requirements and any covenants, conditions and restrictions existing with
respect to the Premises and the use thereof; (w) comply with the requirements
of any board of fire underwriters or other similar body relating to the
Premises; (x) keep the Premises free of objectionable noises and odors; (y) not
store, use or dispose of any hazardous, toxic or radioactive materials on the
Premises except those necessary to the operation of its business and in full
compliance with all applicable present and future governmental or
quasi-governmental laws, ordinances, regulations and requirements regarding the
same; and (z) not place any signs on the Premises, except as provided in
Paragraph 18 of this Lease, unless Landlord consents thereto in advance in
writing.  The judgment of any court of
competent jurisdiction or the admission of Tenant in any action against Tenant,
whether or not Landlord is a party thereto, that Tenant has violated any
governmental or quasi-governmental law, ordinance, regulation or requirement or
any covenant, condition or restriction existing with respect to the Premises or
with respect to any hazardous, toxic or radioactive substance on the Premises
shall be conclusive of that fact as between Landlord and Tenant.  (The foregoing sentence shall not create or
confer upon Tenant or any other person any rights with respect to
Landlord.)  Except as expressly set
forth in this Lease, no representation or warranty has been made to or relied
upon by Tenant concerning the Premises, including, without limitation, the
fitness or suitability of the Premises for the conduct of Tenant’s business,
nor has Landlord agreed to undertake any modification, alteration or
improvement of the Premises.


 


6.2                                 Covenant
of Continuous Operation.  Tenant
shall carry on its business diligently and continuously at the Premises
throughout the Term and shall keep the Premises open for


 


4

















 


business on all business days in accordance with the
schedule of minimum hours specified from time to time by Landlord.


 


7.                                       Utilities
and Services.  Tenant shall pay all
costs, expenses, charges and amounts, or whatever kind or character, for all
water, gars, heat light, power, air conditioning, telephone, sewer service,
protective service, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. 
If any such services are not billed to Tenant, but rather are billed to
and paid by Landlord, Tenant shall pay to Landlord the cost of such
services.  If any utility service to
the Premises is interrupted for any reason whatsoever, Landlord shall not
be liable therefore to Tenant, such interruption shall not be deemed to be an
eviction or interference with Tenant’s use and occupancy of the Premises, the
rents required to be paid hereunder shall not be abated as a result thereof,
and Tenant hereby expressly waives any claims Tenant might otherwise have
against Landlord as a result of any such interruption.


 


8.                                       Maintenance
and Repairs; Alterations; Access.


 


8.1                                 Maintenance
and Repairs.  Tenant, at its sole
cost and expense, shall maintain the Premises and every part thereof in good
order, condition and repair, and in a clean and sanitary condition, including
both structural and nonstructural portions, including, without limitation, all
plumbing, sewage, heating, air conditioning, ventilating, electrical, and
lighting facilities equipment, fixtures, floor, walls and ceilings and their
coverings (interior and exterior), foundations, roofs (interior and
exterior), columns, beams, floors, windows, window sashes and frames, doors and
door frames, locks, glass and plate glass, furnishings, trade fixtures,
leasehold improvements, equipments, landscaping, driveways, parking lots,
fences, signs and other personal property from time to time situated in, on or
upon the Premises.  Tenant expressly and
irrevocably waives the benefit or applicability of any statute in effect on or
after the date of this Lease which affords Tenant the right to make repairs at
Landlord’s expense or to terminate this Lease because of Landlord’s failure to
keep the Premises in good order, condition and repair.


 


8.2                                 Alterations.  Tenant shall not make any change, addition
or improvement to the Premises, unless such change, addition or
improvement: (a) equals or exceeds the then-current standard for the building
and utilizes only new and first-grade materials; (b) is in conformity with all
applicable governmental and quasi-governmental laws, ordinances, regulations
and requirements, and is made after obtaining any required permits and
licenses; (c) is made with the prior written consent of Landlord; (d) is made
pursuant to plans and specifications approved in writing in advance by
Landlord, which approval shall not be unreasonably withheld; (e) is made
after Tenant has provided to Landlord such indemnification or bonds, including,
without limitation, a performance and completion bond, in such form and amount
as may be satisfactory to Landlord, to protect against claims and liens for
labor performed and materials furnished, and to insure the completion of any
change, addition or improvement; (f) is carried out by persons approved in
writing by Landlord, who, if required by Landlord, deliver to Landlord before
commencement of their work proof of such insurance coverage as Landlord
may require, with Landlord named as an additional insured; and (g) immediately
becomes the property of Landlord.  Any
such change, addition or improvement shall be done only at such time and in
such manner as Landlord may reasonably specify.  Tenant shall promptly pay the entire cost of any such change,
addition or improvement.  Tenant shall
indemnify, defend and hold harmless Landlord from and against all liens,
claims, damages, losses, liabilities and expenses, including attorneys’ fees,
which may arise out of or be connected in any way with any such change,
addition or


 


5

















 


improvement. 
Within ten (10) days following the imposition of any such lien Tenant
shall cause such lien to be released of record by payment of money or posting
of a proper bond.  Any increase in
property taxes on or insurance cost for the Premises attributable to such
change, addition or improvement shall be borne by Tenant and shall be paid by
Tenant to Landlord within thirty (30) days after receipt by Tenant of
Landlord’s invoice(s) therefore.


 


8.3                                 Access
to Premises.  Landlord may enter the
Premises at reasonable times for the purpose of inspecting, altering and
repairing the Premises and ascertaining compliance with the provisions of this
Lease by Tenant.  Landlord shall have
free access to the Premises in the event of an emergency.  Landlord may also show the Premises to
prospective purchasers, tenants or mortgages at reasonable times.  Tenant hereby waives any claim for damages
or for injury to inconvenience to or interference with Tenant’s business, any
loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby.  Landlord shall at
all times have a key with which to unlock all of the doors in the Premises
(excluding Tenant’s vaults, safes and similar areas designated in writing by
Tenant in advance).  During the six (6)
months prior to the expiration of the Term or other termination of this Lease,
Landlord may place upon the Premises “To Let,” “For Sale” or other similar
signs.


 


9.                                       Assignment.


 


9.1                                 Prohibition.  Tenant shall not, either voluntarily or by
operation of law, assign, transfer, mortgage, encumber, pledge or hypothecate
this Lease or Tenant’s interest in this Lease, in whole or in part, permit the
use of the Premises by any persons other than Tenant or its Occupants, or
sublease the Premises or any part of the Premises, without the prior written
consent of Landlord, which may be withheld in Landlord’s sole discretion
for any reason or for no reason.  Any
transfer of this Lease from Tenant by merger, consolidation, liquidation or
transfer of assets shall constitute an assignment for the purposes of this
Lease.  If Tenant is a corporation, an
unincorporated association or a partnership, the assignment, transfer,
encumbrance or hypothecation of any stock or interest in such corporation,
association or partnership in the aggregate in excess of forty-nine percent
(49%) shall be deemed an assignment within the meaning of this Paragraph 9.1
unless such transfer is to the immediate family of such majority equity
holder.  Consent to any assignment or
subleasing shall not operate as a waiver of the necessity for consent to any
subsequent assignment or subleasing and the terms of such consent shall be
binding upon any person holding by, under or through Tenant.  At Landlord’s option, any assignment or
sublease without Landlord’s prior written consent shall be void.  Notwithstanding the foregoing, Landlord
expressly consents to subleases to McDonalds and EFT [hand written notation
changing EFT to ETT, initialed by Phyllis Schwartz], Inc.  Tenant hereby pledges its interest in said
leases to Landlord to secure Tenant’s obligations to Landlord hereunder.


 


9.2                                 Termination.  If Tenant requests Landlord’s consent to an
assignment of this Lease or to a subleasing of the whole or any part of the
Premises (other than the approved subleases referred to in Paragraph 9.1
above), Tenant shall submit to Landlord the terms of such assignment or
subleasing, the name and address of the proposed assignee or subtenant, such
information relating to the nature of its business and finances as
Landlord may be reasonably require, and the proposed effective date (the
“Effective Date”) of the proposed assignment or subleasing, which Effective
Date shall be neither less than thirty (30) nor more than ninety (90) days
following the date of Tenant’s submission of such information.  Upon receipt of such request and all such
information from Tenant, Landlord shall have the right, exercisable by notice
within fifteen (15) days after such receipt, to terminate this Lease if the
request is to assign this Lease or to sublease all of the Premises or, if the
request is to


 


6

















 


sublease  a
portion of the Premises only, to terminate this Lease with respect to such
portion, in each case as of the Effective Date, unless within five (5) business
days after notice from Landlord to Tenant of such termination, Tenant withdraws
such request.  Such right to terminate
shall be for any reason whatsoever in the sole discretion of Landlord,
including but not limited to the right to retain all profits of such
assignment or sublease.  If Landlord
shall exercise such termination right, Tenant shall surrender possession
of the entire Premises or the portion which is the subject of the right, as the
case may be, on the Effective Date in accordance with the provisions of
Paragraph 17.  If this Lease is
terminated as to a portion of the Premises only, the rent payable by Tenant
under this Lease shall be abated proportionately commencing as of the Effective
Date, based upon the percentage of the Premises as to which this Lease has
been terminated.


 


9.3                                 Landlord’s
Rights.  If this Lease is assigned
or if all or any portion of the Premises is subleased or occupied by any person
other than Tenant without obtaining Landlord’s consent, Landlord may collect
rent and other charges from such assignee or other party, and apply the amount
collected to the rent and other charges reserved under this Lease, but such
collection shall not constitute consent or waiver of the necessity of consent
to such assignment or subleasing, nor shall such collection constitute the
recognition of such assignee or subtenant as Tenant under this Lease or a
release of Tenant from the further performance of all of the covenants and
obligations of Tenant contained in this Lease. 
No consent by Landlord to any assignment or subleasing by Tenant shall
relieve Tenant of any obligation to be paid or performed by tenant under this
Lease, whether occurring before or after such consent, assignment or
subleasing, but rather Tenant and it assignee or subtenant, as the case may be,
shall b jointly and severally primarily liable for such payment and
performance.  Tenant shall reimburse
Landlord for its attorneys’ and other 
fees and costs incurred in connection with both determining whether to
give its consent and giving its consent. 
O assignment or subleasing under this Lease shall be effective
unless and until Tenant provides to Landlord an executed counterpart of the
assignment or sublease agreement, which shall specifically state that (a) such
agreement is subject to all of the provisions of this Lease; (b) in the case of
an assignment, the assignee assumes and agrees to perform all of Tenant’s
obligations under the Lease; (c) the assignee or subtenant, as the case may be,
does not have the right to a further assignment of such agreement, or to allow
the Premises to be used by others, without the prior written consent of
Landlord in each instance; (d) a consent by Landlord thereto shall not be
deemed or construed to modify, amend or affect the provisions of this
Lease or Tenant’s obligations under this Lease, which shall continue to apply
to the Premises and the occupants of the Premises as if the assignment or sublease
had not been made; (e) if Tenant defaults in the payment of any amounts due
under this Lease, Landlord is authorized to collect any rents or other
amounts due from any assignee, subtenant or other occupant of the Premises and
to apply the net amounts collected to the sums reserved in this Lease; and (f)
the receipt by Landlord of any amounts from an assignee, subtenant or other
occupant of any part of the Premises shall not be deemed or construed as
releasing Tenant from Tenant’s obligations under this Lease or the acceptance
of that party as a direct tenant.


 


10.                                 Indemnity;
Waiver and Release.


 


10.1                           Indemnity.  Tenant shall indemnify, defend and hold
harmless Landlord from, against and with respect to all demands, claims, causes
of action, judgments, losses, damages (including consequential damages),
liabilities, obligations, fines, penalties, costs and expenses,
including but not limited to attorneys’ fees, arising from the occupancy
or use by Tenant or its invitees on the Premises, the conduct of Tenant’s
business on the Premises, and act or omission done, permitted


 


7

















 


or suffered by Tenant or any of its invitees, any default or
nonperformance by Tenant under this Lease, any injury or damage to the person,
property or business of Tenant or its invitees, any litigation commenced by or
against Tenant to which Landlord is made a party without fault on the part of
Landlord, or any change or liability brought by any local, state or federal
governmental agency regarding Tenant’s retail fuel operations, including,
without limitation, claims brought by the Environmental Protection Agency due
to a violation of any law.  If any
action or proceeding is brought against Landlord, its employees or its
agents by reason of any such claim, Tenant, upon notice from Landlord, shall
defend the claim at Tenant’s expense with counsel reasonably satisfactory to
Landlord.


 


10.2                           Waiver
and Release.  Tenant waives and
releases all claims against Landlord, its employees and agents with
respect to all matters for which Landlord has disclaimed liability
pursuant to the provisions of this Lease. 
In addition, Landlord, its employees and agents shall not be liable for
any loss, injury, death or damage (including any consequential damage) to
persons, property or Tenant’s business resulting from any theft, act of
God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition, order of governmental body or authority, fire, explosion, falling
object, steam, water, rain, snow, breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures, construction, repair or alteration of the Premises or other
cause beyond Landlord’s control.  Tenant
acknowledges that it constructed all improvements comprising the Premises and
that it is now leasing the property pursuant to a sale/leaseback transaction
with Landlord.  Consequently, Tenant
waives all claims against Landlord relating to the current or future condition
of the improvements or the Premises and acknowledges that any it is responsible
for any deficiency of the improvements or the Premises.  Tenant shall timely pursue all
meritorious claims against contractors, subcontractors, materialmen and/or architects
contributing to any substandard condition relating to the improvements or the
Premises and shall advise Landlord of any such claim.


 


11.                                 Insurance.  Tenant shall, at Tenant’s dole cost, procure
and continue in force the following insurance coverage: (a) bodily injury and
property damage liability insurance with a combined single limit for bodily
injury and property damage of not less tan $2,000,000 per occurrence; (b)
fire and extended coverage insurance, including vandalism, malicious mischief,
special extended peril (all-risk), boiler, and sprinkler leakage coverage, in
an amount equal to the full replacement value (without deduction for
depreciation) of the Premises and of all furnishings, trade fixtures, leasehold
improvements, equipment, merchandise and other personal property from time to
time situated in, on or upon the Premises; and (c) worker’s compensation
insurance satisfying Tenant’s obligations under the worker’s compensation laws
of the State of Nevada.  Such minimum
limits shall in no event limit the liability of Tenant under this
Lease.  Such liability insurance shall
name Landlord and any other person specified from time to time by Landlord as
an additional insured, such property insurance shall name Landlord as a loss
payee as its interests may appear, and both such liability and property
insurance shall be with companies acceptable to Landlord having a rating of not
less than A:XI in the most recent issue of Best’s Key Rating Guide,
Property-Casualty.  All liability
policies maintained by Tenant shall contain a provision that Landlord and any
other additional insured, although named as an insured, shall nevertheless
be entitled to recover under such policies for any loss sustained by it, its
agents and its employees as a result of the acts or omissions of Tenant.  Tenant shall furnish Landlord certificates
of coverage.  No such policy shall be
cancelable or subject to reduction of coverage or other modification except
after thirty (30) days’ prior written notice to Landlord by the insurer.  All such policies shall be written as
primary policies, not contributing with and not in excess


 


8

















 


of any coverage Landlord may carry, and shall only be subject to such
deductibles as may be approved in writing in advance by Landlord.  Tenant shall, at least ten (10) days prior
to the expiration of such policies, furnish Landlord with renewals or binders
therefore.  Landlord and Tenant hereby
mutually waive their respective rights of subrogation against each other for
any loss insured by insurance policies existing for the benefit of the
respective parties.  Landlord and Tenant
shall cause their respective insurance carriers to issue appropriate waivers of
subrogation rights endorsements to all policies of insurance carried in
connection with the Premises or the contents of the Premises.  Tenant shall cause all other occupants of
the Premises claiming by, through or under Tenant to execute and deliver to
Landlord a waiver of claims similar to the waiver contained in this Paragraph
and to obtain such waiver of subrogation rights endorsements.  Any mortgage lender interested in any part
of the Premises may, at Landlord’s option, be afforded coverage under any
policy required to be secured by Tenant under this Lease, by use of a
mortgagee’s endorsement to the policy concerned.


 


12.                                 Damage
or Destruction.


 


12.1                           General
Provisions.  If the Premises are
partially damaged or destroyed by any casualty insured against under any
insurance policy maintained by Tenant or Landlord, they shall,
upon receipt of any insurance proceeds, use such proceeds to effect repair
of the Premises to substantially the condition in which the Premises were
immediately prior to such destruction. 
Landlord’s obligation under the preceding sentence shall not exceed the
lesser of the cost of the standard improvements installed by Landlord in
the Premises, or the proceeds received by Landlord from any insurance policy
maintained by Tenant.  If (a) by reason
of such occurrence the Premises are rendered wholly untenantable; (b) the
Premises are damaged as a result of a risk not covered by insurance; (c) the
Premises are damaged in whole or in part during the last twelve (12) months of
the Term; (d) the Premises or the Building (whether or not the Premises are
damaged) is damaged to the extent of ten percent (10%) or more of the
then-replacement value of either or to the extent that it would take, in
Landlord’s opinion, in excess of ninety (90) days to complete the requisite
repairs; or (e) insurance proceeds adequate to repair the Premises are not
available to Landlord for any reason, Landlord may either elect to repair the
damage or cancel this Lease by notice of cancellation within sixty (60) days
after such event and thereupon this Lease shall expire as of the date such
notice is given, and Tenant shall vacate and surrender the Premises to
Landlord.  There shall be no abatement
of any payment due from Tenant to Landlord under this Lease.  Tenant expressly waives any claim Tenant
might  have against Landlord for any
loss suffered by reason of any such damage, destruction, repair or restoration,
and Tenant shall have no right to terminate this Lease as the result of any
statutory provision in effect on or after the date of this Lease pertaining
to the damage and destruction of the Premises or the Building.


 


12.2                           Damage
to Tenant’s Trade Fixtures and other Personal Property.  The proceeds of all insurance carried by
Tenant on Tenant’s furnishings, trade fixtures, leasehold improvements,
equipment, merchandise and other personal property shall be held in trust by
Tenant for the purpose of the repair and replacement of the same, and shall not
be subject to any claim by Landlord for repair or replacement of any part of
the Premises.  Landlord shall not be required
to repair any damage or to make any restoration or replacement of any
furnishings, trade fixtures, leasehold improvements, equipment, merchandise and
other personal property installed in the Premises by Tenant or at the
direct or indirect expense of Tenant. 
Unless this Lease is terminated by Landlord pursuant to this Paragraph,
Tenant shall be require to restore or replace such furnishings, trade fixtures,
leasehold


 


9

















 


improvements, equipment, merchandise and other personal property in the
event of damage or destruction in at least a condition equal to that existing
prior to such event.


 


13.                                 Condemnation.  As used in this Paragraph 13, “Condemnation
Proceedings” means any actions or proceedings in which any interest in the
Premises is taken for any public or quasi-public purpose by any lawful
authority through exercise of the poser of eminent domain or by purchase or
otherwise in lieu of such exercise.  If
the whole of the Premises is taken through Condemnation Proceedings, this Lease
shall automatically terminate as of the date of such taking.  The phrase “as of the date of the taking”
means the date of taking actual physical possession by the condemning authority
or such earlier date as the condemning authority gives notice that it is deemed
to have taken possession.  Landlord may
terminate this Lease if more than twenty-five percent (25%) of the Premises is
taken or any portion of the Premises is taken that, in Landlord’s judgment,
substantially interferes with Landlord’s ability to operate or use the Premises
for the purposes for which it was intended. 
Any such termination must be accomplished through written notice to
Tenant given no later than sixty (60) days after, and shall be effective as of,
the date of such taking.  In all other
cases, or if Landlord does not exercise its right to terminate, this Lease
shall remain in effect.  If a portion of
the Premises is taken and this Lease is not terminated, the Basic Monthly Rent
shall be reduced in the proportion that the floor area of buildings taken bears
to the total floor area of the Premises immediately prior to the taking.  Whether or not this Lease is terminated as a
consequence of Condemnation Proceedings, all damages or compensation
awarded for a partial or total taking, including any award for severance damage
and any sums compensating for diminution in the value of or deprivation of the
leasehold estate under this Lease, shall be the sloe and exclusive property of
Landlord.  Tenant shall be entitled to
any award for the loss of or damage to Tenant’s trade fixtures or loss of
business, provided that a separate award is actually made therefore to Tenant
and that the same will not reduce Landlord’s award. Tenant shall have no claim
against Landlord for the occurrence of any Condemnation Proceedings, or for the
termination of this Lease or a reduction in the Premises as a result of any
Condemnation Proceedings.


 


14.                                 Landlord’s
Financing.  This lease shall be
subordinate to any existing or future first mortgage, first deed of trust and
all renewals, modifications, amendments, consolidations, replacements and
extensions of any such instruments.  No
documentation other than this Lease shall be required to evidence such
subordination.  If any holder of a
mortgage or deed of trust shall elect to have this Lease superior to the lien
of its mortgage or deed of trust and shall give written notice of such election
to Tenant, this Lease shall be deemed prior to such mortgage or deed of trust.  Tenant shall execute such documents as may
be required by Landlord to confirm such subordination or priority within ten
(10) days after request therefore. 
Tenant shall from time to time if so requested by Landlord and if doing
so will not materially and adversely affect Tenant’s economic interests under
this Lease, join with Landlord in amending this Lease so as to meet the needs
or requirements of any lender that is considering making or that has made a
loan secured by the Premises or any portion thereof.  Any sale, assignment or transfer of Landlord’s interest under
this Lease or in the Premises, including any such disposition resulting from
Landlord’s default under a debt obligation, shall be subject to this Lease and
Tenant shall attorn to Landlord’s successors and assigns and shall recognize
such successors or assigns as Landlord under this Lease, regardless of any rule
of law to the contrary or absence of privity of contract.


 


10

















 


15.                                 Default.


 


15.1                           Default
by Tenant.  The occurrence of any of
the following events shall constitute a default by Tenant under this Lease:


 


15.1.1                  Tenant
fails to pay timely any installment of Basic Monthly Rent or any other
payment due under this Lease.


 


15.1.2                  Tenant
fails to observe or perform timely any other term, covenant or condition to be
observed or performed by Tenant under this Lease.


 


15.1.3                  Tenant
fails to provide fuel services for a period of five (5) consecutive days,
unless Tenant is prevented from doing so by Force Majeure.  For purposes of this provision, Force
Majeure shall mean any act or event that occurs as a consequence of fire,
theft, water, wind, flood, hurricane, and that could not have been avoided by
reasonable diligence, prevention or control.


 


15.1.4                  Tenant
becomes insolvent or ceases to transact business as a going concern.


 


15.1.5                  Tenant
sells or otherwise transfers its business and the purchaser does not
expressly assume all of Tenant’s obligations hereunder.


 


15.1.6                  Tenant
or any guarantor of this Lease dies (if an individual), files a petition
in bankruptcy, becomes insolvent, has taken against such party in any court,
pursuant to state or federal statute, a petition in bankruptcy or insolvency or
for reorganization or appointment of a receiver or trustee, petitions for or
enters into an arrangement for the benefit of creditors or suffers this Lease
to become subject to a writ of execution.


 


15.1.7                                                                  Tenant
vacates or abandons the Premises.


 


15.1.8                  Any
guarantor, surety or endorser of this Lease for Tenant attempts to rescind or
to terminate its guaranty, or defaults in or breaches any obligation or
liability to Landlord.


 


15.2                           Remedies.  In the event Tenant fails to timely and
fully carry out any of the provisions or obligations under this Lease or is in
default under any of the provisions of Paragraph 15.1 above, Landlord
shall have the right to, at any time and at Landlord’s option, without waiving
or limiting any other right or remedy available to it, (a) perform in Tenant’s
stead any obligation that Tenant has failed to perform, and Landlord shall be
reimbursed promptly for any cost incurred by Landlord in connection therewith
with interest thereon from the date of such expenditure until paid in full at
the greater of the prime rate then charged by Bank of America (or any other
bank or savings and loan association designated by Landlord), plus four percent
(4%), or eighteen percent (18%) per annum (the “Interest Rate”); (b)
terminate Tenant’s rights under this Lease by written notice; (c)
reenter and take possession of the Premises by any lawful means (with or
without terminating this Lease); or (d) pursue any other remedy allowed by
law.  Tenant shall pay to Landlord the
cost of recovering possession of the Premises, all costs of reletting,
including reasonable renovation, remodeling and alteration of the Premises, the
amount of any commissions paid by Landlord in


 


11

















 


connection with such reletting, and all other costs and damages arising
out of Tenant’s default, including attorneys’ fees and costs.  Notwithstanding any termination or reentry,
the liability of Tenant for the rents and other sums reserved in this Lease
shall not be extinguished for the balance of the Term, and Tenant agrees
to compensate Landlord upon demand for any deficiency arising from
reletting the Premises at a lesser rent than applies under this Lease.


 


15.3                           Past
Due Amounts; Tenant’s Obligations Independent.  If Tenant fails to pay when due any amounts required to be paid
by Tenant under this Lease, such unpaid amounts shall bear interest at the
Interest Rate from the due date of such amounts to the date of payment in full,
with interest.  In addition, Landlord
may also charge a sum of five percent (5%) of such unpaid amounts as
a late charge.  The actual cost in
each instance is extremely difficult, if not impossible, to determine.  The 
payment (and acceptance) of this late payment charge shall not
constitute a waiver by Landlord of any default by Tenant under this Lease.  All amounts due under this Lease are and
shall be deemed to be rent or additional, rent, and shall be paid by
without abatement, deduction, offset, prior notice or demand (unless expressly
provided by the terms of this Lease). 
The obligations of Tenant to pay Basic Monthly Rent and all other
amounts due and to perform all of its obligations under this Lease
are severable from and independent of any obligations of Landlord under
this Lease.


 


15.4                           Default
by Landlord.  Landlord shall not be
in default under this Lease unless Landlord or the holder of any mortgage or
deed of trust covering the Premises whose name and address have been
furnished to Tenant in writing fails to perform an obligation required of
Landlord under this Lease within thirty (30) days after written notice by Tenant
to Landlord and to such holder, specifying the respects in which Landlord has
failed to perform such obligation.  If
the nature of Landlord’s obligation is such that more than thirty (30) days are
reasonably required for performance or cure, Landlord shall not be in
default if Landlord or such holder commences performance within
such thirty (30) day period and after such commencement diligently
prosecutes the same to completion.  In no event shall Tenant have the
right to terminate this Lease or to withhold the payment of rent or other
charges provided for in this Lease as a result of Landlord’s default.


 


16.                                 Expiration
or Termination.


 


16.1                           Surrender
of Premises.  Upon the expiration of
the Term or other termination of this Lease, Tenant shall, at its own
cost, (a) promptly and peaceably surrender the Premises to Landlord “broom
clean,” in good order and condition, ordinary wear and tear excepted; (b)
repair any damage to the Premises caused by or in connection with the removal
of any property from the Premises by or at the direction of Tenant; (c)
repair, patch and pain in a good and workmanlike manner satisfactory to
Landlord all holes and other marks in the floors, walls and ceilings of the
Premises to Landlord’s reasonable satisfaction; and (d) deliver all keys to the
Premises to Landlord.  Before
surrendering the Premises, Tenant shall, at its sole cost, remove its movable
personal property only, and all other property shall, unless otherwise directed
by Landlord, remain in the Premises and become the property of Landlord without
payment therefore; however, Tenant shall not remove any personal property,
trade fixtures or other property fro the Premises without Landlord’s prior
written consent if such personal property, trade fixtures or other property is
used in the operation of the Premises, the removal of such personal property,
trade fixtures or other property will impair the structure of the Building, or
Tenant is in default under this Lease. 
If Tenant is in default under this Lease, Landlord shall have a lien on
such personal property, trade fixtures and other property.  Landlord may require Tenant to remove
any personal property, trade fixtures, other property,


 


12

















 


alterations, additions and improvements made to the Premises by Tenant
or by Landlord for Tenant, and to restore the Premises to their condition
on the date of this Lease.  All personal
property, trade fixtures and other property of Tenant not removed from the
Premises upon the abandonment of the Premises or upon the expiration of the
Term or other termination of this Lease for any cause shall conclusively be
deemed to have been abandoned and may be appropriated, sold, stored, destroyed
or otherwise disposed of by Landlord without notice to Tenant or any other
person and without any obligation to account therefore.  Tenant shall pay to Landlord all expenses
incurred in connection with the disposition of such property in excess of any
amount received by Landlord from any such disposition.  No surrender of the Premises shall be
effected by Landlord’s acceptance of the keys or of the rent or by any other
means whatsoever without Landlord’s written acknowledgement of such acceptance
as a surrender.  Tenant shall not be
released from Tenant’s obligations under this Lease in connection with
surrender of the Premises until Landlord has inspected the Premises and
delivered to Tenant a written release.


 


16.2                           Holding
Over.  Tenant shall indemnify,
defend and hold harmless Landlord from and against all claims, liabilities
and expenses, including attorneys’ fees, resulting from delay by Tenant in
surrendering the Premises in accordance with the provisions of this Lease.  If Tenant remains in possession of the
Premises or any part of the Premises after the expiration of the Term or other
termination of this Lease with the express written consent of landlord, such
occupancy shall be a tenancy from month to month at a rental (and not as a
penalty) in the amount of one hundred fifty percent (150%) of the last monthly
rental, plus all other charges payable under this Lease, and upon all of the
terms of this Lease applicable to a month to month tenancy.  The provisions of this Paragraph
16 shall survive the expiration of the Term or other termination of this
Lease.


 


17.                                 Estoppel
Certificate.  Tenant shall, within
five (5) days after Landlord’s request therefor, execute and deliver to
Landlord an estoppel certificate in favor of Landlord and such other persons as
Landlord shall request setting forth the following: (a) a ratification of this
Lease; (b) the Commencement Date and Expiration Date; (c) that this Lease is in
full force and effect and has not been assigned, modified, supplemented or
amended (except by such writing as shall be stated); (d) that all conditions
under this Lease to be performed by Landlord have been satisfied, or, in the
alternative, those claimed by Tenant to be unsatisfied; (e) that there are no
defenses or offsets against the enforcement of this Lease by Landlord, or, in
the alternative, those claimed by Tenant; (f) the amount of advance rent,
if any (or none if such is the case), paid by Tenant; (g) the date to which
rent has been paid; and (h) such other information as Landlord may
request.  Landlord’s mortgage lenders
and purchasers shall be entitled to rely upon any estoppel certificate executed
by Tenant.  If Tenant fails to execute
such estoppel certificate within such five (5) day period, Landlord may execute
the same on behalf of Tenant as Tenant’s duly authorized attorney-in-fact.  For such purpose, Tenant hereby makes,
constitutes and appoints Landlord as Tenant’s true and lawful attorney to act
for Tenant and in Tenant’s name, place and stead and for Tenant’s use and
benefit.  Such power of attorney shall
be irrevocable and shall be deemed to be coupled with an interest.


 


18.                                 Signage.  Tenant may purchase and erect such signage
on the Building and on the lot as may be necessary to advertise its
business, in conformity with all applicable governmental and quasi-governmental
laws, ordinances, regulations and requirements, and after obtaining any
required permits, licenses, variances and approvals.  All signs or letterings on doors shall be printed, painted
and affixed at the sole cost of Tenant by a person approved by Landlord,
and shall comply with the requirements of the governmental authorities having
jurisdiction over the Premises.  At its
sole


 


13

















 


expense, Tenant shall maintain all permitted signs and shall, upon the
expiration of the Term or other termination of this Lease, remove all such
permitted signs and repair any damage caused by such removal.


 


19.                                 Additional
Authorizations and Consents.  Tenant
and Landlord shall execute and file or join in the execution and filing of
any applications or other documents which may be necessary in order to obtain
the authorization, approval or consent of any governmental body, local, state
or federal or any other third party, which may be required, or which Tenant may
reasonably request, in connection with the consummation of the
transactions contemplated hereby.  Each
party shall use its best efforts to obtain all such authorizations, approvals
and consents.


 


20.                                 Purchase
Option.  At any time during the term
of this lease following the end of the 5th Lease Year and continuing for a
period of two months following the end of the term of this Lease (as
the same may be extended from time to time), Tenant shall have an option
to purchase the Premises for a sum equal to $6,090,000, increased by one percent
(1%) per year compounded from the end of the 5th Lease Year until the date
of exercise of the option.


 


21.                                 General
Provisions.


 


21.1                           No
Partnership.  Landlord does not by
this Lease, in any way or for any purpose, become a partner or joint
venturer of Tenant in the conduct of Tenant’s business or otherwise.


 


21.2                           Force
Majeure.  If either Landlord or
Tenant is delayed or hindered in or prevented from the performance of any act
required under this Lease by reason of acts of God, strikes, lockouts, other
labor troubles, inability to procure labor or materials, fire, accident,
failure of power, restrictive governmental laws, ordinances, regulations or
requirements of general applicability, riots, civil commotion, insurrection,
war or other reason not the fault of the party delayed and beyond the control
of such party (financial inability excepted), performance of the action in
question shall be excused for the period of delay and the period for the
performance of such act shall be extended for a period equivalent to the period
of such delay.  The provisions of this
Paragraph shall not, however, operate to excuse Tenant from the prompt payment
of rent or any other amounts required to be paid under this Lease.


 


21.3                           Notices.  Any notice, demand, request or other
instrument which may be or is required to be given under this Lease shall be
delivered in person or sent by United States certified or registered mail,
postage prepaid, shall be addressed as set forth below or as otherwise
designated in writing by Landlord or Tenant to the other, and shall be
effective upon delivery to the then effective notice address for the party
concerned.


 


Landlord:


 


Centennial Acquisitions, LLC


c/o Phyllis Schwartz


2877 Paradise Road, TH3402


Las Vegas, NV 
89109


 


14

















 


with a copy to:


 


John R. Erickson, Esq.


Woods Erickson Whitaker & Miles, LLP


1349 Galleria Drive, Suite 300


Henderson, NV 
89014


 


Tenant:


 


Terrible Herbst, Inc.


Attn: Sean Higgins


5195 South Las Vegas Blvd.


Las Vegas, NV 
89119


 


21.4                           Severablilty.  If any provision of this Lease or the
application of any provision of this Lease to any person or circumstance
shall to any extent be invalid, the remainder of this Lease or the
application of such provision to persons or circumstances other than those as
to which it is held invalid shall not be affected thereby.  Each provision of this Lease shall be valid
and enforceable to the fullest extent permitted by law.


 


21.5                           Notification
of Changes.  Tenant shall promptly
notify Landlord in writing of the existence or happening of any fact,
event or occurrence that may tend to alter, in any material respect, the
accuracy or completeness of any representation or warranty contained in this
Lease, or affect the ability of Tenant to perform its obligations hereunder.


 


21.6                           Brokerage
Commissions.  Except as agreed upon
in writing by Landlord, Tenant represents and warrants that there are no
claims for brokerage commission or finder’s fees in connection herewith and
agrees to indemnify, defend and hold harmless Landlord from and against all
claims, liabilities and expenses, including attorneys’ fees, arising from any
such brokerage commissions or finder’s fees.


 


21.7                           Use
of Pronouns.  The use of the neuter
singular pronoun to refer to Landlord or Tenant shall be deemed a proper
reference even though Landlord or Tenant may be an individual, partnership,
association, corporation or a group of two or more individuals, partnerships,
associations or corporations.  The
necessity grammatical changes required to make the provisions of this Lease
apply in the plural sense where there is more that one Landlord or Tenant
and to corporations, associations, partnerships, individuals, males or females,
shall in all instances be assumed as though in each case fully expressed.


 


21.8                           Successors.  Except as otherwise provided in this Lease,
all provisions contained in this Lease shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
devisees, successors, assigns and legal representatives.  In the event of any sale or assignment
(except for purposes of security or collateral) by Landlord of the Premises or
this Lease, Landlord shall, from and after the Commencement Date (irrespective
of when such sale or assignment occurs), be relieved entirely of all its
obligations under this Lease and such obligations shall, as of the time of
such sale or assignment or on the Commencement Date, whichever is later,
automatically pass to the Landlord’s successor in interest.


 


15

















 


21.9                           Recourse
by Tenant.  Anything in this Lease
to the contrary notwithstanding, Tenant shall look solely to the equity of
Landlord in the Premises, subject to prior rights of the holder of any
mortgage or deed of trust, for the collection of any judgment (or other
judicial process) requiring the payment of money by Landlord in the event
of any default or breach by Landlord with respect to any of the terms,
covenants and conditions of this Lease to be observed or performed by Landlord,
and no other assets of Landlord shall be subject to levy, execution or other
procedures for the satisfaction of Tenant’s remedies.


 


21.10                     Quiet
Enjoyment.  Upon Tenant paying the
rents reserved under this Lease and observing and performing all of the
terms, covenants and conditions on Tenant’s part to be observed and
performed under this Lease, Tenant shall have quiet enjoyment of the Premises
for the Term without interference from Landlord, subject to all of the
provisions of this Lease.


 


21.11                     Waiver.  No failure by any party to insist upon the
strict performance of any covenant, duty or condition of this Lease or to
exercise any right or remedy consequent upon a breach of this Lease shall
constitute a waiver of any such breach or of such or any other covenant, duty
or condition.  Any party may, by notice
delivered in the manner provided in this Lease, but shall be under no
obligation to, waive any of its rights or any conditions to its obligations
under this Lease, or any covenant or duty of any other party hereto.  No waiver shall affect or alter the
remainder of this Lease but each other covenant, duty and condition of this
Lease shall continue in full force and effect with respect to any other then
existing or subsequently occurring breach.


 


21.12                     Rights
and Remedies.  The rights and
remedies of the parties hereto shall not be mutually exclusive and the
exercise of one or more of the provisions of this Lease shall not
preclude the exercise of any other provisions.  The parties confirm that damages at law may be an inadequate
remedy for a breach or threatened breach by any party of any of the provisions
of this Lease.  The parties’ respective rights and obligations under
this Lease shall be enforceable by specific performance, injunction or any
other equitable remedy.


 


21.13                     Authorization.  Each individual executing this Lease does
thereby represent and warrant to each other so signing (and each other
entity for which another person may be signing) that he has been duly
authorized to deliver this Lease in the capacity and for the entity set forth
where he signs.


 


21.14                     Litigation
Expenses.  If any action, suit or
proceeding is brought by a party hereto to recover any rent or other amount due
under this Lease because of any default under this Lease, to enforce or
interpret any of the provisions of this Lease, or for recovery of possession of
the Premises, the prevailing party in such action or proceeding shall be
entitled to recover from the other all of its reasonable costs and
expenses incurred therein (including those incurred in connection with
any appeal), including attorney’s fees, the amounts of which shall be
fixed by the court and made a part of any judgment rendered.  Tenant shall be responsible for all expenses
incurred by Landlord, including, without limitation, attorneys’ fees, that
Landlord incurs in any case or proceeding involving Tenant under or related
to  any bankruptcy or insolvency law.


 


21.15                     Miscellaneous.  The captions to the Paragraphs of this Lease
are for convenience of reference only and shall not be deemed relevant in
resolving questions of construction or interpretation under this
Lease.  Exhibits referred to in this
Lease and any


 


16

















 


addendums, riders and schedules attached to this Lease shall be deemed
to be incorporated I this Lease as though a part of this Lease.  Tenant shall not record this Lease or a
memorandum or notice of this Lease without the prior written consent of
Landlord.  This Lease and the exhibits,
riders and addenda, if any, attached hereto, constitute the entire agreement
between the parties.  Any guaranty
attached hereto is an integral part of this Lease and constitutes consideration
given to Landlord to enter into this Lease.  No amendment to this Lease shall be binding upon Landlord or
Tenant unless reduced to writing and signed. 
Unless otherwise expressly set forth in this Lease, all references to
Paragraphs are to Paragraphs in this Lease. 
Each provision to be performed by Tenant shall be constructed to be both
a covenant and a condition.  This Lease
shall be governed by and construed and interpreted in accordance with the
laws of the State of Nevada.  Venue on
any action arising out of this Lease shall be proper only in the Eighth
Judicial District Court in and for Clark County,
State of Nevada.  Landlord and
Tenant waive trial by jury in any action, proceeding or
counterclaim brought by either of them against the other on all matters
arising out of this Lease or the use and occupancy of the Premises.  Time is of the essence of this Lease and
each and every provision hereof.  The
submission of this Lease to Tenant is not an offer to lese the Premises or an
agreement by Landlord to reserve the Premises for Tenant.  Landlord shall not be bound to Tenant
until Tenant has duly executed and delivered duplicate original copies of
this Lease to Landlord, and Landlord has duly executed and delivered one
of those duplicate original copies to Tenant.


 


IN WITNESS
WHEREOF, Landlord and Tenant have executed this Lease as of the date first set
forth above.


 


	
  “Landlord”

  	
  CENTENNIAL ACQUISITIONS, LLC, a Nevada

  limited liability company,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Phyllis Schwartz

  	
   

  
	
   

  	
   

  	
    Phyllis Schwartz, Manager

  



 


 


	
  “Tenant”

  	
  TERRIBLE HERBST, INC., a Nevada corporation,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jerry Herbst

  	
   

  
	
   

  	
   

  	
    Jerry Herbst, President

  



 


17

















 


GUARANTY


 


FOR GOOD AND
VALUABLE CONSIDERATION the receipt and sufficiency of which are hereby
acknowledged, and for the purpose of inducing Centennial Acquisitions, LLC, a
Nevada limited liability company (“Landlord”), to enter into the foregoing
Lease with Terrible Herbst, Inc., a Nevada corporation (“Tenant”), the
undersigned unconditionally guarantee to Landlord the full, prompt, and complete
payment and performance by Tenant of all of the terms, obligations,  covenants, and conditions of said Lease to
be paid, kept, or performed by Tenant, including the payment of all rent and
other charges thereunder.  The
undersigned shall pay all of Landlord’s expenses, including attorneys’ fees,
incurred in enforcing the obligations of Tenant under said Lease or in
enforcing this Guaranty.


 


The undersigned
hereby waive all requirements of notice of acceptance of this Guaranty and all
requirements of notice of default or non-performance by Tenant.  The obligations of the undersigned under
this Guaranty shall remain fully binding although Landlord may have waived
one or more defaults by Tenant, extended the time of performance by
Tenant, modified or amended said Lease, released, returned, or misapplied other
collateral given as additional security (including other guaranties), or
released Tenant from the performance of its obligations under said Lease.  In the event any right of action
accrues to Landlord under said Lease, Landlord may, at its option, proceed
directly against the undersigned without first having commenced any action,
first having pursued any remedy, or first having obtained any judgment, against
Tenant.


 


If this Guaranty
is signed by more than one person, their obligations shall be joint and
several, and the release of one guarantor shall not release any other
guarantor.  This Guaranty shall be
binding upon the undersigned and their respective heirs, personal
representatives, successors, and assigns.


 


EXECUTED by the
undersigned guarantor(s) on or as of the
                         
day of                          ,
2002.


 


 


	
    /s/ Jerry Herbst

  	
   

  
	
    Jerry Herbst

  



 


18

















 


EXHIBIT A


 


to


 


BUILDING LEASE


 


DESCRIPTION OF PREMISES


 


The Premises referred to in the foregoing instrument are more
particularly described as follows:


 


A parcel of land situated in the southeast Quarter (SE 1/4) of
Section 34 and the Southwest Quarter (SW 1/4) of Section 35, Township
28 South, Range 63 East, M.D.M., Search light of the Piute Lode Claim, U.S.M.S.
2366 lying Easterly of U.S. Highway No. 95, and begin more specifically
described as follows:


 


COMMENCING at the Southwest corner (SW –Cor.) of said Section 25
as shown by a map recorded December 12, 1975 as File 30, Page 61, Record
of Survey Maps, Clark County, Nevada:


 


THENCE North 0°23’28” West along the Westerly line of said
Section 35, a distance of 131616 feet to the Northeasterly line of the
aforesaid Piute Load Claim, said point being the TRUE POINT OF BEGINNING;


 


THENCE South 64°21’32” East along said Northeasterly line, 801.18 feet;


 


THENCE South 25°26’26” West, 467.58 feet;


 


THENCE North 64°28’26” West, 499.42 feet to the Easterly line of U.S.
Highway No. 95, (150.00 feet wide) being concaved to the East, and having a
radius of 2925.00 feet;


 


THENCE from radial line which bears south 71°18’52” West, along said
Easterly line (curving right), through a central angle of 10°20’20”, an arc
length of 527.81 feet;


 


THENCE North 08°f20’48” West, 72.20 feet to the aforementioned
Northeasterly line of the Piute Lode Claim;


 


THENCE departing Easterly line of U.S. Highway No. 95, south 64°21’32”
East, 69.80 feet to the TRUE POINT OF BEGINNING.


 


INCLUDING that portion of the Piute Lode Claim which extends into the
Right of Way of U.S. Highway No. 95, (150.00 feet wide), being more
specifically described as follows:


 


COMMENCING at the Point of Intersection of the Easterly line of
U.S. Highway No. 95 with the Northeasterly line of the Piute Load Claim, U.S.
M.S. No. 2366;


 


THENCE along said Easterly line of U.S. Highway No. 95 as follows:
South 08°20’48” East, 72.20 feet to a curve, concave to the East having a
radius of 2925.00 feet;


 


19

















 


THENCE Southerly (curving right) along said curve, through a central
angle of 4°03’40”, an arc length of 207.32 feet to the TRUE POINT OF BEGINNING;


 


THENCE South 77°35’32” West, along a radial line 43.00 feet to a curve,
concave to the East, having a radius of 2958.00 feet;


 


THENCE Southerly (curving left) along said curve, through a central
angle of 01°54’30” an arc length of 98.85 feet.


 


THENCE North 75°41’02” East along a radial line 43.00 feet to a curve,
concave to the East, having a radius of 2925.00 feet;


 


THENCE Northerly (curving right) along said curve, through a central
angle of 1°54’30”, an arch length of 97.42 feet to the TRUE POINT OF BEGINNING.


 


RESERVING to the grantor herein the right to all oil, petroleum, gas,
asphaltum and other minerals, gaseous, liquid and solid, in and under the
property without any right of surface entry for exploration, development or
extraction.


 


EXCEPTING THEREFROM that portion of said land as conveyed to the State
of Nevada by deed recorded June 24, 1988 in Book 88064 as Document No.
00262, Official Records, Clark County, Nevada.


 


20

















 


AMENDMENT TO LEASE

Searchlight Truck Stop.


 


THIS AMENDMENT TO
LEASE (this “Amendment”) is entered into as of the 30th day of
July 2002, between Centennial Acquisitions, LLC, a Nevada limited
liability company (“Landlord”), and Terrible Herbst, Inc., a Nevada
corporation (“Tenant”).


 


RECITALS:


 


A.                                   On
June 30, Landlord and Tenant entered into a certain Lease (the “Lease”)
of the Property described in Exhibit “A” hereto (the “Property”).


 


B.                                     In
consideration of Tenant’s agreeing to provide interim financing for
Landlord’s acquisition of the Property, Landlord agrees to modify the
Lease as set forth herein.


 


WITNESSETH:


 


FOR GOOD AND
VALUABLE CONSIDERATION, Landlord and Tenant hereby agree as follows:


 


Amendments to
Lease.  The Lease is
hereby amended as follows:


 


(a)                                  The
first paragraph of Section 3 of the Lease is hereby amended to read as
follows: “Tenant’s obligation to pay rent under this Lease shall commence
September 1, 2002.  Land and Tenant
acknowledge that the Commencement Date of the Lease shall be September 1,
2002 except that Tenant shall be entitled to occupy the Premises rent-free from
August 1, 2002 until the Commencement Date and Tenant’s obligation to pay
obligations described in Section 4.3 shall commence as of August 1,
2002.”


 


(b)                                 The
prepaid rent provided for in Section 4.7 of the Lease shall be paid on the
later of September 1, 2002 or the date Landlord pays off the promissory
note due to Tenant by Landlord secured by a first position trust deed on
the Property.


 


IN WITNESS
WHEREOF, Landlord and Tenant have executed this Amendment to Lease as of the
date first set forth above.


 


	
   

  	
  “Landlord”

  
	
   

  	
   

  
	
   

  	
  CENTENNIAL
  ACQUISITIONS, LLC, a

  Nevada limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Phyllis R. Schwartz

  
	
   

  	
   

  	
    Phyllis
  R. Schwartz, Manager

  



 


 

















 


	
   

  	
  “Tenant”

  
	
   

  	
   

  
	
   

  	
  TERRIBLE HERBST,
  INC., a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Jerry Herbst

  
	
   

  	
   

  	
    Jerry
  Herbst, President

  



 


The undersigned
Jerry Herbst hereby consents to the foregoing amendment and acknowledges that
his guaranty of the Lease is not affected by this Amendment to the Lease.


 


 

















 


THENCE Southerly (curving right) along said curve, through a central
angle of 4°03’40”, an arc length of 207.32 feet to the TRUE POINT OF
BEGINNING;


 


THENCE South 77°35’32” West, along a radial line 43.00 feet to a curve,
concave to the East, having a radius of 2958.00 feet;


 


THENCE Southerly (curving left) along said curve, through a central
angle of 01°54’30” an arc length of 98.85 feet.


 


TEHNCE North 75°41’02” East along a radial line 43.00 feet to a curve,
concave to the East, having a radius of 2925.00 feet;


 


THENCE Northerly (curving right) along said curve, through a central
angle of 1°54’30”, an arch length of 97.42 feet to the TRUE POINT OF BEGINNING.


 


RESERVING to the grantor herein the right to all oil, petroleum, gas,
asphaltum and other minerals, gaseous, liquid and solid, in and under the
property without any right of surface entry for exploration, development
or extraction.


 


EXCEPTING THEREFROM that portion of said land as conveyed to the State
of Nevada by deed recorded June 24, 1988 in Book 88064 as Document No.
00262, Official Records, Clark County, Nevada.


 


 

















 


July 1, 2001


 


The Herbst Fmily Limited Partnership


1595 Las Vegas Blvd. So.


Las Vegas, Nevada 89119


 


Dear Mr, Herbst,


 


Please let this letter serve as notification of our
intention to extend the lease between ETT Inc. and The Herbst Family Limited
Partnership for an additional five year term pursuant to the lease dated
July 1, 1996.


 


Per the terms of this extension the lease payment on
the property will increase by $2,500 to $12,500.00 per month.


 


	
  Sincerely,

  
	
   

  
	
  /s/ Edward J. Herbst

  	
   

  
	
  Edward J. Herbst

  
	
  President

  
	
  ETT Inc.

  
	
   

  
	
  Accepted by:

  
	
   

  
	
  Jerry Herbst, General Partner

  



 


 

















 


LEASE AGREEMENT


 


THIS LEASE, made
this 1st day of July, 1996, by and between The Herbst Family Limited
Partnership, hereinafter referred to as “Lessor”, and E-T-T, INC., hereinafter
referred to as “Lessee”.


 


WITNESSETH: that
the Lessor in consideration of the rent herein specified to be
paid by the Lessee, and the covenants and conditions herein
mentioned, does hereby lease, let and demise, unto Lessee, and the Lessee
does hereby rent from the Lessor those certain premises in the County of Nye,
State of Nevada, more particularly described in Exhibit A, attached hereto and
incorporated herein by reference.


 


TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.


 


THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terns and conditions, namely:


 


1.                                       TERM:  The term of this Lease shall be for a period
of five (5) years, commencing on July 1, 1996.


 


2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for said demised premises the sum of Ten Thousand Dollars ($10,000.00)
per month on the first of each month for the duration of said lease.


 


3.                                       SECURITY:                                  Lessee
agrees that buildings and improvements located or erected on premises at
any time during the term of this Lease, or extension thereof, shall


 


1

















 


be and remain charged with the lien in favor of Lessor as security
for the enforcement of all agreements of this lease by Lessee to be kept
and performed.  Such lien shall be prior
to all other contracts, liens and other encumbrances whatsoever
effecting the demised premises provided however that Lessor agrees that it
will subordinate such lien for the actual cost of financing the erection
of any improvements required by the Lessee for the operation of a casino, in
order to finance same.


 


4.                                       QUIET
POSSESSION:  Lessor hereby
covenants, warrants, and agrees that at all times during the term
hereof, provided Lessee is not in default hereunder, Lessee
shall have the full, peaceful and quiet possession of the demised
premises, and, further that Lessor has full right and power to make and enter
into this lease.


 


5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities
used by it in connection with the use of the demised premises.


 


6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on
improvements placed upon said premises by him that he will notify
Lessor in order that a notice of non-responsibility may be posted on said
premises and recorded in accordance with the provisions of the
Mechanic’s Lien Law of the State of Nevada.


 


7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and


 


2

















 


alterations shall conform with building codes and zoning
regulations now or hereinafter legally effective, and promulgated by the
State, County or Municipal authorities.


 


8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the casino and all
ancillary buildings or improvements to be constructed thereon by Lessee
and all fixtures and equipment, including visible plumbing and electrical
fixtures.  The Lessee agrees to keep the
premises clean and to have no nuisance, unsightly rubbish, or to commit or
cause to be committed by its employees, and/or sub-tenants, any violation
of the laws, rules or regulations of the State, County or Municipal Board of
Health or appropriate sanitary agency.


 


9.                                       TITLE
OF FIXTURES:  All buildings,
fixtures and other property and materials installed in the demised
premises by the Lessee shall be and remain the property
of the Lessee, and at the expiration of the Lease, the Lessee may,
within thirty (30) days, remove from said premises all of such fixtures,
property, and materials, provided that all expenses connected with the removal
thereof shall be at the expense of the Lessee. 
The Lessee further agrees to repair at his sole expense all damage
that may result from the removal of such building, fixtures and other
property and to restore said premises to the condition in which they were prior
to the start of construction and that no building or improvements placed upon
said premises by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.


 


10.                                 LIABILITY
AND FIRE  INSURANCE:  The Lessor shall require the Lessee
to carry, maintain and have in full force and effect fire, workmens
compensation, public liability, and product liability insurance with a
recognized insurance company authorized


 


3

















 


to transact business in the State of Nevada for the benefit of the
Lessor and Lessee, and for the protection of all persons who may suffer
injury while in, on or about said premises. 
The amount of said policy must be approved by Lessor in its sole
discretion, within normal and customary limits for an operation of this
type.  Lessor shall be furnished with
copies of said policies and all endorsements thereto.


 


The Lessee shall
carry insurance against loss by destruction of the demised premises caused by
fire, explosion or other action of the elements, except loss caused by
earthquake, equal to ninety per cent (90%) of the value of the
improvements.


 


11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of
State, Federal, County and Municipal authorities, appertaining to the
business conducted upon the demised premises, and Lessee shall not permit
the demised premises to be used for any unlawful purposes.


 


12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the
Lessee, and such default shall continue for thirty (30) days from and
after service upon the Lessee of written notice of such default, signed by the
Lessor or their duly authorized agents, then and in any such event,
the Lessor may, at their option declare this Lease terminated and
repossess themselves of said premises and take such action or pursue such
remedy as may be permitted under the law of the State of
Nevada.  However, if Lessee commences the necessary work to cure said
default before the expiration of the thirty (30) days, but the work takes in
excess of thirty days, then Lessor shall not be allowed to declare this
Lease terminated.


 


4

















 


13.                                 LIENS:  The Lessee agrees that he will, at all
times, save the Lessor and keep it blameless and the demised premises free
and harmless of and from any liability on account of or in respect to
any mechanic’s liens or liens in the nature thereof, for work and
labor done, or materials furnished at the instance and request of the
Lessee, in, on or about the demised premises; provided, however, that the
Lessee shall have the right to contest the claim of such lien, which event the
Lessee shall, at his expense, furnish to the Lessor a sufficient surety
bond executed by a reputable and responsible surety company, in at least
double the amount of such claim of such lien, conditioned upon the
diligent prosecution of such defense, and to hold the Lessor from and
clear of all loss, costs, damages, and expenses of every kind and nature,
arising either directly or indirectly out of said contest, and to pay
any judgment that may be obtained forthwith upon the same being entered.


 


14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease
by either the Lessor or Lessee, the prevailing party in such litigation
shall be entitled to receive from the other party reasonable attorney fees
and costs of action incurred in connection with said litigation.  In the event that either Lessor or
Lessee shall by reason of acts of omission or commission in violation of the
terms of the Lease, be made a party to any litigation commenced by a
person other than the parties hereto, then such party performing the said
act or suffering the said omission shall pay all costs, expenses and
reasonable attorney fees incurred by the other party which arise from or
are in connection with such litigation.


 


15.                                 INDEMNIFICATION:                            Lessee
shall indemnify and hold harmless Lessor and its agents, servants, employees
and representatives from and against all claims,


 


5

















 


damages, losses and expenses, including attorneys’ fees arising out of
or resulting from Lessee’s occupancy, provided however, that Lessor, its
agents, employees, representatives, successors, or assigns are not negligent
with regards to same.  This Paragraph
shall have full force and effect upon execution of this Lease Agreement.


 


16.                                 ASSIGNMENT:  The Lessee shall not have the right to
assign this Lease or hypothecate the same without first receiving the written
consent of the Lessor, which consent shall not unreasonably be
withheld.  Lessee shall have the right
to sublet any department and concession, providing that the tenancy of
such sub-tenant shall be subject to all the terms, covenants and
conditions of this Lease.


 


17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s
right to enforce the same or any other covenant contained herein.


 


18.                                 HOLDING
OVER:  If the Lessee shall hold over
the premises beyond the term herein specified, or any renewal thereof,
with the consent, express or implied of the Lessor such holding over shall
be construed to be a month-to-month tenancy, unless otherwise mutually
agreed upon.


 


19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.


 


6

















 


20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:


 


	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Edward J. Herbst

  
	
   

  
	
  Lessor:

  
	
   

  
	
   

  	
  Jerry Herbst

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  



 


21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations nor
agreements to or with any other party in addition to, or in conflict with
the terms, covenants and conditions hereof, and this Lease contains all of the
terms, covenants and conditions and representations between the parties
upon the subject matter hereof.


 


22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED:      If,
at any time during the term hereof, proceedings in bankruptcy shall be
instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10
or 11 of the Bankruptcy Act of the United States of America as
such act is now in force or as same may be amended, and shall by
judicially approved, or if a Receiver of the business or assets of the
Lessee shall be appointed and if such appointment be not vacated within
sixty (60) days after notice thereof to Lessee, or if a general assignment
is made by the Lessee for the benefit of creditors, or any sheriff,
marshall, constable, or other duly


 


7

















 


constituted public official take possession thereof by authority of any
attachment or execution proceedings, and offer same for sale publicly, the
Lessor may, at its option, in either or any of such events, without
notice to Lessee or any other person or persons, immediately recapture and take
possession of the demised premises and terminate this Lease with or
without the process of law, such process being expressly waiver by Lessee.


 


23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs,
plants or lawn planted on said premises and will keep the parking areas
and black top in a neat and clean condition and will use for parking.


 


24.                                 OPTION
TO RENEW:  The Lessee upon giving
written notice to Lessor, at least sixty (60) days prior to the date of
the expiration of the term aforesaid, provided it has faithfully complied
with the terms hereof, shall have the option of renewing this Lease
for five additional consecutive five (5) year terms subject to the same
terms, covenants and conditions and agreements as contained herein other than
this paragraph.  The monthly
rental for each renewal term shall be determined by increasing the
monthly rental payment for the preceding term by the greater of $2,500.00
or the amount by which one percent (1%) of the appraised value of the
property exceeds the current monthly rental amount.  For purposes of determining the appraised value of the property
at each renewal date the parties shall have an ALTA-certified
appraiser appraise the property no more than ninety (90) days prior to the
end of the preceding term.  If the
parties are unable to agree on an appraiser, then each party may hire its own
ALTA-certified appraiser and the average of the two appraisals shall
be used to determine the appraised value for purposes of
determining the monthly rental amount.


 


8

















 


25.                                 RIGHT
OF FIRST REFUSAL:  In the event of a
contemplated sale of the premises during the demised term, the Lessor agrees to
give Lessee a notice in writing at least ten (10) days before the
contemplated sale of substance of terms on which it is proposed to be
made, which notice shall be registered mail directed to Lessee at his
principal place of business for notices; and thereupon within ten (10)
days from the date of mailing of notice the Lessee shall have the right
exercise its option to purchase upon the proposed terms and conditions.  If the Lessee fails to exercise said option
within the foregoing time, said option shall be and stand cancelled.


 


26.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.


 


27.                                 BINDING
EFFECT:  The covenants and
agreements contained in this Lease shall be binding upon the parties
hereto and upon their respective heirs, executors, administrators, successors
and assigns.


 


IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.


 


	
  THE HERBST FAMILY LIMITED PARTNERSHIP

  Lessor

  
	
   

  
	
   

  
	
    /s/ Jerry Herbst

  	
   

  	
    /s/ Maryanna Herbst

  	
   

  
	
    Jerry Herbst, General Partner

  	
    Maryanna Herbst, General Partner

  
	
   

  
	
   

  
	
  E-T-T, Inc.

  
	
  Lessee

  
	
   

  
	
   

  
	
    /s/ Edward J. Herbst

  	
   

  
	
    Edward J. Herbst, President

  



 


9

















 


July 1, 2001


 


The Herbst Family Limited Partnership


1595 Las Vegas Blvd. So.


Las Vegas, Nevada 89119


 


Dear Mr, Herbst,


 


Please let this letter serve as notification of our intention to extend
the lease between ETT Inc. and The Herbst Family Limited Partnership for an
additional five year term pursuant to the lease dated July 1, 1996.


 


Per the terms of this extension the lease payment will increase by
$2,500 to $12,500.00 per month.


 


	
  Sincerely,

  
	
   

  
	
  /s/ Edward J. Herbst

  	
   

  
	
  Edward J. Herbst

  
	
  President

  
	
  ETT Inc.

  
	
   

  
	
  Accepted by:

  
	
   

  
	
  Jerry Herbst, General Partner

  



 


 

















 


LEASE AGREEMENT


 


THIS LEASE, made
this 1st day of July, 1996, by and between The Herbst Family Limited
Partnership, hereinafter referred to as “Lessor”, and E-T-T, INC., hereinafter
referred to as “Lessee”.


 


WITNESSETH: that
the Lessor in consideration of the rent herein specified to be
paid by the Lessee, and the covenants and conditions herein
mentioned, does hereby lease, let and demise, unto Lessee, and the Lessee
does hereby rent from the Lessor those certain premises in the County of Nye,
State of Nevada, more particularly described in Exhibit A, attached hereto and
incorporated herein by reference.


 


TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.


 


THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terns and conditions, namely:


 


1.                                       TERM:  The term of this Lease shall be for a period
of five (5) years, commencing on July 1, 1996.


 


2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for said demised premises the sum of Ten Thousand Dollars ($10,000.00)
per month on the first of each month for the duration of said lease.


 


3.                                       SECURITY:                                  Lessee
agrees that buildings and improvements located or erected on premises at
any time during the term of this Lease, or extension thereof, shall


 


1

















 


be and remain charged with the lien in favor of Lessor as security
for the enforcement of all agreements of this lease by Lessee to be kept
and performed.  Such lien shall be prior
to all other contracts, liens and other encumbrances whatsoever effecting
the demised premises provided however that Lessor agrees that it will
subordinate such lien for the actual cost of financing the erection of any
improvements required by the Lessee for the operation of a casino, in order to
finance same.


 


4.                                       QUIET
POSSESSION:  Lessor hereby
covenants, warrants, and agrees that at all times during the term
hereof, provided Lessee is not in default hereunder, Lessee
shall have the full, peaceful and quiet possession of the demised
premises, and, further that Lessor has full right and power to make and enter
into this lease.


 


5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities
used by it in connection with the use of the demised premises.


 


6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon said premises by him that he will notify Lessor in order
that a notice of non-responsibility may be posted on said premises and
recorded in accordance with the provisions of the Mechanic’s Lien Law
of the State of Nevada.


 


7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and


 


2

















 


alterations shall conform with building codes and zoning
regulations now or hereinafter legally effective, and promulgated by the
State, County or Municipal authorities.


 


8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the casino and all
ancillary buildings or improvements to be constructed thereon by Lessee
and all fixtures and equipment, including visible plumbing and electrical
fixtures.  The Lessee agrees to keep the
premises clean and to have no nuisance, unsightly rubbish, or to commit or
cause to be committed by its employees, and/or sub-tenants, any violation
of the laws, rules or regulations of the State, County or Municipal Board of
Health or appropriate sanitary agency.


 


9.                                       TITLE
OF FIXTURES:  All buildings,
fixtures and other property and materials installed in the demised
premises by the Lessee shall be and remain the property
of the Lessee, and at the expiration of the Lease, the Lessee may,
within thirty (30) days, remove from said premises all of such fixtures,
property, and materials, provided that all expenses connected with the removal
thereof shall be at the expense of the Lessee. 
The Lessee further agrees to repair at his sole expense all damage
that may result from the removal of such building, fixtures and other
property and to restore said premises to the condition in which they were prior
to the start of construction and that no building or improvements placed upon
said premises by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.


 


10.                                 LIABILITY
AND FIRE  INSURANCE:  The Lessor shall require the Lessee
to carry, maintain and have in full force and effect fire, workmens
compensation, public liability, and product liability insurance with a
recognized insurance company authorized


 


3

















 


to transact business in the State of Nevada for the benefit of the
Lessor and Lessee, and for the protection of all persons who may suffer
injury while in, on or about said premises. 
The amount of said policy must be approved by Lessor in its sole
discretion, within normal and customary limits for an operation of this
type.  Lessor shall be furnished with
copies of said policies and all endorsements thereto.


 


The Lessee shall
carry insurance against loss by destruction of the demised premises caused by
fire, explosion or other action of the elements, except loss caused by
earthquake, equal to ninety per cent (90%) of the value of the
improvements.


 


11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of
State, Federal, County and Municipal authorities, appertaining to the business
conducted upon the demised premises, and Lessee shall not permit the
demised premises to be used for any unlawful purposes.


 


12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the
Lessee, and such default shall continue for thirty (30) days from and
after service upon the Lessee of written notice of such default, signed by the
Lessor or their duly authorized agents, then and in any such event,
the Lessor may, at their option declare this Lease terminated and
repossess themselves of said premises and take such action or pursue such
remedy as may be permitted under the law of the State of Nevada.  However,
if Lessee commences the necessary work to cure said default before the
expiration of the thirty (30) days, but the work takes in excess of thirty
days, then Lessor shall not be allowed to declare this Lease terminated.


 


4

















 


13.                                 LIENS:  The Lessee agrees that he will, at all
times, save the Lessor and keep it blameless and the demised premises free
and harmless of and from any liability on account of or in respect to
any mechanic’s liens or liens in the nature thereof, for work and
labor done, or materials furnished at the instance and request of the
Lessee, in, on or about the demised premises; provided, however, that the
Lessee shall have the right to contest the claim of such lien, which event the Lessee
shall, at his expense, furnish to the Lessor a sufficient surety bond
executed by a reputable and responsible surety company, in at least
double the amount of such claim of such lien, conditioned upon the
diligent prosecution of such defense, and to hold the Lessor from and
clear of all loss, costs, damages, and expenses of every kind and
nature, arising either directly or indirectly out of said contest,
and to pay any judgment that may be obtained forthwith upon the same
being entered.


 


14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease
by either the Lessor or Lessee, the prevailing party in such litigation
shall be entitled to receive from the other party reasonable attorney fees
and costs of action incurred in connection with said litigation.  In the event that either Lessor or
Lessee shall by reason of acts of omission or commission in violation of the
terms of the Lease, be made a party to any litigation commenced by a
person other than the parties hereto, then such party performing the said
act or suffering the said omission shall pay all costs, expenses and
reasonable attorney fees incurred by the other party which arise from or
are in connection with such litigation.


 


15.                                 INDEMNIFICATION:                            Lessee
shall indemnify and hold harmless Lessor and its agents, servants, employees
and representatives from and against all claims,


 


5

















 


damages, losses and expenses, including attorneys’ fees arising out of
or resulting from Lessee’s occupancy, provided however, that Lessor, its
agents, employees, representatives, successors, or assigns are not negligent
with regards to same.  This Paragraph
shall have full force and effect upon execution of this Lease Agreement.


 


16.                                 ASSIGNMENT:  The Lessee shall not have the right to
assign this Lease or hypothecate the same without first receiving the written
consent of the Lessor, which consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
department and concession, providing that the tenancy of such sub-tenant
shall be subject to all the terms, covenants and conditions of this
Lease.


 


17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s
right to enforce the same or any other covenant contained herein.


 


18.                                 HOLDING
OVER:  If the Lessee shall hold over
the premises beyond the term herein specified, or any renewal thereof,
with the consent, express or implied of the Lessor such holding over shall
be construed to be a month-to-month tenancy, unless otherwise mutually
agreed upon.


 


19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.


 


6

















 


20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:


 


	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Edward J. Herbst

  
	
   

  
	
  Lessor:

  
	
   

  
	
   

  	
  Jerry Herbst

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  



 


21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations nor
agreements to or with any other party in addition to, or in conflict with
the terms, covenants and conditions hereof, and this Lease contains all of the
terms, covenants and conditions and representations between the parties
upon the subject matter hereof.


 


22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED:      If,
at any time during the term hereof, proceedings in bankruptcy shall be
instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10
or 11 of the Bankruptcy Act of the United States of America as
such act is now in force or as same may be amended, and shall by judicially
approved, or if a Receiver of the business or assets of the Lessee shall
be appointed and if such appointment be not vacated within sixty (60) days
after notice thereof to Lessee, or if a general assignment is made by the
Lessee for the benefit of creditors, or any sheriff, marshall, constable,
or other duly


 


7

















 


constituted public official take possession thereof by authority of any
attachment or execution proceedings, and offer same for sale publicly, the
Lessor may, at its option, in either or any of such events, without
notice to Lessee or any other person or persons, immediately recapture and take
possession of the demised premises and terminate this Lease with or
without the process of law, such process being expressly waiver by Lessee.


 


23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs,
plants or lawn planted on said premises and will keep the parking areas
and black top in a neat and clean condition and will use for parking.


 


24.                                 OPTION
TO RENEW:  The Lessee upon giving
written notice to Lessor, at least sixty (60) days prior to the date of
the expiration of the term aforesaid, provided it has faithfully complied
with the terms hereof, shall have the option of renewing this Lease
for five additional consecutive five (5) year terms subject to the same
terms, covenants and conditions and agreements as contained herein other than
this paragraph.  The monthly
rental for each renewal term shall be determined by increasing the
monthly rental payment for the preceding term by the greater of $2,500.00
or the amount by which one percent (1%) of the appraised value of the
property exceeds the current monthly rental amount.  For purposes of determining the appraised value of the property
at each renewal date the parties shall have an ALTA-certified
appraiser appraise the property no more than ninety (90) days prior to the
end of the preceding term.  If the
parties are unable to agree on an appraiser, then each party may hire its own
ALTA-certified appraiser and the average of the two appraisals shall
be used to determine the appraised value for purposes of
determining the monthly rental amount.


 


8

















 


25.                                 RIGHT
OF FIRST REFUSAL:  In the event of a
contemplated sale of the premises during the demised term, the Lessor agrees to
give Lessee a notice in writing at least ten (10) days before the
contemplated sale of substance of terms on which it is proposed to be
made, which notice shall be registered mail directed to Lessee at his
principal place of business for notices; and thereupon within ten (10)
days from the date of mailing of notice the Lessee shall have the right
exercise its option to purchase upon the proposed terms and conditions.  If the Lessee fails to exercise said option
within the foregoing time, said option shall be and stand cancelled.


 


26.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.


 


27.                                 BINDING
EFFECT:  The covenants and
agreements contained in this Lease shall be binding upon the parties
hereto and upon their respective heirs, executors, administrators, successors
and assigns.


 


IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.


 


	
  THE HERBST FAMILY LIMITED PARTNERSHIP

  Lessor

  
	
   

  
	
   

  
	
    /s/ Jerry Herbst

  	
   

  	
    /s/ Maryanna Herbst

  	
   

  
	
    Jerry Herbst, General Partner

  	
    Maryanna Herbst, General Partner

  
	
   

  
	
   

  
	
  E-T-T, Inc.

  
	
  Lessee

  
	
   

  
	
   

  
	
    /s/ Edward J. Herbst

  	
   

  
	
    Edward J. Herbst, President

  



 


9



















SCHEDULE 2.01


INITIAL COMMITMENTS

AND PRO RATA SHARES


 


	
  Lender

  	
   

  	
  Revolving Commitment

  	
   

  	
  Revolving Percentage

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  40,833,333

  	
   

  	
  23.33333314

  	
  %

  
	
  U.S. Bank National
  Association

  	
   

  	
  $

  	
  35,000,000

  	
   

  	
  20.00000000

  	
  %

  
	
  Wells Fargo Bank, N.A.

  	
   

  	
  $

  	
  35,000,000

  	
   

  	
  20.00000000

  	
  %

  
	
  The CIT Group/Equipment
  Financing, Inc.

  	
   

  	
  $

  	
  23,333,333

  	
   

  	
  6.66666686

  	
  %

  
	
  Comerica West
  Incorporation

  	
   

  	
  $

  	
  17,500,000

  	
   

  	
  13.33333314

  	
  %

  
	
  Lehman Commercial Paper
  Inc.

  	
   

  	
  $

  	
  11,666,667

  	
   

  	
  10.00000000

  	
  %

  
	
  Nevada State Bank

  	
   

  	
  $

  	
  11,666,667

  	
   

  	
  6.66666686

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  175,000,000

  	
   

  	
  100.00000000

  	
  %

  



 


11





















 


SCHEDULE 5.05


SUPPLEMENT TO INTERIM
FINANCIAL STATEMENTS


 


NONE


 


1





















 


SCHEDULE 5.06


 


LITIGATION


 


 


NONE


 


1





















 


 


SCHEDULE 5.09


 


ENVIRONMENTAL MATTERS


 


 


NONE


 


1





















 


 


SCHEDULE 5.13


 


SUBSIDIARIES AND


OTHER EQUITY INVESTMENTS


 


 


Wholly owned subsidiaries of
Herbst Gaming, Inc.


1.               Market Gaming, Inc., a
Nevada corporation


2.               Flamingo Paradise Gaming,
LLC, a Nevada limited liability company


3.               E-T-T Enterprises L.L.C., a
Nevada limited liability company


4.               E-T-T, Inc., a Nevada
corporation


5.               HGI - Mark Twain, a Nevada
corporation


6.               HGI- Lakeside, a Nevada
corporation


7.               HGI — St. Jo, a Nevada
corporation


 


Wholly owned subsidiaries of
E-T-T, Inc.


1.               Cardivan Company, a Nevada
corporation


2.               Corral Coin, Inc., a Nevada
corporation


3.               Corral Country Coin, Inc., a
Nevada corporation


 


1





















 


SCHEDULE 5.17


 


INTELLECTUAL PROPERTY MATTERS


 


 


[NONE]


 


1










 












SCHEDULE 7.01


 


EXISTING LIENS


 


 


[[SEE ATTACHED]]


 


1






















 


SCHEDULE 7.01


 


EXISTING LIENS


 


The
security interest described in the following UCC-1 Financing Statements filed
with the Nevada Secretary of State reflecting the Borrower or Borrower’s
subsidiary as indicated, as Debtor, shall constitute Existing Liens under this
Agreement.  In addition to the following
security interests, all liens securing the Existing Senior Notes in an
aggregate principal amount not to exceed $8,571,000 shall remain outstanding on
the Closing Date.


 


HERBST GAMING, INC.


 


	
  File No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  0104786

  04/04/2001

  	
   

  	
  The CIT Group/Equipment Financing, Inc.

  	
   

  	
  Master Security Agreement between Flamingo Paradise Gaming LLC and
  Herbst Gaming LLC

  
	
  2001003729-1

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  
	
  2003003769-9

  02/07/2003

  	
   

  	
  The Bank of New York, as Trustee

  	
   

  	
  Escrow Account with Bank of New York. 
  Termination by Debtor on file.

  
	
  2003007876-0

  03/19/2003

  	
   

  	
  CIT Technology Financing Services Inc.

  	
   

  	
  Specific equipment lease.

  



 


CARDIVAN COMPANY


 


	
  File No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  20010033732-8

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  



 


CORRAL COIN, INC.


 


	
  File No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  2001003735-4

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  



 


CORRAL COUNTRY COIN, INC.


 


	
  File No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  2001003733-0

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  



 


1

















 


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


 


	
  File No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  2001003734-2

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  



 


E-T-T, INC.


 


	
  File No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  9914926

  09/27/1999

  	
   

  	
  WMS Gaming Inc.

  	
   

  	
  Specific equipment lease.

  
	
  991972

  12/16/1999

  	
   

  	
  Computer Sales International Inc.

  	
   

  	
  Specific equipment lease.

  
	
  9919570

  12/23/1999

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0000370

  01/06/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0000725

  01/13/2000

  	
   

  	
  United Capital (division of Hudson United Bank)

  	
   

  	
  Specific equipment lease.

  
	
  0001908

  02/03/2000

  	
   

  	
  Heller Financial Inc.

  	
   

  	
  Specific equipment lease.

  
	
  0003124

  02/28/200

  	
   

  	
  Wells Fargo Financial Leasing Inc.

  	
   

  	
  Specific equipment lease.

  
	
  0011529

  08/01/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0012751

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0012752

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0012753

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0015729

  10/20/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment.

  
	
  0018301

  12/11/2000

  	
   

  	
  Conseco Finance Vendor Services Corp.

  	
   

  	
  Specific equipment lease. 
  Additional debtor Flaming Paradise Gaming.

  
	
  0100442

  01/08/2001

  	
   

  	
  Sun West Bank

  	
   

  	
  Specific equipment lease. 
  Additional debtors:  Market
  Gaming, E. Herbst, Tim Herbst and Troy Herbst.

  
	
  0106497

  05/02/2001

  	
   

  	
  IGT

  	
   

  	
  Specific equipment lease.

  
	
  0108124

  06/04/2001

  	
   

  	
  Computer Sales International Inc.

  	
   

  	
  Specific equipment lease.

  
	
  0108977

  06/19/2001

  	
   

  	
  IGT

  	
   

  	
  Specific equipment lease.

  



 


2

















 


	
  2001003180-7

  08/20/2001

  	
   

  	
  IGT

  	
   

  	
  Specific equipment lease.

  
	
  2001003731-6

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  
	
  2003029442-7

  11/04/2003

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2003031951-0

  12/02/2003

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2004001647-1

  01/16/2004

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2004006337-9

  03/02/2004

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2004006434-5

  03/02/2004

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2004006437-1

  03/02/2004

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  



 


FLAMINGO PARADISE GAMING, LLC


 


	
  File No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  0018301

  12/11/2000

  	
   

  	
  Conseco Finance Vendor Services Corp.

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T Inc.

  
	
  0106291

  04/30/2001

  	
   

  	
  GreatAmerica Leasing Corp.

  	
   

  	
  Specific equipment lease.

  
	
  2001003730-4

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing excluding accounts receivable, furniture,
  fixtures and equipment of Terrible Hotel & Casino.

  
	
  2003007669-1

  03/18/2003

  	
   

  	
  CIT Technology Financing Services Inc.

  	
   

  	
  Specific equipment lease.

  



 


MARKET GAMING, INC.


 


	
  File No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  9919173

  12/16/1999

  	
   

  	
  Computer Sales International Inc.

  	
   

  	
  Specific equipment lease.

  
	
  9919570

  12/23/1999

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0000370

  01/06/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0000724

  01/13/2000

  	
   

  	
  United Capital (division of Hudson United Bank)

  	
   

  	
  Specific equipment lease.

  
	
  0001909

  02/03/2000

  	
   

  	
  Heller Financial Inc.

  	
   

  	
  Specific equipment lease.

  
	
  0011529

  08/01/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  



 


3

















 


	
  File No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  0012751

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0012752

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0012753

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0015730

  10/20/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment.

  
	
  0100442

  01/08/2001

  	
   

  	
  Sun West Bank

  	
   

  	
  Specific equipment lease.

  
	
  0108123

  06/04/2001

  	
   

  	
  Computer Sales International Inc.

  	
   

  	
  Specific equipment lease.

  
	
  2001003728-9

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets.

  



 


 


4

















 


 


SCHEDULE 7.03


 


 


EXISTING INDEBTEDNESS


 


1.                                       Existing
Indebtedness in respect of Existing Senior Notes in an aggregate principal
amount of $4,071,000.


 


2.                                       Existing
Indebtedness in respect of Existing Senior Subordinated Notes in an aggregate
principal of $160,000,000.


 


 


1

















 


 


SCHEDULE 10.02


 


ADMINISTRATIVE
AGENT’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES


 


BORROWER:


 


Herbst Gaming, Inc.


5195 Las Vegas Boulevard


Las Vegas, NV 89119


702/798-6400


702/798-8079 FAX


Attn:


mhiggins@herbstgaming.com


 


 


ADMINISTRATIVE
AGENT:


 


Administrative
Agent’s Office


(for payments
and Requests for Credit Extensions):


Bank
of America, N.A.


1850
Gateway Blvd.


Mail
Code: CA4-706-05-09


Concord,
CA 94520-3282


Attention: Curtis Laney


Telephone: 925-675-8398


Telecopier: 888-969-9252


Electronic Mail:  curtis.laney@bankofamerica.com


Account No.: 
3750836479


Ref: 
Herbst Gaming, Inc.


ABA# 111000012


 


Other
Notices as Administrative Agent:


Bank
of America, N.A.


Agency
Management


901
Main St., 14th Floor


Mail
Code: TX1-492-14-11


Dallas,
TX 75202-3714


Attention: 
Chris M. Levine


Telephone: 
214-209-4129


Telecopier: 
214-290-9432


Electronic Mail:  chris.m.levine@bankofamerica.com


 


i






















 


L/C ISSUER:


Bank
of America, N.A.


Trade
Operations-Los Angeles #22621


333
S. Beaudry Avenue, 19th Floor


Mail
Code:  CA9-703-19-23


Los
Angeles, CA 90017-1466


Attention:                                         Sandra Leon


Vice President


Telephone:  213.345.5231


Telecopier:  213.345.6694


Electronic Mail:  Sandra.Leon@bankofamerica.com


 


 


SWING LINE LENDER:


Bank
of America, N.A.


1850
Gateway Blvd.


Mail
Code: CA4-706-05-09


Concord,
CA 94520-3282


Attention: Curtis Laney


Telephone: 925-675-8398


Telecopier: 888-969-9252


Electronic Mail:  curtis.laney@bankofamerica.com


Account No.: 
3750836479


Ref: 
Herbst Gaming, Inc.


ABA# 111000012


 


ii