Exhibit
10.33




 





 


OPTION AGREEMENT


 


by and among


 


CROWN LIMITED,


 


CROWN CCR GROUP
INVESTMENTS ONE, LLC,


 


CROWN CCR GROUP
INVESTMENTS TWO, LLC,


 


MILLENNIUM GAMING,
INC.,


 


OCM HOLDCO, LLC


 


and


 


CANNERY CASINO
RESORTS, LLC


 


Dated as of March 12,
2009


 




 




















 


TABLE OF CONTENTS


 


	
   

  	
  ARTICLE 1

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 2

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Option

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1.

  	
  Grant of Option

  	
  22

  
	
  2.2.

  	
  Purchase Price Upon Exercise of the Option

  	
  22

  
	
  2.3.

  	
  Exercise of the Option

  	
  24

  
	
  2.4.

  	
  Sellers’ Closing Deliveries

  	
  24

  
	
  2.5.

  	
  Buyers’ Closing Deliveries

  	
  25

  
	
  2.6.

  	
  Intentionally Omitted

  	
  26

  
	
  2.7.

  	
  Allocation of Purchase Price

  	
  26

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 3

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Closing

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 4

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Representations and Warranties Regarding Sellers

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1.

  	
  Representations of Millennium

  	
  28

  
	
  4.2.

  	
  Representations of HoldCo

  	
  28

  
	
  4.3.

  	
  Representations of Each Seller

  	
  33

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 5

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Representations and Warranties Regarding the
  Companies

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1.

  	
  Company Organization; Good Standing; CCR Authority
  and Enforceability

  	
  36

  
	
  5.2.

  	
  Capitalization

  	
  37

  
	
  5.3.

  	
  No Litigation

  	
  38

  
	
  5.4.

  	
  Consents and Approvals

  	
  38

  
	
  5.5.

  	
  No Violations

  	
  38

  
	
  5.6.

  	
  Material Contracts

  	
  39

  
	
  5.7.

  	
  Financial Information

  	
  40

  
	
  5.8.

  	
  Liabilities

  	
  41

  



 

















 


	
  5.9.

  	
  Labor Matters

  	
  41

  
	
  5.10.

  	
  Employee Benefit Matters

  	
  42

  
	
  5.11.

  	
  Taxes

  	
  44

  
	
  5.12.

  	
  Governmental Authorizations

  	
  46

  
	
  5.13.

  	
  Insurance

  	
  46

  
	
  5.14.

  	
  Compliance with Laws

  	
  47

  
	
  5.15.

  	
  Real Property

  	
  47

  
	
  5.16.

  	
  Environmental Matters

  	
  49

  
	
  5.17.

  	
  Intellectual Property

  	
  50

  
	
  5.18.

  	
  Absence of Certain Changes

  	
  51

  
	
  5.19.

  	
  Brokers and Finders

  	
  51

  
	
  5.20.

  	
  Solvency

  	
  51

  
	
  5.21.

  	
  Related Party Transactions

  	
  51

  
	
  5.22.

  	
  Personal Property

  	
  52

  
	
  5.23.

  	
  No Other Representations or Warranties

  	
  52

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 6

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Representations and Warranties of the Buyers and the
  Parent

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1.

  	
  Buyer Organization and Good Standing

  	
  52

  
	
  6.2.

  	
  Buyer Authority; Enforceability

  	
  52

  
	
  6.3.

  	
  Consents and Approvals

  	
  53

  
	
  6.4.

  	
  No Violations

  	
  53

  
	
  6.5.

  	
  Funds Available

  	
  53

  
	
  6.6.

  	
  Brokers and Finders

  	
  53

  
	
  6.7.

  	
  Securities Act

  	
  53

  
	
  6.8.

  	
  No Litigation

  	
  54

  
	
  6.9.

  	
  Intentionally Omitted

  	
  54

  
	
  6.10.

  	
  Solvency

  	
  54

  
	
  6.11.

  	
  No Other Representations or Warranties

  	
  54

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 7

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Covenants of the Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1.

  	
  Conduct of the Companies

  	
  55

  
	
  7.2.

  	
  Conduct of Blocker and AcquisitionCo.

  	
  58

  



 


ii

















 


	
  7.3.

  	
  No Control of Other Party’s Business

  	
  58

  
	
  7.4.

  	
  Reasonable Best Efforts

  	
  58

  
	
  7.5.

  	
  Updates to Disclosure Schedules

  	
  61

  
	
  7.6.

  	
  Notifications to Buyers

  	
  62

  
	
  7.7.

  	
  No Alternative Transactions

  	
  62

  
	
  7.8.

  	
  Publicity

  	
  62

  
	
  7.9.

  	
  Intentionally Omitted

  	
  63

  
	
  7.10.

  	
  Tax Matters

  	
  63

  
	
  7.11.

  	
  LandCo Disposition

  	
  70

  
	
  7.12.

  	
  Excluded Opportunities

  	
  70

  
	
  7.13.

  	
  Assistance and Records

  	
  71

  
	
  7.14.

  	
  Guarantee

  	
  71

  
	
  7.15.

  	
  Intentionally Omitted

  	
  72

  
	
  7.16.

  	
  Intentionally Omitted

  	
  72

  
	
  7.17.

  	
  Intentionally Omitted

  	
  72

  
	
  7.18.

  	
  Intentionally Omitted

  	
  72

  
	
  7.19.

  	
  No Assignment if Breach

  	
  72

  
	
  7.20.

  	
  FIRPTA Certificates

  	
  73

  
	
  7.21.

  	
  Repayment of Loan Obligations

  	
  73

  
	
  7.22.

  	
  Activities of AcquisitionCo and Blocker

  	
  74

  
	
  7.23.

  	
  Intentionally Omitted

  	
  74

  
	
  7.24.

  	
  Amended Nevada Palace Lease; Subordination,
  Non-disturbance and Attornment Agreement

  	
  74

  
	
  7.25.

  	
  Termination of Affiliate Agreements; Release of Claims

  	
  75

  
	
  7.26.

  	
  Intentionally Omitted

  	
  76

  
	
  7.27.

  	
  Impact of New Gaming Taxes

  	
  76

  
	
  7.28.

  	
  Changes in CCR Capital Structure

  	
  77

  
	
  7.29.

  	
  Outside New CCR Equity

  	
  78

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 8

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Conditions to Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1.

  	
  Conditions to the Obligations of All Parties

  	
  78

  
	
  8.2.

  	
  Conditions to the Obligations of the Buyers

  	
  79

  



 


iii

















 


	
  8.3.

  	
  Conditions to the Obligations of Sellers

  	
  80

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 9

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1.

  	
  This Agreement may be terminated and shall be of no
  further force and effect at any time prior to the Closing

  	
  80

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 10

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1.

  	
  Survival

  	
  81

  
	
  10.2.

  	
  Indemnification

  	
  82

  
	
  10.3.

  	
  Limits on Indemnification

  	
  85

  
	
  10.4.

  	
  Escrow

  	
  86

  
	
  10.5.

  	
  Tax Benefit

  	
  87

  
	
  10.6.

  	
  Intentionally Omitted

  	
  88

  
	
  10.7.

  	
  Exclusive Remedy

  	
  88

  
	
  10.8.

  	
  Adjustment of Purchase Price

  	
  89

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 11

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  General

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1.

  	
  Entire Agreement

  	
  89

  
	
  11.2.

  	
  No Third Party Rights

  	
  89

  
	
  11.3.

  	
  Counterparts

  	
  89

  
	
  11.4.

  	
  Headings

  	
  89

  
	
  11.5.

  	
  Applicable Law

  	
  89

  
	
  11.6.

  	
  Enforcement

  	
  89

  
	
  11.7.

  	
  Waiver of Jury Trial

  	
  90

  
	
  11.8.

  	
  Waiver of Conditions

  	
  90

  
	
  11.9.

  	
  Transaction Expenses

  	
  90

  
	
  11.10.

  	
  Construction

  	
  91

  
	
  11.11.

  	
  Severability

  	
  91

  
	
  11.12.

  	
  Amendments

  	
  91

  
	
  11.13.

  	
  Assignments

  	
  91

  
	
  11.14.

  	
  Notices

  	
  91

  
	
  11.15.

  	
  Further Assurances

  	
  93

  



 


iv

















 


	
  11.16.

  	
  Confidentiality

  	
  93

  
	
  11.17.

  	
  Additional Rules of Construction

  	
  93

  
	
  11.18.

  	
  Enforcement of this Agreement

  	
  94

  
	
  11.19.

  	
  Knowledge

  	
  94

  



 


v

















 


EXHIBITS


 


	
  Exhibit A

  	
   

  	
  Unit Ownership

  
	
  Exhibit B

  	
   

  	
  Amended Nevada Palace
  Lease

  
	
  Exhibit C

  	
   

  	
  Escrow Agreement

  
	
  Exhibit D

  	
   

  	
  Payment Percentages

  
	
  Exhibit E

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit F

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit G

  	
   

  	
  Title Commitment
  Exceptions

  
	
  Exhibit H

  	
   

  	
  Form of Sale of
  Option Agreement

  
	
  Exhibit I

  	
   

  	
  Form of Opinion of
  Sellers’ Counsel

  
	
  Exhibit J

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit K

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit L

  	
   

  	
  Assignment/Sale
  Documentation

  
	
  Exhibit M

  	
   

  	
  Form of Cash Log

  
	
  Exhibit N

  	
   

  	
  Form of Releases

  
	
  Exhibit O

  	
   

  	
  Form of
  Non-Imputation Endorsement

  
	
  Exhibit P

  	
   

  	
  Form of
  Subordination, Non-disturbance and Attornment Agreement

  



 


vi
















 


OPTION
AGREEMENT


 


This OPTION AGREEMENT, dated as of  March 12,
2009 (this “Agreement”), is by and among (i) Crown Limited, an
Australian company (the “Parent”), (ii) Crown CCR Group Investments
One, LLC (“Crown One”) and Crown CCR Group Investments Two, LLC (“Crown
Two” and, collectively with Crown One, the “Buyers” and each, a “Buyer”),
each a Delaware limited liability company and an indirect wholly owned
subsidiary of Parent, (iii) Millennium Gaming, Inc., a Nevada
corporation (“Millennium”), (iv) OCM HoldCo, LLC, a Delaware
limited liability company (“HoldCo” and, collectively with Millennium,
the “Sellers” and each, a “Seller”), and (v) Cannery Casino
Resorts, LLC, a Nevada limited liability company (“CCR”).  Capitalized terms used but not defined herein
have the respective meanings specified in Article 1.


 


RECITALS


 


WHEREAS, Millennium and OCM AcquisitionCo LLC, a
Nevada limited liability company (“AcquisitionCo”), own all of the
issued and outstanding units (the “CCR Units”) of CCR;


 


WHEREAS, OCM Blocker, LLC, a Delaware limited
liability company (“Blocker”), owns all of the issued and outstanding
units of AcquisitionCo (the “Blocker Units”), and AcquisitionCo owns 42%
of the CCR Units (the “AcquisitionCo Units”), as set forth on Exhibit A
hereto;


 


WHEREAS, HoldCo owns all of the issued and outstanding
Class A Units (the “Blocker A Units”) of Blocker, which represent
more than 99.99% of the capital interest in Blocker (the “HoldCo Units”);


 


WHEREAS, HoldCo and Blocker are parties to an Option
to Purchase dated January 5, 2006, as corrected on March 17, 2006
(the “Blocker Option Agreement”), whereby HoldCo has the option to
purchase the Blocker Units (the “Blocker Option”);


 


WHEREAS, GLCP Nevada LLC, a Delaware limited liability
company (“GLCP”), owns all of the issued and outstanding Class B
Units of Blocker, which represent less than 0.01% of the capital interest in
Blocker (the “GLCP Units”);


 


WHEREAS, Millennium owns 58% of the CCR Units as set
forth on Exhibit A hereto (the “Millennium Units”);


 


WHEREAS, the parties hereto have entered into a
Purchase Agreement dated as of December 11, 2007, as amended thereafter
(the “Original Purchase Agreement”), pursuant to which, upon the terms
and subject to the conditions set forth therein, (i) Millennium agreed to
sell to Crown One, and Crown One agreed to purchase from Millennium, the
Millennium Units, (ii) HoldCo agreed to sell to Crown Two, and Crown Two
agreed to purchase from HoldCo, the HoldCo Units, and (iii) HoldCo agreed
to sell to Crown One, and Crown One agreed to purchase from HoldCo, all of
HoldCo’s right, title, and interest in the Blocker Option Agreement;


 

















 


WHEREAS, concurrently with the execution of the
Original Purchase Agreement, GLCP and Crown Two entered into the GLCP Purchase
Agreement, pursuant to which, upon the terms and subject to the conditions
therein, GLCP agreed to sell to Crown Two, and Crown Two agreed to purchase
from GLCP, the GLCP Units; and


 


WHEREAS, as a condition and inducement to the parties’
willingness to enter into this Agreement, the parties have entered into a
Termination and Settlement Agreement dated of even date herewith, pursuant to
which the parties terminated the Original Purchase Agreement;


 


WHEREAS, concurrently with the execution of this
Agreement, Parent, the Buyers and CCR have entered into a Preferred Purchase
Agreement (the “Preferred Purchase Agreement”), pursuant to which the
Buyers have agreed to purchase either (i) Series B Preferred Units of
CCR (the “Series B Preferred Units”), which are convertible, at the
option of the Buyers, into Series A2 Preferred Units of CCR (“Series A2
Preferred Units”) representing 24.5% of the outstanding equity of CCR or (ii) Series A2
Preferred Units representing 4.1% of the outstanding equity of CCR (the “4.1%
Interest”);


 


WHEREAS, as a condition and inducement to Parent and
the Buyers’ willingness to enter into the Preferred Purchase Agreement, each of
the Sellers desires to grant to the Buyers exclusive options to acquire, upon
the terms and subject to the conditions herein, all of the Millennium Units,
the Holdco Units and the Blocker Option Agreement as set forth herein;


 


WHEREAS, if the options granted hereunder are
exercised, then upon the consummation of the transactions contemplated by this
Agreement and by the Preferred Purchase Agreement, the Buyers shall
collectively own, directly or indirectly, 100% of the issued and outstanding
CCR Units.


 


NOW, THEREFORE, in consideration of the terms,
conditions and other provisions herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:


 


ARTICLE 1


 


Definitions


 


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


 


1.1.         “AcquisitionCo” has the meaning
set forth in the Recitals.


 


1.2.         “AcquisitionCo Units” has the
meaning set forth in the Recitals.


 


1.3.         “Action” means any action, cause
of action, complaint, petition, suit, demand, notice, investigation, hearing,
arbitration or administrative or other proceeding, whether civil, criminal,
administrative, or investigative, and whether at law or in equity.


 


2

















 


1.4.         “Actually Realized” with respect
to a Tax Benefit, shall mean the time that any refund of Taxes is actually
received or applied against other Taxes due, or at the time of the filing of a
Tax Return (including any Tax Return relating to estimated Taxes) on which a
loss, deduction or credit or increase in basis is applied to reduce the amount
of Taxes that would otherwise be payable.


 


1.5.         “Administrative
Agent” means Bank of America, N.A. in its capacity as administrative agent
under the Bank of America Facilities.


 


1.6.         “Affiliate” means, with respect
to a specified Person, a Person that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the Person specified; provided, that, for the purposes of this
definition, “control” (including, with correlative meanings, the terms “controlling,”
“controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by Contract, or otherwise; provided,
however, that when used with respect to the Parent or any Buyer, “control”
(including, with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”) shall require the ownership of securities or
other interests having the power to elect a majority of the Board of Directors
or similar governing body of such Person.


 


1.7.         “Affiliate Agreements” means,
individually and collectively, the Millennium Management Agreement and the
Oaktree Purchase Agreement.


 


1.8.         “Agreement” has the meaning set
forth in the Preamble.


 


1.9.         “Allocation Accounting Firm” has
the meaning set forth in Section 2.7.


 


1.10.       “Amended Nevada Palace Lease”
means the Amended and Restated Ground Lease for the land upon which the Cannery
East Casino and Hotel is currently located, in the form attached hereto as Exhibit B.


 


1.11.       “Assignment Documents” has the
meaning set forth in Section 2.4(g).


 


1.12.       “Audited Financial Statements” has
the meaning set forth in Section 5.7.


 


1.13.       “Bank of America Facilities” means
credit facilities of CCR pursuant to (a) that certain First Lien Credit
Agreement, dated as of May 18, 2007, by and among CCR, WTA, each lender
from time to time party thereto, Bank of America, N.A., as Administrative
Agent, Collateral Agent, Swing Line Lender and L/C Issuer and CIT Lending
Services Corporation, Commerzbank AG, Los Angeles Branch and Nevada State Bank
as Co-Documentation Agents in the maximum 


 


3

















 


aggregate outstanding amount of $745,000,000; and (b) that
certain Second Lien Credit Agreement, dated as of May 18, 2007, by and
among CCR, WTA, the lenders from time to time party thereto, and Bank of
America as Administrative Agent and Collateral Agent in the outstanding amount
of $115,000,000.


 


1.14.       “Bank of America Repayment” has
the meaning set forth in Section 2.2(b).


 


1.15.       “Base Purchase Price” has the
meaning set forth in Section 2.2(b).


 


1.16.       “Blocker” has the meaning set forth
in the Recitals.


 


1.17.       “Blocker A Units” has the meaning
set forth in the Recitals.


 


1.18.       “Blocker Buyer” has the meaning
set forth in Section 7.10(d).


 


1.19.       “Blocker Option” has the meaning
set forth in the Recitals.


 


1.20.       “Blocker Option Agreement” has the
meaning set forth in the Recitals.


 


1.21.       “Blocker Units” has the meaning
set forth in the Recitals.


 


1.22.       “Business” means the gaming,
racing, entertainment, hospitality and related businesses and operations
conducted by the Companies in Nevada and Pennsylvania.


 


1.23.       “Business Day” means any day other
than a Saturday or a Sunday or a day on which banks located in New York, New
York generally are authorized or required by law or regulation to close.


 


1.24.       “Buyer” and “Buyers” have
the meanings set forth in the Preamble.


 


1.25.       “Buyer Indemnified Parties” has the
meaning set forth in Section 10.2(a).


 


1.26.       “Buyer Loan Payment Amount” has
the meaning set forth in Section 2.2(b).


 


1.27.       “Buyer Requested Amount” has the
meaning set forth in Section 7.10(f).


 


1.28.       “Buyers Due Date” has the meaning
set forth in Section 7.10(f).


 


4

















 


1.29.       “Cannery East” means the Eastside
Cannery Casino and Hotel, which is located on Boulder Highway in Las Vegas, Nevada.


 


1.30.       “Capital Expenditure” means any
expenditure that is capitalized on a balance sheet in accordance with GAAP.


 


1.31.       “Cash Collateral Account” means
the “Cash Collateral Accounts” established pursuant to the Bank of America
Facilities.


 


1.32.       “Cash Collateral and Disbursement
Agreement” means the Cash Collateral and Disbursement Agreement, dated May 18,
2007, by and among Bank of America, N.A., as Disbursement and Control Agent,
Professional Associates Construction Services, Inc., CCR, WTA and the
guarantors under the Bank of America Facilities.


 


1.33.       “Cash Log” shall mean the
regularly generated consolidated unrestricted cash log of the Companies,
substantially in the form of Exhibit M attached hereto.


 


1.34.       “CCR” has the meaning set forth in
the Preamble.


 


1.35.       “CCR Units” has the meaning set
forth in the Recitals.


 


1.36.       “CERCLA” means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as now or
hereafter amended (42 U.S.C. Section 9601 et seq.).


 


1.37.       “Closing” has the meaning set
forth in Article III.


 


1.38.       “Closing Date” means the date on
which the Closing occurs.


 


1.39.       “Closing Statement” has the
meaning set forth in Section 2.3(c).


 


1.40.       “COBRA” has the meaning set forth
in Section 5.10(g).


 


1.41.       “Code” means the Internal Revenue
Code of 1986, as amended.


 


1.42.       “Companies” means, collectively,
CCR and its Subsidiaries, other than the Excluded HoldCo Subsidiaries; “Company”
means, individually, any of CCR or its Subsidiaries, other than the Excluded
HoldCo Subsidiaries.


 


5

















 


1.43.       “Company Benefit Plans” has the
meaning set forth in Section 5.10(a).


 


1.44.       “Company Cash” means the cash
amounts shown on the Cash Log in the line item “Cash in Cage”.


 


1.45.       “Company Liens” has the meaning
set forth in Section 7.21(b).


 


1.46.       “Conditional Exercise Notice” has
the meaning set forth in Section 2.3(b).


 


1.47.       “Confidentiality Agreement” has
the meaning set forth in Section 11.1.


 


1.48.       “Construction Reserve Account” means
the “Construction Reserve Account” established pursuant to the Cash Collateral
and Disbursement Agreement.


 


1.49.       “Contract” means any agreement,
lease, license, note, mortgage, contract or other legally binding obligation,
in each case, including all modifications and amendments thereto.


 


1.50.       “Crown One” has the meaning set
forth in the Preamble.


 


1.51.       “Crown Two” has the meaning set
forth in the Preamble.


 


1.52.       “Damages” has the meaning set
forth in Section 10.2(f).


 


1.53.       “Debt Facilities” means the Bank
of America Facilities and the Merrill Lynch Facilities or any successor or
replacement facilities thereto or any other facilities in respect of
Indebtedness of the Companies or any of them, other than debt between or among
the Companies.


 


1.54.       “DOJ” has the meaning set forth in
Section 7.4(b).


 


1.55.       “Effect” has the meaning set forth
in the definition of “Material Adverse Effect.”


 


1.56.       “Environmental Claim” means any
Action by any Governmental Entity alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release
into the environment, of, or exposure to, any Hazardous Materials at any
location, whether or not owned or operated by the Companies, or (b) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.


 


6

















 


1.57.       “Environmental Laws” means any Law
regulating, pertaining or relating to health, industrial hygiene, pollution or
the environment, including: RCRA; the Clean Air Act, as now or hereafter
amended (42 U.S.C. Section 7401 et seq.); CERCLA; the Emergency Planning
and Community Right-to-Know Act of 1986, as now or hereafter amended (42 U.S.C.
Section 11001 et seq.); the Federal Hazardous Substances Act, as now or
hereafter amended (15 U.S.C. Section 1261 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as now or hereafter amended (7
U.S.C.  Section 136 et seq.); the
Federal Water Pollution Control Act, as now or hereafter amended (33
U.S.C.  Section 1251 et seq.); the
Hazardous Materials Transportation Act, as now or hereafter amended (49
U.S.C.  Section 1801 et seq.); the
Occupational Safety and Health Act of 1970, as now or hereafter amended (29
U.S.C.  Section 551 et seq.); the
Toxic Substances Control Act, as now or hereafter amended (15 U.S.C.  Section 2601 et seq.); Nev. Rev. Stat.
chs. 444, 445A, 445B, 459, 477, 590 and 618, each as now or hereafter amended;
and the regulations, rules and orders promulgated under each of them; and
all Laws regulating, pertaining or relating to one or more Hazardous Materials
or health, industrial hygiene, pollution or the environment, or recordkeeping,
notification, disclosure and reporting requirements regarding Hazardous
Materials, or relating to endangered or threatened species of fish, wildlife
and plants and the management or use of natural resources.


 


1.58.       “Environmental Permit” means any
Governmental Authorization issued by any Governmental Entity which relates to
the environment or to public health and safety or to worker health and safety
as they may be affected by the environment.


 


1.59.       “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.


 


1.60.       “ERISA Affiliate” means, with
respect to any Person, any entity (other than such Person) that, together with
such Person, is required to be treated as a single employer under Sections
414(b), (c), (m) or (o) of the Code.


 


1.61.       “Escrow Agent” shall have the
meaning set forth in the Escrow Agreement.


 


1.62.       “Escrow Agreement” means that
certain Escrow Agreement by and among the Parent, the Buyers, the Sellers and
the Escrow Agent, substantially in the form of Exhibit C attached
hereto.


 


1.63.       “Escrow Period” has the meaning
set forth in Section 10.4(b).


 


1.64.       “Excluded HoldCo Subsidiaries”
means LandCo and NP Land, LLC, a Nevada limited liability company.


 


1.65.       “Excluded Opportunity” means any
gaming opportunity offered to any of the Companies or their respective
directors or officers, including 


 


7

















 


Messrs. Wortman and Paulos, whether acquired by
them before, on or after the date of this Agreement, including the Rockingham
Opportunity and the Tejon Opportunity.


 


1.66.       “Exercise Date” means the date on
which the Final Exercise Notice is delivered to CCR and the Sellers.


 


1.67.       “Exercise Period” has the meaning
set forth in Section 2.3(b).


 


1.68.       “Final Disclosure Schedules” has
the meaning set forth in Section 7.5(a).


 


1.69.       “Final Exercise Notice” has the
meaning set forth in Section 2.3(b).


 


1.70.       “Financial Statements” has the
meaning set forth in Section 5.7.


 


1.71.       “FIRPTA Certificate” has the
meaning set forth in Section 7.20.


 


1.72.       “4.1% Interest” has the meaning
set forth in the Recitals.


 


1.73.       “FTC” has the meaning set forth in
Section 7.4(b).


 


1.74.       “Fundamental Representations”
means (i) solely with respect to Millennium, breaches of the
representations and warranties set forth in Section 4.1 (Millennium
Representations), Section 4.3(a) (Sellers’ Good Standing), Section 4.3(b) (Sellers’
Authority; Enforceability), Section 4.3(f) (Sellers’ Brokers
and Finders), (ii) solely with respect to HoldCo, breaches of the
representations and warranties set forth in Sections 4.2(a), (b),
(c), (d) and (e) (Certain HoldCo
Representations), Section 4.2(f) (HoldCo Taxes), Section 4.3(a) (Sellers’
Good Standing), Section 4.3(b) (Sellers’ Authority;
Enforceability), Section 4.3(f) (Sellers’ Brokers and
Finders), and (iii) jointly and severally with respect to the Sellers,
breaches of the representations and warranties set forth in Section 5.1
(Company Organization and Good Standing), Section 5.2 (Company
Capitalization), Section 5.11 (Taxes) and Section 5.19
(Company Brokers and Finders).


 


1.75.       “GAAP” means United States
generally accepted accounting principles in effect from time to time.


 


1.76.       “Gaming Approvals” has the meaning
set forth in Section 7.4(a).


 


1.77.       “Gaming Authorities” means any
Governmental Entity with regulatory control, authority or jurisdiction over
casino, pari-mutuel and lottery or other gaming activities and operations,
including the Nevada Gaming Commission, 


 


8

















 


the Nevada State Gaming Control Board, the Clark
County Liquor and Gaming Licensing Board, the City of Las Vegas and the City of
North Las Vegas, the Pennsylvania Gaming Control Board and the Pennsylvania
Harness Racing Commission.


 


1.78.       “Gaming Laws” means all Laws
pursuant to which any Gaming Authority possesses regulatory, licensing or
permit authority over, casino and pari-mutuel, lottery or other gaming
activities within the State of Nevada or the Commonwealth of Pennsylvania,
including the rules and regulations established by any Gaming Authority.


 


1.79.       “Gaming Tax Amount” shall mean the
daily local share assessment accrued and unpaid through and including the day
before Closing by WTA to North Strabane Township and other local Governmental
Entities in the Commonwealth of Pennsylvania pursuant to Section 1403(c)(3) of
the Pennsylvania Gaming Act and on the basis of the normal operating reports
generated by CCR in the ordinary course of business, less any amount (the “Holdback
Tax Amount”) pursuant to which a claim may be made pursuant to the Holdback
Agreement in respect thereof.


 


1.80.       “GLCP” has the meaning set forth
in the Recitals.


 


1.81.       “GLCP Purchase Agreement” means
that certain Purchase Agreement, dated December 11, 2007, by and among the
Parent, Crown Two and GLCP.


 


1.82.       “GLCP Purchase Price” means the
purchase price that would have been payable by Crown Two to GLCP for the GLCP
Units pursuant to the GLCP Purchase Agreement.


 


1.83.       “GLCP Units” has the meaning set
forth in the Recitals.


 


1.84.       “Governing Documents” means with
respect to any particular entity, (a) if a corporation, the articles or
certificate of incorporation and the bylaws; (b) if a general partnership,
the partnership agreement and any statement of partnership; (c) if a
limited partnership, the limited partnership agreement and the certificate of
limited partnership; (d) if a limited liability company, the articles or
certificate of organization and the limited liability company agreement or
operating agreement; (e) if another type of entity, any other charter or
similar document adopted or filed in connection with the creation, formation or
organization of such entity; and (f) any amendment or supplement to any of
the foregoing.


 


1.85.       “Governmental Authorization” means
any authorization, approval, consent, finding of suitability, license, permit,
franchise, registration, exemption or similar right, approval or authorization
from any Governmental Entity (including any Gaming Authority).


 


9
















 


1.86.                                    “Governmental
Entity” means any federal, state or local government or any subdivision
thereof, any supranational, or any domestic or foreign federal, state or local
court, tribunal (including any arbitrator or arbitral tribunal), legislative,
executive, or regulatory authority, agency, department, commission,
instrumentality or body, including any Gaming Authority.


 


1.87.                                    “Hazardous
Materials” means (a) any petroleum, petroleum products, by-products or
breakdown products, radioactive materials, asbestos-containing materials, urea
formaldehyde foam, heavy metals, polychlorinated biphenyls, lead or lead-based
paints or materials, radon, fungus, mold, mycotoxins or other substances that
are known or suspected to have an adverse effect on human health or the
environment, (b) any waste,
chemical, pollutant, material or substance defined as toxic or hazardous or
otherwise regulated or governed under any Environmental Law or (c) anything
that is a “hazardous substance” pursuant to CERCLA or any similar Environmental
Law, anything that is a “solid waste” or “hazardous waste” pursuant to RCRA or
any similar Environmental Law or any “pesticide,” “pollutant,” “contaminant,” “toxic
chemical” or “noise” giving rise to any liability under any Environmental Law.


 


1.88.                                    “Holdback
Agreement” means the Holdback Agreement, dated November 14, 2006, by
and between Magna and PA Meadows.


 


1.89.                                    “Holdback Tax
Amount” has the meaning set forth in the definition of “Gaming Tax Amount.”


 


1.90.                                    “HoldCo” has
the meaning set forth in the Preamble.


 


1.91.                                    “HoldCo Due Date”
has the meaning set forth in Section 7.10(f).


 


1.92.                                    “HoldCo Units”
has the meaning set forth in the Recitals.


 


1.93.                                    “Hot Asset
Allocation” has the meaning set forth in Section 2.7.


 


1.94.                                    “Hot Asset
Allocation Notice of Disagreement” has the meaning set forth in Section 2.7.


 


1.95.                                    “HSR Act”
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.


 


1.96.                                    “HSR
Notification” means the notification and report forms contemplated to be
filed under the HSR Act.


 


1.97.                                    “Income Tax”
means any federal, state, local, or foreign income tax based upon or measured
by net income, including any interest, penalty, or addition thereto, whether
disputed or not.


 


10

















 


1.98.                                    “Indebtedness”
means, without duplication, any indebtedness for borrowed money, obligations
evidenced by notes, bonds, debentures or similar instruments, net obligations
(positive or negative) under any swap contract or hedging agreement and guarantees
of any of the foregoing.


 


1.99.                                    “Independent
Accounting Firm” has the meaning set forth in Section 7.10(f).


 


1.100.                              “Indemnification Cap”
has the meaning set forth in Section 10.3(c).


 


1.101.                              “Indemnified Party”
has the meaning set forth in Section 10.2(e).


 


1.102.                              “Indemnifying Party”
has the meaning set forth in Section 10.2(e).


 


1.103.                              “Indemnity Escrow
Account” means the escrow account maintained by the Escrow Agent to hold
the Indemnity Escrow Amount pursuant to the terms of the Escrow Agreement.


 


1.104.                              “Indemnity Escrow
Amount” means the amount deposited in the Indemnity Escrow Account pursuant
to Section 2.2(b).


 


1.105.                              “Intellectual Property”
means all of the following owned or used by the Companies in connection with
the Business: (a) trademarks, service marks, trade names, logos, designs
and symbols and all goodwill associated therewith, and all registrations and
applications pertaining to the foregoing; (b) patents, patent applications
and patentable inventions; (c) trade secrets; (d) registered and
material unregistered copyrights in all works, including all Software; (e) confidential
information, customer data and database rights; and (f) Internet web
sites, domain name registrations and all of (a) through (e) above
contained in such Internet web sites.


 


1.106.                              “Interim Financial
Statements” has the meaning set forth in Section 5.7.


 


1.107.                              “Investments”
means, for purposes of the Cash Log, US Treasury securities, certificates of
deposit, commercial paper rated at least A-1 by Standard & Poor’s or
at least P-1 by Moody’s Investors Service, Inc., bankers’ acceptances
issued by financial institutions rated at least first tier paper by a National
Recognized Statistical Rating Organization, repurchase agreements covering US
Treasury securities, and money market funds that comply with all provisions of Rule 2a-7
promulgated under the Investment Company Act of 1940.


 


1.108.                              “Joint Instructions”
has the meaning set forth in Section 10.4(b).


 


11

















 


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


 


1.110.                              “LandCo Disposition”
has the meaning set forth in Section 7.11.


 


1.111.                              “Law” or “Laws”
means any federal, state, regional, local, municipal or other statute, law,
code, ordinance, Order, rule or regulation or any common law right or
obligation, including the Gaming Laws.


 


1.112.                              “Liabilities”
means any and all Indebtedness, losses, liabilities, lawsuits, claims, damages,
expenses, demands, fines, costs, royalties, proceedings, deficiencies or
obligations (including those arising out of any Action, such as any settlement
or compromise thereof or judgment or award therein), of any nature, whether
known or unknown, absolute, accrued, contingent or otherwise and whether due or
to become due, and those arising under any contract, agreement, arrangement,
commitment, guarantee or undertaking.


 


1.113.                              “Liens” means all
liens, assessments, governmental charges or levies, security interests, deeds
of trust, pledges, charges, conditional sales contracts, mortgages or
encumbrances.


 


1.114.                              “Loan Payoff Amount”
means the amount equal to the aggregate amount of liabilities and Indebtedness
owing under CCR’s then outstanding Debt Facilities and any prepayment or other
fees due to the lenders thereof to fulfill the obligations under the Debt
Facilities as of the Closing Date.


 


1.115.                              “Magna” means
Magna Entertainment Corp., a Delaware corporation.


 


1.116.                              “March Pro Formas”
means (i) that certain Pro Forma Title Insurance Policy prepared in March 2009
and delivered to the Buyers by First American Title Insurance Company for CCR
Racing Management and CCR Pennsylvania Racing, Inc., (ii) that
certain Pro Forma Title Insurance Policy prepared in March 2009 and
delivered to the Buyers by Commonwealth Land Title Insurance Policy for Nevada
Palace, LLC and (iii) that certain Pro Forma Title Insurance Policy
prepared in March 2009 and delivered to the Buyers by Commonwealth Land
Title Insurance Policy for The Cannery Hotel and Casino, LLC.


 


1.117.                              “Material Adverse
Effect” means (i) any fact, change, development, circumstance, event,
effect or occurrence (an “Effect”) that, when considered either
individually or in the aggregate with all other Effects, is materially adverse
to the business (excluding any future development opportunities), properties,
assets, liabilities, financial condition or results of operations of the
Companies, taken as a whole, (ii) any failure of any Seller to have good
and valid title to, and be able to deliver to the Buyers at the Closing, free
and clear of all Liens, the Millennium Units, the Holdco Units, or the Blocker
Option, 


 


12

















 


as applicable, or any failure of AcquisitionCo to have good and valid
title to all of the AcquisitionCo Units, or (iii) the loss by any
Subsidiary of CCR of its non-restricted gaming license necessary to operate its
gaming Business in the State of Nevada, the loss by CCR of its finding of
suitability as a holding company of any Subsidiary holding such non-restricted
gaming license, or the loss of WTA’s Category I Slot Machine License to operate
its gaming Business; provided, however, that in no event shall any of the
following, alone or in combination, be deemed to constitute, nor shall any of
the following be taken into account in determining whether there has been, a
Material Adverse Effect under clause (i) above:  (A) an Effect in general business,
economic, political, legislative, social, regulatory or other conditions,
whether locally, nationally or internationally, or in the financial, banking or
securities markets (including changes to interest rates, currency rates or the
value of the U.S. Dollar relative to other currencies, consumer confidence,
stock, bond and/or debt prices and trends), or any acts of war, hostilities,
military action, sabotage or terrorism (whether or not declared or undeclared)
or any escalation or worsening of any such acts of war, hostility, military
action, sabotage or terrorism; (B) any Effect resulting from the
announcement of this Agreement and the transactions contemplated hereby, or the
identity of the Parent, the Buyers or any of their Affiliates as the acquiror
of the Companies; (C) any failure to meet projections, forecasts or
revenue or earnings predictions for any period, provided that the underlying
causes of any such failure shall not be excluded; (D) any changes in Law,
GAAP or any accounting regulation (including any proposal or adoption of any
new Law or GAAP rule or any change in the interpretation or enforcement of
any existing Law or GAAP rule); (E) any Effect in the travel, hospitality
or gaming industries generally; or (F) any taking of any action by any of
the Companies or the Sellers specifically required by this Agreement to be so
taken; provided, however, that the Effects set forth in clauses (A), (D) and
(E) above may be taken into account to the extent such Effects have a
disproportionate impact on the Companies.


 


1.118.                              “Material Contract”
has the meaning set forth in Section 5.6.


 


1.119.                              “Meadows Property”
means the Meadows Racetrack located on Racetrack Road in North Strabane
Township, Washington County, Pennsylvania, which comprises approximately 153.03
acres.


 


1.120.                              “Meadows Purchase
Agreement” means the Stock Purchase Agreement, dated as of November 8,
2005, by and between Magna and PA Meadows, LLC, as amended by the First
Amendment to Stock Purchase Agreement dated as of July 26, 2006.


 


1.121.                              “Merrill Lynch
Facility” means the credit facility of CCR established pursuant to that
certain Amended and Restated Loan Agreement, dated as of May 18, 2007, by
and among CCR, WTA, Merrill Lynch Capital, a division of Merrill Lynch Business
Financial Services Inc., as administrative agent, and each of 


 


13

















 


the lenders from time to time party thereto in the maximum outstanding
amount of $30,000,000.


 


1.122.                              “Millennium” has
meaning set forth in the Preamble.


 


1.123.                              “Millennium Management
Agreement” means the Casino Management Agreement, dated as of September 22,
2006, by and among CCR, Rampart Resort Management, LLC, The Cannery Hotel and
Casino, LLC, Nevada Palace, LLC, and Millennium Management Group II, LLC.


 


1.124.                              “Millennium Units”
has the meaning set forth in the Recitals.


 


1.125.                              “Multiemployer Plan”
has the meaning set forth in Section 5.10(b).


 


1.126.                              “Negative Pledge
Approval” means the administrative approval of the Chairman of the Nevada
Gaming Control Board with respect to any restrictions on transfer or agreements
not to encumber the equity interests or securities of CCR contained in this
Agreement, and in particular, Section 7.1 hereof.


 


1.127.                              “New CCR Equity”
has the meaning set forth in Section 7.28.


 


1.128.                              “New Tax” has the
meaning set forth in Section 7.27(a).


 


1.129.                              “New Tax Deadline”
means December 31, 2010; provided, that, if the State of Nevada has
approved the imposition of a New Tax, or has formally announced that the State
of Nevada will impose a New Tax, or a vote on a referendum approving the
imposition of a New Tax is passed, in each case on or prior to December 31,
2010, the “New Tax Deadline” shall be extended until the earlier of (A) the
date of actual imposition by the State of Nevada of such New Tax (substantially
in the form it was formally approved (including by way of a referendum) or
formally announced on or prior to December 31, 2010) or (B) the date
on which it is not reasonably likely that such New Tax (substantially in the
form it was formally approved (including by way of a referendum) or formally
announced on or prior to December 31, 2010) will actually be imposed by
the State of Nevada (whether due to its withdrawal, abandonment, failure of
enactment, invalidation or otherwise).


 


1.130.                              “New Tax Impact”
means the product of (a) NGT Tax Amount and (b) ten (10).


 


1.131.                              “New Tax Payment”
has the meaning set forth in Section 7.27(a).


 


14

















 


1.132.                              “NGT Tax Amount”
means the estimated increased amount of aggregate taxes and levies imposed on
the Companies on an annual basis as a direct result of the New Tax, as such
estimate is mutually agreed upon by the Sellers and the Buyers or, if the
Sellers and the Buyers cannot come to such mutual agreement, as such estimate
is determined by an independent expert selected in accordance with Section 7.27(b).  For purposes of determining the NGT Tax
Amount, the Buyers and the Sellers or the independent expert, as applicable,
shall (i) decrease the NGT Tax Amount to the extent that it is
commercially practicable for the Companies and consistent with prudent business
practice for similarly situated companies, to pass along some or all of such
increased amount of aggregate taxes and levies onto the Companies’ customers
and (ii) use forecasts adopted and used by the Managers of CCR in the
ordinary course of business for business planning purposes for the year in
which the New Tax is first imposed on the Companies or is scheduled to be
imposed on the Companies; provided, that, if imposition of the New Tax is “phased
in” over time, the forecasts to be used shall be (if such forecasts are
available) for the year in which the amount of the New Tax is scheduled to be
the greatest (as of the date the estimated increased amount of aggregate taxes
and levies is determined).


 


1.133.                              “Non-Income Taxes”
means all Taxes other than Income Taxes.


 


1.134.                              “Oaktree Purchase
Agreement” means the First Amendment and Restatement of Contribution and
Unit Purchase Agreement, dated as of September 23, 2005, by and among OCM
InvestCo, LLC, OCM AcquisitionCo, LLC, OCM LandCo, Mr. William Paulos, Mr. William
Wortman, Millennium, CCR, MGIM, LLC, WCW LandCo, LLC, and NP Land, LLC.


 


1.135.                              “Obligations” has
the meaning set forth in Section 7.14(a).


 


1.136.                              “Omitted Items”
has the meaning set forth in Section 7.5(a).


 


1.137.                              “Option” has the
meaning set forth in Section 2.1.


 


1.138.                              “Order” means any
order, injunction, judgment, decree, ruling, writ, or arbitration or judicial
award.


 


1.139.                              “Original Purchase
Agreement” has the meaning set forth in the Recitals.


 


1.140.                              “Outside Equity Investor”
has the meaning set forth in Section 7.28(c).


 


1.141.                              “Outside New CCR
Equity” has the meaning set forth in Section 7.28(c).


 


15

















 


1.142.                              “Outside New CCR
Equity Purchase Price” has the meaning set forth in Section 7.28(c).


 


1.143.                              “Owned Real Property”
has the meaning set forth in Section 5.15(a).


 


1.144.                            “Outside New CCR Equity
Option Agreement” shall mean an option agreement providing to the Buyers an
exclusive and irrevocable option during the Exercise Period and so long as this
Agreement is not terminated to purchase all but not less than all of such
Outside New CCR Equity from the Outside Equity Investor, containing reasonable
and customary terms for the purchase of equity securities on an arms length
basis, including representations, warranties and indemnities ordinarily
contained in a securities purchase agreement for a transaction of that nature.


 


1.145.                              “PA Meadows” means
PA Meadows, LLC, a Delaware limited liability company.


 


1.146.                              “Parent” has the
meaning set forth in the Preamble.


 


1.147.                              “Payoff and Release of
Liens” has the meaning set forth in Section 7.21(b).


 


1.148.                              “Pennsylvania Act”
means the Pennsylvania Race Horse Development and Gaming Act, as amended, and
the rules and regulations of the Pennsylvania Gaming Control Board
promulgated thereunder.


 


1.149.                              “Pennsylvania Gaming
Fee” means the change in ownership fee imposed on the Buyers pursuant to Section 1328
of the Pennsylvania Act.


 


1.150.                              “Permitted Exceptions”
means (i) any Liens for Taxes not yet due and payable or that are being
contested in good faith by appropriate proceedings and for which appropriate
reserves have been established in accordance with GAAP; (ii) mechanics’,
warehousemens’, materialmens’, contractors’, workmens’, repairmens’, carriers’
and other similar Liens that are (a) inchoate or (b) being contested
in good faith by appropriate proceedings or with respect to which there remains
a bona fide opportunity to contest and, in either case, for which reserves have
been established, where appropriate and consistent with past practice; (iii) Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations provided that such items do not appear on
title; (iv) imperfections of title that, individually or in the aggregate,
do not materially and adversely restrict or affect the value or the
contemplated or current use and enjoyment of any material property or assets of
any of the Companies; (v) the title policy and title commitment exceptions
identified on Exhibit G attached hereto, and all other exceptions,
exclusions from coverage, or other title matters reflected 


 


16

















 


in the March Pro Formas, provided that such title matters
reflected in the March Pro Formas shall be subject to all of the
endorsements included in the March Pro Formas; (vi) any state of
facts shown or which should have been shown on an existing ALTA survey covering
any of the real property of the Companies that has been delivered or made
available to the Buyers; (vii) all presently existing and future Liens of
water rates, water meter charges, water frontage charges and sewer Taxes, rents
and charges, if any, provided that such items are not due and payable; (viii) any
other matter or thing affecting title to the Real Property that the Buyers
shall have expressly agreed in writing to waive; (ix) Liens disclosed on Schedule
1.201 of the Sellers Disclosure Schedules; (x) the dedication of
approximately 2.242 acres of the Meadows Property to North Strabane Township,
as set forth in that certain Agreement of Dedication entered into as of December 29,
2008, by and between North Strabane Township and CCR Pennsylvania Racing, Inc.,
or (xi) any other Liens (excluding any Liens for Indebtedness) that have been
incurred or suffered in the ordinary course of business consistent with past
practice and are not, individually or in the aggregate, material to the
Companies.


 


1.151.                              “Person” means any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, Governmental Entity, joint
venture, estate, trust, association, organization or other entity of any kind
or nature.


 


1.152.                              “Personal Property”
has the meaning set forth in Section 5.22.


 


1.153.                              “Post-Closing Periods”
has the meaning set forth in Section 7.10(b).


 


1.154.                              “Pre-Closing Events”
has the meaning set forth in Section 7.5(a).


 


1.155.                              “Pre-Closing Periods”
has the meaning set forth in Section 7.10(b).


 


1.156.                              “Preferred Purchase
Agreement” has the meaning set forth in the Recitals.


 


1.157.                              “Property Adjustment
Amount” has the meaning set forth in Section 7.19(b).


 


1.158.                              “Purchase Price”
has the meaning set forth in Section 2.2(a).


 


1.159.                              “Rampart Amount”
shall mean the “Base Rent” and “Additional Rent” and that sum reasonably
estimated by CCR to approximate “Adjusted Operating Cash Flow” through and
including the day before Closing, each payable to the “Landlord” (as such terms
are defined in the Rampart Lease), accrued and unpaid under the Rampart Lease
through and including the day before 


 


17

















 


Closing on the basis of the normal operating reports generated by CCR
in the ordinary course of business.


 


1.160.                              “Rampart Lease” shall
mean the Casino Sublease Agreement, dated as of April 1, 2002, by and
between Hotspur Casinos Nevada, Inc. and Rampart Resort Management, LLC,
as amended by the First Amendment to Casino Sublease executed on January 5,
2006 (which First Amendment erroneously recites that the date of the Casino
Sublease Agreement is April 1, 2001).


 


1.161.                              “RCRA” means the
Resource Conservation and Recovery Act of 1976 now or hereafter amended (42
U.S.C. Section 5901 et seq.).


 


1.162.                              “Real Property Leases”
has the meaning set forth in Section 5.15(b).


 


1.163.                              “Related Party”
means (i) any director, officer, member or manager of any Seller, Blocker
or AcquisitionCo or any Affiliate thereof, (ii) any member of the
immediate family of any of the foregoing and (iii) any corporation,
partnership, limited liability company or other entity controlled by any of the
foregoing, or any estate or trust for which any of the foregoing is the settlor
or beneficiary.


 


1.164.                              “Related Party
Transactions” has the meaning set forth in Section 5.21.


 


1.165.                              “Releases” has the
meaning set forth in Section 2.4(g).


 


1.166.                              “Releasor” means
either the Sellers or the Buyers.


 


1.167.                              “Remaining Accrued
Liabilities” has the meaning set forth in Section 2.2(b).


 


1.168.                              “Representatives”
of any Person shall mean such Person’s directors, managers, members, officers,
employees, agents, advisors, Affiliates and representatives (including
attorneys, accountants, consultants, financial advisors, financing sources and
any representatives of such advisors or financing sources).


 


1.169.                              “Restraint” has
the meaning set forth in Section 8.1(c).


 


1.170.                              “Rockingham
Opportunity” has the meaning set forth in Section 7.12.


 


1.171.                              “RSA” means the
Racing Services Agreement, dated as of July 26, 2006, by and among the RSA
Operator, WTA and the other parties thereto.


 


1.172.                              “RSA Operator”
means MEC Pennsylvania Racing Services, Inc., in such capacity pursuant to
the RSA.


 


18

















 


1.173.                              “Section 1542”
has the meaning set forth in Section 7.25(d).


 


1.174.                              “Securities Act”
has the meaning set forth in Section 6.7.


 


1.175.                              “Security Arrangements”
has the meaning set forth in Section 7.27(c).


 


1.176.                              “Seller” and “Sellers”
have the meaning set forth in the Preamble.


 


1.177.                              “Seller Indemnified
Parties” has the meaning set forth in Section 10.2(d).


 


1.178.                              “Sellers Disclosure
Schedules” has the meaning set forth in Article 4.


 


1.179.                              “Sellers Due Date”
has the meaning set forth in Section 7.10(f).


 


1.180.                              “Sellers New CCR
Equity” has the meaning set forth in Section 7.28(b).


 


1.181.                              “Series A2
Preferred Units” has the meaning set forth in the Recitals.


 


1.182.                              “Software” means
any and all computer programs, including any and all software implementation of
algorithms, whether in source code or object code.


 


1.183.                              “Stay Bonuses” has
the meaning set forth in Section 5.9(f).


 


1.184.                              “Stay Bonus Payoff
Amount” has the meaning set forth in Section 2.2(b).


 


1.185.                              “Straddle Period”
has the meaning set forth in Section 7.10(b).


 


1.186.                              “Subsidiary”
means, with respect to any Person, any corporation or other entity of which
such Person has, directly or indirectly, (i) ownership of securities or
other interests having the power to elect a majority of the Board of Directors
or similar governing body of such corporation or other entity, or (ii) the
power to direct the business and policies of that corporation or other entity.


 


1.187.                              “Supplemental
Disclosure Schedules” has the meaning set forth in Section 7.5(a).


 


1.188.                              “Survival Period”
has the meaning set forth in Section 10.1.


 


19
















 


1.189.                              “Tax Amount”
means, with respect to any period, an amount equal to (i) the lowest
aggregate amount of distributions to the Tax Recipients (based on pro rata
distributions to such Tax Recipients) such that each Tax Recipient receives an
amount sufficient to equal (x) the amount of taxable income allocated to
such Tax Recipient in respect of such period (taking into account any Code §
704(c) items and annualizing the estimated taxable income (excluding
extraordinary items, which shall be taken into account separately) for
distributions with respect to periods of less than a fiscal year), multiplied
by (y) the highest maximum combined marginal federal, state and local
income tax rates to which any Tax Recipient may be subject (taking into account
the deductibility of state income tax for federal income tax purposes), plus (ii) an
additional amount (distributed to Tax Recipients pursuant to the operating
agreement of CCR) such that, after giving effect to distributions of such
additional amount, each Tax Recipient will satisfy the safe harbor for
estimated tax payments based on prior year tax liability under Code §§ 6654 or
6655 (and analogous state or local provisions) assuming that each Tax Recipient’s
only income was from CCR.


 


1.190.                              “Tax Authority” means
any Governmental Entity or any subdivision, agency, commission or authority
thereof, or any quasi-governmental or private body having jurisdiction over the
assessment, determination, collection or imposition of any Tax.


 


1.191.                              “Tax Benefit”
means the sum of the amount by which the actual Tax Liability (after giving
effect to any alternative minimum or similar Tax) of an Indemnified Party to
the appropriate Tax Authority is reduced by the payment of the Liability upon
which the claim for indemnity (or other claim) is based (including by or as a
result of a deduction, entitlement to refund, or credit) plus any interest (on
an after-Tax basis) from such Tax Authority relating to such Tax Liability and
taking into account the Tax treatment of the receipt of indemnification
payments. Where a Tax Benefit may be realized that may result in the reduction
of a payment to the Indemnified Party, the Indemnified Party will as promptly
as practicable take or cause Indemnified Party’s Affiliates to take such
reasonable or appropriate steps (including the filing of an amended Tax Return
or Claim for refund) to obtain at the earliest possible time any such
reasonably available Tax Benefit.


 


1.192.                              “Tax Benefit
Accountant” has the meaning set forth in Section 10.6(b).


 


1.193.                              “Tax Benefit Dispute
Notice” has the meaning set forth in Section 10.6(a).


 


1.194.                              “Tax Benefit Report”
has the meaning set forth in Section 10.6(c).


 


1.195.                              “Tax Benefit Statement”
has the meaning set forth in Section 10.6(a).


 


20

















 


1.196.                              “Tax Proceeding”
has the meaning set forth in Section 7.10(h).


 


1.197.                              “Tax Recipient”
means each direct or indirect equityholder of CCR that is required to report
and pay federal income taxes with respect to taxable income of CCR or any of
its Subsidiaries that is directly or indirectly allocated to such Person, and
each of his, her or its successors and assigns.


 


1.198.                              “Tax Returns”
means any report, return, election, document, estimated tax filing, declaration
or other filing required to be provided to any Tax Authority or jurisdiction
with respect to Taxes, including any amendments thereto.


 


1.199.                              “Taxes” means all
taxes, assessments, charges, duties, fees, levies, imposts or other
governmental charges, including Income Taxes, all federal, state, local,
municipal, county, foreign and other franchise, profits, capital gains, capital
stock, capital structure, transfer, gross receipt, sales, use, transfer,
service, occupation, ad valorem, property, excise, severance, windfall profits,
premium, stamp, license, payroll, employment, social security, unemployment,
disability, environmental (including taxes under Code Section 59A),
alternative minimum, add-on, value-added, withholding and other taxes of any
kind whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a Tax Return), and all estimated taxes, deficiency
assessments, additions to tax, and additional amounts imposed by any
governmental authority (domestic or foreign) with respect to a Tax, and
penalties and interest thereon.


 


1.200.                              “Tejon Opportunity”
has the meaning set forth in Section 7.12.


 


1.201.                              “Third Party Claims”
has the meaning set forth in Section 10.2(e).


 


1.202.                              “Threshold Amount”
has the meaning set forth in Section 10.3(a).


 


1.203.                              “Title Commitments”
means those certain Title Commitments issued by the Title Company as of September 1,
2007, November 21, 2007 and November 21, 2007 (Commitment Nos.
410007114, 07-09-0081-DTL and 07-09-0077-DTL, respectively).


 


1.204.                              “Title Company”
means Commonwealth Land Title Insurance Company.


 


1.205.                              “WARN Act” has the
meaning set forth in Section 5.9(c).


 


1.206.                              “WTA” means
Washington Trotting Association, Inc., a Delaware corporation.


 


21

















 


1.207.                              “XpressBet Assessments”
means the assessments for pari-mutuel taxes by the Pennsylvania Department of
Revenue with respect to wagers on behalf of non-Pennsylvania residents
processed by XpressBet, Inc. (currently a wholly-owned subsidiary of
Magna) against XpressBet, WTA, and Mountain Laurel Racing, Inc., a
Delaware corporation, which assessments are currently being contested by an
Affiliate of Magna.


 


ARTICLE 2


 


Option


 


2.1.                              Grant
of Option.  (a) Millennium
grants to Crown One an exclusive and irrevocable option during the Exercise
Period to purchase all, but not less than all, of the Millennium Units; (b) HoldCo
grants to Crown Two an exclusive and irrevocable option during the Exercise
Period to purchase all, but not less than all, of the HoldCo Units; and (c) HoldCo
grants to Crown One an exclusive and irrevocable option during the Exercise
Period to purchase all of HoldCo’s right, title and interest in the Blocker
Option Agreement, in each case, in accordance with the terms of this Agreement
(such options are hereinafter collectively referred to as the “Option”).


 


2.2.                              Purchase Price Upon
Exercise of the Option.


 


(a)                                  The
purchase price (the “Purchase Price”) payable upon exercise of the
Option shall be an amount in cash equal to the following:


 


(i)                                     $1,414,700,000
(One Billion Four Hundred Fourteen Million Seven Hundred Thousand Dollars),
less the dollar amount of the GLCP Purchase Price (the “Base Purchase Price”);


 


(ii)                               decreased
by the Remaining Accrued Liabilities, if any;


 


(iii)          decreased
by the Property Adjustment Amount, if applicable, in accordance with Section 7.19(b);
and


 


(iv)                              increased,
if applicable, in accordance with Section 7.28(b).


 


(b)                                 Cash
Amounts.


 


(i)                                     At
the Closing, CCR (A) shall direct the release and application of the
amounts in the Cash Collateral Account and the Construction Reserve Account, if
any,  to make a payment in respect of the
Bank of America Facilities (such amounts, the “Bank of America Repayment”)
and (B) may, but shall not be obligated to, make payment(s) in
respect of any of the Debt Facilities (the aggregate amounts paid by CCR
pursuant to this clause (B), if any, and the Bank of America Repayment are
collectively hereinafter referred to as the “Company Loan Payment Amount”).


 


22

















 


(ii)                                  At
the Closing, the Purchase Price shall be paid by the Buyers to or for the
benefit of the Sellers as follows:


 


(A)                              $25,000,000
(Twenty Five Million Dollars) (the “Indemnity Escrow Amount”) payable by
wire transfer in immediately available US funds to the Escrow Agent to be held
to satisfy Sellers’ indemnification obligations pursuant to Section 7.10
and Article 10 and distributed pursuant to the terms and conditions
of the Escrow Agreement and this Agreement;


 


(B)                                an
aggregate amount (the “Buyer Loan Payment Amount”) equal to the Loan
Payoff Amount, less the Company Loan Payment Amount, payable by wire transfer
in immediately available funds to the lenders under the Debt Facilities;


 


(C)                                an
amount (the “Stay Bonus Payoff Amount”) equal to the aggregate amount
required to satisfy in full all Stay Bonuses outstanding as of the Closing
Date, if any, payable by wire transfer in immediately available funds to an
escrow account and to be held and distributed pursuant to the Escrow Agreement;
and


 


(D)                               an
amount to each Seller equal to the product of (i) the Purchase Price, less
the Indemnity Escrow Amount, less the Buyer Loan Payment Amount, less the Stay
Bonus Payoff Amount, multiplied by (ii) the Purchase Price percentage set
forth on Exhibit D hereto for each Seller, by wire transfer of
immediately available funds to such account or accounts designated in writing
at least three (3) Business Days prior to the Closing Date, by such
Seller.


 


(iii)          CCR
agrees that, as of the shift change closest in time following 12:00 a.m.
local time on the Closing Date, Company Cash shall equal at least $20,000,000
(Twenty Million Dollars) (or $18,500,000 (Eighteen Million Five Hundred
Thousand Dollars) if the Purchase Price is reduced by the Property Adjustment
Amount), and such amount of Company Cash shall not be applied to reduce any
Remaining Accrued Liabilities as of the Closing Date, but shall be retained by
CCR (or the applicable Subsidiary thereof) thereafter for the benefit of the
Parent and the Buyers in the operation of the Business.


 


(iv)                              CCR
agrees that “Remaining Accrued Liabilities” shall be equal to the total
of the Rampart Amount and the Gaming Tax Amount as of the date immediately
preceding the Closing Date; provided that, in the event that the Cash Log as of
such date reflects amounts in the line items “Cash in Bank” and “Investments”
and such amounts 


 


23

















 


have not otherwise been applied
to the Company Loan Payment Amount, then the Sellers may elect to have all or
any portion of the “Cash in Bank” and “Investments” amounts retained by CCR (or
the applicable Subsidiary thereof) on the Closing Date for the benefit of the
Parent and the Buyers, in which event, for purposes of determining the Purchase
Price, the Remaining Accrued Liabilities shall be reduced by the aggregate
amount so retained by CCR (or the applicable Subsidiary thereof).


 


(c)                                  Closing
Statement and Cash Log.  On the
Closing Date, CCR shall deliver to the Parent and the Buyers (i) a closing
statement certified by the Chief Financial Officer of CCR (the “Closing
Statement”), setting forth a reasonably detailed calculation of the Company
Loan Payment Amount, the Buyer Loan Payment Amount, the Stay Bonus Payoff
Amount and the Remaining Accrued Liabilities, and (ii) the Cash Log as of
such date, together with bank statements or other reasonable supporting
documentation in respect of the line items “Cash in Bank” and “Investments”.  In connection with the preparation of the Closing
Statement and the Cash Log, CCR shall permit employees of the Parent or an
entity in the gaming business related to the Parent to observe and review the
determination of Company Cash and Remaining Accrued Liabilities, including the
preparation of the operating reports used for determining the Rampart Amount
and the Gaming Tax Amount.


 


2.3.                              Exercise of the Option.


 


(a)                                  The
Option is exercisable at the election of the Buyers in their sole and absolute
discretion at any time during the period following the date hereof and prior to
12:01 a.m., local time, on the first day immediately following the second
anniversary of the date hereof (such period is hereinafter referred to as the “Exercise
Period”).  The Option may only be
exercised a single time during the Exercise Period.


 


(b)                                 If
the Buyers desire to elect to exercise the Option, the Buyers shall deliver a
written revocable notice (the “Conditional Exercise Notice”) to CCR and
the Sellers of the Buyers’ intention to exercise the Option.  If, after review of the Supplemental Sellers
Disclosure Schedules, if any, delivered in accordance with Section 7.5,
the Buyers elect to exercise the Option, the Buyers shall deliver irrevocable
written notice (the “Final Exercise Notice”) to CCR and the Sellers
within thirty (30) days of the delivery of the Supplemental Disclosure
Schedules by CCR and the Sellers in accordance with Section 7.5,
confirming the Buyers’ exercise of the Option. 
Subject to Section 7.5(c), if the Buyers deliver the Final
Exercise Notice, the closing of the Option and the other transactions
contemplated by this Agreement shall occur in accordance with Article 3.


 


(c)                                  Notwithstanding anything to the contrary
contained in this Agreement, the Option may not be exercised unless and until
the Buyers have obtained all Gaming Approvals.


 


2.4.                              Sellers’ Closing
Deliveries.  At the Closing, the
Sellers shall deliver, or cause to be delivered, to the Buyers each of the
following (in addition to any other documents required to be delivered to the
Buyers by or on behalf of the Sellers pursuant to any other provisions of this
Agreement):


 


24

















 


(a)                                  a
certificate duly executed by each of the Sellers certifying to the satisfaction
of the conditions in Section 8.2(a) and Section 8.2(b);


 


(b)                                 the
Closing Statement;


 


(c)                                  the
Cash Log dated as of the Closing Date, as certified by the Chief Financial
Officer of CCR;


 


(d)                                 the
resignations, effective immediately following the Closing, of each manager,
director and officer of each Company;


 


(e)                                  the
Payoff and Release of Liens as contemplated by Section 7.21;


 


(f)                                    the
assignment documents evidencing the assignment and transfer of the Millennium
Units (and all Sellers New CCR Equity, if any, then directly or indirectly
owned by Millennium) and the HoldCo Units (and all Sellers New CCR Equity, if
any, then directly or indirectly owned by HoldCo), each substantially in the
respective forms as attached hereto as Exhibit L, the sale
documents evidencing the sale of the Blocker Option Agreement, substantially in
the form as attached hereto as Exhibit H, and the assignment
documents evidencing the assignment and transfer of any Units owned by any
Outside Equity Investor (collectively, the “Assignment Documents”);


 


(g)                                 the
releases as contemplated by Section 7.11 and Section 7.12,
substantially in the forms as attached hereto as Exhibit N (the “Releases”);


 


(h)                                 the
FIRPTA Certificates required by Section 7.20;


 


(i)                                     the
opinions of Sellers’ counsels, in substantially the form set forth in Exhibit I
attached hereto, with such further changes as may be reasonably satisfactory to
the Buyers;


 


(j)                                     such
instruments and documents, including affidavits and indemnity agreements, as
are required to cause the Title Company to issue full equity transfer
non-imputation endorsements in the applicable forms attached hereto as Exhibit O
for all of the Companies’ title insurance policies, including the new title
insurance policies to be issued as contemplated by the Title Commitments;


 


(k)                                  the
Escrow Agreement (and any additional documents or instructions as the Escrow
Agent may reasonably require);


 


(l)                                     certificates
representing the Millennium Units; and


 


(m)                               the
books and records of the Companies, Blocker and AcquisitionCo, including any
certificates with respect to any stock or units of the Companies, Blocker and
AcquisitionCo.


 


2.5.                              Buyers’ Closing
Deliveries.  At the Closing, the
Buyers shall deliver or cause to be delivered, to the Sellers each of the
following (in addition to any other documents 


 


25

















 


required to be delivered
to the Sellers by or on behalf of the Buyers pursuant to any other provisions
of this Agreement):


 


(a)                                  an
amount equal to the Purchase Price (as calculated pursuant to Section 2.2(a));


 


(b)                                 a
certificate duly executed by an executive officer of the managing member of the
managing member of each of the Buyers and dated as of the Closing Date,
certifying as to the satisfaction of the conditions in Section 8.3(a) and
Section 8.3(b);


 


(c)                                  the
Releases;


 


(d)                                 the
Assignment Documents duly executed by the applicable Buyer;


 


(e)                                  evidence
of the Gaming Approvals reasonably satisfactory to CCR and the Sellers; and


 


(f)                                    the
Escrow Agreement (and any additional documents or instructions as the Escrow
Agent may reasonably require).


2.6.                              Intentionally Omitted.


 


2.7.                              Allocation of Purchase
Price.  The Purchase Price paid by
the Buyers (including any adjustments thereto) shall be allocated 58% to the
Millennium Units and 42% to the HoldCo Units and Blocker Option Agreement.  With respect to that portion of the Purchase
Price (including any adjustments thereto) allocated to the HoldCo Units and
Blocker Option Agreement, the parties are not agreeing to a further allocation
between the HoldCo Units and Blocker Option Agreement, and no inference is to
be drawn from the respective amounts paid by the Buyers.  With respect to that portion of the Purchase
Price (including any adjustments thereto) allocated to the Millennium Units,
such amount shall be allocated among Millennium’s interest in the various
assets of the Company as provided in Treasury Regulations Section §1.755-1
taking into account that pursuant to Section 7.10(a) of this
Agreement there will be an election under Section 754 of the Code in
effect for the Company taxable year that includes the Closing Date that will
require an adjustment to the basis of Company assets under Section 743(b) of
the Code to be made; provided, however, that the Buyers and Millennium shall
agree upon the amounts allocated to Millennium’s interest in Company unrealized
receivables and inventory items, as described in Sections 751(c) and (d) of
the Code and shall file all Tax Returns consistently with the amount allocated
to Millennium’s interest in such Company unrealized receivables and inventory
items.  Within thirty (30) days after the
Closing Date, Millennium shall propose and deliver to the Buyers a preliminary
allocation of the Purchase Price paid for the Millennium Units that is allocated
to Millennium’s interest in Company unrealized receivables and inventory items
(the “Hot Asset Allocation”).  The
Buyers shall have ten (10) Business Days after delivery of the Hot Asset
Allocation to give written notice to Millennium of its disagreement with the
Hot Asset Allocation (with such notice so timely delivered referred to herein
as a “Hot Asset Allocation Notice of Disagreement”).  Any Hot Asset Allocation Notice of
Disagreement shall specify in reasonable detail the basis and amount of any
disagreement.  The Hot Asset Allocation
shall become final if the Buyers do not deliver to Millennium a valid Hot Asset
Allocation Notice of Disagreement within the allotted time period.  During the thirty 


 


26

















 


(30) days
immediately following delivery of the Hot Asset Allocation Notice of
Disagreement, the Buyers and Millennium shall seek in good faith to resolve in
writing any differences which they may have with respect to any matter
specified in the Hot Asset Allocation Notice of Disagreement.  Within ten (10) Business Days after the
end of such thirty (30) day period, or such longer period as may be mutually
agreed in writing, the Buyers, on the one hand, and Millennium, on the other
hand, shall submit for review and resolution by an independent accounting firm
jointly selected by the Buyers and Millennium (the “Allocation Accounting
Firm”) any and all matters which remain in dispute and relate solely to
matters included in the Hot Asset Allocation Notice of Disagreement.  The Allocation Accounting Firm shall be
directed to make a final determination within thirty (30) days of the deadline
for submissions as set forth in the preceding sentence with respect to the
proper allocation of the disputed items which determination shall be final, conclusive
and binding on the parties.  If the
Buyers and Millennium are unable to agree on an independent accounting firm,
then each shall pick an independent accounting firm and the two accounting
firms shall choose the accounting firm to serve as the “Allocation Accounting
Firm” hereunder.  The fees and
disbursements of the Allocation Accounting Firm shall be shared equally by the
Buyers, on the one hand, and Millennium, on the other hand.  Each of the Buyers and Millennium agrees that
it will not take any position with any Tax Authority or on any Tax Returns that
is contrary to the final Hot Asset Allocation.


 


ARTICLE 3


 


Closing


 


The closing of the sale and purchase of the Millennium
Units and the HoldCo Units pursuant to this Option and the other transactions
contemplated by this Agreement (the “Closing”) shall take place at the
offices of Munger, Tolles & Olson LLP, Los Angeles, California at
10:00 a.m. local time (or such other time, place and date as the Buyers
and the Sellers may mutually agree) as soon as practicable, but no later than
two (2) Business Days after the first date on which all the conditions to
Closing (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the fulfillment or waiver of those conditions)
shall have been satisfied or waived.


 


ARTICLE 4


 


Representations
and Warranties Regarding Sellers


 


Except as set forth in the corresponding sections of
the disclosure schedules delivered by the Sellers to the Buyers concurrently
with the execution and delivery of this Agreement (the “Sellers Disclosure
Schedules”) (provided that a listing of an item in one section of the
Sellers Disclosure Schedules shall be deemed to be a listing in each section of
the Sellers Disclosure Schedules to which such item relates only to the extent
that it is reasonably apparent from a reading of such disclosure that it also
qualifies or applies to another section), the parties referenced below make the
following representations.  Except for
the representations and warranties in Sections 4.3(a), 4.3(b), 4.3(e)(i),  and 4.3(e)(iv) (the “Sellers
Execution Reps”), the making of the following representations and
warranties on the date of this Agreement is solely 


 


27

















 


for informational
purposes only and is not intended and does not create any liability for the
Sellers for any misrepresentation or misstatements on such date.


 


4.1.                              Representations of
Millennium.  Millennium hereby
represents and warrants to the Parent and the Buyers as follows:  Millennium is the owner of all right, title
and interest (record and beneficial) in and to the number and type of CCR Units
set forth opposite its name on Exhibit A, free and clear of any
Liens.  The delivery to Crown One of the
Millennium Units hereunder will transfer to Crown One good and valid title to
all the Millennium Units, free and clear of any Liens (other than Liens created
by Crown One).  Other than the Millennium
Units listed opposite Millennium’s name on Exhibit A, Millennium
owns no right, title or interest (record or beneficial) to any other CCR Units
or any other equity interests of CCR or right of any kind to have any such
equity interests issued.  No Person has
any agreement or option or any right or privilege (whether pre-emptive or
contractual) capable of becoming an agreement or option for the acquisition of
the Millennium Units.  Except as provided
in this Agreement, Millennium and, to the knowledge of Millennium, each other
member, partner or other owner of CCR owns no right, title or interest (record
or beneficial) to any other equity interests of CCR or right of any kind to
have any such equity interests.


 


4.2.                              Representations of
HoldCo.  HoldCo hereby represents and
warrants to the Parent and the Buyers as follows:


 


(a)                                  HoldCo
is the owner of all right, title and interest (record and beneficial) in and to
the number of Blocker A Units set forth opposite its name on Exhibit A
to this Agreement, free and clear of any Liens. 
The delivery to Crown Two of the HoldCo Units hereunder will transfer to
Crown Two good and valid title to all the HoldCo Units, free and clear of any
Liens (other than Liens created by Crown Two). 
Other than the HoldCo Units listed opposite HoldCo’s name on Exhibit A,
HoldCo owns no right, title or interest (record or beneficial) to any other
Blocker A Units or any other equity interests of Blocker or right of any kind
to have any such equity interests issued. 
Other than as set forth in the Blocker Option Agreement, no Person has
any agreement or option or any right or privilege (whether pre-emptive or
contractual) capable of becoming an agreement or option for the acquisition of
the HoldCo Units.  Except as provided in
this Agreement, each of AcquisitionCo, Blocker and HoldCo and, to the knowledge
of HoldCo, each other member, partner or other owner of CCR, AcquisitionCo or
Blocker owns no right, title or interest (record or beneficial) to any other
equity interests of CCR, AcquisitionCo or Blocker, as the case may be, or right
of any kind to have any such equity interests.


 


(b)                                 Blocker
is the owner of all right, title and interest (record and beneficial) in and to
the number of Class A Units in AcquisitionCo set forth opposite Blocker’s
name on Exhibit A to this Agreement, free and clear of any
Liens.  Other than the Blocker Units
listed opposite Blocker’s name on Exhibit A, Blocker owns no right,
title or interest (record or beneficial) to any other Class A Units in
AcquisitionCo or any other equity interests of AcquisitionCo or right of any
kind to have any such equity interests issued. 
Except pursuant to the Blocker Option Agreement, no Person has any
agreement or option or any right or privilege (whether pre-emptive or
contractual) capable of becoming an agreement or option for the acquisition of
the Blocker Units.


 


28

















 


(c)                                  AcquisitionCo
is the owner of all right, title and interest (record and beneficial) in and to
the number and type of CCR Units set forth opposite its name on Exhibit A
to this Agreement, free and clear of any Liens. 
Other than the AcquisitionCo Units listed opposite AcquisitionCo’s name
on Exhibit A, AcquisitionCo owns no right, title or interest
(record or beneficial) to any other CCR Units or any other equity interests of
CCR or right of any kind to have any such equity interests issued.  No Person has any agreement or option or any
right or privilege (whether pre-emptive or contractual) capable of becoming an
agreement or option for the acquisition of the AcquisitionCo Units.


 


(d)                                 Neither
Blocker nor AcquisitionCo has any Subsidiaries or own any stock of, or any
equity participation in, any Person, except as set forth on Exhibit A
to this Agreement.  The equity interests
of each of Blocker and AcquisitionCo as set forth on Exhibit A constitute
all of the issued and outstanding equity interests of each of Blocker and
AcquisitionCo, respectively.  All of the
issued and outstanding equity interests of each of Blocker and AcquisitionCo
have been duly authorized and are validly issued, fully paid (if applicable)
and nonassessable and none of them has been issued in violation of preemptive
or similar rights.  There are no declared
or accrued but unpaid dividends or distributions with regard to any issued and
outstanding equity interests of Blocker or AcquisitionCo.  There are no equity interests in Blocker or
AcquisitionCo reserved for issuance or subject to preemptive rights or any
outstanding subscriptions, options, warrants, calls, rights, agreements,
obligations, convertible, exercisable or exchangeable securities, or other
commitments, contingent or otherwise, relating to membership interests of, or
other equity or voting interests in, Blocker or AcquisitionCo.  There are no outstanding or authorized
membership interests, stock appreciation, phantom stock, profit participation,
or similar rights for which Blocker or AcquisitionCo has any Liability, and
there are no issued and outstanding bonds, indentures, notes or other
Indebtedness having the right to vote (or convertible into, exchangeable or
exercisable for, or evidencing the right to subscribe for or acquire securities
that have the right to vote) on any matters on which owners or members of
Blocker or AcquisitionCo may vote. There are no shareholder agreements,
proxies, voting trusts or other agreements or understandings to which Blocker
or AcquisitionCo is a party or by which Blocker or AcquisitionCo is bound
relating to the voting or registration of any equity interests of Blocker or
AcquisitionCo or preemptive rights with respect thereto.


 


(e)                                  Neither
AcquisitionCo nor Blocker has conducted any business or operations since its
date of formation other than actions taken in connection with holding the
Blocker Units, the AcquisitionCo Units, and interests in the Excluded HoldCo
Subsidiaries, and neither AcquisitionCo nor Blocker has any Liabilities, other
than statutory obligations or obligations under their respective Governing
Documents as in effect on the date hereof, accurate and complete copies of
which have been provided or made available to the Buyers.


 


(f)                                    Each
of AcquisitionCo and Blocker has duly filed with the appropriate Tax Authority
all Tax Returns required to be filed (or has timely and properly filed valid
extensions of time with respect to the filing thereof), and each such Tax
Return was complete and accurate in all material respects.


 


(i)                               AcquisitionCo
and Blocker have timely paid all Taxes due with respect to each such entity,
except with respect to Taxes that are being contested in good faith by
appropriate proceedings and for


 


29
















 


which adequate reserves (in
accordance with GAAP) have been maintained. 
All Taxes that AcquisitionCo and Blocker have been required to collect
or withhold have been duly collected or withheld, and have been, to the extent
required when due, duly paid to the proper Tax Authority and each Company has
complied with all material information reporting and record keeping
requirements related to withholding.


 


(ii)           No
deficiencies for Taxes of AcquisitionCo or Blocker have been claimed, proposed
or assessed by any Tax Authority in writing. 
There are no pending or, to the knowledge of HoldCo, threatened audits,
suits, proceedings, actions or claims for or relating to any Liability in
respect of Taxes of AcquisitionCo or Blocker. 
Schedule 4.2(f) of the Sellers Disclosure Schedules contains
a list of all material Tax Returns of AcquisitionCo and Blocker that have been
audited or are currently under audit and describes any deficiencies or other
amounts that have been paid or are currently being contested. There are no
pending claims for refund of any Tax of either AcquisitionCo or Blocker.


 


(iii)          There
are no Liens for Taxes (other than Permitted Exceptions) upon the assets of
AcquisitionCo or Blocker.


 


(iv)          None
of the assets of AcquisitionCo or Blocker (i) is property that is required
to be treated as being owned by any other person or (ii) is treated as
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code or comparable provision of state or local Tax
law.


 


(v)           Neither
AcquisitionCo nor Blocker is a party to or bound by any Tax sharing, Tax
indemnity or Tax allocation agreement or other similar arrangement with any
other party.


 


(vi)          At
all times since its formation, Blocker has been classified for U.S. federal Income
Tax purposes as a corporation.  At all
times since its formation, AcquisitionCo has been classified for U.S. federal
income Tax purposes as an entity disregarded as separate from its owner within
the meaning of Treasury Regulation Section 301.7701-2(c)(2)(i).


 


(vii)         Blocker
and AcquisitionCo have made available to the Buyers accurate and correct copies
of all filed Income Tax Returns and other material Tax Returns of Blocker and
AcquisitionCo for each of the taxable years since their formation.


 


(viii)        No
Tax Authority in a jurisdiction in which any of AcquisitionCo or Blocker does
not file Tax Returns has claimed in writing that 


 


30

















 


AcquisitionCo or Blocker is or
may be required to file Tax Returns in, or is or may be subject to Tax by, that
jurisdiction.


 


(ix)           There
are no outstanding waivers, extensions or comparable consents regarding the
application of the statute of limitations with respect to any Tax or Tax Return
of AcquisitionCo or Blocker.


 


(x)            Neither
AcquisitionCo nor Blocker has distributed the stock of another entity or had
its stock distributed by another entity in a transaction that was purported or
intended to be governed in whole or in part by Sections 355 or 361 of the Code.


 


(xi)           Neither
AcquisitionCo nor Blocker is the subject of or bound by any private letter
ruling, technical advice memorandum or similar ruling, memorandum of agreement
with any Tax Authority.


 


(xii)          Neither
AcquisitionCo nor Blocker will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any (i) change
in method of accounting under Section 481 of the Code (or any
corresponding or similar provision of state, local or foreign tax law) for a
taxable period ending on or prior to the Closing Date; (ii) “closing
agreement”  as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign tax law) executed
on or prior to the Closing Date; (iii) deferred intercompany gain or
excess loss account described in Treasury Regulations under Section 1502
of the Code (or any corresponding or similar provision of state, local or
foreign tax law); (iv) installment sale or open transaction disposition
made on or prior to the Closing Date; or (v) prepaid amount received on or
prior to the Closing Date.


 


(xiii)         Neither
AcquisitionCo nor Blocker (a) has ever been a member of an affiliated
(within the meaning of Section 1504 of the Code), combined or unitary
group of corporations  filing a
consolidated, combined or unitary Tax Return; (b) is a successor to any
other entity for Tax purposes by way of merger, liquidation or other
transaction; (c) is a party to any Tax sharing or indemnification
agreement or arrangement with any person or entity pursuant to which it would
have an obligation with respect to Taxes of another person or entity following
the Closing; or (d) has liability for the Taxes of any person as a transferee
or successor or under Treasury Regulation § 1.1502-6 (or any comparable
provision of state, local or foreign law), by contract or otherwise.


 


(xiv)        Neither
AcquisitionCo nor Blocker has participated or engaged in any transaction that
gave rise to (x) a registration obligation under 


 


31

















 


section 6111 of the Code or the
Treasury Regulations thereunder, (y) a list maintenance obligation under
section 6112 of the Code or the Treasury Regulations thereunder, or (z) a
disclosure obligation as a “reportable transaction” under section 6011 of the
Code and the Treasury Regulations thereunder (or in each of clauses (x), (y) or
(z) any corresponding or similar provision of state, local or foreign Tax law).


 


(xv)         AcquisitionCo
and Blocker are not and have not been within the most recent five years a “United
States real property holding corporation” as defined in Section 897 of the Code.


 


(g)                                 The
Blocker Option Agreement is currently in effect, has continuously been in
effect since its execution January 5, 2006 and correction March 17,
2006, and has not been modified or amended since March 17, 2006. Accurate
and complete copies of the Blocker Option Agreement (i) as executed January 5,
2006 and (ii) as amended March 17, 2006, have been made available to
the Buyers.  The Blocker Option Agreement
is a legally valid and binding agreement of HoldCo and Blocker, enforceable by
each party thereto against the other, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting creditors’ rights and
remedies generally and to general principles of equity. Notwithstanding the
foregoing, no representations or warranties are made with respect to the Tax
effect or consequences of the Blocker Option Agreement (including its
exercise).  HoldCo has the full power and
legal right to sell its rights under the Blocker Option Agreement to Crown One,
and such sale shall be recorded on the books of Blocker upon the surrender of the
Blocker Option Agreement at the Closing, properly endorsed to Crown One, to
Blocker at its principal offices.  Upon
the execution and delivery of the sale agreement evidencing the sale of the
Blocker Option Agreement from HoldCo to Crown One, attached hereto as Exhibit H,
Crown One shall have all of the rights, powers and obligations of HoldCo under
the Blocker Option Agreement.


 


(h)                                 Organization
and Good Standing.  Each of Blocker
and AcquisitionCo (i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) has
all requisite power and authority to own, operate and lease its properties and
to carry on its business as now conducted and (iii) is qualified to
transact business and in good standing in each state or jurisdiction in which the
ownership of its property or conduct of its business requires such
qualification, except where the failure to so qualify or be in good standing
are not reasonably likely to prohibit or materially restrict or delay its
performance of this Agreement.


 


(i)                                     Consents
and Approvals.  Except for HSR
Notifications, the Gaming Approvals and the Negative Pledge Approval, no
notices, reports, registrations or other filings are required to be made by
Blocker or AcquisitionCo with, nor are any consents, approvals or Governmental
Authorizations required to be obtained by Blocker or AcquisitionCo from any
Governmental Entity, in connection with the execution, delivery or performance
of this Agreement or the Escrow Agreement by HoldCo, except for where the
failure to make such notices, reports, registrations or other filings or to
obtain such consents, approval or Governmental Authorizations, individually or
in the aggregate with other such failures, are not reasonably likely to
prohibit or materially restrict or delay its performance of this Agreement.


 


32

















 


(j)                                     No
Litigation.  There are no Actions
pending or, to the knowledge of HoldCo, threatened, against either Blocker or
AcquisitionCo or any of their respective properties or assets, nor is there any
Order outstanding against Blocker or AcquisitionCo or any of their respective
properties or assets, other than Actions or Orders, as applicable, that,
individually or in the aggregate, are not reasonably likely to prohibit or materially
restrict or delay its performance of this Agreement.


 


(k)                                  No
Violations.  The execution and
delivery by HoldCo of this Agreement does not, and the consummation by HoldCo
of the transactions contemplated hereby and thereby will not:


 


(i)                                     violate,
breach, conflict with or contravene any provision of the Governing Documents of
Blocker or AcquisitionCo;


 


(ii)                                  violate,
breach, conflict with, or constitute or result in a default, acceleration,
termination or modification of the terms of, or entitle any party to declare
such a default, or give rise to any right to accelerate, terminate, cancel,
amend or modify the terms of or under, or the rights or obligations of Blocker
or AcquisitionCo under (in each case with or without notice or lapse of time or
both), any provision of  any material
Contract to which Blocker or AcquisitionCo is a party or by which any of its
properties or assets are bound, in each case other than (A) as set forth
on Schedule 4.2(k) of the Sellers Disclosure Schedules or (B) as
would not prohibit or materially restrict or delay its performance of this
Agreement;


 


(iii)                               result
in the creation or imposition of any Liens with respect to any of the Blocker
Units or AcquisitionCo Units, in each case, other than (A) as set forth on
Schedule 4.2(k) of the Sellers Disclosure Schedules, or (B) as
would not prohibit or materially restrict or delay its performance of this
Agreement; or


 


(iv)                              assuming
all notices, reports, registrations, filings, consents, approvals and other
Governmental Authorizations contemplated by Section 4.2(i) having
been made or obtained, as applicable, violate, breach, contravene or conflict
with any Law or Order of any Governmental Entity applicable to Blocker or
AcquisitionCo, other than such violations that would not prevent or materially
delay the consummation of the transactions contemplated hereby.


 


4.3.                              Representations of
Each Seller.  Each Seller, severally
and not jointly, hereby represents and warrants to the Parent and the Buyers as
follows in respect of such Seller:


 


(a)                                  Organization
and Good Standing.  The Seller (i) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and
authority to own, operate and lease its properties and to carry on its business



 


33

















 


as now
conducted and (iii) is qualified to transact business and in good standing in
each state or jurisdiction in which the ownership of its property or conduct of
its business requires such qualification, except for failures to so qualify or
be in good standing that, individually or in the aggregate, are not material to
its ability to perform its obligations hereunder or under the Escrow Agreement
and are not reasonably likely to prohibit or materially restrict or delay its
performance of this Agreement or the Escrow Agreement.


 


(b)                                 Seller
Authority; Enforceability.  The
Seller has the power and authority to execute, deliver, and perform its
obligations under this Agreement and the Escrow Agreement and to consummate the
transactions contemplated hereby and thereby. 
The execution, delivery, and performance of this Agreement and the
Escrow Agreement and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary action on
the part of the Seller, and no other company action on the part of the Seller
or any of its members or shareholders is necessary to authorize the execution,
delivery and performance of this Agreement and the Escrow Agreement and the
consummation of the transactions contemplated hereby and thereby.  This Agreement and the Escrow Agreement, when
duly executed by the other parties hereto and thereto, will constitute legally
valid and binding obligations of such Seller enforceable against it in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally and to general principles of equity.


 


(c)                                  Consents
and Approvals.  Except for HSR
Notifications, the Gaming Approvals and the Negative Pledge Approval, no
notices, reports, registrations or other filings are required to be made by the
Seller with, nor are any consents, approvals or Governmental Authorizations
required to be obtained by the Seller from, any Governmental Entity, in
connection with the execution, delivery or performance by such Seller of this
Agreement or the Escrow Agreement, except where the failure to make such
notices, reports, registrations or other filings, or to obtain such consents,
approvals or Governmental Authorizations, individually or in the aggregate, are
not material to the Seller’s ability to perform its obligations under this
Agreement or the Escrow Agreement and are not reasonably likely to prohibit or
materially restrict or delay the performance by the Seller of this Agreement or
the Escrow Agreement.


 


(d)                                 No
Litigation.  There are no Actions
pending or, to the knowledge of the Seller, threatened, against such Seller or
any of its respective properties or assets, other than Actions that,
individually or in the aggregate, are not material to its ability to perform
its obligations hereunder or under the Escrow Agreement and are not reasonably
likely to prohibit or materially restrict or delay the performance of this
Agreement or the Escrow Agreement. 
Seller is not subject to any Order, other than Orders that, individually
or in the aggregate, are not material to its ability to perform its obligations
hereunder or under the Escrow Agreement and are not reasonably likely to
prohibit or materially restrict or delay the performance by Seller of this
Agreement the Escrow Agreement.


 


(e)                                  No
Violations.  The execution and
delivery of this Agreement and the Escrow Agreement by the Seller does not, and
the consummation by the Seller of the transactions contemplated hereby and
thereby will not:


 


34

















 


(i)                                     violate,
breach, conflict with or contravene any provision of the Governing Documents of
the Seller;


 


(ii)                                  violate,
breach, conflict with, or constitute or result in a default, acceleration,
termination or modification of the terms of, or entitle any party to declare
such a default, or give rise to any right to accelerate, terminate, cancel,
amend or modify the terms of or under, or the rights or obligations of the
Seller under (in each case with or without notice or lapse of time or both),
any provision of  any material Contract
to which the Seller is a party or by which any of its properties or assets are
bound, in each case other than (A) as set forth on Schedule 4.3(e) of
the Sellers Disclosure Schedules and (B) for any such matters that,
individually or in the aggregate, are not material to the ability of the Seller
to perform its material obligations hereunder or under the Escrow Agreement and
are not reasonably likely to prohibit or materially restrict or delay its
performance of this Agreement or the Escrow Agreement;


 


(iii)                               result
in the creation or imposition of any Liens with respect to any of the
Millennium Units or Holdco Units, in each case, other than (A) as set
forth on Schedule 4.3(e) of the Sellers Disclosure Schedules and (B) for
any such matters that, individually or in the aggregate, are not material to
the ability of the Seller to perform its material obligations hereunder or
under the Escrow Agreement and are not reasonably likely to prohibit or
materially restrict or delay its performance of this Agreement or the Escrow
Agreement;


 


(iv)                              assuming
all notices, reports, registrations, filings, consents, approvals and other
Governmental Authorizations contemplated by Section 4.3 (c) having
been made or obtained, as applicable, violate, breach, contravene or conflict
with any Law or Order of any Governmental Entity applicable to the Seller,
other than such violations that, individually or in the aggregate, are not
material to the ability of the Seller to perform its material obligations
hereunder or under the Escrow Agreement and are not reasonably likely to prohibit
or materially restrict or delay its performance of this Agreement or the Escrow
Agreement; or


 


(v)                                 assuming
all notices, reports, registrations, filings, consents, approvals and other
Governmental Authorizations contemplated by Section 4.3(c) having
been made or obtained, as applicable, violate, breach, contravene or conflict
with or result in the cancellation, modification, revocation or suspension of,
any Governmental Authorization required for Seller to lawfully conduct and
operate its business in the manner it currently conducts and operates such
business or to permit it to own, lease, operate and use its assets and
properties in the manner it currently owns, leases, operates and uses


 


35

















 


them, other than (A) any
violations, contraventions or conflicts with, or cancellations, modifications,
revocations or suspensions of any such authorization that are set forth on Schedule
4.3(e) of the Sellers Disclosure Schedules or (B) any violations,
contraventions or conflicts with, or cancellations, modifications, revocations
or suspensions of such Governmental Authorization that, individually or in the
aggregate, are not material to the ability of the Seller to perform its
material obligations hereunder or the Escrow Agreement and are not reasonably
likely to prohibit or materially restrict or delay its performance of this
Agreement or the Escrow Agreement.


 


(f)                                    Brokers
and Finders.  Except for Deutsche
Bank Securities Inc. and Mercanti Securities, LLC whose fees shall be paid by
the Sellers, no agent, broker, investment banker, intermediary, finder, or firm
acting on behalf of the Seller is or will be entitled to any broker’s or finder’s
fee or any other commission or similar fee, directly or indirectly, from such
Seller in connection with this Agreement or the Escrow Agreement or upon
consummation of the transactions contemplated hereby or thereby.


 


ARTICLE 5


 


Representations
and Warranties Regarding the Companies


 


Except as set forth in the corresponding sections of
the Sellers Disclosure Schedules (provided that a listing of an item in one
section of the Sellers Disclosure Schedules shall be deemed to be a listing in
each section of the Sellers Disclosure Schedules to which such item relates
only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to another section), each of the
Sellers and CCR, jointly and severally, hereby represent and warrant to the
Parent and the Buyers as follows. Except for the representations and warranties
in the first sentence of Section 5.1(a), Section 5.1(b),
Section 5.5(a), and Section 5.5(d) (the “Company
Execution Reps”), the making of the following representations and
warranties on the date of this Agreement is not intended and does not create
any liability for the Sellers for any misrepresentation or misstatements on
such date. The making of these representations and warranties on the date of
this Agreement is solely for informational purposes and is not intended and
does not create any liability for the Sellers or CCR for any misrepresentation
or misstatements on such date.


 


5.1.                              Company Organization;
Good Standing; CCR Authority and Enforceability.


 


(a)                                  Each
Company (a) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, (b) has all requisite power
and authority to own, operate and lease its properties and to carry on its
business as now conducted, and (c) is duly qualified or licensed to
transact business and is in good standing in each state or jurisdiction in
which the ownership, operation or leasing of its property or conduct of its
business requires such qualification or license, except where the failure to so
qualify or be licensed would not have a 


 


36

















 


Material
Adverse Effect.  Accurate and complete
copies of all of the organizational documents of each of the Companies have
been provided to the Buyers.


 


(b)                                 CCR
has the power and authority to execute, deliver, and perform its obligations
under this Agreement the Escrow Agreement, and to consummate the transactions
contemplated hereby and thereby.  The
execution, delivery, and performance of this Agreement the Escrow Agreement, and
the consummation of the transactions contemplated hereby and thereby, have been
duly and validly authorized by all necessary action on the part of CCR, and no
other company action on the part of CCR or any of its members or shareholders
is necessary to authorize the execution, delivery and performance of this
Agreement and the Escrow Agreement and the consummation of the transactions
contemplated hereby and thereby.  This
Agreement and the Escrow Agreement, when duly executed by the other parties
hereto and thereto, will constitute legally valid and binding obligations of
CCR enforceable against it in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights and remedies generally and to general principles
of equity.


 


5.2.                              Capitalization.


 


(a)                                  Exhibit A
to this Agreement contains a complete and accurate description of the ownership
structure of the Companies (including the identity and percentage ownership of
each Company and each other member, partner or other owner).  The Companies do not have any other
Subsidiaries or own any stock of, or any equity participation in, any Person,
except as set forth on Exhibit A to this Agreement.  Each Company and each other member, partner
or other owner, as applicable, is the owner of all right, title and interest
(record and beneficial) in and to the issued and outstanding equity interests
of the Companies as set forth on Exhibit A to this Agreement, free
and clear of all Liens, other than Permitted Exceptions.  No Company and no other member, partner or
other owner, as applicable, owns any right, title or interest (record or
beneficial) to any other equity interests of the Companies.  The equity interests of each Company as set
forth on Exhibit A to this Agreement constitute all of the issued
and outstanding equity interests of such Company.  All of the issued and outstanding equity
interests of each Company have been duly authorized and are validly issued,
fully paid (if applicable) and nonassessable (if applicable) and none of them
has been issued in violation of preemptive or similar rights.  There are no declared or accrued but unpaid
dividends or distributions with regard to any issued and outstanding equity
interests of any Company, other than distributions by CCR to the Sellers for
payment of Taxes in accordance with the Governing Documents of CCR.


 


(b)                                 There
are no equity interests in any Company reserved for issuance or subject to
preemptive rights or any outstanding subscriptions, options, warrants, calls,
rights, agreements, obligations, convertible, exercisable or exchangeable
securities, or other commitments, contingent or otherwise, relating to equity
interests in any of the Companies.  There
are no outstanding or authorized membership interests, stock appreciation,
phantom stock, profit participation, or similar rights for which any Company
has any Liability, and there are no issued and outstanding bonds, indentures,
notes or other Indebtedness having the right to vote (or convertible into,
exchangeable or exercisable for, or creating the right to subscribe for or
acquire securities that have the right to vote) on any matters on which owners
or members of any Company may vote. There are no shareholder agreements,
proxies, voting trusts or other agreements or understandings to which any
Company is a party or by which any Company is 


 


37

















 


bound relating
to the voting or registration of any equity interests of a Company or
preemptive rights with respect thereto.


 


5.3.                              No Litigation.  There is no material Action pending or, to
the knowledge of the Sellers, threatened, against any of the Companies or any
of their respective properties, assets or rights, nor is there any material
Order to which any of the Companies or any of their properties, assets or
rights is subject.


 


5.4.                              Consents and Approvals.  Except for (a) the HSR Notification, (b) the
Gaming Approvals and (c) such filings as may be required in connection
with the Taxes described in Section 7.10, no notices, reports,
registrations or other filings are required to be made by any of the Companies
with, nor are any consents, approvals or Governmental Authorizations required
to be obtained by any of the Companies from, any Governmental Entity, in
connection with the execution or delivery of this Agreement or the Escrow
Agreement by the Sellers and the consummation of the transactions contemplated
hereby or thereby, except where the failure to make such notices, reports,
registrations or other filings or to obtain such consents, approvals or
Governmental Authorizations are not material to the ability of CCR to observe
or perform its obligations hereunder or are not reasonably likely to prohibit
or materially restrict or delay the consummation of the transactions
contemplated hereby.


 


5.5.                              No Violations.  The execution and delivery of this Agreement
and the Escrow Agreement by the Sellers and CCR does not, and the consummation
by the Sellers and CCR of the transactions contemplated hereby and thereby will
not:


 


(a)                                  violate,
breach, conflict with or contravene any provision of the Governing Documents of
any Company;


 


(b)                                 violate,
breach, conflict with, or constitute or result in a default, acceleration,
termination or modification of the terms of, or entitle any party to declare
such a default, or give rise to any right to accelerate, terminate, cancel,
amend or modify the material terms of or under, or the material rights or
material obligations of any of the Companies under (in each case with or
without notice or lapse of time or both) or require the consent or approval of
any other contracting Person under, any Material Contract to which any Company
is a party;


 


(c)                                  result
in the creation or imposition of any Liens with respect to any of the assets or
properties of any Company, in each case, other than (i) Permitted
Exceptions and (ii) as set forth on Schedule 5.5(c) of the
Sellers Disclosure Schedules;


 


(d)                                 assuming
all notices, reports, registrations, filings, consents, approvals and other
Governmental Authorizations contemplated by Section 5.4 having been
made or obtained, as applicable, violate, breach, contravene or conflict with
any Law or Order of any Governmental Entity applicable to any Company, other
than such violations that would be immaterial or are not reasonably likely to
prohibit or materially restrict or delay the consummation of the transactions
contemplated hereby or CCR’s ability to perform its material obligations
hereunder; or


 


(e)                                  assuming
all notices, reports, registrations, filings, consents, approvals and other
Governmental Authorizations contemplated by Section 5.4 having been
made or obtained, as applicable, violate, breach, contravene or conflict with
or result in the cancellation, 


 


38

















 


modification,
revocation or suspension of, any Governmental Authorization required for any
Company to lawfully conduct and operate its businesses in the manner it
currently conducts and operates such businesses or to permit it to own, lease,
operate and use its properties and assets materially in the manner it currently
owns, leases, operates and uses them, other than (x) any violations,
contraventions or conflicts with, or cancellations, modifications, revocations
or suspensions of any such Governmental Authorization as set forth on Schedule
5.5(e) of the Sellers Disclosure Schedules and (y) any
violations, contraventions or conflicts with, or cancellations, modifications,
revocations or suspensions of any such Governmental Authorization that are not
reasonably likely to prohibit or materially restrict or delay the consummation
of the transactions contemplated hereby or CCR’s ability to perform its
material obligations hereunder.


 


5.6.                              Material Contracts.  Schedule 5.6 of the Sellers Disclosure
Schedules lists the following Contracts to which any Company is a party (the “Material
Contracts” and, each, a “Material Contract”):


 


(a)                                  any
Contract (other than any Governing Document of such Company) that contains
restrictions with respect to the payment of dividends or distributions in
respect of membership interests or other equity interests of such Company;


 


(b)                                 any
Contract, the performance of which extends over a period of more than one year
from the date hereof or which cannot be terminated by such Company on thirty
(30) days notice or less without penalty, and which by its express terms will
involve expenditures or receipts by such Company (whether actual or
contingent), in excess of $1,000,000 per year;


 


(c)                                  any
Contract that establishes a partnership, joint venture or similar arrangement,
and any Contract related to the construction or development of any material
properties or assets and which by its express terms will involve expenditures
or receipts by any of the Companies (whether actual or contingent) in excess of
$1,000,000;


 


(d)                                 any
Contract under which such Company has created, incurred, assumed or guaranteed
any Indebtedness or any capitalized lease obligation, in excess of $1,000,000
or under which such Company has imposed a material Lien on any of its assets,
tangible or intangible, except for Permitted Exceptions;


 


(e)                                  any
Contract that restrains or limits the ability of such Company to compete in the
Business or to operate in any business equivalent to the Business in any
geographic territory or industry;


 


(f)                                    any
Contract with any Sellers or any of their respective Affiliates or Related
Parties;


 


(g)                                 any
Contract for the employment, compensation, consulting, retirement, severance or
similar arrangement of any current employee or consultant providing for aggregate
annual payments or benefits in excess of $250,000;


 


(h)                                 any
Contract that obligates such Company to purchase, sell, lease or sublease any
real property of such Company, including options, purchase agreements, puts,
calls, rights of first offer, rights of first refusal or similar obligations;


 


39
















 


(i)            any Contract, the
performance of which extends over a period of more than one year, pursuant to
which any other Person operates, leases, controls, manages or holds any
properties or assets of such Company, or pursuant to which such Company is
obligated to operate, lease, control, manage or hold any properties or assets
of any other Person, in each case where the consideration for such operation,
leasing, control, management or holding is in excess of $500,000 per year;


 


(j)            any Contract for
the lease of real or personal property to or from any Person, other than, in
the case of personal property, (i) Contracts in the ordinary course of
business or (ii) Contracts providing for annual payments less than
$500,000;


 


(k)           any written Contract
providing for a license of any material Intellectual Property used by any of
the Companies (other than generally available or off-the shelf Software);


 


(l)            any Contract
containing a most-favored nations, best customer pricing or similar provision,
and any Contract with customers or suppliers for the sharing of fees, the
rebating of charges or similar arrangements; and


 


(m)          any Contract under
which such Company has advanced or loaned any amount to any of its directors,
statutory managers, officers and employees.


 


Accurate and complete copies of all Material Contracts
have been delivered or made available to the Buyers or the Parent. Except as
listed on Schedule 5.6 of the Sellers Disclosure Schedules:  (i) each such Material Contract is
valid, existing and in full force and effect with respect to each Company party
thereto, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and to general principles of equity; and (ii) neither any Company party
thereto, nor, to the knowledge of the Sellers, any other party to such
Contract, is in material breach of or in material default under such Material
Contract and, to the knowledge of any Seller, no event has occurred that with
the lapse of time or the giving of notice or both would constitute a material
breach thereof or a material default thereunder.


 


5.7.          Financial
Information.  Attached to Schedule
5.7 of the Sellers Disclosure Schedules are (a) audited consolidated
balance sheets for the Companies as of December 31, 2006 and 2007 and
audited consolidated statements of operations for the fiscal years ended December 31,
2006, 2007 and 2008 (such financial statements, including the footnotes
contained therein, the “Audited Financial Statements”), and the reports
thereon of Piercy Bowler Taylor & Kern, independent certified public
accountants, and (b) an unaudited consolidated balance sheet for the
Companies as of September 30, 2008 and an unaudited consolidated statement
of operations for the year ended September 30, 2008 (such financial
statements, including the footnotes contained therein, are referred to as the “Interim
Financial Statements”, and, together with the Audited Financial Statements,
the “Financial Statements”).  The
Financial Statements have been prepared in accordance with GAAP consistently
applied throughout the periods covered by each such statement, are consistent
with the books and records of the Companies, and fairly present, in all
material respects, the consolidated financial condition of the Companies as of
the respective dates and the results of operations and cash flows of the
Companies for the respective periods then ended, as applicable.


 


40

















 


5.8.          Liabilities.  The Companies have no Liabilities of any
kind, character or nature whatsoever, contingent or otherwise required by GAAP
to be set forth on a consolidated balance sheet or in the notes thereto, other
than (i) Liabilities set forth or reserved against in the Financial Statements,
(ii) Liabilities which have arisen since the date of the Financial
Statements in the ordinary course of business consistent with past practice, (iii) Liabilities
under the Holdback Agreement, and (iv) Liabilities disclosed on Schedule
5.8 of the Sellers Disclosure Schedules.


 


5.9.          Labor
Matters.


 


(a)           With respect to the
Companies: (i) there are no trade unions, council of trade unions,
employee bargaining agencies or affiliated bargaining agents representing,
purporting to represent or, to the knowledge of the Sellers, attempting to
represent any employees of any of the Companies by way of certification,
interim certification, voluntary recognition, or succession rights, or have
applied or, to the knowledge of the Sellers, threatened to apply, to be
certified as the bargaining agent of any employees of any of the Companies; (ii) to
the knowledge of the Sellers, there has been no such attempt since January 1,
2005, and there are no threatened or pending union organizing activities
involving any employees of any of the Companies; (iii) no Company is a
party to any labor contract or collective bargaining agreement with any labor
union or labor organization with respect to employees of any of the Companies; (iv) no
Company is currently negotiating any labor or collective bargaining agreement
in respect of employees of any of the Companies; (v) no Company has
breached or otherwise failed to comply in any material respect with the
provisions of any collective bargaining or union contract; and (vi) since January 1,
2005, there has not occurred or, to the knowledge of the Sellers, been
threatened, any strike, slowdown, picketing, work stoppage, lockout, concerted
refusal to work overtime, claim of unfair labor practice or other similar labor
activity against any of the Companies that would materially disrupt the conduct
of the Business.


 


(b)           The Companies are in
compliance in all material respects with all Laws respecting employment and
employment practices, including all Laws respecting terms and conditions of
employment, health and safety, wages and hours, immigration, employment
discrimination, disability rights or benefits, equal opportunity, plant
closures and layoffs, affirmation action, workers’ compensation, labor
relations and unemployment insurance, and there are no material Actions,
pending or, to the knowledge of the Sellers, threatened against any Company, by
or on behalf of any current or former employee or any class of the foregoing,
relating to any of the foregoing applicable laws and regulations, or alleging
breach of any express or implied contract of employment, wrongful termination
of employment, or alleging any other discriminatory, wrongful or tortious
conduct in connection with the employment relationship.  From January 1, 2005 to the date of this
Agreement, no Company has received any written notice of the intent of the
Equal Employment Opportunity Commission, the National Labor Relations Board,
the Department of Labor or any other Governmental Entity responsible for the
enforcement of labor or employment laws to conduct an investigation with
respect to any Company, and no such investigation is in progress.


 


(c)           The Companies are
and have been in compliance in all material respects with all notice and other
requirements under the Workers’ Adjustment and Retraining Notification Act (the
“WARN Act”) and any similar foreign, state or local Laws relating to
plant closings and 


 


41

















 


layoffs.  Schedule 5.9(c) of the Sellers
Disclosure Schedules sets forth a true and complete list of the names and sites
of employment or facilities of those employees who suffered an “employment loss”
(as defined in the WARN Act) at any site of employment or facility of any
Company during the ninety (90)-day period prior to the date of this Agreement.


 


(d)           To the knowledge of
the Sellers, the Companies have, since January 1, 2005, properly
classified, under applicable law, each of its employees as employees, and each
of its independent contractors as independent contractors, and have treated
each person classified by it as an employee or independent contractor
consistently with such status.  There is
no proceeding pending or, to the knowledge of the Sellers, threatened against
any Company challenging the classification of any person as an employee or an
independent contractor, including any claim for unpaid benefits, for or on
behalf of, any such person.


 


(e)           To the knowledge of
the Sellers, no employee of any Company is in any material respect in violation
of any term of any employment agreement, nondisclosure agreement, common law
nondisclosure obligation, noncompetition agreement, restrictive covenant or
other obligation to a former employer of any such employee relating (i) to
the right of any such employee to be employed by any Company or (ii) to
the knowledge or use of trade secrets or proprietary information.


 


(f)            Subject to Section 7.1(b),
Schedule 5.9(f) of the Sellers Disclosure Schedules sets forth
bonuses that would be due immediately after the Closing Date to the individuals
listed on it if such individual performed his or her obligations pursuant to
the documents governing such bonuses (the “Stay Bonuses”).


 


5.10.        Employee
Benefit Matters.


 


(a)           “Company Benefit
Plans” means all employee benefit and compensation plans, programs,
agreements and arrangements, including all “employee benefit plans” (within the
meaning of Section 3(3) of ERISA), all employment or consulting
agreements, all retirement, profit sharing, savings, pension, deferred
compensation, change in control and retention plans, all health, medical,
vision, dental, severance, insurance, disability and other employee welfare
plans and all incentive, bonus, stock option or other equity-based
compensation, stock purchase, vacation, fringe benefit and other plans in each
case, whether oral or written, funded or unfunded, or insured or self-insured,
that are maintained, sponsored, contributed to or required to be contributed
to, by any of the Companies or by any ERISA Affiliate of the Companies or to
which any of the Companies or any ERISA Affiliate of any of the Companies has
or may have had any material liability (contingent or otherwise), in each case
for or to any current or former employees, directors, officers or consultants
of any of the Companies.  Schedule
5.10(a) of the Sellers Disclosure Schedule lists all Company Benefit
Plans that currently are maintained, sponsored, contributed to, or required to
be contributed to, by any of the Companies or by any ERISA Affiliate of the
Companies, or in which any of the Companies participates or its future
participation has been announced.


 


(b)           With respect to the
Companies:  (i) no Company or any
ERISA Affiliate of such Company sponsors, maintains or contributes to, or has
at any time sponsored, maintained or contributed to, or has participated in or
its future participation has been announced in, any 


 


42

















 


multi-employer
plan as defined in Section 3(37) of ERISA (a “Multiemployer Plan”)
or any pension plan subject to Title IV of ERISA; (ii) no Company or any
ERISA Affiliate of such Company has withdrawn or partially withdrawn from any
Multiemployer Plan with respect to which there is any outstanding Liability as
of the date of this Agreement; (iii) to the knowledge of the Sellers, no
event has occurred or circumstance exists, including the transactions
contemplated by this Agreement, that presents a risk of the occurrence of any
withdrawal from, or the termination, reorganization, or insolvency of, any
Multiemployer Plan that could result in any Liability of the Companies or the
Buyers to a Multiemployer Plan that would have a Material Adverse Effect; and (iv) no
Company has received notice from any Multiemployer Plan that it is in
reorganization or is insolvent, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any excise Tax, or that
such plan intends to terminate or has terminated.


 


(c)           With respect to each
Company Benefit Plan, the Sellers have made available the Buyers copies of (i) all
plan documents (including all amendments and attachments thereto); (ii) all
related trust agreements, insurance contracts and other funding arrangements
and all amendments thereto, as in effect as of the date hereof; (iii) the
two most recent annual information filings (Form 5500) and annual reports;
(iv) the most recent determination letter or opinion letter from the
Internal Revenue Service; and (v) the most recent summary plan
descriptions, as applicable.


 


(d)           As to each of the Company
Benefit Plans, each of the Companies has complied, in all material respects,
with all applicable Laws in the administration thereof, including the
provisions of ERISA and the Code, and each Company Benefit Plan complies in all
material respects with its terms and all applicable Laws.  All material contributions required to be
made under the terms of each Company Benefit Plan have been timely made or, if
not yet due, have been properly reflected or incorporated by reference in the
Financial Statements.  Each Company
Benefit Plan which is intended to qualify under Section 401(a), Section 401(k),
Section 401(m) or Section 4975(e)(7) of the Code and each
trust established with any Company Benefit Plan which is intended to qualify
under Section 501(a) of the Code has received a favorable
determination letter or opinion letter, as applicable, from the Internal
Revenue Service as to its qualified status, and to the knowledge of the
Sellers, no fact or event has occurred that would reasonably be expected to affect
adversely the qualified status of any such Company Benefit Plan.


 


(e)           There has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975
of the Code) with respect to any Company Benefit Plan, other than a transaction
that is exempt under a statutory or administrative exemption, with respect to
any Company Benefit Plan that is subject to ERISA or the Code that would
reasonably be expected to result in Liability to any of the Companies.  With respect to each Company Benefit Plan,
all Tax, annual reporting and other governmental filings required by ERISA and
the Code have been timely filed with the appropriate Governmental Entity and,
to the knowledge of the Sellers, all notices and disclosures have been timely
provided to participants.


 


(f)            No judicial action, suit, or claim or legal,
administrative or arbitration proceeding, investigation or review has
been brought, or, to the knowledge of the Sellers, is threatened, against or
with respect to any Company Benefit Plan, including any audit or inquiry 


 


43

















 


by the
Internal Revenue Service or the United States Department of Labor (other than
routine benefits claims).


 


(g)           Except as required
by Law, no Company Benefit Plan provides any medical, disability or life
insurance benefits for retirees or any such post-employment benefits to any
Person, except for continuation obligations under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended from time to time, and the
regulations (including the proposed regulations) thereunder (“COBRA”).


 


(h)           Neither the
execution and delivery of this Agreement nor the consummation or performance of
the transactions contemplated hereby (either alone or in conjunction with any
other event, including a termination of employment) will (i) result in any
payment (including any bonus, severance, unemployment compensation, deferred
compensation, forgiveness of Indebtedness or golden parachute payment) becoming
due to any current or former employee, officer, director or consultant under
any Company Benefit Plan; (ii) increase in any benefit otherwise payable
under any Company Benefit Plan; (iii) result in the acceleration or
creation of any rights of any Person to benefits under any Company Benefit Plan
(including the acceleration of the vesting or exercisability of any stock
options or restricted stock or the acceleration or creation of any rights under
any Company Benefit Plan); (iv) result in any obligation to fund any trust
or other arrangement with respect to compensation or benefits under a Company
Benefit Plan; or (v) result in any payment or benefit that will fail to be
deductible under Section 280G of the Code.


 


5.11.        Taxes.


 


(a)           Each Company has
duly filed with the appropriate Tax Authority all Income Tax Returns and all
other material Tax Returns that it was required to file (or has timely and
properly filed valid extensions of time with respect to the filing thereof),
and each such Tax Return was complete and accurate in all material respects.


 


(b)           Each Company has
timely paid all Taxes due and owing by it, except with respect to Taxes that
are being contested in good faith and have been adequately provided for in the
Interim Financial Statements in accordance with GAAP. All Taxes that the
Companies have been required to collect or withhold have been duly collected or
withheld and, to the extent required when due, have been duly paid to the
proper Tax Authority and each Company has complied with all material
information reporting and record keeping requirements related to withholding.


 


(c)           No material
deficiencies for Taxes of the Companies have been claimed, proposed or assessed
by any Tax Authority in writing.  There
are no pending or, to the knowledge of the Sellers and CCR, threatened material
audits, suits, proceedings, actions or claims for or relating to any Liability
in respect of Taxes of the Companies.  Schedule
5.11 of the Sellers Disclosure Schedules contains a list of all material
Tax Returns of the Companies that have been audited or are currently under
audit and describes any deficiencies or other amounts that were paid or are
currently being contested. There are no pending claims for refund of any Tax of
any of the Companies.


 


44

















 


(d)           There are no Liens
for Taxes (other than Permitted Exceptions) upon the assets of the Companies.


 


(e)           At all times since
their formation, each Company has been classified for U.S. federal income Tax
purposes either as a partnership or as an entity disregarded as separate from
its owner within the meaning of Treasury Regulation Section 301.7701-2(c)(2)(i) except
for those Subsidiaries set forth on Schedule 5.11 of the Sellers
Disclosure Schedules hereto, which have been classified as corporations for
such purposes.


 


(f)            Each of the
Companies has made available to the Buyers true and correct copies of the Tax
Returns listed on Schedule 5.11 of the Sellers Disclosure Schedules.


 


(g)           No Tax Authority in
a jurisdiction in which any of the Companies does not file Tax Returns has
claimed in writing that any Company is or may be required to file Tax Returns
in, or is or may be subject to Tax by, that jurisdiction.


 


(h)           There are no
outstanding waivers, extensions or comparable consents regarding the application
of the statute of limitations with respect to any Tax or Tax Return of any
Company.


 


(i)            None of the
Companies has distributed the stock of another entity or had its stock
distributed by another entity in a transaction that was purported or intended
to be governed in whole or in part by Sections 355 or 361 of the Code.


 


(j)            None of the
Companies is the subject of or bound by any private letter ruling, technical
advice memorandum or similar ruling, memorandum or agreement with any Tax
Authority.


 


(k)           None of the
Companies will be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in
method of accounting under Section 481 of the Code (or any corresponding
or similar provision of state, local or foreign tax law) for a taxable period
ending on or prior to the Closing Date; (ii) “closing agreement”  as described
in Section 7121 of the Code (or any corresponding or similar provision of
state, local or foreign tax law) executed on or prior to the Closing Date; (iii) deferred
intercompany gain or excess loss account described in Treasury Regulations
under Section 1502 of the Code (or any corresponding or similar provision
of state, local or foreign tax law); (iv) installment sale or open
transaction disposition made on or prior to the Closing Date; or (v) prepaid
amount received on or prior to the Closing Date.


 


(l)            None of the
Companies (a) has ever been a member of an affiliated (within the meaning
of Section 1504 of the Code), combined or unitary group of
corporations  filing a consolidated,
combined or unitary Tax Return; (b) is a successor to any other entity for
Tax purposes by way of merger, liquidation or other transaction; (c)  is a
party to any Tax sharing or indemnification agreement or arrangement with any
person or entity (other than CCR or any of its subsidiaries) pursuant to which
it would have an obligation with respect to Taxes of another person or entity
following the Closing; or (d) has liability for the Taxes of any person
(other than 


 


45

















 


CCR or any of
its Subsidiaries) as a transferee or successor or under Treasury Regulation
§ 1.1502-6 (or any comparable provision of state, local or foreign law),
by contract or otherwise.


 


(m)          None of Mountain
Laurel Racing, Inc., Washington Trotting Association, Inc., CCR
Pennsylvania Racing, Inc., CCR Pennsylvania Food Service, Inc. or any
other Company that is or was a “C” Corporation for U.S. federal income taxation
purposes (i) was a member of Blocker’s affiliated group within the meaning
of Section 1504(a) of the Code (determined without regard to Section 1504(b) of
the Code) at any time prior to the time CCR acquired, directly or indirectly,
the stock of such corporation, or (ii) has reduced (or been required to
reduce) the adjusted basis of its property under Section 732(f) of
the Code.


 


(n)           None of the
Companies has participated or engaged in any transaction that gave rise to (x) a
registration obligation under section 6111 of the Code or the Treasury
Regulations thereunder, (y) a list maintenance obligation under section
6112 of the Code or the Treasury Regulations thereunder, or (z) a
disclosure obligation as a “reportable transaction” under section 6011 of the
Code and the Treasury Regulations thereunder (or in each of clauses (x), (y) or
(z) any corresponding or similar provision of state, local or foreign Tax
law).


 


(o)           None of the
Companies is or has been within the most recent five years a “United
States real property holding corporation” as defined in Section 897 of the Code.


 


5.12.        Governmental
Authorizations.  The Companies have
obtained and maintain in full force and effect all material Governmental Authorizations
required to substantially conduct the Business of the Companies as it is
presently being conducted, and for the lawful ownership, leasing, use and
operation of their respective properties and assets, in each case, except for
such Governmental Authorizations the failure to have, obtain or maintain are
not material to the ability of CCR to perform its obligations hereunder or are
not reasonably likely to prohibit or materially restrict or delay the
consummation of the transactions contemplated hereby.  There has occurred no material violation of
or default under any such Governmental Authorization.  None of the Sellers or the Companies has
received a currently effective written notice, or has knowledge of any other
notice, indicating that any such Governmental Authorizations will be revoked or
will not be renewed or will only be renewed in a manner that would prohibit or
materially restrict the Companies from conducting their material operations in
the ordinary course of business consistent with past practice.


 


5.13.        Insurance.


 


(a)           Schedule 5.13
of the Sellers Disclosure Schedules lists all material insurance policies of
the Companies that cover the Companies, any of their assets, or any of their
directors, statutory managers or officers (in their capacities as such).  Copies of (i) all policies or insurance
binders with respect to such policies and (ii) a summary of the Companies’
loss experience under such policies or the predecessor policies have been made
available to the Buyers.


 


(b)           No written notice of
cancellation or termination or any other notice or indication of intent to
cancel or not to renew any insurance policy of any Company has been received
with respect to any such policy, and each such policy is legally valid,
binding, 


 


46

















 


enforceable
and in full force and effect.  Each
Company has paid all premiums due, and has otherwise performed all of its
respective material obligations under each such policy as and when due, except
to the extent that the failure to duly pay the premiums or perform such
obligations is not reasonably expected to result in the loss of coverage under
such policies.


 


(c)           During the past five
years, to the knowledge of any Seller, no Company has been denied insurance for
any reason with respect to any insurance policy for which it applied. No
Company is in breach or default under any policy listed on Schedule 5.13,
and to the knowledge of the Sellers, no event has occurred which, with notice
or the lapse of time or both, would constitute such a breach or default or
permit termination, revocation, modification or acceleration, under such
policy; and to the knowledge of any Seller, no Company has received any notice
from the insurer disclaiming coverage or reserving rights with respect to a
particular claim or such policy in general or otherwise indicating that the
insurer is not willing or able to perform its obligations thereunder or
that the insurer disputes or intends to dispute the validity of its obligations
under any such policy.  As of the date
hereof, no policy limits for any Company have been exhausted or materially
reduced.


 


(d)           The
proceeds under each insurance policy for any Company have not been assigned or
mortgaged in favor of a third party, except in connection with the Debt
Facilities.


 


5.14.        Compliance
with Laws.


 


(a)           Except for matters
that are the subject of the representations and warranties contained in Section 5.5,
Section 5.9, Section 5.10, Section 5.11, Section 5.12,
Section 5.15 and Section 5.16, which are controlled by
such Sections without duplication in this Section  5.14, each of
the Companies is in compliance in all material respects with all Laws and
Orders applicable to the Business.


 


(b)           To the knowledge of
the Sellers, none of the Sellers or any Company, nor any of their respective
directors, officers, managers or agents, has made any contribution or gift
using funds of any Company, which contribution or gift is in material violation
of any applicable Law.  None of the
Sellers or any Company, nor, to the knowledge of the Sellers, any of their
respective directors, officers, managers or agents, has (i) made any
bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in money, property or
services, in each case which is in material violation of any applicable Law, or
(ii) established or maintained any unlawful fund or asset of any Company
funds or other properties.


 


5.15.        Real
Property.


 


(a)           As of the date
hereof, the Companies own in fee simple the real properties listed on  Schedule 5.15(a) of the Sellers
Disclosure Schedules (the “Owned Real Property”). With respect to each
Owned Real Property, (i) the Companies have good and marketable title to
such Owned Real Property, free and clear of all Liens, tenancies, or
restrictive covenants, other than Permitted Exceptions, and (ii) there are
no outstanding options or rights of first refusal in favor of any other party
to purchase such Owned Real Property or any portion thereof or interest
therein.  As of the date hereof, none of
the Companies has received notice of any pending, and to 


 


47

















 


the knowledge
of the Companies there is no threatened, condemnation proceeding with respect
to any of the Owned Real Properties.


 


(b)           Schedule 5.15(b) of
the Sellers Disclosure Schedules lists all leases, subleases and other material
agreements, including all amendments, assignments and modifications thereto,
under which the Companies use or occupy or have the right to use or occupy any
real property (the “Real Property Leases”). Each Real Property Lease is
valid, binding and in full force and effect and all rent and other sums and
charges payable by the Companies as tenants thereunder are current and, to the
knowledge of the Sellers, no termination event (other than expirations in the
ordinary course) or condition or uncured default (or event which with notice or
lapse of time, or both, would constitute a default) of a material nature on the
part of the applicable Company or the landlord thereunder, exists under any
Real Property Lease. The Companies have a good and valid leasehold interest in
each parcel of real property which is subject to a Real Property Lease free and
clear of all Liens, subtenancies, or restrictive covenants,  other than Permitted Exceptions or those
imposed by the applicable Real Property Leases. As of the date hereof, none of
the Companies have received notice of any pending, and to the knowledge of the
Companies there is no threatened, condemnation proceedings with respect to any
property leased pursuant to any of the Real Property Leases.


 


(c)           Intentionally
omitted.


 


(d)           Intentionally
omitted.


 


(e)           Except as set forth
on Schedule 5.15(d) of the Sellers Disclosure Schedules and the
Permitted Exceptions:


 


(i)         no parties other than the
Companies have a right to occupy, use or own any Owned Real Property or real
property subject to a Real Property Lease;


 


(ii)        the Owned Real Property
and real property subject to a Real Property Lease is used only for the current
operation of the Business of the Companies (subject to the Permitted
Exceptions), and includes all real property necessary for the business of the
Companies as currently conducted;


 


(iii)       all Owned Real Property and
all real property subject to a Real Property Lease of the Companies is, in all
material respects, in good operating condition and repair and regularly
maintained in accordance with the Companies’ past practice and consistent with
the standards that would be applied by a reasonable prudent owner of similar
properties, and, to the Sellers’ knowledge, there is no structural, electrical,
mechanical, plumbing, air conditioning or heating defect or other defect in the
building systems (other than any defects that will be repaired or replaced in
the ordinary course of business with normal or routine capital expenditures for
maintenance) in the improvements located on the Owned Real 


 


48

















 


Property or real property
subject to a Real Property Lease except for defects which, individually or in
the aggregate, would not have a material adverse effect (A) on the Owned
Real Property or real property subject to a Real Property Lease or (B) on
the value, use or occupancy of the real property or improvements;


 


(iv)          the Owned Real Property
and to the Sellers’ knowledge, real property subject to a Real Property Lease,
is in compliance in all material respects with all applicable Laws; and


 


(v)           the Companies have not
received any notice of material violation of any Law governing the use or
occupancy of the Owned Real Property or real property subject to a Real
Property Lease.


 


5.16.        Environmental
Matters.


 


(a)           The Companies are in
material compliance with all applicable Environmental Laws.  To the knowledge of the Sellers, the
Companies have complied and are in material compliance with all Environmental
Permits required to conduct the Business as it is presently being conducted and
has been conducted during the Companies’ ownership or operation of the
Business, and to the knowledge of the Sellers, the Companies have not received
any notice that remains unresolved that: (i) any such existing
Environmental Permits will be revoked; or (ii) any pending application for
any new Environmental Permit or renewal of any existing Environmental Permits
will be denied.


 


(b)           The Companies have
not received any written notice, or to the knowledge of Sellers any other
notice, that remains unresolved of any actual, alleged or potential material
noncompliance with, Liabilities under, or claimed material violation of, any
Environmental Laws and, to the knowledge of the Sellers, there is no event or
condition which would reasonably be expected to cause material noncompliance
with, Liabilities under, or material violation of, any Environmental Laws.


 


(c)           There are no
underground storage tanks, surface impoundment or other disposal area, or any
waste management unit dedicated to the disposal, treatment or long-term
(greater than ninety (90) days) storage of Hazardous Materials located at or on
the Owned Real Property or, to the knowledge of the Sellers, property subject
to the Real Property Leases.  To the
knowledge of the Sellers, there has been no spill, release, discharge, disposal
or arrangement for disposal of any Hazardous Materials on or under any Owned
Real Property or property subject to the Real Property Leases or under any
other property owned, leased or occupied by any of the Companies or their
predecessors in violation of any Environmental Law or Environmental Permit, or
otherwise requiring remedial action under any Environmental Law or
Environmental Permit.


 


(d)           To the knowledge of
the Sellers, there is no site to which the Companies have transported or
arranged for the transport of any Hazardous Materials which are or have
received written notice to be, the subject of any Environmental Claim.


 


(e)           None of the
Companies is currently subject to any Order relating to, compliance with,
Liability under, any Environmental Law, Environmental Permit, or the


 


49
















 


investigation,
sampling, monitoring, treatment, remediation, removal or cleanup of any
Hazardous Materials.


 


(f)            Copies of all
material or otherwise relevant (with respect to current known matters,
facilities or operations) non-privileged environmental site assessment reports,
audits or compliance reports, or other written reports relating to the
environmental condition of any current or former operations of any Company, and
which are in the possession or control of any of the Sellers or any Company,
have been made available to the Buyers and with respect to former facilities or
operations of any Company, to the extent known to the Sellers or CCR to exist.


 


(g)           There is no
Environmental Claim pending or threatened against any of the Companies or
against any person or entity whose liability for any Environmental Claim any of
the Companies has retained or assumed either contractually or by operation of
law.


 


(h)           Except as set forth
in Schedule 5.16(d), there is no asbestos contained in or forming part
of any building, building component, structure or office space owned, leased,
operated or used by the Companies, and no polychlorinated biphenyls (PCBs) or
PCB-containing items are used or stored by the Companies, or to the knowledge
of the Sellers or CCR by any other Person, at any property owned, leased,
operated or used by the Companies.


 


(i)            Neither the Sellers
nor any of the Companies are required by virtue of the transactions set forth
herein and contemplated hereby, or as a condition to the effectiveness of any
transactions contemplated hereby, (1) to perform a site assessment for
Hazardous Materials, (2) to remove or remediate Hazardous Materials, (3) to
receive approval from any Governmental Entity, other than with respect to the
transfer of any Governmental Authorization related to the normal operation of
the Business, or (4) to record or deliver to any Person any disclosure
document or statement pertaining to environmental matters.


 


5.17.        Intellectual Property.


 


(a)           Each Company owns or
has a valid license or other right to use, free and clear of all material Liens
(subject to Permitted Exceptions), all of the Intellectual Property used by it
in the conduct of the Business as presently conducted.


 


(b)           Schedule 5.17(b) of
the Sellers Disclosure Schedules sets forth, for all Intellectual Property
owned by each of the Companies, a complete and accurate list of all U.S. and
foreign: (i) patents and patent applications; (ii) trademark and
service mark registrations (including domain name registrations) and trademark
and service mark applications; and (iii) copyright registrations and
copyright applications.


 


(c)           To the knowledge of
the Sellers, all rights to Intellectual Property owned by or used by the
Companies are valid and subsisting.


 


(d)           To the knowledge of the
Sellers, the conduct of the Business does not infringe upon or violate any
Intellectual Property right owned or controlled by any third party in any
material manner.  No Actions are pending
and no written demand or notice has been received by any Company or the Sellers
alleging any such infringement and, to the knowledge of the Sellers, no such
claim has been verbally threatened.


 


50

















 


(e)           No Action by the
Companies is pending alleging infringement of any Intellectual Property owned
by the Companies and to the knowledge of the Sellers and the Companies, no
third party is infringing any of the Intellectual Property owned by the
Companies.


 


(f)            The Companies are
in compliance in all material respects with the 
website privacy policy and other written privacy policies of the
Companies.


 


5.18.        Absence of Certain Changes.  Since the date that is six (6) months
prior to the date of receipt of the Conditional Exercise Notice through the
date of delivery of the Supplemental Disclosure Schedules in accordance with Section 7.5,
(i) there has not occurred any Effect that would reasonably be expected to
have a Material Adverse Effect, and (ii) no Company has taken any of the
actions specified in clause (a), (c), (d), (f), (g), (h), (i), (k), (l), (n),
(o), (p) or (t) of Section 7.1, or authorized or agreed
to take any of the actions specified in the foregoing clauses.


 


5.19.        Brokers and Finders.  No agent, broker, investment banker,
intermediary, finder or firm acting on behalf of the Companies will be entitled
to any broker’s or finder’s fee or any other commission or similar fee,
directly or indirectly, from any of the Companies or in connection with the
execution of this Agreement or the Escrow Agreement or upon consummation of the
transactions contemplated hereby or thereby except as set forth in Section 4.2(f).


 


5.20.        Solvency. 
The Companies are not in the hands of a receiver and have not committed
any act of bankruptcy or insolvency or any acts which are reasonably likely to
result in bankruptcy or insolvency.


 


5.21.        Related Party Transactions.


 


(a)           There is no
Indebtedness between any Company, on the one hand, and any Seller, any
Affiliate of any Seller, or any Related Party, on the other hand (other than
solely with another Company).


 


(b)           No Seller, no
Affiliate of any Seller, and no Related Party owns, in whole or in part, or
provides or causes to be provided to any Company, any assets, services or
facilities of any Company (other than solely from another Company).


 


(c)           No Company provides
or causes to be provided any assets, services, or facilities to any Seller, to
any Affiliate of any Seller, or to any Related Party (other than solely to
another Company).


 


(d)           No Company
beneficially owns, directly or indirectly, any investment in or issued by any
Seller, any Affiliate of any Seller, or any Related Party (other than solely in
another Company).


 


(e)           No Company made any
payment to any Seller or its Affiliates or any Related Party since the date of
the Interim Financial Statements (other than pursuant to existing contractual
or tax sharing arrangements disclosed on Schedule 5.21 of the Sellers
Disclosure Schedule, Real Property Leases, or compensation to employees of the
Companies).


 


51

















 


 


Such transactions
described in each of (a) through (e) collectively and with regard to
the parentheticals contained therein or exceptions set forth on the Sellers
Disclosure Schedules, the “Related Party Transactions”.


 


5.22.        Personal
Property.  The Companies have good
and valid title to, or an adequate leasehold interest in, or other legal right
to, all material tangible Personal Property necessary to conduct its Business
as presently conducted free and clear of all Liens, other than Permitted
Exceptions. For the purposes of this Section 5.22, “Personal
Property” means all tangible assets, including furniture, fixtures and
equipment owned or leased by any of the Companies on the date of this
Agreement.


 


5.23.        No
Other Representations or Warranties. 
Except for the representations and warranties made by the Sellers in
this Article 5, neither the Sellers nor any other person makes any
representation or warranty with respect to the Companies or their respective
business, operations, assets, liabilities, condition (financial or otherwise)
or prospects, notwithstanding the delivery or disclosure to the Parent, the
Buyers or any of their Affiliates or Representatives of any documentation,
forecasts or other information with respect to any one or more of the
foregoing.  Specifically, without
limitation, the Sellers make no representation or warranty with respect to any
projection, estimates or budgets delivered to or made available to the Parent,
the Buyers or their Representatives of future revenues, future results of
operations (or any component thereof), future cash flows or future financial
condition (or any component thereof) of the Companies.


 


ARTICLE 6


 


Representations
and Warranties of the Buyers and the Parent


 


Each of the Buyers and the Parent, jointly and
severally, hereby represent and warrant to each Seller as follows:


 


6.1.          Buyer
Organization and Good Standing.  Each
of the Buyers and the Parent (a) is a limited liability company or
corporation, as applicable, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization (except where
such concepts are not applicable), (b) has all requisite power and
authority to own, operate and lease its properties and assets and to carry on
its business as now conducted and (c) is duly qualified to transact
business and in good standing in each state or jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except for failures to so qualify or be in good standing that,
individually or in the aggregate, are not material to its ability to perform
its obligations hereunder and are not reasonably likely to prohibit or
materially restrict or delay the performance of this Agreement by either of the
Buyers or the Parent.


 


6.2.          Buyer
Authority; Enforceability.  Each of
the Buyers and the Parent has the requisite power and authority to execute,
deliver and perform their obligations under this Agreement and the Escrow
Agreement, and to consummate the transactions contemplated hereby and
thereby.  The execution, delivery and
performance of this Agreement and the Escrow Agreement and the consummation of
the transactions contemplated hereby and thereby have 


 


52

















 


been duly and validly
authorized by all necessary action on the part of the Buyers or the Parent, as
applicable.  This Agreement and the
Escrow Agreement, when executed by the other parties hereto and thereto, will
constitute legally valid and binding obligations of the Buyers or the Parent,
as applicable, enforceable against it in accordance with their terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights and remedies generally and to general
principles of equity.


 


6.3.          Consents
and Approvals.  Except for (a) the
HSR Notification, (b) the Gaming Approvals, and (c) such filings as
may be required in connection with the Taxes described in Section 7.10,  no notices, reports, registrations or other filings are
required to be made by the Buyers or the Parent with, nor are any consents,
approvals or authorizations required to be obtained by the Buyers or the Parent
from, any Governmental Entity in connection with the execution, delivery and
performance of this Agreement or, at the time of their execution, the Escrow
Agreement, by the Buyers or the Parent, in each case except for those the
failure of which to make or obtain, individually or in the aggregate, are not
material to its ability to perform the Buyers’ or the Parent’s obligations
hereunder and are not reasonably likely to prohibit or materially restrict or
delay the performance of this Agreement by either of the Buyers or the Parent.


 


6.4.          No
Violations.  The execution and
delivery of this Agreement and the Escrow Agreement by the Parent or any Buyer
do not, and the consummation by the Parent or any Buyer of the transactions
contemplated hereby or thereby will not, conflict with or result in a breach of
or constitute a default (with or without notice or lapse of time or both) under
(a) any provision of the Governing Documents of the Buyers or the Parent, (b) any
agreement, instrument, permit, franchise, license, judgment or order,
applicable to the Buyers or the Parent or its properties or assets, other than
such conflicts, violations, defaults, terminations, cancellations or
accelerations which, individually or in the aggregate, are not material to its
ability to perform its obligations hereunder and are not reasonably likely to
prohibit or materially restrict or delay the performance of this Agreement by
either of the Buyers or the Parent.


 


6.5.          Funds
Available.  The Buyers or the Parent
will have available at the Closing, all the funds necessary to pay the Purchase
Price to the Sellers. The Buyers’ ability to consummate the transactions
contemplated hereby is not contingent upon their or the Parent’s ability to
obtain financing.


 


6.6.          Brokers
and Finders.  Neither the Buyers nor
the Parent has retained any agent, broker, investment banker, intermediary,
finder, or firm acting on behalf of the Buyers or the Parent in connection with
this Agreement or the transactions contemplated hereby.  The Buyers and the Parent have not incurred,
and shall not incur, directly or indirectly, any liability for any broker’s or
finder’s fees or any other commission or similar fee in connection with this
Agreement or any transaction contemplated hereby.


 


6.7.          Securities
Act.  The Buyers are acquiring the
Millennium Units and the HoldCo Units, as applicable, for their own account and
not with a view to their distribution within the meaning of Section 2(11)
of the Securities Act of 1933, as amended (the “Securities Act”), in any
manner that would be in violation of the Securities Act.  Neither of the Buyers has, directly or
indirectly, offered the Millennium Units, the HoldCo Units or the CCR Units to 


 


53

















 


anyone or solicited any
offer to buy the Millennium Units, the HoldCo Units or the CCR Units from
anyone, so as to bring the offer and sale of the Millennium Units, the HoldCo
Units or the CCR Units within the registration requirements of the Securities
Act.  Neither of the Buyers will sell,
convey, transfer or offer for sale any of the Millennium Units, the HoldCo Units
or the CCR Units except upon compliance with the Securities Act and any
applicable state securities or “blue sky” laws or pursuant to any exemption
therefrom.


 


6.8.          No
Litigation.  As of the date hereof,
there are no claims, actions or proceedings pending or, to the knowledge of the
Buyers or the Parent, threatened, against any of the Buyers or any of its
assets, other than claims, actions or proceedings that, individually or in the
aggregate, are not material to its ability to perform its obligations hereunder
and are not reasonably likely to prohibit or materially restrict or delay the
performance of this Agreement by the Buyers. 
Neither any Buyer nor the Parent nor any of their respective
Subsidiaries or Affiliates is a party to or subject to the provisions of any
Order of any Governmental Entity including any Gaming Authority, which
individually or in the aggregate would reasonably be expected to prohibit or
materially restrict or delay the performance of this Agreement by the Buyers or
the Parent.


 


6.9.          Intentionally
Omitted.


 


6.10.        Solvency.  Neither any Buyer nor the Parent is entering
into the transactions contemplated by this Agreement with the actual intent to
hinder, delay or defraud either present or future creditors of the Companies.  Assuming that the representations and
warranties of the Sellers contained in this Agreement are true and correct in
all material respects, at and immediately after the Closing, and after giving
effect the transactions contemplated by this Agreement, the Companies will be
solvent (in that both the fair value of its assets will not be less than the
sum of its debts and that the present fair saleable value of its assets will
not be less than the amount required to pay its probable liabilities or its
debts as they become absolute and matured); (b) will have adequate capital
and liquidity with which to engage in its business; and (c) will not have
incurred and does not plan to incur debts beyond its ability to pay as they
become absolute and matured.


 


6.11.        No
Other Representations or Warranties. 
Except for the representations and warranties expressly made by the
Buyers and the Parent in this Article 6 or in the Escrow Agreement,
neither the Parent nor the Buyers make any other representation or warranty in
connection with the transactions contemplated hereby.  Each of the Buyers and the Parent acknowledge
that the Sellers, the Companies and their respective Affiliates and
Representatives have not made and do not make any representations or warranties
as to any matter whatsoever except as expressly set forth in this Agreement and
specifically (but without limiting the generality of the foregoing) that the
Sellers, the Companies and their respective Affiliates and Representatives have
not made and do not make any representations with respect to (i) any
projections, estimates or budgets delivered to or made available to the Parent
or the Buyers (or their respective Affiliates or Representatives) of future
revenues, results of operations (or any components thereof), cash flows or
financial condition (or any components thereof) of the Companies or (ii) the
future business and operations of the Companies.  Except for the representations and warranties
expressly made by the Sellers in Article 4, Article 5
or in the Escrow Agreement, none of the Sellers or any Affiliates or any of
their Representatives will have 


 


54

















 


or be subject to any
liability to the Buyers, the Parent or any other person resulting from the
distribution to the Buyers, the Parent or their Representatives or the Buyers’
use of, any such information, including any memoranda or materials distributed
on behalf of the Sellers relating to the Companies or other publications or
data room information provided to the Buyers, the Parent or their
Representatives, or any other document or information in any form provided to
the Buyers, the Parent or their representatives in connection with the sale of
the Companies and the transactions contemplated hereby.


 


ARTICLE 7


 


Covenants
of the Parties


 


7.1.          Conduct of the Companies.  Except for matters (x) set forth on Schedule
7.1 of the Sellers Disclosure Schedules or as otherwise specifically
provided in this Agreement, or (y) consented to in writing by the Buyers
(which consent shall not be unreasonably withheld, conditioned or delayed),
from the Exercise Date until the Closing Date, each of the Sellers and CCR
shall, and shall cause each of the other Companies to, conduct business in the
ordinary course consistent with past practice, make capital expenditures  consistent with past practice, and use all
commercially reasonable efforts to maintain and preserve intact their business
organizations, including the services of their key employees on terms and
conditions substantially comparable to those currently in effect and the
goodwill of any Governmental Authorities, customers, distributors, suppliers
and other Persons with which the Companies have material business
relationships.  Without limiting the
generality of the foregoing, and except for matters set forth on Schedule
7.1 of the Sellers Disclosure Schedules, or as otherwise specifically
provided in this Agreement, without the prior written consent of the Buyers
(which consent shall not be unreasonably withheld, conditioned or delayed),
from the Exercise Date until the Closing Date, each of the Sellers and CCR
shall not, and shall not permit any of the other Companies to:


 


(a)           propose or adopt any
change in the Governing Documents of the Companies, other than in the Governing
Documents of the Excluded HoldCo Subsidiaries;


 


(b)           approve, authorize,
adopt, enter into, announce or communicate to employees any new, modified,
amended or supplemental benefit plan or any employment agreement with any
executive level employee, or grant any increase in wages, salary, bonus or
other compensation remuneration or benefits, except (i) as required by
applicable Law, (ii) as required by the terms of any existing benefit plan
or employment agreement, (iii) in connection with the periodic performance
reviews or routine promotions of employees or reviews of appropriate salary
levels for a job classification in the ordinary course of business consistent
with past practices and policies of the Companies, (iv) annual bonuses and
salary increases consistent with past practice, (v) signing bonuses not to
exceed $50,000 individually, (vi) entry into agreements with employees for
the Stay Bonuses provided the amount of the aggregate of all Stay Bonuses does
not exceed the Stay Bonus Payoff Amount, (vii) annual renewals of existing
health care plans so long as the renewal is in the ordinary course of business,
or (viii) pursuant to any collective bargaining agreement entered into in
accordance with clause (j) below;


 


(c)           sell, lease or
otherwise dispose of any material assets, including by merger, consolidation,
asset sale or other business combination, other than (i) assets of the


 


55

















 


Excluded
HoldCo Subsidiaries and assets of the Excluded Opportunities, or (ii) sales
of equipment and other non-current assets in an amount not to exceed $250,000
in the ordinary course of business;


 


(d)           redeem, repurchase,
defease, cancel or otherwise acquire any Indebtedness of any Company (except
for letters of credit and surety bonds required in the course of business), or
commit to do any of the foregoing (other than at stated maturity and any
required amortization payments and mandatory prepayments, in each case, in
accordance with the terms of the instrument governing such Indebtedness as in
effect on the date hereof or as modified with the prior written consent of the
Buyers), provided that, notwithstanding the
above, the Companies may incur, repay, prepay, amend or modify any Indebtedness
as set forth on Schedule 5.6 of the Sellers Disclosure Schedules;


 


(e)           incur, create,
assume or otherwise become liable for any Indebtedness (including the issuance
of any debt security) or assume, guarantee or endorse, enter into any “keep
well” arrangement or otherwise become responsible for, whether directly,
contingently or otherwise, the obligations of any other Person, provided that,
notwithstanding the above, the Companies may incur, repay, prepay, amend or
modify any Indebtedness as set forth on Schedule 5.6 of the Sellers
Disclosure Schedules;


 


(f)            fail to pay all of
the payables of the Companies and collect all of the receivables of the
Companies in the ordinary course of business consistent with past practice;


 


(g)           make any
acquisitions of any equity interests, business or assets of any other Person,
or make any loans, advances or capital contributions to, or investments in, any
other Person, with an aggregate value in excess of $500,000 after the date
hereof, except (i) loans, advances, capital contributions or investments
solely among the Companies or (ii) with respect to the Excluded
Opportunities;


 


(h)           authorize any
capital expenditures in excess of $5,000,000 except for (i) expenditures
made in response to any emergency, or (ii) as set forth on Schedule 7.1
of the Sellers Disclosure Schedule;


 


(i)            pledge or otherwise
encumber any membership interests, shares of capital stock, or any other debt,
ownership or equity interests or securities of any of the Companies, or create
or assume any Lien thereupon;


 


(j)            enter into any
collective bargaining agreement, the term (including any renewal term) of which
extends beyond December 31, 2010, or which does not provide for employment
terms and conditions that are the same in all material respects over the entire
term of such collective bargaining agreement;


 


(k)           mortgage, pledge or
otherwise encumber any of the Companies’ assets, tangible or intangible, having
a value in excess of $5,000,000 or create or assume any Lien thereupon (other
than Permitted Exceptions), in each case, which are not prepayable or able to
be released without premium or penalty on or before the Closing Date, except in
connection with Indebtedness (including facilities providing for Indebtedness)
which is permitted by Section 7.1(d) or Section 7.1(e);


 


56

















 


(l)            (i) split,
combine or reclassify or otherwise change or exchange any securities or equity
interests of the Companies or amend the terms of any securities or equity
interests of the Companies, (ii) declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of securities or equity interests of the Companies other
than (A) a dividend or distribution by a wholly owned Subsidiary of a
Company to such Company or (B) a Tax Amount to a Tax Recipient (provided,
that, for the avoidance of doubt, any amounts under clause (B) to be paid
on or before the Closing Date shall be excluded from the calculation of Company
Cash), or (iii) redeem, repurchase or otherwise acquire or offer to
redeem, repurchase, or otherwise acquire, any securities or equity interests of
the Companies;


 


(m)          enter into, modify or
amend any Material Contract, except in the ordinary course of business
consistent with past practice, Material Contracts that (i) do not provide
for annual expenditures by any of the Companies in excess of $1,000,000, (ii) are
terminable by the Company party thereto on thirty (30) days notice or less or (iii) are
related to the Excluded Opportunities; provided, that, for the purpose of
clarity, the parties acknowledge and agree that renewals of Material Contracts
on substantially the same terms shall be deemed to be in the ordinary course of
business;


 


(n)           enter into, modify
or amend any Related Party Transaction;


 


(o)           close or shutdown
any casino, hotel, racetrack or other facility of the Companies except for such
closure or shutdowns which are (i) required by action, order, writ,
injunction, judgment or decree or otherwise required by Law; or (ii) due
to acts of God or other force majeure events;


 


(p)           fail to maintain,
repair and keep in good operating condition (and commit appropriate capital
expenditures for such purposes) all casino, hotel, racetrack and other
facilities of the Companies in the ordinary course of business consistent with
past practice;


 


(q)           other than in the
ordinary course of business consistent with past practice and with respect to
the litigation set forth in Schedule 7.1(o) of the Sellers
Disclosure Schedules, settle or compromise any litigation, or release, dismiss
or otherwise dispose of any claim or arbitration other than settlements or
compromises of litigation, claims or arbitration, that involve the payment of
monetary damages not in excess of $1,000,000 individually or $5,000,000 in the
aggregate by the Companies and do not involve any material injunctive or other
non-monetary relief or impose material restrictions on the business or
operations of the Companies;


 


(r)            write up or write
down the value of any asset or make any material change in financial accounting
methods or material method of Tax accounting, principles or practices
materially affecting the reported consolidated assets, liabilities or results
of operations of the Companies, except insofar as may have been required by a
change in or interpretation of GAAP or Law;


 


(s)           (i) make, amend
or revoke any material Tax election, (ii) settle or compromise any
material Tax liability, claim or assessment, or agree to any adjustment of any
material Tax attribute, (iii) file any amended material Tax Return, (iv) enter
into any material 


 


57

















 


“closing
agreement” within the meaning of Section 7121 of the Code (or any material
comparable agreement under state, local or foreign law), (v) surrender any
right to claim a material Tax refund, (vi) consent to waive any statute of
limitations with respect to material Taxes;


 


(t)            adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of any of the Companies
or approve, authorize or enter into any agreement or understanding, or letter
of intent or agreement in principle with respect thereto, other than with
respect to the Excluded HoldCo Subsidiaries;


 


(u)           fail to exercise
commercially reasonable efforts to keep in force insurance policies or
replacement or revised provisions providing insurance coverage with respect to
any casinos and any related assets and
any other material assets, operations and activities (including construction
activities) of the Companies as is currently in effect, other than immaterial
variations in policies in the ordinary course consistent with past practice; or


 


(v)           fail to keep and
maintain at least such insurance as may be required by the Debt Facilities; or


 


(w)          authorize, agree or
commit to do any of the foregoing.


 


7.2.          Conduct of Blocker and AcquisitionCo.


Except for
matters (x) set forth on Schedule 7.2 of the Sellers Disclosure
Schedules or as otherwise specifically provided in this Agreement, or (y) consented
to in writing by the Buyers (which consent shall not be unreasonably withheld,
conditioned or delayed), from the Exercise Date until the Closing Date, HoldCo
shall not cause, authorize or agree to cause Blocker or AcquisitionCo to take
any actions or incur any Liabilities that would make the representations and
warranties set forth in Section 4.2(e) to become untrue or
incorrect.


 


7.3.          No Control of Other Party’s Business.  Nothing contained in this Agreement is
intended to give the Parent or any Buyer, directly or indirectly, the right to
control or direct the operations of the Companies or the Excluded HoldCo
Subsidiaries prior to the Closing Date, and nothing contained in this Agreement
is intended to give CCR or the Sellers, directly or indirectly, the right to
control or direct any Buyer’s or its Subsidiaries’ operations in each case, in
a manner prohibited by applicable Law (including Gaming Laws and antitrust
Laws).


 


7.4.          Reasonable Best Efforts.


 


(a)           Subject to the terms
of this Agreement and applicable Law (including Gaming Laws and antitrust
Laws), following the Exercise Date, each party will use its reasonable best
efforts to take, or cause to be taken, all appropriate actions, to file, or
cause to be filed, all documents and to do, or cause to be done, all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement, including preparing and filing as promptly as reasonably
practicable all documentation to effect all Governmental Authorizations, including
all necessary filings, consents, waivers, approvals, Authorizations, permits or
orders from all Governmental Entities (including Gaming Authorities) or other
Persons, including any licenses, permits, approvals, authorizations,
registrations, findings of suitability, franchises, entitlements, waivers and
exemptions issued by any Gaming Authority required to permit the 


 


58

















 


parties hereto
to consummate the transactions contemplated by this Agreement or necessary to
permit the Buyers to own and operate the Companies (collectively, “Gaming
Approvals”), provided, however, that in no event shall the Companies be
required to pay, prior to the Closing, any fee, penalty or other consideration
to obtain any consent, approval or waiver required for the consummation of the
transactions contemplated by this Agreement other than de minimis amounts.  In furtherance and not in limitation of the
foregoing, each party hereto agrees to make an appropriate filing, if required,
of any HSR Notification with respect to the transactions contemplated by this
Agreement within one (1) Business Day following the Exercise Date and to
supply as promptly as reasonable practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and use its
reasonable best efforts to take or cause to be taken all other actions
necessary, proper or advisable consistent with this Section 7.4 to
cause the expiration or termination of the applicable waiting periods, or
receipt of required authorizations, as applicable, under the HSR Act.  The filing fees with respect to the HSR
filings shall be borne 100% by the Buyers. 
Without limiting the foregoing, the parties shall request and shall use
their respective reasonable best efforts to obtain early termination of the
waiting period under the HSR Act as promptly as reasonably practicable.


 


(b)           Following the
Effective Date, each of the Parent and the Buyers, on the one hand, and the
Sellers and CCR, on the other hand, shall, in connection with the efforts
referenced in Section 7.4(a) to obtain all requisite approvals
and authorizations for the transactions contemplated by this Agreement, use its
reasonable best efforts to (i) cooperate in all respects with each other
in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party; (ii) keep the other party reasonably informed of any communication
received by such party from, or given by such party to, the Federal Trade
Commission (the “FTC”), the Antitrust Division of the Department of
Justice (the “DOJ”), or any other Governmental Entity and of any
communication received or given in connection with any proceeding by a private
party, in each case regarding any of the transactions contemplated hereby; and (iii) permit
the other party to review any communication given by it to, and consult with
each other in advance of any meeting or conference with, the FTC, the DOJ, or
any other Governmental Entity or, in connection with any proceeding by a
private party, with any other person, and to the extent permitted by the FTC,
the DOJ, or such other applicable Governmental Entity or other person, give the
other party the opportunity to attend and participate in such meetings and
conferences.


 


(c)           In furtherance and
not in limitation of the covenants of the parties contained in Section 7.4(a) and
Section 7.4(b), if any objections are asserted with respect to the
transactions contemplated hereby under any Law or if any suit is instituted (or
threatened to be instituted) by the FTC, the DOJ, or any other applicable
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any material Law or which would otherwise
prevent, materially impede or materially delay the consummation of the
transactions contemplated hereby, each of the parties shall use its reasonable
best efforts to resolve any such objections or suits so as to permit consummation
of the transactions contemplated by this Agreement as promptly as reasonably
practicable.


 


(d)           In the event that
any administrative or judicial action or proceeding is instituted (or
threatened to be instituted) by a Governmental Entity or private party
challenging the transactions contemplated by this Agreement, each of the
parties shall cooperate in all respects 


 


59

















 


with each
other and use its respective reasonable best efforts to contest and resist any
such action or proceeding and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order, whether temporary, preliminary
or permanent, that is in effect and that prohibits or materially restricts or
delays consummation of the transactions contemplated by this Agreement.


 


(e)           Notwithstanding
anything herein to the contrary, each of the Sellers and CCR shall, and shall
cause its respective directors, officers, employees and Subsidiaries to, use
their respective reasonable best efforts in working with the Parent, the Buyers
and their counsel to obtain the Gaming Approvals; provided that nothing
contained herein shall require any expenditure by the Companies (other than any
expenditures relating to counsel fees of such parties).


 


(f)            The Sellers agree
to use their reasonable best efforts to (i) continue to cause CCR and the
other Companies to maintain any licenses required under applicable Gaming Laws
with respect to the operation of the Business, including obtaining or renewing
all other licenses, permits, approvals, authorizations, registrations, findings
of suitability, entitlements, waivers and exemptions issued in connection with
such licenses and necessary to continue to operate the Business and (ii) pursuing
any renewal application process applicable to such licenses, including any
follow-up submissions and requests.  .


 


(g)           Between the Exercise
Date and the Closing Date, the Sellers and CCR shall, and shall cause each of
the other Companies and their respective directors, managers, members,
officers, employees and agents to, afford the employees, authorized agents and
Representatives of the Parent and the Buyers access, during normal business
hours, to the offices, personnel, premises, properties, Contracts, books and records,
and other documents and financial, operating, construction status and other
data of the Companies as the Buyers may reasonably request; provided that the
Buyers shall not engage in any environmental testing with respect to any of the
Companies’ Owned Real Property or property subject to Real Property Leases
without the prior written consent of the Sellers, which consent shall not be
unreasonably withheld or conditioned. 
The foregoing shall not require the Sellers or any Company to permit any
inspection, or to disclose any information, to the extent that in their
reasonable judgment is reasonably likely to result in waiver of any
attorney-client privilege or the disclosure of any trade secrets of third
parties or violate any of their obligations with respect to confidentiality if
the Sellers or such Company, as the case may be, shall have used reasonable
efforts to obtain the consent of such third party to such inspection or
disclosure and have used reasonable efforts to implement requisite procedures to
enable access to such information without violating such obligations.  No investigation by the parties or their
respective Representatives shall affect the representations or warranties of
the other set forth herein, and disclosure of any report to the Sellers shall
not effect the knowledge of the Sellers if they were not aware of the facts
described in such report.


 


(h)           From the Exercise
Date until the Closing Date, if any counterparty to any Material Contract
specified in Schedule 7.4(h) (the “Specified Material Contracts”)
notifies any Seller or any Company party thereto, claiming a breach, a default,
or the right to declare a default, under such Specified Material Contract as a
result of the failure by such Seller or such Company to obtain the consent or
approval of such counterparty to the execution and delivery of this Agreement,
each of the Sellers and CCR shall, or shall cause the applicable Company to,
resolve 


 


60

















 


such claim as
promptly as reasonably practicable by mutual agreement with such counterparty
that no such consent or approval was required or to obtain appropriate
consents, amendments or waivers under such Specified Material Contract to
resolve such claim.  Notwithstanding
anything to the contrary contained herein, CCR shall, or shall cause the
applicable Company to, pay any fees, costs and expenses payable or incurred in
connection with resolving such claim or obtaining such consent, amendment or
waiver (including all consent fees required by the applicable counterparty to
such Specified Material Contract), and each of the Sellers and CCR shall
indemnify, defend and hold harmless the Buyer Indemnified Parties from and
against any and all Damages (without duplication) incurred by any of them
arising out of, relating to or in connection with any claim by a counterparty
for breach of any such Specified Material Contract due to the failure to have
obtained the consent or approval of any counterparty to the execution and/or
delivery of this Agreement, or any action taken by any Seller or CCR pursuant
to this Section 7.4(h). 
Neither any Buyer nor the Parent shall be entitled to assert a breach of
any representation, warranty or covenant made by the Sellers or CCR in this
Agreement due to a claim by any counterparty to any Specified Material Contract
as a result of the failure by any Seller or any Company to obtain the consent
or approval of such counterparty to the execution and delivery of this
Agreement.


 


7.5.          Updates to Disclosure Schedules.


 


(a)           If the Buyers
deliver the Conditional Exercise Notice pursuant to Section 2.3,
within twenty (20) Business Days of delivery of the Conditional Exercise
Notice, the Sellers shall deliver to the Buyers in writing supplemental
disclosure schedules (the “Supplemental Disclosure Schedules”). The
Supplemental Disclosure Schedules shall replace the original schedules, with
the intention of the parties that no liability shall attach to Sellers or CCR
as a result of any changes to the Sellers Disclosure Schedules reflected in the
Supplemental Disclosure Schedules, except with respect to the Company Execution
Reps.


 


(b)           In the event that
the Sellers or CCR become aware (i) of facts or circumstances that should
have been included on the Supplemental Sellers Disclosure Schedules in order
for the Sellers’ and/or CCR’s representations and warranties to be true and
accurate as of the date of the delivery of the Supplemental Disclosure
Schedules but were not so included (“Omitted Items”) and/or (ii) that
any representation and warranty that was true and accurate as of the date of
the delivery of the Supplemental Disclosure Schedules becomes untrue or
inaccurate due to events occurring or circumstances arising from the date of
the delivery of the Supplemental Disclosure Schedules (“Pre-Closing Events”),
the Sellers and CCR may deliver to the Buyers in writing supplemental
disclosure schedules setting forth the additions or changes to the Supplemental
Disclosure Schedules that are required to reflect such Omitted Items and/or Pre-Closing
Events (the “Final Disclosure Schedules”).  The Supplemental Disclosure Schedules, as
supplemented by the Final Disclosure Schedules, shall be deemed to modify the
applicable representation and warranty set forth in this Agreement for purposes
of determining whether the condition set forth in Section 8.2(a) shall
have been satisfied as of the Closing Date and shall be deemed to cure breaches
of representations and warranties as described in the Supplemental Disclosure
Schedules for purposes of indemnification by the Sellers pursuant to this
Agreement, including in accordance with Section 7.10 and Article 10.


 


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(c)                                  Notwithstanding
anything to the contrary herein, after the Final Sellers Disclosure Schedules
are delivered in accordance with this Section 7.5, the Buyers may
rescind the Final Exercise Notice within five (5) Business Days of the
delivery of the Final Disclosure Schedules and such Final Exercise Notice shall
be void and of no force or effect and the Buyers shall have no further
obligations under this Agreement.


 


7.6.                              Notifications to
Buyers.  From the Exercise Date until
the Closing Date, the Parent and the Buyers, on the one hand, and the Sellers
and CCR, on the other hand, shall promptly notify each other of (i) any
Actions commenced or, to the knowledge of such party, threatened, against the
Sellers, Blocker, AcquisitionCo or any Company or any of their respective
Affiliates or directors, managers, members, officers, directors, employees or
agents in their capacity as such or, to the extent that such Actions relate to
the consummation of the transactions contemplated by this Agreement, the Parent
or the Buyers or any of their Affiliates or directors, managers, members,
officers, directors, employees or agents in their capacity as such and (ii) the
occurrence or non-occurrence of any fact or event that, in either case, would
be reasonably likely to cause any condition set forth in Article 8
not to be satisfied; provided, that no such notification, nor the
obligation to make such notification, shall affect the representations,
warranties, covenants or indemnification obligations of any Party or the conditions
to the obligations of any Party, or cure any breach by any Party of this
Agreement, or limit or otherwise affect the termination rights, indemnification
rights or other remedies available under this Agreement to the Party receiving
such notice.


 


7.7.                              No Alternative
Transactions.  Until the expiration
of the Exercise Period, the parties agree that none of the Sellers, Blocker,
AcquisitionCo or the Companies shall and each of the Sellers and the Companies
shall require its respective Representatives not to, directly or indirectly, (i) initiate,
solicit, encourage or otherwise facilitate any inquiry, proposal, offer or
discussion with any party (other than the Parent or the Buyers) concerning any
merger, reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale or license of
material assets or similar business transaction involving any of the Companies,
(ii) furnish any non-public information concerning the business,
properties or assets of any of the Companies to any party (other than the
Parent or the Buyers) in connection with any such transaction, or (iii) engage
in discussions or negotiations with any party (other than with the Parent or
the Buyers) with respect to, or consummate, any such transaction, or (iv) enter
into, approve, agree to, recommend or consummate any such transaction.


 


7.8.                              Publicity.  Any press
release or release of other information to the press or any other Person with
respect to the subject matter of this Agreement shall be mutually approved by
the Buyers and the Sellers, except as may be required by (i) any
Gaming Law or other applicable Law, Authorization, court process or (ii) obligations
pursuant to any listing agreement with or rules of any securities exchange
or interdealer quotation service in the United States or Australia; provided,
however, the disclosing party shall use commercially reasonable efforts to
provide prior notice to and consult with the non-disclosing party.  The Buyers and the Parent acknowledge that
HoldCo has filing obligations under the Securities Exchange Act of 1934, as
amended, and shall file a Current Report on Form 8-K after the signing of
this Agreement.


 


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7.9.                              Intentionally Omitted.


 


7.10.                        Tax Matters.


 


(a)                                  Section 754
Election.  The Sellers shall cause
CCR to attach a properly completed election statement to CCR’s U.S. Tax Returns
with respect to Income Taxes for its taxable year that will end on the Closing
Date pursuant to Section 754 of the Code and any similar provisions of
applicable state and local law effective for the Tax Period of CCR that
includes the Closing Date.


 


(b)                                 Tax
Indemnification.


 


(i)                                     After the Closing Date, HoldCo shall
indemnify, defend and hold harmless the Buyer Indemnified Parties from and
against and in respect of all Damages (without duplication) incurred or paid by
any of the Buyer Indemnified Parties arising out of, relating to or resulting
from (a) Taxes imposed on Blocker or AcquisitionCo for taxable periods
ending on or before the Closing Date (“Pre-Closing Periods”) and, with
respect to any period that begins on or before and that ends after the Closing
Date (in each case, a “Straddle Period”), the portion of such Straddle
Period deemed to end on and include the Closing Date; (b) Taxes imposed on
Blocker or AcquisitionCo as a result of the LandCo Disposition; (c) any
breach of or inaccuracy in any representation or warranty contained in Section 4.2(f) (without
regard to any “materiality” modifier); (d) Taxes imposed on any of Blocker
or AcquisitionCo under Treasury Regulations Section 1.1502-6 (and all
corresponding provisions of state, local, or foreign Law) as a result of being
a member of any consolidated, unitary, combined or similar group for any
Pre-Closing Period or portion of any Straddle Period deemed to end on and
include the Closing Date; and (e) the breach or nonperformance of any
covenant or agreement on the part of HoldCo or Blocker or AcquisitionCo with
respect to Taxes set forth in this Section 7.10. Any cash left in
Blocker or AcquisitionCo at Closing shall be credited against any HoldCo
indemnification obligation arising under this Section 7.10.


 


(ii)                                  After the Closing Date, the Sellers shall
jointly and severally indemnify, defend and hold harmless the Buyer Indemnified
Parties from and against and in respect of all Damages (without
duplication)  incurred or paid by any of
the Buyer Indemnified Parties arising out of, relating to or resulting from (a) Taxes
imposed on any of the Companies for Pre-Closing Periods (including the
XpressBet Assessments) and, with respect to any Straddle Period, the portion of
such Straddle Period deemed to end on and include the Closing Date; (b) any
breach of or inaccuracy in any representation or warranty contained in Section 5.11
(without regard to any “materiality” modifier); (c) Taxes imposed on any
of the Companies under Treasury Regulations Section 1.1502-6 (and all
corresponding provisions of state, local or foreign Law) as a result of being a
member of any consolidated, unitary, combined or similar group for any
Pre-Closing Period or portion of any Straddle Period deemed to end on and
include the Closing Date; and (d) the breach or nonperformance of any
covenant or agreement on the part of Seller with respect to Taxes set forth in
this Section 7.10 or Section 7.1(s).  Notwithstanding the foregoing, the Sellers
shall not be obligated to indemnify the Buyer Indemnified Parties for Damages
attributable to Non-Income Taxes (but not including Damages attributable to the
XpressBet Assessments) until such time as Buyer Indemnified Parties’ Damages
attributable to Non-Income Taxes (but not including Damages attributable to the
XpressBet Assessments) exceed $500,000.


 


63

















 


(iii)                               After the Closing Date, the Parent and
the Buyers shall jointly and severally indemnify, defend and hold harmless the
Seller Indemnified Parties from and against and in respect of all Damages
(without duplication) incurred or paid by any of the Seller Indemnified Parties
arising out of, relating to or resulting from (a) Taxes imposed on Blocker
AcquisitionCo, or any of the Companies for taxable periods beginning after the
Closing Date (“Post-Closing Periods”) and, with respect to any Straddle
Period, that portion of such Straddle Period deemed to begin immediately after
the Closing Date; and (b) the breach or nonperformance of any covenant or
agreement on the part of Buyers or Parent with respect to Taxes contained in
this Section 7.10 or Section 7.1(s).  Notwithstanding the foregoing, the Parent and
the Buyers shall not be obligated to indemnify the Seller Indemnified Parties
for Damages attributable to Non-Income Taxes until such time as Seller
Indemnified Parties’ Damages attributable to Non-Income Taxes exceed $500,000.


 


(c)                                  Allocation
of Straddle Period Taxes.  In order
to apportion appropriately any Taxes relating to a Straddle Period, the parties
shall, to the extent permitted or required under applicable Law, treat the
Closing Date as the last day of the taxable year or period of each relevant
entity for all Tax purposes.  In any case
where applicable Law does not permit the parties to treat the Closing Date as
the last day of the taxable year or period, the portion of any Taxes that are
allocable to the portion of the Straddle Period ending on the Closing Date
shall be as follows:


 


(i)                                     Taxes that are imposed on a periodic
basis and not based on income or receipts (e.g., property taxes), shall be
equal to the product of such Taxes attributable to the entire Taxable period
and a fraction, the numerator of which is the total number of days in such
period that elapsed through the Closing Date and the denominator of which is
the number of days in such Taxable period; provided, however, that, if the
amount of periodic Taxes imposed for such Taxable period reflects different
rates of Tax imposed for different periods within such Taxable period, the
formula described in the preceding clause shall be applied separately with
respect to each such period within the Taxable period; and


 


(ii)                                  Taxes (other than those described in
clause (i)) shall be computed as if such Taxable period ended on and included
the Closing Date.


 


(d)                                 Blocker
Buyer.  Buyers agree that the
purchaser of the HoldCo Units will be subject to U.S. federal income taxation
as a United States “C” Corporation (“Blocker Buyer”) and that Blocker
will join the federal consolidated group of which Blocker Buyer is a member
after the Closing Date, such that Blocker’s federal taxable year will close as
of the Closing Date.


 


(e)                                  Extraordinary
Transactions.


 


(i)                                     Notwithstanding anything to the contrary
in this Agreement, Parent, Buyers and Blocker Buyer jointly and severally agree
to indemnify and hold harmless Seller Indemnified Parties for any Damages
attributable to Taxes resulting from any transaction engaged in by Parent,
Buyers, Blocker Buyer, Blocker, AcquisitionCo or any Company not in the
ordinary course of business, other than payment of the Company Loan Payment
Amount paid by CCR at the Closing pursuant to Section 2.2(b)(i) of
this Agreement and any repayment, or contribution to any of Blocker,
AcqusitionCo or the Companies of the Blocker Note (as such term is defined in Schedule
4.2(e)), occurring on or after the Closing Date after Buyers’ and


 


64

















 


Blocker Buyer’s purchase of the Millennium Units, the
HoldCo Units and the Blocker Option Agreement, including any Tax resulting from
the exercise of the Blocker Option Agreement.


 


(ii)                                  Notwithstanding anything to the contrary
in this Agreement, Parent, Buyers, Blocker Buyer, Blocker, AcquisitionCo, each
Company, and Sellers agree to allocate all transactions not in the ordinary
course of business, other than payment of the Company Loan Payment Amount paid
by CCR at the Closing pursuant to Section 2.2(b)(i) of this
Agreement and any repayment, or contribution to any of Blocker, AcqusitionCo or
the Companies of the Blocker Note (as such term is defined in Schedule
4.2(e)), occurring on or after the Closing Date after Buyers’ and Blocker
Buyer’s purchase of the Millennium Units, the HoldCo Units, and the Blocker
Option Agreement to a Post-Closing Period or, with respect to a Straddle
Period, that portion of such Straddle Period deemed to begin immediately after
the Closing Date, as applicable, and to report such transactions on Buyers’ or
Blocker Buyer’s federal Income Tax Return, as applicable, to the extent
permitted by Treas. Reg. §1.1502-76(b)(1)(ii)(B) or similar principles.


 


(f)                                    Returns.  (i)  After the Closing Date, HoldCo
shall, at its own expense, prepare or cause to be prepared and timely file or
cause to be timely filed all Tax Returns for Blocker and AcquisitionCo for all
Pre-Closing Periods, and shall pay all Taxes due for the taxable periods
covered by such Tax Returns.  HoldCo
shall provide Buyers with a copy of such Tax Returns at least thirty (30) days
prior to the due date for filing such Tax Returns (after taking into account
any applicable extensions or waivers) (the “HoldCo Due Date”). Buyers
shall provide HoldCo with its comments, if any, to such Tax Returns at least
twenty (20) days prior to the HoldCo Due Date. 
If the Buyers object in good faith to any item reflected on such a Tax
Return, HoldCo and Buyers shall attempt to resolve the disagreement in good
faith.  If the parties are unable to
resolve the disagreement, the dispute shall be referred to an independent
accounting firm jointly selected by the Buyers and the Sellers or, if the Buyers
and the Sellers are unable to agree on such accounting firm within fifteen (15)
days, an independent accounting firm jointly selected within ten (10) days
by the Buyers’ accounting firm and an accounting firm identified by the Sellers
(such firm, the “Independent Accounting Firm”), which shall resolve the
dispute no later than three (3) days prior to the HoldCo Due Date and
whose determination shall be binding on the parties. The fees and expenses of
the Independent Accounting Firm shall be borne equally by HoldCo, on the one
hand, and the Buyers, on the other hand. If the dispute has not been resolved
or the Independent Accounting Firm has not made its determination three (3) days
prior to the HoldCo Due Date, such Tax Return shall be filed as originally
proposed by HoldCo, reflecting any items previously objected to by the Buyers
and agreed to by HoldCo.  When the amount
of Taxes due in respect of such Tax Return is finally determined by the
Independent Accounting Firm, a settlement payment shall be made from HoldCo to
the Buyers in an amount equal to the excess, if any, of (i) the amount
finally determined to be due over (ii) the amount of Taxes actually paid
by HoldCo pursuant to this Section 7.10(f)(i) with respect to
such taxable period, or from the Buyers to HoldCo in an amount equal to the
excess, if any, of (i) the amount of Taxes actually paid by HoldCo
pursuant to this Section 7.10(f)(i) with respect to such
taxable period over (ii) the amount finally determined to be due.


 


(ii)                                  After the Closing Date, the Sellers
shall, at Sellers’ own expense, prepare or cause to be prepared and timely file
or cause to be timely filed all Tax Returns for the Companies for all
Pre-Closing Periods, and shall pay all Taxes due for the taxable periods


 


65

















 


covered by such Tax Returns.  The Sellers shall provide Buyers with a copy
of such Tax Returns at least thirty (30) days prior to the due date for filing
such Tax Returns (after taking into account any applicable extensions or
waivers) (the “Sellers Due Date”). Buyers shall provide the Sellers with
its comments, if any, to such Tax Returns at least twenty (20) days prior to
the Sellers Due Date.  If the Buyers
object in good faith to any item reflected on such a Tax Return, the Sellers
and Buyers shall attempt to resolve the disagreement in good faith.  If the parties are unable to resolve the
disagreement, the dispute shall be referred to the Independent Accounting Firm,
which shall resolve the dispute no later than 3 days prior to the Sellers Due
Date and whose determination shall be binding on the parties The fees and
expenses of the Independent Accounting Firm shall be borne equally by the
Sellers, on the one hand, and the Buyers, on the other hand. If the dispute has
not been resolved or the Independent Accounting Firm has not made its
determination three (3) days prior to the Sellers Due Date, such Tax
Return shall be filed as originally proposed by the Sellers, reflecting any
items previously objected to by the Buyers and agreed to by Sellers.  When the amount of Taxes due in respect of
such Tax Return is finally determined by the Independent Accounting Firm, a
settlement payment shall be made from the Sellers to the Buyers in an amount
equal to the excess, if any, of (i) the amount finally determined to be
due over (ii) the amount of Taxes actually paid by the Sellers pursuant to
this Section 7.10(f)(ii) with respect to such taxable period,
or from the Buyers to the Sellers in an amount equal to the excess, if any, of (i) the
amount of Taxes actually paid by HoldCo pursuant to this Section 7.10(f)(ii) with
respect to such taxable period over (ii) the amount finally determined to
be due.


 


(iii)                               The Buyers shall, at their own expense,
prepare or cause to be prepared and timely file or cause to be timely filed all
Tax Returns for Blocker, AcquisitionCo, and the Companies for all Straddle
Periods.  The Buyers shall provide HoldCo
or the Sellers, as applicable, with a copy of such Tax Returns at least thirty
(30) days prior to the due date for filing such Tax Returns (after taking into
account any applicable extensions or waivers) (the “Buyers Due Date”).  HoldCo or the Sellers, as applicable, shall
provide the Buyers with comments to such Returns, if any, at least twenty (20)
days prior to the Buyers Due Date.  HoldCo and the Sellers, as the case may be,
shall pay to the Buyers all Taxes for which Holdco or the Sellers are liable
pursuant to Section 7.10 hereof with respect to any such Tax Return
promptly upon the written request of the Buyers (the “Buyer Requested Amount”),
setting forth in detail the computation of the amount owed.  If HoldCo or the Sellers, as applicable,
objects in good faith to any item reflected on such a Tax Return, HoldCo or the
Sellers, as applicable, and Buyers shall attempt to resolve the disagreement in
good faith.  If the parties are unable to
resolve the disagreement, the dispute shall be referred to the Independent
Accounting Firm, which shall resolve the dispute no later than three (3) days
prior to the Buyers Due Date and whose determination shall be binding on the
parties.  The fees and expenses of the
Independent Accounting Firm shall be borne equally by HoldCo or the Sellers, as
applicable, on the one hand, and the Buyers, on the other hand.  If the dispute has not been resolved or the
Independent Accounting Firm has not made its determination three (3) days
prior to the Buyers Due Date, such Tax Return shall be filed as originally
proposed by the Buyers, reflecting any items previously objected to by HoldCo
or the Sellers, as the case may be and agreed to by the Buyers, and HoldCo or
the Sellers, as applicable, shall pay to the Buyers the Buyer Requested
Amount.  When the amount due to the
Buyers from HoldCo or the Sellers, as applicable, in respect of such Tax Return
is finally determined by the Independent Accounting Firm, a settlement payment
shall be made from HoldCo or the Sellers, as applicable, to the Buyers in an
amount equal to the


 


66

















 


excess, if any, of (i) the amount finally
determined to be due over (ii) the Buyer Requested Amount, or from the
Buyers to HoldCo or the Sellers, as applicable, in an amount equal to the
excess, if any, of (i) the Buyer Requested Amount over (ii) the
amount finally determined to be due.


 


(iv)                              All Tax Returns described in this Section 7.10(f) shall
be prepared in accordance with past custom and practice of Blocker,
AcquisitionCo, and the Companies, as applicable, in preparing their Tax
Returns, except to the extent otherwise required by applicable Law.  Notwithstanding the foregoing, Section 7.10(j) shall
exclusively govern the filing of Transfer Tax Returns and payment of Transfer
Taxes.


 


(g)                                 Refunds
and Tax Benefits. Any Tax refunds that are received by Buyers,
AcquisitionCo, Blocker or any Company, and any amounts credited against Taxes
which Buyers, AcquisitionCo, Blocker or any Company Actually Realizes, that
relate to Pre-Closing Periods, or, with respect to any Straddle Period, to the
portion of such Straddle Period deemed to end on and include the Closing Date
and which relates solely to Blocker, AcquisitionCo or the Companies (and not
Buyers or any of their Affiliates), shall be for the account of Sellers, and
Buyers shall pay over to Sellers any such refund or the amount of any such credit,
net of any Taxes or expenses incurred by Buyers, AcquisitionCo, Blocker or any
Company relating to such Tax refund or credit, within 10 Business Days after
receipt or entitlement thereto. 
Notwithstanding the foregoing, any Tax refunds or credits that are
received by Buyers, AcquisitionCo, Blocker or any Company that are attributable
to the operations or activities of AcquisitionCo, Blocker, or any Company (i) in
any Post-Closing Period or in that portion of any Straddle Period deemed to
begin immediately after the Closing Date, or (ii) in any Pre-Closing
Period or in that portion of a Straddle Period deemed to end on and include the
Closing Date to the extent such refund relates or is attributable to the
carryback of any credit, loss, deduction or other Tax item arising in or
attributable to any Post-Closing Period or in that portion of any Straddle
Period deemed to begin immediately after the Closing Date shall be for the
account of the Buyers. In addition, refunds of Taxes paid by Buyers pursuant to
Section 7.10(e)(i) shall be for the account of Buyers.


 


(h)                                 Tax
Proceedings.


 


(i)                                     If any third party shall notify any of
the Buyer Indemnified Parties of any audit, litigation, request for payment or
other proceeding with respect to Taxes or other payments that may give rise to
indemnity under this Section 7.10 (each, a “Tax Proceeding”),
such Buyer Indemnified Party shall promptly (and in any event within fifteen
(15) Business Days after receiving notice of the Tax Proceeding) notify HoldCo
or the Sellers, as applicable, thereof in writing; provided, however, that
failure to give such timely notification shall not affect the indemnification
provided under this Section 7.10, except to the extent HoldCo or
the Sellers, as applicable,  shall have
been actually and materially prejudiced as a result of such failure.


 


(ii)                                  To the extent that any Tax Proceeding
involves a claim for Taxes of, or payments relating to, Blocker, AcquisitionCo
or the Companies for any Pre-Closing Period, HoldCo or the Sellers, as the case
may be, shall at their own expense control the conduct of such Tax
Proceeding.  HoldCo or the Sellers, as
applicable, shall (i) consult in good faith with the Buyer Indemnified
Parties before taking any significant action in connection with the Tax Proceeding
that may materially adversely affect the Buyer Indemnified Parties, (ii) consult
in


 


67

















 


good faith with the Buyer Indemnified Parties and
offer the Buyer Indemnified Parties a reasonable opportunity to comment before
submitting any written materials prepared or furnished in connection with the
Tax Proceeding (including, to the extent practicable, any documents furnished
to the applicable Tax Authority in connection with any discovery request) to
the extent such materials concern matters in the Tax Proceeding that may
materially adversely affect the Buyer Indemnified Parties, (iii) conduct
the Tax Proceeding diligently and in good faith, (iv) not pay, discharge,
settle, compromise, litigate, or otherwise dispose (collectively, “dispose”) of
any item subject to such Tax Proceeding to the extent such item may materially
adversely affect the Buyer Indemnified Parties without obtaining the prior
written consent of the Buyer Indemnified Parties; which consent shall not be
unreasonably withheld, conditioned or delayed, and (v) if applicable, pay
the Buyer Indemnified Parties their allocable share, as provided for in this
section, of the amount of Taxes or payments due pursuant to such disposition
within five (5) Business Days of the due date of the payment of such
amount.


 


(iii)                               To the extent that any Tax Proceeding
involves Taxes of Blocker, AcquisitionCo or the Companies for any Straddle
Periods or Post-Closing Periods, the Buyer Indemnified Parties shall at their
own expense control the conduct of such Tax Proceeding. The Buyer Indemnified
Parties shall (i) consult in good faith with HoldCo or the Sellers, as
applicable, before taking any significant action in connection with the Tax
Proceeding that may materially adversely affect the Seller Indemnified Parties,
(ii) consult in good faith with HoldCo or the Sellers, as applicable, and
offer HoldCo or the Sellers, as applicable, a reasonable opportunity to comment
before submitting any written materials prepared or furnished in connection
with the Tax Proceeding (including, to the extent practicable, any documents
furnished to the applicable Tax Authority in connection with any discovery
request) to the extent such materials concern matters in the Tax Proceeding that
may materially adversely affect the Seller Indemnified Parties, (iii) conduct
the Tax Proceeding diligently and in good faith, (iv) use reasonable best
efforts to provide HoldCo and Sellers, as applicable, with an opportunity to
attend at their own expense, as an observer, settlement discussions and other
conferences and meetings relating thereto to the extent such item may
materially adversely affect the Seller Indemnified Parties, and (v) not
pay, discharge, settle, compromise, litigate, or otherwise dispose
(collectively, “dispose”) of any item subject to such Tax Proceeding to the
extent such item may materially adversely affect the Seller Indemnified Parties
without obtaining the prior written consent of HoldCo or the Sellers, as
applicable, which consent shall not be unreasonably withheld, conditioned or
delayed. HoldCo or the Sellers, as applicable, shall pay the Buyer Indemnified
Parties their allocable share, as provided for in this section, of the amount
of Taxes or payments due pursuant to such disposition within five (5) Business
Days of the due date of the payment of such amount.


 


(i)                                     Tax
Sharing Agreements.  All Tax sharing
agreements or similar agreements with respect to or involving Blocker,
AcquisitionCo or the Companies shall be terminated as of the Closing Date and,
after the Closing Date, none of Blocker, AcquisitionCo  or the Companies shall be bound thereby or
have any liability thereunder.


 


(j)                                     Transfer
Taxes.  Except with respect to the
Pennsylvania Gaming Fee, all transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with the transactions contemplated by this
Agreement shall be paid 50% by the Buyers, on the one hand, and 50% by the
Sellers, on the


 


68

















 


other hand.  If the Pennsylvania Gaming Fee shall become
due as a result of the sale from the Sellers to the Buyers of WTA, such fee
shall be split equally between the Sellers, on the one hand, and the Buyers, on
the other hand.  The Buyers will, at
their own expense, file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp, registration and
other Taxes and fees, and, if required by applicable law, the Sellers will join
in the execution of any such Tax Returns and other documentation.  The Sellers shall pay to the Buyers, no later
than five (5) days before the due date of any Taxes described in this Section 7.10(j),
Sellers’ share of such Taxes, and the Buyer shall pay the full amount of such
Taxes owed to the appropriate Tax Authority.


 


(k)                                  Certain
Amended Returns.  The Buyers,
AcquisitionCo and Blocker shall not amend, or cause to be amended, any material
Tax Return with respect to Income Taxes that includes the period that includes
the LandCo Disposition without the approval of HoldCo, if such amendment would
give rise to an indemnification obligation on the part of HoldCo pursuant to Section 7.10(c)(i) of
this Agreement, which approval shall not be unreasonably withheld or delayed.


 


(l)                                     Cooperation.  The Buyers and Blocker and AcquisitionCo on
the one hand, and HoldCo and the Sellers on the other hand, shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this Section 7.10
and any Tax Proceeding subject to Section 7.10(h) and shall
provide prompt notice to the other party of any notice received from any Tax
Authority that could reasonably affect the Tax liability of such other
party.  Such cooperation shall include
the retention and (upon the other party’s request) the provision of records and
information that are reasonably relevant to any such Tax Proceeding  and filing of Returns and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Buyers, Blocker,
AcquisitionCo, HoldCo, and the Sellers shall each preserve and keep all books
and records with respect to Taxes and Tax Returns of Blocker, AcquisitionCo,
and the Companies in such party’s possession as of the Closing Date, or as
later come into such party’s possession, until the expiration of the applicable
statute of limitations and shall give reasonable written notice to the other
party prior to transferring, destroying or discarding any such information,
returns, books, records or documents and, if the other party so requests, allow
the other party to take possession of such information, returns, books, records
or documents.  The party requesting
assistance hereunder shall reimburse the other for reasonable out-of-pocket
costs and expenses incurred in providing such assistance.  The Buyers and Blocker and AcquisitionCo on
the one hand, and HoldCo and the Sellers on the other hand, further agree, upon
request, to use their reasonable efforts to obtain any certificate or other
document from any Tax Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including with
respect to the transactions contemplated by this Agreement).


 


(m)                               Except
for matters set forth on Schedule 7.10 of the Sellers Disclosure
Schedules or as otherwise specifically provided in this Agreement, without the
prior written consent of the Buyers (which consent shall not be unreasonably
withheld, conditioned or delayed), each of Blocker and AcquisitionCo from the
date hereof until the Closing Date shall not: (i) make, amend or revoke
any material Tax election, (ii) settle or compromise any material Tax
liability, claim or assessment, or agree to any adjustment of any material Tax
attribute, (iii) file any amended material Tax Return, (iv) enter
into any material “closing agreement” within the


 


69

















 


meaning of Section 7121 of
the Code (or any material comparable agreement under state, local or foreign
law), (v) surrender any right to claim a material Tax refund, (vi) consent
to waive any statute of limitations with respect to material Taxes.


 


(n)                                 Survival.  The indemnification obligations pursuant to
this Section 7.10 shall survive the Closing until ninety (90) days
following the expiration of the applicable statute of limitations (including
any extensions thereof) relevant to each particular item provided that if
notice of indemnification under Section 7.10 is provided to the
indemnifying party, as applicable, prior to any such expiration date, any
obligation to indemnify for any claim described in such notice shall continue
indefinitely until such claim is finally resolved.  For the avoidance of doubt, notwithstanding
anything to the contrary in this Agreement, the representations set forth in Section 4.2(f) and
Section 5.11 of this Agreement shall survive until 90 days after
the expiration of the applicable statutes of limitation.


 


(o)                                 Exclusivity.  Except as otherwise provided in Article 10,
all issues relating to Tax matters associated with Blocker, AcquisitionCo, and
the Companies shall be governed exclusively by the provisions of this Section 7.10.  Principles equivalent to Section 10.3(d) and
(e) shall apply for purposes of this Section 7.10.


 


7.11.                        LandCo Disposition.  Following the Exercise Date and prior to the
Closing, HoldCo shall cause (i) all of the equity interests in LandCo or (ii) all
of the assets and liabilities of LandCo, to be sold or otherwise transferred to
a third party that will be unaffiliated with CCR after the Closing; provided,
Bill Wortman and any entities that he controls or is affiliated with shall not
be considered an Affiliate of the Companies after the Closing.  In the event that the assets and liabilities
of LandCo are sold or otherwise transferred, then HoldCo shall cause LandCo to
either be liquidated or otherwise removed as a direct or indirect subsidiary of
Blocker and AcquisitionCo.  The
agreements and arrangements relating to the sale or transfer of such interests,
or assets and liabilities, shall include a full and unconditional release and
indemnification of each of the Companies, which shall survive the Closing, for
any and all Liabilities of, or arising in connection with or related to, LandCo
including all Liabilities of the Companies under the existing Nevada Palace
lease, but excluding any Liabilities arising after the Closing under the
Amended Nevada Palace Lease.  The
transactions described in the previous two sentences shall be referred to as
the “LandCo Disposition.”


 


7.12.                        Excluded Opportunities.  The Buyers acknowledge that neither any Buyer
nor its Affiliates nor the Companies has any right, title or interest to the
gaming opportunity at Rockingham Park in New Hampshire (the “Rockingham
Opportunity”), the gaming opportunity at Tejon Ranch in California (the “Tejon
Opportunity”), any other Excluded Opportunity or the agreement set forth on
Schedule 7.12 of the Sellers Disclosure Schedules.  The agreements and arrangements relating to
the transfer of the assets, liabilities, contracts and agreements related to
each Excluded Opportunity shall include a full and unconditional release and
indemnification of each of the Companies, which shall survive the Closing, for
any and all Liabilities of, or arising in connection with or related to, the
Excluded Opportunities.  Any moneys
received by the Companies on or prior to the Closing Date with respect to
receivables related to the Rockingham Opportunity may be included in the
Company Loan Amount and/or applied to repay any of the Debt Facilities or may
reduce the amount of the Remaining Accrued Liabilities.  The Parent and the Buyers acknowledge and
agree that nothing contained herein shall (i) prevent CCR or the


 


70

















 


Companies from developing the Excluded Opportunities or incurring costs
and expenses with respect to such development prior to the Closing, so long as CCR
and the Companies do not retain any obligations or Liabilities with respect to
such Excluded Opportunities following the Closing or (ii) obligate HoldCo
or any Affiliate of Oaktree Capital Management (other than Millennium and the
Companies) to present any gaming opportunities to CCR, Parent or the Buyers.


 


7.13.                        Assistance and Records.  If the Closing occurs, the Buyers shall
retain, and cause each Company to retain, all books and records relating to the
conduct of the Business prior to the Closing Date for a period of at least six
years from the date hereof.  The Sellers
and their Representatives shall have the right during business hours, upon
reasonable notice to the Buyers, to inspect and make copies of any such records
in order to prepare its financial statements, Tax returns and other documents
and reports that the Sellers or any of their Affiliates are required to file
with Governmental Entities or any stock exchange on which their securities may
be listed, all at the sole cost and expense of the Seller(s) requesting
such records.


 


7.14.                        Guarantee.


 


(a)                                  The
Parent absolutely, unconditionally and irrevocably guarantees to the Sellers
the due and punctual observance, performance and discharge of all of the
covenants, agreements, obligations and liabilities of the Buyers pursuant to
this Agreement, whether fixed, contingent, now existing or hereafter arising,
created, assumed, incurred or acquired from the Exercise Date through the
Closing Date (the “Obligations”).


 


(b)                                 The
Parent agrees that the obligations of the Parent hereunder shall not be
released or discharged, in whole or in part, or otherwise affected by (i) the
failure of the Sellers to assert any claim or demand or to enforce any right or
remedy against the any of Buyers, (ii) any change in the time, place or
manner of payment of any of the Obligations or any rescission, waiver,
compromise, consolidation or other amendment or modification of any of the
terms of provisions of this Agreement, (iii) any change in the corporate
existence, structure or ownership of any of the Buyers, (iv) any
insolvency, bankruptcy, reorganization or other similar proceeding affecting
any of the Buyers, (v) any lack of validity or enforceability of this
Agreement, (vi) the existence of any claim, set-off or other rights which
the Parent may have at any time against the Sellers or any of the Buyers,
whether in connection with the Obligations or otherwise, and (vii) any
other act or omission which might in any manner or to any extent vary the risk
of the Parent or otherwise operate as a release or discharge of the Parent, all
of which may be done without notice to the Parent.  The Sellers shall not be bound or obliged to
exhaust their recourse against the Buyers or pursue any other remedy whatsoever
before being entitled to demand the satisfaction of the Obligations by the
Parent hereunder.  To the fullest extent
permitted by law, the Parent hereby expressly waives any and all rights or
defenses arising by reason of any law which would otherwise require any
election of remedies by the Sellers.  The
Parent acknowledges that it will receive substantially direct and indirect
benefits from the transactions contemplated by this Agreement and that the
waivers set forth herein are knowingly made in contemplation of such benefits.
Notwithstanding anything to the contrary herein, the Parent’s obligations under
this guarantee shall be subject to any and all claims, defenses, setoffs or
other rights of or available to the Buyers.


 


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(c)                                  This
guarantee shall remain in full force and effect and shall be binding on the
Parent, its successors and assigns until all of the Obligations have been
indefeasibly paid, observed, performed or satisfied in full.


 


7.15.                        Intentionally Omitted.


 


7.16.                        Intentionally Omitted.


 


7.17.                        Intentionally Omitted.


 


7.18.                        Intentionally Omitted.


 


7.19.                        No Assignment if Breach.


 


(a)                                  Following
the Exercise Date, the Sellers agree to use commercially reasonable efforts to
obtain all consents listed on Schedule 7.19 of the Sellers Disclosure
Schedules.  Notwithstanding anything
contained in this Agreement to the contrary, this Agreement shall not
constitute an agreement to effect a change in, or transfer, assign or assume,
any Contract, if the attempted change in, or transfer, assignment or assumption
of the same, as a result of the absence of the consent or authorization of a
third party, would constitute a breach or default under any Contract, would
violate any Law or would materially increase the obligations of the Buyers or
the Sellers with respect thereto.  If any
such consent or authorization is not obtained, then the Buyers and the Sellers
shall enter into such cooperative arrangements as may be reasonably acceptable
to the Buyers and the Sellers, but which shall not, in any event, result in a
breach or default under any Contract, violate any Law or materially increase
the obligations of the Buyers or the Sellers with respect thereto.


 


(b)                                 In
the event that the consent for the Contract identified on Schedule 7.19(b) of
the Sellers Disclosure Schedules is not obtained from the relevant third party
prior to Closing then the Purchase Price shall be reduced by $25,000,000
(Twenty-five Million Dollars) (the “Property Adjustment Amount”);
provided, that upon any such reduction, any rights and interests in such
Contract and the operations located at the premises that are the subject of
such Contract (if any) shall be retained by the Sellers or an Affiliate
thereof; provided, further, that any termination payment paid or payable with
respect to such Contract shall be for the account of the Sellers.


 


Commencing as
soon as practicable following the Exercise Date and continuing until the
earlier to occur of Closing or the receipt of the “Consent and Estoppel
Certificates” and “NDAs” (as defined below), the Sellers shall use commercially
reasonable efforts (a) to cause the sublandlord and prime landlord to
execute and deliver any consents of the sublandlord and the prime landlord
required in connection with the transactions contemplated by this Agreement, as
well as estoppel certificates from the sublandlord and prime landlord
(collectively, the “Consent and Estoppel Certificates”), and (b) if
there are any feehold or leasehold mortgage(s) or deed(s) of trust
encumbering the interest(s) of the sublandlord or the prime landlord in
the premises described by the Contract identified on Schedule 7.19(b),
to obtain fully executed nondisturbance agreements from the mortgagees or
beneficiaries thereof (the “NDAs”), in each case in form and substance
acceptable to the Buyers, such acceptance not to be unreasonably conditioned,
withheld or delayed.  The Buyers shall
reasonably cooperate in the Sellers’ efforts to obtain such


 


72

















 


Consent and Estoppel Certificates and NDAs,
and such cooperation shall include (x) providing such information
regarding the Buyers or Parent and their respective personnel, plans for the
premises described by the Contract identified on Schedule 7.19(b) or
casino operations as reasonably requested by prime landlord or sublandlord and (y) executing
any amendments to the Contract identified on Schedule 7.19(b) or
other documents or agreements that are not materially adverse to the
sublandlord or to the Buyers or their Affiliates.  In the event the Consent and Estoppel
Certificates (and the NDAs, if applicable) are delivered to the Buyers prior to
Closing, the Purchase Price shall not be reduced by the Property Adjustment
Amount.


 


7.20.                        FIRPTA Certificates.


 


(a)                                  At
the Closing, the Buyers shall have received from Holdco a duly executed
certificate (“FIRPTA Certificate”) that complies with the requirements
of either Section 1445(b)(2) or Section 1445(b)(3) of the
Code and the Treasury Regulations promulgated thereunder; notwithstanding
anything to the contrary herein, if Holdco fails to deliver a FIRPTA
Certificate, the parties shall proceed with the Closing and the Buyers shall be
entitled to withhold the amount required to be withheld pursuant to Section 1445
of the Code from the Purchase Price.


 


(b)                                 At
the Closing, the Buyers shall have received from Millennium a duly executed
FIRPTA Certificate that complies with the requirements of either Section 1445(b)(2) or
Section 1445(e)(5) of the Code and the Treasury Regulations promulgated
thereunder; notwithstanding anything to the contrary herein, if Millennium
fails to deliver a FIRPTA Certificate, the parties shall proceed with the
Closing and the Buyers shall be entitled to withhold the amount required to be
withheld pursuant to Section 1445 of the Code from the Purchase Price.


 


7.21.                        Repayment of Loan
Obligations.


 


(a)                                  If
the Option is exercised, the Sellers shall deliver to the Buyers, not less than
five (5) Business Days prior to the Closing Date, a statement which shall
set forth a reasonably detailed good faith estimate, as of the Closing Date, of
the calculation of the Loan Payoff Amount.


 


(b)                                 If
the Option is exercised, at or prior to the Closing, in connection with the
foregoing and with respect to any Encumbrances on any assets of the Companies
that in whole or in part were security for the Debt Facilities (the “Company
Liens”), each of the Sellers and CCR shall, and shall cause each of the
other Companies to, negotiate and enter into appropriate agreements with the
lenders under the Debt Facilities to obtain as of the Closing evidence of the
repayment of the Loan Payoff Amount and the release of all Company Liens (the “Payoff
and Release of Liens”).  To the
extent applicable, such Payoff and Release of Liens shall include (i) payoff
letters and other written documentation evidencing the release, as of the
Closing Date and after giving effect to the payments contemplated by such
payoff letters pursuant to this Section 7.21(b), of the Companies
from any and all obligations and Liens under or in connection with any
Indebtedness under the Debt Facilities, including the release of all Liens upon
or in any of the respective properties and assets of, and any guarantees by,
any of the Companies arising under or in connection with the Debt Facilities;
and (ii) the delivery of Uniform Commercial Code amendments or collateral
change statements (in each case terminating Uniform Commercial Code


 


73

















 


financing statements of
record), discharges or other appropriate termination statements, recordings and
other actions in connection with the Payoff and Release of Liens.


 


(c)                                  If
the Option is exercised, at the Buyers’ request, the Sellers and the Companies
shall use commercially reasonable efforts (at Buyers’ expense) to cooperate
with the Buyers to enable the Companies to refinance the Debt Facilities at the
Closing; provided that there shall be no adverse consequence to Sellers or the
Companies therefrom; and, provided further, that the Sellers and the Companies
shall not (1) have any liability or obligation arising from such
refinancing, except any liability or obligation of the Companies (and not
Sellers) arising on or after the Closing; (2) be required to take any
action that would interfere with the ongoing operations of the Companies,
conflict with or violate any of the Sellers’ or the Companies’ organizational
documents, laws or agreements, require the approval of any Gaming Authorities,
cause any representations or warranties in this Agreement to be breached or any
condition to Closing in Article 8 to fail to be satisfied or otherwise
cause a breach of this Agreement; (3) execute or deliver any agreements or
documents in connection with such refinancing or become subject to any lien or
security interest thereunder, except by or with respect to the Companies if no
approval or consent of any Gaming Authority is required and if effective only
on or after the Closing; or (4) be required to pay any fees or expenses in
connection therewith, including commitment fees.  The Sellers, the Companies and the Buyers
agree to negotiate in good faith to amend the provisions related to the flow of
funds to effectuate such refinancing, if appropriate and without any adverse
consequence to the Sellers or the Companies. 
The Parent and the Buyers shall jointly and severally indemnify, defend,
save and hold harmless the Seller Indemnified Parties from and against any and
all Damages (without duplication) arising out of, relating to, resulting from
or in connection with such refinancing.


 


(d)                                 If
the Option is exercised, at or prior to the Closing, Holdco shall cause the
Blocker Note to be eliminated by causing Blocker to repay the Blocker Note (as
such term is defined in Schedule 4.2(e)) or by contributing the Blocker Note to
the capital of Blocker.


 


7.22.                        Activities of AcquisitionCo
and Blocker.  During the time period
between the Exercise Date and the Closing Date, neither AcquisitionCo nor
Blocker shall conduct any business or operations, other than actions taken in
connection with holding the AcquisitionCo Units, the CCR Units and interests in
the Excluded HoldCo Subsidiaries, and shall not incur any Liabilities, other
than statutory obligations or obligations under their respective Governing
Documents as in effect on the date hereof.


 


7.23.                        Intentionally Omitted.


 


7.24.                        Amended Nevada Palace Lease;
Subordination, Non-disturbance and Attornment Agreement.  If the Option is exercised, on or before the
Closing Date, the Sellers and CCR shall cause the following to be fully
executed and delivered by all parties so that each of the same is valid and
binding and in full force and effect as of the Closing Date: (i) the
Amended Nevada Palace Lease, and (ii) the Subordination, Non-disturbance
and Attornment Agreement in the form attached hereto as Exhibit P
from Nevada State Bank (or its successor, and any other person or entity that
as of Closing has a deed of trust or other lien on or security interest in the
land described in the Amended Nevada Palace Lease) in favor of the Lessee under
the Amended


 


74

















 


Nevada Palace Lease (but only in the event that such deeds of trust,
other liens on or security interests in the land described in the Amended
Nevada Palace Lease remain outstanding).


 


7.25.                        Termination of Affiliate
Agreements; Release of Claims.


 


(a)                                  If the Option is
exercised, (i) each of the Sellers shall, and shall cause each of the
applicable Companies to, terminate the Millennium Management Agreement
effective at the Closing, and (ii) each of the Sellers shall cause the
Oaktree Purchase Agreement to be terminated with respect to any and all of the
rights and obligations of each of the Companies thereunder.


 


(b)                                 If
the Option is exercised, each of the Sellers, on its own behalf and on behalf
of its Affiliates and all Persons entitled to assert on each such Seller’s
behalf, irrevocably and unconditionally releases and forever discharges each of
the Companies from any and all claims, charges, complaints, demands,
proceedings, causes of action, orders, obligations, contracts, agreements,
debts and liabilities whatsoever, whether known or unknown, suspected or
unsuspected, contingent or actual, both at law and in equity, which each such
Seller now has, has ever had or may hereafter claim to have against the
respective Companies arising contemporaneously with or prior to the date
hereof, on account of, or arising out of, or relating in any way to, any
matter, cause, transaction or event occurring contemporaneously with or prior to
the Closing Date pursuant to any Affiliate Agreement or in respect of such
Seller’s interest in any of the Companies; provided, nothing contained in this Section 7.25(b) shall
operate to release any agreements, indemnities, liabilities, covenants or other
obligations between the Sellers.


 


(c)                                  From
and after the Closing, each of the Buyers, on its own behalf and on behalf of
its Affiliates and all Persons entitled to assert on each such Buyer’s behalf,
irrevocably and unconditionally releases and forever discharges each of the
Sellers from any and all claims, charges, complaints, demands, proceedings,
causes of action, orders, obligations, contracts, agreements, debts and
liabilities whatsoever, whether known or unknown, suspected or unsuspected,
contingent or actual, both at law and in equity, which any Company now has, has
ever had or may hereafter claim to have against any of the Sellers arising
contemporaneously with or prior to the date hereof, on account of, or arising
out of, or relating in any way to, any matter, cause, transaction or event
occurring contemporaneously with or prior to the Closing Date pursuant to any
Affiliate Agreement (other than any claim for fraud or breach of contract);
provided that, nothing contained in this Section 7.24(c) shall
operate to release any agreements, indemnities, liabilities, covenants or other
obligations of any Seller or any other Person arising under this Agreement or
the Escrow Agreement.


 


(d)                                 Each
Releasor expressly waives all rights afforded by Section 1542 of the Civil
Code of California (“Section 1542”) or any statute or common law
principle of similar effect in any jurisdiction with respect to the
Companies.  Section 1542 states as
follows:


 


A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.


 


75

















 


Notwithstanding the provisions of Section 1542,
and for the purpose of implementing a full and complete release, each Releasor
expressly waives and relinquishes any rights and benefits that it may have
under Section 1542.  Each Releasor
understands and agrees that this release is intended to include all claims, if
any, which such Releasor may have and which such Releasor does not know or
suspect to exist in its favor against any of the Companies or any of the
Sellers, as the case may be, and that this release extinguishes those claims.


 


Each Releasor represents and warrants that it has been
advised by its attorney of the effect and import of the provisions of Section 1542,
and that such Releasor has not assigned or otherwise transferred or subrogated
any interest in any claims, demands or causes of action that are the subject of
this release.


 


7.26.                        Intentionally Omitted.


 


7.27.                        Impact of New Gaming Taxes


.


(a)                                  If,
at any time prior to the Closing, the State of Nevada imposes a new, additional
or increased statewide tax or levy on or prior to the New Tax Deadline that
increases the aggregate taxes and levies payable by the Companies (a “New
Tax”), and if the Option is exercised, the Sellers and the Buyers agree
that, subject to the terms and conditions of this Section 7.27, the
Sellers shall pay to the Buyers a one-time amount in cash equal to the lesser
of (i) 50% of the New Tax Impact with respect to such New Tax and (ii) $25
million (the “New Tax Payment”).


 


(b)                                 If
a New Tax Payment is due in accordance with Section 7.27(a), the
Buyers shall promptly notify the Sellers by written notice.  During the 45 days immediately following
delivery of such notice by the Buyers, the Buyers and the Sellers shall seek in
good faith to agree upon the NGT Tax Amount. 
If the Buyers and the Sellers fail to agree upon the NGT Tax Amount
within such 45-day period, or such longer period as the Buyers and the Sellers
may mutually agree, the Buyers and the Sellers shall each submit a written
determination of the NGT Tax Amount, including a reasonably detailed
description of the assumptions and calculations used in arriving at such
determination, to an independent accounting firm jointly selected by the
Sellers and the Buyers to act as an independent expert; provided, that, if the
Buyers and the Sellers are unable to agree on an independent accounting firm,
then each of the Buyers and the Sellers shall pick an independent accounting
firm and the two accounting firms shall choose a third independent accounting
firm to serve as the independent expert. 
The independent expert shall be directed to make a final determination
of the NGT Tax Amount within 45 days following its selection as the independent
expert.  For purposes of its
determination of the NGT Tax Amount, the independent expert may only select a
value equal to one of, or between, the two values submitted by the Sellers, on
the one hand, and the Buyers, on the other hand. The Buyers and the Sellers
agree to cooperate with the independent expert during the course of its
determination and promptly provide any information reasonably requested by the
independent expert for its determination, including information regarding the
assumptions and calculations underlying the written determinations submitted by
the Buyers and the Sellers and information regarding the Companies (including
forecasts adopted and used by the Managers of CCR in the ordinary course of
business for business planning purposes). 
The independent expert’s determination of the NGT Tax Amount shall be
final, conclusive and binding on the


 


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Sellers and the Buyers.  Within 30 days of the final determination of
the NGT Tax Amount pursuant to this Section 7.27(b), the Sellers
agree to pay to the Buyers the New Tax Payment. 
The fees and costs of the independent expert shall be shared equally by
the Buyers, on the one hand, and the Sellers, on the other hand.


 


(c)                                  At
the Closing, solely to support the Sellers’ potential obligation to make the
New Tax Payment pursuant to the terms and conditions of this Section 7.27,
the Buyers and the Sellers agree to: (x) enter in a mutually agreeable
escrow arrangement involving the deposit into escrow by the Sellers of $25
million (it being agreed and acknowledged that escrow arrangements with terms
substantially consistent with those set forth in the Escrow Agreement shall be
mutually agreeable among the parties) or a letter of credit from a nationally
recognized commercial bank for the benefit of the escrow agent in the stated
amount of $25 million, or (y) provide other credit support reasonably
acceptable to the Buyers ((x) and (y) collectively, the “Security
Arrangements”).  Upon the earlier of (i) the
payment by the Sellers of the New Tax Payment pursuant to this Section 7.27,
and (ii) the occurrence of the New Tax Deadline (if no New Tax Payment is
due in accordance with Section 7.27(a)), the Security Arrangements
shall terminate, all remaining cash amounts related to such Security
Arrangements, if any, shall be promptly returned to the Sellers and all instruments
(including any letters of credit or other instruments of credit support)
related to such Security Arrangements shall be promptly returned to the Sellers
for cancellation.


 


(d)                                 Any
and all payments made by the Sellers to the Buyers pursuant to this Section 7.27
shall be treated for all Tax purposes as an adjustment to the Purchase Price.


 


7.28.                        Changes in CCR Capital
Structure.  The parties understand
and acknowledge that the purpose and intent of the Option is that, upon
exercise thereof and consummation of the transactions contemplated hereby, the
Buyers will own, either directly or indirectly, one hundred percent (100%) of
the outstanding equity capital of CCR. 
Accordingly, in the event that CCR issues any units or other equity
securities (“New CCR Equity”) after the date hereof, the Sellers and CCR
agree that any such New CCR Equity shall be issued either for cash or as valued
under the operating agreement of CCR and further agree as follows:


 


(a)                                  In
the event that such New CCR Equity is purchased by the Buyers (other than in
connection with the purchase of the Series B Preferred Units or Series A2
Preferred Units pursuant to the Preferred Purchase Agreement), then the
Purchase Price shall remain unchanged.


 


(b)                                 In
the event that such New CCR Equity is purchased, directly or indirectly, by the
Sellers (“Sellers New CCR Equity”), then the Purchase Price shall be
increased on a dollar for dollar basis by the amount of equity contributed,
directly or indirectly, by the Sellers in respect of such Sellers New CCR
Equity and this Option shall represent, in addition to an Option to purchase
the Millennium Units and the Holdco Units, an exclusive and irrevocable option
during the Exercise Period to purchase all but not less than all of such
Sellers New CCR Equity from the Sellers, directly or indirectly, as their
respective interests may appear, in accordance with the terms of this
Agreement.


 


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(c)                                  In
the event that such New CCR Equity is purchased by a party (an “Outside
Equity Investor”) other than the Buyers or the Sellers (“Outside New CCR
Equity”), then:


 


(i)            the Outside Equity
Investor shall enter into an Outside New CCR Equity Option Agreement with the
Buyers providing for the purchase by the Buyers of the Outside New CCR Equity
owned by such Outside Equity Investor for a dollar amount (the “Outside New
CCR Equity Purchase Price”) equal to the dollar amount of equity
contributed by such Outside Equity Investor in respect of such Outside New CCR
Equity; and


 


(ii)           the purchase by the
Buyers of the Outside New CCR Equity pursuant to the Outside New CCR Equity
Option Agreement shall occur contemporaneously with, and shall be a condition
to, the Closing under this Agreement.


 


7.29.                        Outside New CCR Equity.  CCR shall not, and the Sellers shall cause
CCR not to, sell any Outside New CCR Equity unless the Outside Equity Investor
enters into, simultaneous with the purchase of such Outside New CCR Equity, an
Outside New CCR Equity Option Agreement with the Buyers reflecting the terms
set forth in this Agreement with respect thereto.


 


ARTICLE 8


 


Conditions
to Closing


 


8.1.                              Conditions to the
Obligations of All Parties.  The
obligations of each party hereto to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver, at or prior to
the Closing, of each of the following conditions.


 


(a)                                  HSR
Act.  Any applicable waiting period
(and any extension thereof) under the HSR Act applicable to the purchase of the
CCR Units shall have expired or been terminated.


 


(b)                                 Regulatory
Approval.  Any and all Gaming
Approvals required to be obtained prior to the Closing to consummate the
transactions contemplated by this Agreement shall remain in full force and
effect.


 


(c)                                  No
Injunctions or Restraints; Illegality. 
No temporary restraining order, preliminary or permanent injunction or
other judgment or order issued by any Governmental Entity (other than a failure
to obtain any Gaming Approval) (each, a “Restraint”) shall be in effect
which prohibits, restrains or renders illegal the consummation of the
transactions contemplated by this Agreement; provided, that prior to asserting
this condition, the party asserting this condition (i) shall have used its
reasonable best efforts (in the manner contemplated by Section 7.4)
to prevent the entry of any such Restraint and to appeal as promptly as
practicable any judgment that may be entered and (ii) such party’s failure
to fulfill or cause to be fulfilled in any manner any obligation under this
Agreement shall not have meaningfully contributed to such Restraint.


 


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8.2.                              Conditions to the
Obligations of the Buyers.  The
obligation of the Buyers to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following conditions:


 


(a)                                  Representations
and Warranties.  The representations
and warranties of the Sellers contained in this Agreement, shall be true and
correct in all material respects (except for such representations and
warranties as are qualified by materiality or Material Adverse Effect, which
representations and warranties shall be true and correct in all respects), as
of the date of the delivery of the Supplemental Sellers Disclosure Schedules
(or the Final Disclosure Schedules, if applicable) in accordance with Section 7.5
and as of the Closing Date as though made on and as of the Closing Date (other
than such representations and warranties that are expressly made as of an
earlier date which need only be true and correct in all material respects or
true and correct, as the case may be, as of such earlier date), except where
the failure of such representations and warranties to be in compliance with the
standard set forth above would not have a Material Adverse Effect.  The Buyers shall have received a certificate
from CCR, signed by a manager of CCR with respect to the representations and
warranties in Article 5 and from the Sellers with respect to their
respective representations and warranties in Article 4 of the
Sellers, certifying as to the matters set forth in this Section 8.2(a).


 


(b)                                 Covenants.  The Sellers shall have performed in all
material respects all obligations required to be performed by the Sellers under
this Agreement and the Escrow Agreement at or prior to the Closing Date.  The Buyers shall have received a certificate,
signed by an executive officer of each of the Sellers and CCR, certifying as to
the matters set forth in this Section 8.2(b).


 


(c)                                  No
Litigation.  There shall be no bona
fide Actions pending against or affecting any of the Sellers, Blocker,
AcquisitionCo or the Companies or any of their respective properties, assets or
rights that (i) would, if determined adversely, have a Material Adverse
Effect,  (ii) challenges the
ownership by the Sellers and their ability to sell to the Buyers, and for the
Buyers to have and hold the right, title and interest in the Millennium Units,
the HoldCo Units or the Blocker Option, as applicable, or (iii) are
reasonably likely to succeed and would, if determined adversely, prevent the
consummation of the transactions contemplated hereby.


 


(d)                                 Material
Adverse Effect.  Since the Exercise
Date, there shall not have been any Effect that would, individually or in the
aggregate, have a Material Adverse Effect.


 


(e)                                  Closing
Deliveries.  The Buyers shall have
received the Amended Nevada Palace Lease, the Assignment Documents, the Payoff
and Release of Liens and the Releases, in each case executed by the appropriate
counterparties.


 


(f)                                    Excluded
Assets.  Each of (i) the
Excluded HoldCo Subsidiaries shall have been sold or transferred to a third
party or dissolved in accordance with Section 7.11, and (ii) the
transfer of the Excluded Opportunities and the agreement set forth in Section 7.12
of the Sellers Disclosure Schedule shall have been completed in accordance with
Section 7.12.


 


(g)                                 GLCP
Closing.  The closing of the purchase
by Crown Two of the GLCP Units from GLCP shall have simultaneously occurred.


 


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(h)                                 Ownership.
Immediately following the Closing, the Buyers collectively shall own, directly
or indirectly, 100% of the issued and outstanding CCR Units.


 


8.3.                              Conditions to the
Obligations of Sellers.  The obligation
of the Sellers to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or waiver, at or prior to the Closing, of
each of the following conditions:


 


(a)                                  Representations
and Warranties.  The representations
and warranties of  the Buyers contained
in this Agreement shall be true and correct in all material respects (except
for such representations and warranties as are qualified by materiality, which
representations and warranties shall be true and correct in all respects), as
of the Closing Date as though made on and as of the Closing Date (other than
such representations and warranties that are expressly made as of an earlier
date which need only be true and correct in all material respects or true and
correct, as the case may be, as of such earlier date), except where the failure
of such representations and warranties to be in compliance with the standard
set forth above would not materially affect its ability to perform its
obligations hereunder and would not prohibit or materially restrict the
performance of this Agreement by the Buyers. 
The Sellers shall have received a certificate, signed by an executive
officer of each of the Buyers, certifying as to the matters set forth in this Section 8.3(a).


 


(b)                                 Covenants.  Each Buyer shall have performed in all
material respects all obligations required to be performed by such Buyer under
this Agreement and the Escrow Agreement at or prior to the Closing Date.  The Sellers shall have received a
certificate, signed by an executive officer of the managing member of the
managing member of each of the Buyers, certifying as to the matters set forth
in this Section 8.3(b).


 


(c)                                  Nevada
Palace Lease.  The Buyers shall have
delivered a fully executed copy of the Amended Nevada Palace Lease.


 


(d)                                 Receipt
of Purchase Price.  The Sellers shall
have received from the Buyers the payment of the Purchase Price required by Section 2.2
hereof.


 


ARTICLE 9


 


Termination


 


9.1.                              This Agreement may be
terminated and shall be of no further force and effect at any time prior to the
Closing


 


(a)                                  
immediately, without action of the parties,


 


(i)                                     upon
the termination of the Preferred Purchase Agreement or the closing of the
purchase thereunder by the Buyers of the 4.1% Interest; or


 


(ii)                                  if
the Option has not been exercised prior to the expiration of the Exercise
Period; or


 


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(b)                                 by
the mutual written consent of the Sellers, on the one hand, and the Buyers, on
the other hand;


 


(c)                                  by
either the Sellers or the Buyers, if:


 


(i)            if
the Closing shall not have occurred by the sixtieth (60th) day after the delivery of the Final
Exercise Notice, provided that in order for a party to seek to terminate this
Agreement pursuant to this Section 9.1(c)(i), it must not be in
material breach of its covenants and agreements under this Agreement such that
the conditions set forth in Sections 8.2(a) or  8.2(b) or
Sections 8.3(a) or 8.3(b), as applicable, are incapable of being
satisfied; or


 


(ii)           any
Restraint having the effect set forth in Section 8.1(c) shall
be in effect and shall have become final and nonappealable; provided, that the
right to terminate this Agreement pursuant to this Section 9.1(c)(ii) shall
not be available to a party unless  (i) such
party shall have used its reasonable best efforts (in the manner contemplated
by Section 7.4) to prevent the entry of any such Restraint and to
appeal as promptly as practicable any judgment that may be entered and (ii) such
party’s failure to fulfill or cause to be fulfilled in any manner any
obligation under this Agreement shall not have meaningfully contributed to such
Restraint; or


 


(iii)          any
applicable Gaming Authority shall have conclusively determined not to grant any
Gaming Approval, the receipt of which is necessary to satisfy the condition set
forth in Section 8.1(b); provided that in order for a party to seek
to terminate this Agreement pursuant to this Section 9.1(c)(iii),
it must have complied in all material respects with its obligations under Section 7.4.


 


ARTICLE
10


 


Indemnification


 


10.1.                        Survival.  If the Closing occurs, the representations
and warranties contained in this Agreement shall survive for a period of two (2) years
after the Closing Date (the “Survival Period”); provided, that (a) the
representations and warranties contained in Section 5.10 (Employee
Benefit Matters), and Section 5.16 (Environmental Matters) shall
survive until the expiration of 90 days after the applicable statutes of
limitations, and (b) the representations and warranties contained in Section 4.1
(Millennium Representations), Sections 4.2(a), (b), (c), (d) and
(e) (Certain HoldCo Representations), Section 4.3(a) (Sellers’
Good Standing), Section 4.3(b) (Sellers’ Authority;
Enforceability), Section 5.1 (Company Organization and Good
Standing), Section 5.2 (Company Capitalization), Section 6.1
(Buyer Organization and Good Standing) and Section 6.2 (Buyer
Authority; Enforceability) shall survive in perpetuity with respect to the
matters addressed in such Sections.  The
covenants and agreements contained in


 


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this Agreement
shall survive the Closing Date.  If
written notice of a claim has been given in accordance with Section 10.2(e) prior
to the expiration of the applicable representations, warranties, covenants or
agreements, then the applicable representations, warranties, covenants or
agreements shall survive as to such claim, until such claim has been finally
resolved.  Notwithstanding anything to
the contrary contained in this Agreement, it is the explicit intent of each
party hereto that no party hereto is making any representations or warranties
whatsoever, express or implied, to any other party hereto except those
representations and warranties contained in Article 4, Article 5
and Article 6 or Section 11.15.


 


10.2.        Indemnification


.


(a)           By Sellers.  From and after the Closing, the Sellers shall
indemnify, defend, save and hold harmless the Buyers and the Parent and their
Affiliates (including the Companies), successors and assigns and each of the
foregoing’s respective officers, directors, managers, members, employees and
agents (collectively, the “Buyer Indemnified Parties”), from and against
any and all Damages (without duplication) arising out of, relating to,
resulting from or in connection with:


 


(i)            the
breach or failure to be true and correct of any representation or warranty made
by any of the Sellers or CCR under Article 5 of this Agreement
(subject to Section 7.5(b) with respect to any breach of any
representation or warranty for Pre-Closing Events, it being agreed that for
purposes of such right to indemnification, such representations and warranties
shall be deemed not to be qualified by any references therein to knowledge or
materiality generally or to whether or not any breach would result or could be
expected to result in a Material Adverse Effect, and any such qualification
shall in all respects be disregarded);


 


(ii)           the
breach of or failure to perform any covenant or agreement made or to be
performed by any of the Sellers or CCR contained in this Agreement, the Escrow
Agreement or any other agreement contemplated hereby or thereby;


 


(iii)          the
Excluded HoldCo Subsidiaries; and


 


(iv)          the
Excluded Opportunities and the agreements and arrangements related thereto.


 


(b)           By Millennium.
From and after the Closing, Millennium shall indemnify, defend, save and hold
harmless, the Buyer Indemnified Parties, from and against any and all Damages
(without duplication) arising out of, relating to, resulting from or in
connection with the breach of any representation or warranty made by Millennium
under Section 4.1 or Section 4.3 of this Agreement
(subject to Section 7.5(b) with respect to any breach of any
representation or warranty for Pre-Closing Events, it being agreed that for
purposes of such right to indemnification, such representations and warranties
shall be deemed not to be qualified by any references therein to knowledge or
materiality generally or to whether or not any breach would


 


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result or could be expected to
result in a Material Adverse Effect, and any such qualification shall in all
respects be disregarded).


 


(c)           By HoldCo.
From and after the Closing, HoldCo shall indemnify, defend, save and hold
harmless, the Buyer Indemnified Parties, from and against any and all Damages
(without duplication) arising out of, relating to, resulting from or in
connection with the breach of any representation or warranty made by HoldCo
under Section 4.2 or Section 4.3 of this Agreement
(subject to Section 7.5(b) with respect to any breach of any
representation or warranty for Pre-Closing Events, it being agreed that for
purposes of such right to indemnification, such representations and warranties
shall be deemed not to be qualified by any references therein to knowledge or
materiality generally or to whether or not any breach would result or could be
expected to result in a Material Adverse Effect, and any such qualification
shall in all respects be disregarded); and


 


(d)           By Parent and
Buyers.  From and after the Closing,
the Parent and the Buyers shall jointly and severally indemnify, defend, save
and hold harmless the Sellers and their respective Affiliates, successors and
assigns and each of the foregoing’s respective officers, directors, managers,
members, employees and agents (collectively, the “Seller Indemnified Parties”)
from and against any and all Damages (without duplication) arising out of,
resulting from or in connection with:


 


(i)                                     the
breach or failure to be true and correct of any representation or warranty made
by the Buyers and the Parent in Article 6 of this Agreement (it
being agreed that for purposes of such right to indemnification, such
representations and warranties shall be deemed not to be qualified by any
references therein to knowledge or materiality generally, and any such qualification
shall in all respects be disregarded); and


 


(ii)                                  the
breach of or failure to perform any covenant or agreement by any Buyer or the
Parent contained in this Agreement, the Escrow Agreement or any other agreement
contemplated hereby or thereby.


 


(e)           Procedure.  Any party seeking indemnification under this Section 10.2
(but not, for the avoidance of doubt, under Section 7.10, Section 7.4(h) or
Section 7.21(c)) (an “Indemnified Party”) shall give the
party from whom indemnification is being sought (an “Indemnifying Party”)
notice of any matter which such Indemnified Party has determined has given or
could give rise to a right of indemnification under this Agreement as soon as
practicable after such Indemnified Party becomes aware of any fact, condition
or event which may give rise to Damages for which indemnification may be sought
under this Section 10.2, and such notice shall state the nature and
basis of the claim, the amount thereof to the extent known and a reference to
the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises; provided, that the failure to give
notice as soon as practicable shall not release the Indemnifying Party from any
of its obligations except to the extent the Indemnifying Party is materially
prejudiced thereby.  The liability of an
Indemnifying Party under this Section 10.2 with respect to Damages
arising from claims of any third party (including any Governmental Entity)
which are subject to the indemnification provided for in this Section 10.2
(“Third Party Claims”)


 


83

















 


shall be governed by and
contingent upon the following additional terms and conditions: if an
Indemnified Party shall receive notice of any Third Party Claim, the Indemnified
Party shall give the Indemnifying Party notice of such Third Party Claim as
soon as reasonably practicable; provided, that
the failure to provide such notice shall not release the Indemnifying Party
from any of its obligations under this Section 10.2 except to the
extent the Indemnifying Party is materially prejudiced by such failure.  The Indemnifying Party shall be entitled to
assume and control the defense of such Third Party Claim at its expense and
through counsel of its choice if it gives notice of its intention to do so to
the Indemnified Party within thirty (30) days of the receipt of such notice
from the Indemnified Party; provided, that if the
Indemnified Party shall have been advised by counsel that there are one or more
legal or equitable defenses available to it that are different from or in
addition to those available to the Indemnifying Party and representation of
both parties by the same counsel would be inappropriate due to the actual or
potential differences between them, then the Indemnified Party shall be
entitled to retain its own counsel, at the expense of the Indemnifying Party,
so long as the Indemnifying Party shall not be obligated to pay the reasonable
fees and expenses of more than one separate counsel for all Indemnified Parties,
taken together.  If the Indemnifying
Party shall not assume the defense of any Third Party Claim or litigation
resulting therefrom, the Indemnified Party may defend against such claim or
litigation in such manner as it may deem appropriate and may settle such claim
or litigation on such terms as it may deem appropriate; provided, that in settling any claim or litigation in respect of
which indemnification is payable under this Article 10, it shall
obtain the consent of the Indemnifying Party which shall not be unreasonably
withheld.  In the event the Indemnifying
Party exercises its right to undertake any such defense against any such Third
Party Claim as provided above, the Indemnified Party shall cooperate with the
Indemnifying Party in such defense, including by making available to the
Indemnifying Party all witnesses, pertinent records, materials and information
in the Indemnified Party’s possession or under the Indemnified Party’s control
relating thereto and all personnel, premises and properties of the Indemnified
Party relating thereto, in each case, as is reasonably required by the
Indemnifying Party.  Similarly, in the
event the Indemnified Party is, directly or indirectly, conducting the defense
against any such Third Party Claim, the Indemnifying Party shall cooperate with
the Indemnified Party in such defense, including by making available to the
Indemnified Party all such witnesses, records, materials and information in the
Indemnifying Party’s possession or under the Indemnifying Party’s control
relating thereto and all personnel, premises and properties of the Indemnifying
Party relating thereto, in each case, as is reasonably required by the
Indemnified Party.  The Indemnifying
Party shall not, without the written consent of the Indemnified Party, (i) settle
or compromise any Third Party Claim or consent to the entry of any judgment
which does not include an unconditional written release by the claimant or
plaintiff of the Indemnified Party from all liability in respect of such Third
Party Claim or (ii) settle or compromise any Third Party Claim if the
settlement imposes equitable remedies or material obligations on the
Indemnified Party other than financial obligations for which such Indemnified
Party will be indemnified hereunder.  No
Third Party Claim which is being defended in good faith by the Indemnifying
Party in accordance with the terms of this Agreement shall be settled or
compromised by the Indemnified Party without the written consent of the
Indemnifying Party.


(f)            Definition of
Damages.  For purposes of Section 7.10,
this Article 10, Section 7.4(h) and Section 7.21(c),
the term “Damages” means any and all costs, losses, Liabilities,
obligations, damages, lawsuits, deficiencies, fines, judgments, settlements,
penalties, and expenses (whether or not arising out of Third Party Claims),
including reasonable attorneys’


 


84

















 


fees and all amounts paid in
investigation, defense or settlement of any of the foregoing.  Notwithstanding anything in this agreement to
the contrary, no Indemnifying Party shall be required to indemnify or hold
harmless any Indemnified Party or otherwise compensate any Indemnified Party
for damages with respect to lost profits, restitution, damage to reputation,
diminutions in value, mental or emotional distress, exemplary, consequential,
incidental, special or punitive damages.


 


10.3.        Limits
on Indemnification.  Notwithstanding
anything in this Agreement to the contrary:


 


(a)           No amount shall be
payable by Millennium pursuant to Section 10.2(a)(i), Section 10.2(a)(ii),
Section 10.2(a)(iii) or Section 10.2(b) or
HoldCo pursuant to Section 10.2(a)(i), Section 10.2(a)(ii),
Section 10.2(a)(iii) or Section 10.2(c), unless
the aggregate amount of all claims for Damages pursuant to such sections
collectively exceeds $1,500,000 (the “Threshold Amount”), and then only for the
amount by which such Damages exceed the Threshold Amount; provided, that the
Threshold Amount shall not apply to claims for Damages arising out of,
resulting from or in connection with (i) any Fundamental Representation
and (ii) claims for fraud or willful misrepresentation, in each case of (i) and
(ii) which Damages shall be indemnified against in their entirety (but
shall not count for purposes of determining whether Damages have exceeded the
Threshold Amount).


 


(b)           No Buyer Indemnified
Party may seek indemnification for any Damages related to the Meadows Property
against the Sellers pursuant to Section 10.2(a) or Section 7.10
and no amount shall be payable by the Sellers with respect to any such claimed
Damages, until the Buyer Indemnified Party has first made and resolved a claim
for such Damages pursuant to the terms of any indemnity available under the
Meadows Purchase Agreement and the Holdback Agreement; provided, that in
settling or resolving any such claim, the Buyer Indemnified Party shall consult
with the Sellers; provided, further, that upon such resolution, the Sellers
shall indemnify the Buyer Indemnified Parties against such Damages pursuant to Section 10.2(a) or
Section 7.10 to the extent such Damages are in excess of the amount paid
pursuant to the RSA, the Meadows Purchase Agreement or the Holdback Agreement
and for which Damages related to the Meadows Property are payable pursuant to Article 10
or Section 7.10.


 


(c)           The maximum
aggregate amount of Damages for which indemnity may be recovered from
Millennium and its Representatives pursuant to Section 10.2(a)(i), Section 10.2(a)(ii) and
Section 10.2(b) and HoldCo and its Representatives pursuant to
Section 10.2(a)(i), Section 10.2(a)(ii) and Section 10.2(c) shall
be an aggregate amount equal to $25,000,000 (the “Indemnification Cap”);
provided, that the Indemnification Cap shall not apply to claims for
Damages arising out of, resulting from or in connection with (i) breaches
of any Fundamental Representation and (ii) claims for fraud or willful
misrepresentation, in each case of (i) and (ii) which Damages shall
be indemnified against in their entirety (and shall not count for purposes of
determining whether Damages have exceeded the Indemnification Cap).


 


(d)           If an Indemnified
Party recovers Damages from an Indemnifying Party under Section 10.2
or Section 7.10, the Indemnifying Party shall be subrogated, to the
extent of such recovery, to the Indemnified Party’s rights against any third
party with respect to such recovered losses, subject to the subrogation rights
of any insurer providing insurance coverage


 


85

















 


under one of the Indemnified
Party’s policies and except to the extent that the grant of subrogation rights
to the Indemnifying Party is prohibited by the terms of the applicable
insurance policy.


 


(e)           An Indemnified Party
shall not be entitled to multiple recovery for the same Damages.


 


10.4.        Escrow


.


(a)           Any and all claims
for Damages under Section 10.2(a)(i), Section 10.2(a)(ii),
Section 10.2(b) and Section 10.2(c) by the
Buyer Indemnified Parties against the Sellers up to an amount equal to the
Indemnity Escrow Amount shall be payable solely from the Indemnity Escrow
Account with no recourse by the Buyer Indemnified Parties against Millennium or
HoldCo directly or personally or against any assets of Millennium or Holdco or
their respective Affiliates; provided, that to the extent the aggregate amount
of Damages with respect to claims for which the Buyer Indemnified Parties may
seek indemnity from Millennium pursuant to Section 10.2(a)(i), Section 10.2(a)(ii) or
Section 10.2(b) or HoldCo pursuant to Section 10.2(a)(i),
Section 10.2(a)(ii) or Section 10.2(c) is in
excess of the Indemnity Escrow Amount, the Buyer Indemnified Parties may pursue
such claims against Millennium or HoldCo directly and personally, subject to
the terms of this Article 10, including Section 10.2(e).  All other claims for indemnification pursuant
to Section 10.2 and Section 7.10 may, but shall not be
required to be, brought by the Buyer Indemnified Parties against the Indemnity
Escrow Account; provided, that claims for indemnification pursuant to Section 7.10
from and including the second anniversary of the Closing Date to the end of the
Escrow Period shall first be payable from the Indemnity Escrow Account and to
the extent such claims are in excess of any amount of the Indemnity Escrow
Amount remaining in the Indemnity Escrow Account, the Buyer Indemnified Parties
may pursue such claims against Millennium or HoldCo directly or personally.


 


(b)           The Indemnity Escrow
Amount shall be held for three (3) years after the Closing Date (the “Escrow
Period”), except that, to the extent permitted under the Escrow Agreement,
the Indemnity Escrow Amount may be withheld after the expiration of the Escrow
Period to satisfy (i) claims for indemnification that are the subject of
an indemnity claim by a Buyer Indemnified Party pursuant to a notice delivered
to the Sellers prior to the expiration of the Escrow Period or (ii) claims
first being pursued against third parties in accordance with Section 10.3(b) or
Section 10.7. Within one (1) Business Day after the final
resolution of a particular claim (such final resolution to be evidenced by (i) joint
written instructions to the Escrow Agent (“Joint Instructions”), or (ii) a
final non-appealable order of a court of competent jurisdiction), the Buyers
and the Sellers shall deliver Joint Instructions to the Escrow Agent to (x) pay
to the Buyers from the Indemnity Escrow Account an amount equal to the Damages
in respect of such claim to which the Buyer Indemnified Parties shall have been
determined to be entitled and, if such final resolution has occurred after the
Escrow Period, (y) pay to the Sellers the excess, if any, of (A) the
remaining amount in the Indemnity Escrow Account over (B) the aggregate
amount of unresolved claims, in accordance with each Seller’s payment
percentage as set forth in Exhibit D, by wire transfer of
immediately available funds.


 


(c)           Insurance.  Payments by the Sellers pursuant to Section 10.2(a)(i) or
Section 7.10 shall be limited to (i) the amount of any
liability or damage that remains after deducting therefrom any insurance
proceeds and any indemnity, contribution or other similar


 


86

















 


payment actually recovered by
the Buyer from any third party with respect thereto, net of any Taxes imposed
on receipt of such amounts, plus (ii) out-of-pocket costs of collection
thereof, co-pays, increases in premiums or deductibles and related expenses.


 


10.5.        Tax
Benefit.  The amount of any payment
to an Indemnified Party pursuant to Article 10 or Section 7.10
shall be reduced by the amount of any Tax Benefit Actually Realized by the
Indemnified Party, which Tax Benefit is solely attributable to the payment of
the Damages upon which the claim for indemnity is based and shall be determined
as follows:


 


(a)           No later than 45
days after the filing of a Tax Return for any taxable period that includes a
date upon which any amount was paid or accrued by the Indemnified Party in
respect of the Liability upon which the claim for indemnity is based, the
Indemnified Party shall provide the Indemnifying Party a detailed statement (a “Tax
Benefit Statement”) specifying the amount, if any, of any Tax Benefit that
was Actually Realized by the Indemnified Party for such Tax period. To the
extent that any deductions or other Tax items that could give rise to a Tax
reduction or savings do not result in such a Tax reduction or savings being
Actually Realized in the year described in the previous sentence, this Section 10.6(a) shall
apply to each subsequent taxable period of the Indemnified Party, as the case
may be, until either such Tax savings are Actually Realized (resulting in a Tax
Benefit) or the losses or other carryforwards to which such deductions or other
Tax items gave rise expire unused, if applicable.  For each relevant taxable period, the
Indemnifying Party shall be provided with full access to the non-proprietary
work papers and other materials and information prepared by the Indemnified
Party or its accountants in connection with the review of the Tax Benefit
Statement; provided, however, that in no event shall an Indemnifying Party have
any access to such non-proprietary work papers and other materials and
information related to any Affiliate of Parent other than Crown One and Crown
Two; and provided, further, that in no event shall an Indemnifying Party have
any access to proprietary work papers and other materials and information.  If the Indemnifying Party disagrees in any
respect with the Indemnified Party’s computation of the amount of the Tax
Benefit Actually Realized, the Indemnifying Party may, on or prior to 45 days
after the receipt of the Tax Benefit Statement, deliver a notice to the
Indemnified Party setting forth in reasonable detail the basis for the
Indemnifying Party’s disagreement therewith (the “Tax Benefit Dispute Notice”).  If no Tax Benefit Dispute Notice is received
by the Indemnified Party on or prior to the 45th day after the Indemnifying
Party’s receipt of the Tax Benefit Statement from the Indemnified Party, the
Tax Benefit Statement shall be deemed accepted.


 


(b)           Within 15 days after
the Indemnified Party’s receipt of a Tax Benefit Dispute Notice, unless the
matters in the Tax Benefit Dispute Notice have otherwise been resolved by
mutual agreement of the parties, the Indemnified Party and the Indemnifying
Party shall jointly select a nationally-recognized independent certified public
accountant (the “Tax Benefit Accountant”); provided, however, that if
the Indemnified Party and the Indemnifying Party are unable to agree upon the
Tax Benefit Accountant within such 15-day period, then the Indemnified Party
and the Indemnifying Party shall each select a nationally-recognized
independent certified public accountant which shall then jointly choose the Tax
Benefit Accountant within 15 days thereafter. The Tax Benefit Accountant shall conduct
such review of the work papers and such other materials and information, and
the Tax Benefit Dispute Notice, and any supporting documentation as the Tax
Benefit Accountant in the Tax Benefit Accountant’s


 


87

















 


sole discretion deems
necessary, and the Tax Benefit Accountant shall conduct such hearings or hear
such presentations by the parties or obtain such other information as the Tax
Benefit Accountant in the Tax Benefit Accountant’s sole discretion deems
necessary.


 


(c)           The Tax Benefit
Accountant shall, as promptly as practicable and in no event later than 45 days
following the date of the Tax Benefit Accountant’s retention, deliver to the
Indemnifying Party and the Indemnified Party a report (the “Tax Benefit
Report”) in which the Tax Benefit Accountant shall, after reviewing the
disputed items set forth in the Tax Benefit Dispute Notice, determine what
adjustments, if any, should be made to the amount of the Tax Benefit Actually
Realized. The Tax Benefit Report shall set forth, in reasonable detail, the Tax
Benefit Accountant’s determination with respect to the disputed items or
amounts specified in the Tax Benefit Dispute Notice, and the revisions, if any,
to be made to the amount of the Tax Benefit Actually Realized, together with
supporting calculations.  All fees and
expenses relating to this work of the Tax Benefit Accountant shall be borne
equally by the Indemnified Party and the Indemnifying Party.  The Tax Benefit Report shall be final and
binding upon the Indemnified Party and the Indemnifying Party, shall be deemed
a final arbitration award that is binding on each of the Indemnified Party and
the Indemnifying Party, and no Party shall seek further recourse to courts,
other arbitral tribunals or otherwise. 
The amount, if any, of the Tax Benefit Actually Realized set forth in
the Tax Benefit Report shall reduce the payment of the Liability upon which the
claim for indemnity is based and the net amount of such payment shall be paid
to the Indemnified Party.


 


(d)           If the Indemnifying
Party has not paid the Indemnified Party the Damages attributable to the claim
giving rise to a Tax Benefit being Actually Realized at the time that such Tax
Benefit is Actually Realized and either (i) the Tax Benefit Statement has
been accepted or (ii) the Tax Benefit Report has been finalized, as
applicable, the amount to be paid by the Indemnifying Party to the Indemnified
Party shall be reduced by the amount of such Tax Benefit.  If the Indemnifying Party has paid the claim
of the Indemnified Party at the time that such Tax Benefit is Actually Realized
and either (x) the Tax Benefit Statement has been accepted or (y) the
Tax Benefit Report has been finalized, as applicable, the Indemnified Party
shall pay the Indemnifying Party the amount of such Tax Benefit no later than
twenty (20) business days after such date.


 


10.6.        Intentionally
Omitted


.


10.7.        Exclusive
Remedy.  Other than claims for or in
the nature of fraud or willful misrepresentation, each party hereby acknowledges
and agrees that, from and after the Closing, without limitation of any
available equitable remedies, its sole remedy relating to the CCR Units, the
Blocker Units, the Business or the subject matter of this Agreement shall be
pursuant to the indemnification provisions of this Article 10, Section 7.10,
Section 7.4(h) and Section 7.21(c).  In furtherance of the foregoing, each party
hereby waives, from and after the Closing, to the fullest extent permitted by
law, any and all other rights, claims, and causes of action it may have against
the other parties or their respective Representatives and Affiliates relating
to the Millennium Units, the HoldCo Units, the Blocker Units, the Business or
the subject matter of this Agreement, other than claims for or in the nature of
fraud.


 


88

















 


10.8.        Adjustment
of Purchase Price.  All payments for
indemnification made pursuant to this Agreement shall be treated for all Tax
purposes as an adjustment to the Purchase Price.


 


ARTICLE
11



General


 


11.1.        Entire
Agreement.  This Agreement, including
the Exhibits hereto, the Buyers and Sellers Disclosure Schedules and the other
agreements, documents and written understandings referred to herein or
otherwise entered into by the parties hereto on the date hereof (including the
Escrow Agreement) and the Confidentiality Agreement, dated March 12, 2009,
between Parent and CCR (the “Confidentiality Agreement”), constitute the
entire agreement and understanding and supersede all other prior covenants,
agreements, undertakings, obligations, promises, arrangements, communications,
representations and warranties, whether oral or written, by any party hereto or
by any director, officer, employee, agent, Affiliate or Representative of any
party hereto.  Except for the documents
referred to in the immediately preceding sentence, there are no covenants,
agreements, undertakings or obligations with respect to the subject matter of
this Agreement other than those expressly set forth or referred to herein and
no representations or warranties of any kind or nature whatsoever, express or
implied, including any implied warranties of merchantability or fitness for a
particular purpose, are made or shall be deemed to be made herein by the
parties hereto except those expressly made herein.


 


11.2.        No
Third Party Rights.  Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
the parties hereto, any rights or remedies of any nature whatsoever under or by
reason of this Agreement or any provision of this Agreement.  This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their respective successors and permitted assigns.


 


11.3.        Counterparts.  This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.  The parties agree and acknowledge that
delivery of a signature by facsimile shall constitute execution by such
signatory.


 


11.4.        Headings.  The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of, or to
affect the meaning, construction or interpretation of, this Agreement.


 


11.5.        Applicable
Law.  This Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware, regardless of the laws that might otherwise govern under
the applicable principles of conflicts of laws.


 


11.6.        Enforcement.  The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and


 


89

















 


provisions of this Agreement in any federal or state court located in
the State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of the federal and state courts
located in the State of Delaware in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal or state court
in the State of Delaware.


 


11.7.        Waiver
of Jury Trial.  EACH PARTY TO THIS
AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.


 


11.8.        Waiver
of Conditions


.


(a)           No claim or right
arising out of this Agreement or the documents referred to in this Agreement
can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
party.  No waiver that may be given by a
party will be applicable except in the specific instance for which it is
given.  No notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.


 


(b)           Except
as otherwise set forth herein, the rights and remedies of the parties hereto
are cumulative and not alternative. Except where a specific period for action
or inaction is provided herein, neither the failure nor any delay on the part
of any party in exercising any right, power or privilege under this Agreement
or the documents referred to in this Agreement shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right, power
or privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any other or further exercise thereof or the exercise of
any other such right, power or privilege. 
The failure of a party to exercise any right conferred herein within the
time required shall cause such right to terminate with respect to the transaction
or circumstances giving rise to such right, but not to any such right arising
as a result of any other transactions or circumstances.


 


11.9.        Transaction
Expenses.  Whether or not the
transactions contemplated by this Agreement or the Escrow Agreement are
consummated, each party shall pay its own fees and expenses incident to the
negotiation, preparation, execution, delivery and performance hereof and
thereof, including the fees and expenses of its counsel, accountants and other
experts, except as expressly provided herein. 
All fees associated with the investment banking services provided by
Deutsche Bank and Mercanti Securities, LLC and legal services of Munger, Tolles &
Olson, LLP, Santoro, Driggs, Walch, Kearney, Holley and Thompson, Brownsten
Hyatt Farber Schreck, DLA Piper US LLP, and Fox Rothschild LLP and all other
service providers to the Sellers in connection with this Agreement and the
transactions contemplated hereby shall not be expenses of the Companies, and
shall be paid by the Sellers at the Closing.


 


90

















 


11.10.      Construction.  Each party has been represented by counsel of
its choice in the negotiation of this Agreement.  This Agreement shall be deemed to have been
drafted by each of the parties hereto jointly, and no rule of construction
shall be invoked respecting the authorship hereof.


 


11.11.      Severability.  In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision or provisions shall be ineffective
only to the extent of such invalidity, illegality or unenforceability, without
invalidating the remainder of such provision or provisions or the remaining
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein, unless such a construction would be unreasonable.


 


11.12.      Amendments.  This Agreement may only be amended by a
written document signed by the Buyers and the Sellers.  Until such an amendment is signed by both
parties, any other agreements, understandings, writings or oral promises or
representations that are at odds with the terms of this Agreement will be of no
effect and will not in any way be binding upon the parties.


 


11.13.      Assignments.


 


(a)           None of the Buyers
nor the Parent may assign any of their rights or obligations under this
Agreement without the prior written consent of the Sellers and any purported
assignment without such consent shall be void, except that each Buyer may
assign this Agreement to its direct or indirect wholly-owned Affiliate.


 


(b)           The Sellers may not
assign any of their rights or obligations under this Agreement without the
prior written consent of the Buyers and any purported assignment without such
consent shall be void.


 


11.14.      Notices.  All notices, requests, instructions, claims,
demands, consents and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given on
the date delivered by hand or by courier service such as Federal Express, or by
other messenger (or, if delivery is refused, upon presentment) or upon receipt
by facsimile transmission (with confirmation), or upon delivery by registered
or certified mail (return receipt requested), postage prepaid, to the parties
at the following addresses:


 


	
  If to the Buyers:

  
	
   

  
	
  The Corporation
  Trust Company

  
	
  1209 Orange
  Street

  
	
  Wilmington,
  Delaware  19801

  
	
  Attention:   Scott Lascala

  
	
        Service
  of Process Department

  
	
  Facsimile:  (302) 655-7813

  



 


91
















 


	
  With a copy to:

  
	
   

  
	
  Crown Limited

  
	
  8 Whiteman Street

  
	
  Southbank, Victoria
  3006

  
	
  Australia

  
	
  Attn: Company Secretary

  
	
  Facsimile: + 61 3 9292
  8815

  
	
   

  
	
  and

  
	
   

  
	
  Skadden, Arps, Slate,
  Meagher & Flom LLP

  
	
  Four Times Square

  
	
  New York, New York
  10036

  
	
  Attn: Patricia Moran

  
	
  Facsimile: (212)
  735-2000

  
	
   

  
	
  If to the Parent:

  
	
   

  
	
  Crown Limited

  
	
  8 Whiteman Street

  
	
  Southbank, Victoria
  3006

  
	
  Australia

  
	
  Attn: Company Secretary

  
	
  Facsimile: + 61 3 9292
  8815

  
	
   

  
	
  With a copy to:

  
	
   

  
	
  Skadden, Arps, Slate,
  Meagher & Flom LLP

  
	
  Four Times Square

  
	
  New York, New York
  10036

  
	
  Attn: Patricia Moran

  
	
  Facsimile: (212)
  735-2000

  
	
   

  
	
  If to the Sellers:

  
	
   

  
	
  Millennium
  Gaming, Inc.

  
	
  9107 West Russell Road

  
	
  Las Vegas, Nevada 89148

  
	
  Attn: Chief Executive
  Officer

  
	
  Facsimile: (702)
  856-5101

  
	
   

  
	
  and

  



 


92

















 


	
  OCM Holdco, LLC

  
	
  333 South Grand Avenue,
  28th Floor

  
	
  Los Angeles, California 90071

  
	
  Attn: Stephen A. Kaplan

  
	
  Facsimile: (213)
  830-6377

  
	
   

  
	
  With a copy to:

  
	
   

  
	
  Munger,
  Tolles & Olson LLP

  
	
  355 South Grand Avenue,
  35th Floor

  
	
  Los Angeles, California 90071

  
	
  Attn: Sandra A. Seville-Jones

  
	
  Facsimile: (213)
  683-5126

  



 


or to such other Persons or addresses as the Person to
whom notice is given may have previously furnished to the other in writing in
the manner set forth above (provided that notice of any change of address shall
be effective only upon receipt thereof).


 


11.15.      Further
Assurances.  Without limiting the
provisions of Section 7.4, the parties hereto shall use
commercially reasonable efforts to do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments or documents as any other
party may reasonably request in order to carry out the intent and purposes of this
Agreement and the consummation of the transactions contemplated hereby.


 


11.16.      Confidentiality.  The disclosure of confidential or proprietary
information by the Sellers or the Buyers to the other shall be governed by the
terms and conditions of the Confidentiality Agreement.  Notwithstanding anything to the contrary set
forth herein or in any other understanding or agreement between the parties
hereto, the parties acknowledge and agree that any obligations of confidentiality
contained herein and therein shall not apply to the tax treatment and tax
structure of this Agreement upon the earlier to occur of (i) the date of
the public announcement of discussions relating to the sale and purchase
described herein, (ii) the date of the public announcement of sale and
purchase described herein, or (iii) the date of the execution of this
Agreement, all within the meaning of Treasury Regulations Section 1.6011-4;
provided, however, that the
foregoing is not intended to affect each party’s privilege to maintain, in its
sole discretion, the confidentiality of communications with its attorneys or
with a federally authorized tax practitioner under Section 7525 of the
Internal Revenue Code.


 


11.17.      Additional
Rules of Construction.  The
following provisions shall be applied wherever appropriate herein:


 


(a)           “herein,” “hereby,” “hereunder,”
“hereof” and other equivalent words shall refer to this Agreement as an
entirety and not solely to the particular portion of this Agreement in which
any such word is used;


 


93

















 


(b)           all definitions set
forth herein shall be deemed applicable whether the words defined are used
herein in the singular or the plural;


 


(c)           all pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require;


 


(d)           the words “include”
and “including” and variations thereof shall not be deemed terms of limitation,
but rather shall be deemed to be followed by the words “without limitation”;


 


(e)           all accounting terms
not specifically defined herein shall be construed in accordance with GAAP;


 


(f)            the captions and
descriptive headings herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof;


 


(g)           any references
herein to a particular Section, Article, Exhibit or Schedule means a Section or
Article of, or an Exhibit or Schedule to, this Agreement unless
another agreement is specified;


 


(h)           the Exhibits and the
Sellers Disclosure Schedules attached hereto are incorporated herein by
reference and shall be considered part of this Agreement as if fully set forth
herein; and


 


(i)            all references to “$”
or “Dollars” shall mean United States Dollars.


 


11.18.      Enforcement
of this Agreement.  Subject to Section 11.6
above, the parties hereto agree that money damages or other remedy at law would
not be sufficient or adequate remedy for any breach or violation of, or default
under, this Agreement by them and that in addition to all other remedies
available to them, each of them shall be entitled to the fullest extent
permitted by law to an injunction restraining such breach, violation or default
and to other equitable relief, including specific performance, with bond or
other security being required.


 


11.19.      Knowledge.  When references are made in this Agreement to
information being “to the knowledge of” a party hereto or similar language,
such knowledge shall refer to the actual knowledge of: (a) for the
purposes of Article 4 and Article 5, William Paulos,
William Wortman, and Tom Lettero for Millennium, and Stephen Kaplan and Skardon
Baker for HoldCo; (b) for the purposes of Article 5, William
Paulos, William Wortman, Tom Lettero, and Guy Hillyer; and (c) for the
purposes of Article 6, Rowen Craigie and Geoff Kleemann.  Such individuals shall be deemed to have “knowledge”
of a particular fact or other matter if such individual is actually aware of
such fact or other matter.


 


[Signature
Pages Follow]


 


94

















 


IN WITNESS WHEREOF, the parties hereto have entered
into and signed this Agreement as of the date and year first above written.


 


 


	
  Signed for CROWN LIMITED by its

  	
   

  	
   

  
	
  attorney under power of attorney in the

  	
   

  	
   

  
	
  presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Garry Besson

  	
   

  	
  /s/Guy Jalland

  
	
  Signature of witness

  	
   

  	
  Signature of attorney

  
	
   

  	
   

  	
   

  
	
  Garry Besson

  	
   

  	
  Guy Jalland

  
	
  Name of witness (print)

  	
   

  	
  Name of attorney (print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed for CROWN CCR GROUP

  	
   

  	
   

  
	
  INVESTMENTS ONE, LLC by its

  	
   

  	
   

  
	
  attorney under power of attorney in the

  	
   

  	
   

  
	
  presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Garry Besson

  	
   

  	
  /s/Guy Jalland

  
	
  Signature of witness

  	
   

  	
  Signature of attorney

  
	
   

  	
   

  	
   

  
	
  Garry
  Besson

  	
   

  	
  Guy
  Jalland

  
	
  Name
  of witness (print)

  	
   

  	
  Name
  of attorney (print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed for CROWN CCR GROUP

  	
   

  	
   

  
	
  INVESTMENTS TWO, LLC by its

  	
   

  	
   

  
	
  attorney under power of attorney in the

  	
   

  	
   

  
	
  presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Garry Besson

  	
   

  	
  /s/Guy Jalland

  
	
  Signature of witness

  	
   

  	
  Signature of attorney

  
	
   

  	
   

  	
   

  
	
  Garry
  Besson

  	
   

  	
  Guy
  Jalland

  
	
  Name
  of witness (print)

  	
   

  	
  Name
  of attorney (print)

  



 

















 


SELLERS:


 


	
  MILLENNIUM
  GAMING, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  William J. Paulos

  	
   

  
	
  Name:

  	
  William J. Paulos

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  OCM
  HOLDCO, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  Stephen A. Kaplan

  	
   

  
	
  Name:

  	
  Stephen A. Kaplan

  	
   

  
	
  Title:

  	
  Manager

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  Ronald N. Beck 

  	
   

  
	
  Name:

  	
  Ronald N. Beck

  	
   

  
	
  Title:

  	
  Manager

  	
   

  
				



 


 


COMPANY:


 


	
  CANNERY
  CASINO RESORTS, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  William C. Wortman

  	
   

  
	
  Name:

  	
  William C. Wortman

  	
   

  
	
  Title:

  	
  Manager