ex41to8k05558_07272009.htm


    Exhibit 4.1

     

    
      AMENDED
AND RESTATED LOAN AGREEMENT

       

      AMENDED
AND RESTATED LOAN AGREEMENT, dated as of July 24, 2009, among EMPIRE RESORTS,
INC., a Delaware corporation (“Borrower”), the GUARANTORS (as defined herein),
THE PARK AVENUE BANK (“PAB”), as assignee of Bank of Scotland (“BoS”), and the
other lenders listed on the signature pages hereof (each a “Bank” and
collectively, the “Banks”) and THE PARK AVENUE BANK, as assignee of BoS, as
agent for the Banks (in such capacity, the “Agent”).

       

      W I T N E
S S E T H :

       

      WHEREAS,
the Borrower has entered into that certain Loan Agreement dated as of January
10, 2005 (as amended, restated, modified or supplemented from time to time prior
to the date hereof, the “Original Loan Agreement”), by and among Borrower, the
Guarantors, BoS as sole lender (the “Original Bank”) and BoS, as agent for the
Original Bank (in such capacity “Original Agent”);

       

      WHEREAS,
it is contemplated that on the date hereof (i) the Original Bank will assign all
of its right, title and interest in, to and under the Original Loan Agreement
and all other Loan Documents (as defined in the Original Loan Agreement) to PAB,
including, without limitation, all Loans made under the Original Loan Agreement,
and (ii) the Original Agent will assign all of its right, title and interest in,
to and under the Original Loan Agreement and all other Loan Documents (as
defined in the Original Loan Agreement) to the Agent, including, without
limitation, all Liens granted by the Borrower and the Guarantors in all
Collateral;

       

      WHEREAS,
PAB, as Bank and the Agent, is not willing to acquire the interests of BoS under
the Original Loan Agreement and the Loan Documents relating thereto unless the
Borrower and the Guarantors agree to amend and restate the Original Loan
Agreement in the form of this Agreement;

       

      NOW,
THEREFORE, in consideration of the mutual promises contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

       

      AMENDMENT
AND RESTATEMENT

       

      As of the
date of this Agreement, the terms, conditions, covenants, agreements,
representations and warranties contained in the Original Loan Agreement shall be
deemed amended and restated in their entirety as follows and the Original Loan
Agreement shall be superseded by this Agreement; provided, however, that nothing
contained in this Agreement shall impair, limit or affect the Liens heretofore
granted, pledged and/or assigned to Agent, as assignee of the Original Agent,
for the ratable benefit of the Banks as security for the Obligations under the
Original Loan Agreement and the Loan Documents as defined therein and this
Agreement and the Loan Documents.

       

      Accordingly,
the parties hereto agree as follows:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        Section
1.              DEFINITIONS.  (a)  Terms
used in this Agreement which are defined in Annex I hereto shall have the
meanings specified in such Annex I (unless otherwise defined herein) and shall
include in the singular number the plural and in the plural number the
singular.

         

        (b)           Unless
otherwise specified, each reference in this Agreement or in any other Loan
Document to a Loan Document shall mean such Loan Document as the same may from
time to time be amended, restated, supplemented or otherwise
modified.

         

        (c)           All
references to Sections in this Agreement or in Annex I hereto shall be deemed
references to Sections in this Agreement unless otherwise
specified.

         

        Section
2.               THE LOAN FACILITIES.

         

        2.1.           Validity of Original Loan
Agreement and Loan Documents.  Borrower and each Guarantor
represent, acknowledge and agree that (i) at all times prior to the amendment
and restatement of the Original Loan Agreement pursuant to this Agreement, the
Original Loan Agreement and each of the Loan Documents as defined therein were
the legal, valid and binding obligations of Borrower and each Guarantor, as
applicable, enforceable in accordance with their respective terms, subject, as
to enforceability, to applicable bankruptcy, insolvency, reorganization and
similar laws affecting the enforcement of creditors’ rights generally and to
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), (ii) as of the date hereof,
immediately prior to the amendment and restatement of the Original Loan
Agreement pursuant to this Agreement, the aggregate principal amount of
Obligations as defined in and outstanding under the Original Loan Agreement is
$6,917,040.77, which amount is due and owing to the Original Bank and the
Original Agent by Borrower and the Guarantors without defense, offset, claim or
recoupment or counterclaim or deduction of any kind, nature or description
whatsoever, (iii) the amendment and restatement of the Original Loan Agreement
pursuant to this Agreement and the amendment, assignment and/or modification of
the Loan Documents under the Original Loan Agreement which constitute the Loan
Documents under this Agreement shall not in any manner affect their legality,
validity or binding effect upon the Borrower and the Guarantors, as applicable,
and (iv) the Guaranties of the Guarantors are, and will remain, in full force
and effect in accordance with their respective terms without any diminution
thereof and that Guarantor has any defense, counterclaim, claim of recoupment or
offset of any kind or nature whatsoever.

         

        2.2.           Waiver and Release by
Borrower and Guarantor.  Each of Borrower and each Guarantor
waives and affirmatively agrees not to allege or otherwise pursue any or all
defenses, affirmative defenses, counterclaims, claims, causes of action, setoffs
or other rights that it may have, as of the date hereof, to contest on any basis
whatsoever, including without limitation based upon theories of liability such
as “lender in control”, “lender liability” and/or “deepening insolvency” or
otherwise, (a) any Defaults, Events of Default or other conditions or under or
matters relating to the Original Loan Agreement or the other Loan Documents
thereunder, (b) the acquisition by PAB from BoS of the Obligations under the
Original Loan Agreement and the other Loan Documents, the amendment and
restatement of the Original Loan Agreement pursuant to this Agreement, or the
assignment, amendment or other modification of any Loan Document in connection
therewith, (c) the right of Agent to all of the rents, issues, profits and
proceeds from the Collateral, (d) the Lien of Original Agent or Agent, as
assigned to it by the Original Agent, in any property, whether real, personal,
or mixed, tangible or intangible, or any right or other interest, now or
hereafter arising in connection with any Collateral, or (e) the conduct of
Original Agent, Agent, Original Bank and/or Bank in administering the financing
arrangements under the Original Loan Agreement, the other Loan Documents
thereunder, this Agreement or the other Loan Documents.  Each of
Borrower and each Guarantor hereby releases, remises, acquits and forever
discharges Agent, Bank and their respective employees, agents, representatives,
consultants, attorneys, fiduciaries, servants, officers, directors, partners,
predecessors, participants, successors and assigns, subsidiary corporations,
parent corporations, and related corporate divisions (all of the foregoing
hereinafter called the “Released Parties”),
from any and all actions and causes of action, judgments, executions, suits,
debts, claims, demands, Obligations, obligations, damages and expenses of any
and every character, known or unknown, direct and/or indirect, at law or in
equity, of whatsoever kind or nature, for or because of any matter or things
done, omitted or suffered to be done by any of the Released Parties prior to and
including the date of execution hereof, and in any way directly or indirectly
arising out of or in any way connected to (i) the Original Loan Agreement, the
other Loan Documents relating thereto, this Agreement or any other Loan
Document, (ii) any discussions, commitments, negotiations, conversations or
communications with respect to the acquisition by PAB from BoS of the
Obligations under the Original Loan Agreement and the other Loan Documents, the
amendment and restatement of the Original Loan Agreement pursuant to this
Agreement, the assignment, amendment or other modification of any Loan Document
in connection therewith, or the refinancing, restructuring or collection of any
Obligations and/or the administration thereof or the Obligations created thereby
or (iii) any matter related to the foregoing (all of the foregoing hereinafter
called the “Released
Matters”).  Each of Borrower and Each Guarantor acknowledges
that the agreements in this Section are intended to be in full satisfaction of
all or any alleged injuries or damages arising in connection with the Released
Matters.

         

        
          
            
            

          

          
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        2.3.           Continuation
of Loans; Application of Reserve Account and Partial Prepayment of
Loans.

         

        (a)           On
the Closing Date, all Loans under (and as defined in) the Original Loan
Agreement that remain outstanding immediately prior to the effectiveness of the
amendment and restatement of the Original Loan Agreement pursuant to this
Agreement shall continue to be loans (the “Loans”) to the Borrower under this
Agreement.  As of such date and time, the aggregate outstanding
principal amount of the Loans is $6,917,040.77.

         

        (b)           On
the Closing Date, the amount on deposit in the Reserve Account under the
Original Loan Agreement that was transferred from the Original Agent to the
Agent on the Closing Date is $467,427.05.  Such amount shall be
applied by the Agent on the Closing Date to the partial prepayment of the
Loans.

         

        (c)           On
the Closing Date, the Borrower shall make a prepayment of the Loans in the
amount of $2,000,000 by wire transfer of immediately available funds to the
Agent.  After giving effect to the prepayments set forth in Section
2.3(b) above and this Section 2.4(c), the outstanding principal amount of the
Loans shall be $4,449,613.72.  It is understood that such $2,000,000
shall be funded by the Borrower to the Agent and applied by the Agent in
connection with the acquisition of the Loans from BoS.

         

        
          
            
            

          

          
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        (d)           The
Loans shall be evidenced by one or more amended and restated secured promissory
notes (collectively, the “Note”) in
substantially the form attached hereto as Exhibit A.  Once repaid,
Loans may not be reborrowed unless approved by PAB in its sole
discretion.

         

        2.4.           Mandatory
Repayments and Prepayments of Loans.  

         

        (a)           The
Borrower shall repay the Loans on the Maturity Date.

         

        (b)           Commencing
with the fiscal quarter ending December 31, 2009, if, as of the last day of any
fiscal quarter ending December 31, 2009, the Consolidated Debt Service Coverage
Ratio with respect to Monticello Raceway Management shall not be greater than
1.5 to 1, then such amount of the unpaid principal amount of the Loans which, if
repaid, would cause the Consolidated Debt Service Coverage Ratio with respect to
Monticello Raceway Management to be greater than 1.5 to 1 shall be immediately
due and payable as of such day, provided that if the
Consolidated Debt Service Coverage Ratio with respect to Monticello Raceway
Management would be less than 1.5 to 1 even if the entire unpaid principal
amount of all the Loans were repaid, then the entire unpaid principal amount of
all the Loans and of all of the other unpaid Obligations shall become and be
absolutely and unconditionally due and payable in full on such day.

         

        (c)           Promptly
after each Transfer of any asset permitted to be Transferred under Section 8.8
or otherwise Transferred by any member of the Empire Group (except any Transfer
of the Trust Land to the United States in trust for an Indian Tribe which is
developing a casino in conjunction with the Borrower, which shall not cause any
obligation by the Borrower hereunder), the Borrower shall (subject, however, to
the provisions of Section 8.8) pay to the Agent an amount equal to the lesser of
(x) said Net Proceeds and (y) the sum of the outstanding principal amount of the
Loans, the accrued and unpaid interest thereon and any amounts due in connection
with the repayment thereof and the Agent shall apply such amount to the
prepayment of the Loans, the accrued and unpaid interest thereon and any amounts
due in connection with the repayment thereof (an “Asset Sale Mandatory
Prepayment”).  Notwithstanding the foregoing, the Borrower shall not
be subject to the Asset Sale Mandatory Prepayment until the Empire Group
receives aggregate Net Proceeds from the Transfer of assets equal to or in
excess of $2.5 million (at which time, any previously unpaid Net Proceeds from
prior asset Transfers, and not just the amount in excess of $2.5 million, shall
be applied as required pursuant to the second preceding
sentence).  Upon the completion of each Asset Sale Mandatory
Prepayment, the aggregate Net Proceeds for future asset Transfers will be reset
at zero.

         

        (d)           Promptly
(and in any event within five days) after each issuance of any debt
(subordinated or otherwise) after the Closing Date by any Loan Party, other than
Permitted Subordinated Debt (the issuance of which shall not be subject to this
Section 2.4(g)), to a Person not a Loan Party, the Borrower shall pay an amount
equal to the lesser of (x) said Net Proceeds and (y) the sum of the outstanding
principal amount of the Loans, the accrued and unpaid interest thereon and any
amounts due in connection with the repayment thereof and the Agent shall apply
such amount to the prepayment of the Loans, the accrued and unpaid interest
thereon and any amounts due in connection with the repayment thereof, it being
acknowledged by the Guarantors and the Borrower that no such debt issuance shall
be permitted hereunder unless expressly permitted by the terms hereof or the
Required Lenders consent in writing thereto.

         

        
          
            
            

          

          
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        (e)           All
prepayments received by the Agent pursuant to this Section 2.4 shall be
distributed by the Agent in accordance with the provisions of Section
5.3.

         

        2.5.           Voluntary Repayment of
Loans.  The Borrower shall have the right, at any time and from
time to time, upon at least three Business Days’ prior written notice to the
Agent (which notice the Agent shall promptly transmit to the Banks in writing
(including electronic mail) or by telephone, confirmed as soon as possible
thereafter in writing (including electronic mail)) to prepay the Loans, in
whole, or in part in amounts equal to $100,000 (and, if greater, in integral
multiples of $100,000), and without premium or penalty.  All
prepayments under this Section shall be accompanied by all accrued but unpaid
interest on the principal amount to be prepaid.

         

        2.6.           Participants; Increase in
Amount of Loans.  The Borrower acknowledges that as of the
Closing Date, after giving effect to the prepayments of the Loans set forth in
Section 2.3, PAB, as sole Bank, shall be executing a loan participation
agreement in favor of Stamford (Victoria) LP with respect to $1 million of the
Loans.  From time to time after the Closing Date, upon ten (10)
Business Days’ prior written notice, so long as no Event of Default has occurred
and is continuing, the Borrower may request that the Agent and PAB, as sole
Bank, make available to the Borrower additional Loans, subject to the following
conditions: (a) such additional Loans shall be funded in full by parties
selected by Borrower and approved by Agent, which approval shall not be
unreasonably withheld, (such approval to be based, among other things, on the
identity and financial condition of such parties), (b) such parties shall
execute a participation agreement in form and substance satisfactory to PAB, as
Lender, with respect to such additional Loans, which additional Loans shall be
subordinated to the PAB Loan and the participation therein in favor of Stamford
(Victoria) LP with respect to $1 million of the Loans; provided, however that
additional Loans in an aggregate original outstanding principal amount not to
exceed $2,000,000 shall be pari passu with the PAB Loan and the participation
therein in favor of Stamford (Victoria) LP with respect to $1 million of the
Loans, (c) the aggregate principal amount of all such additional Loans shall not
exceed $10,000,000, and (d) the Borrower shall execute and deliver such
documents, agreements and instruments, including without limitation a
participation agreement in form and substance reasonably satisfactory to Agent
reasonably requested by Agent, and pay all expenses incurred by the Agent and
PAB, as Lender, in connection with such additional Loans, including without
limitation payment of all applicable mortgage recording taxes.  All
such additional Loans shall be subject to the same terms and provisions
applicable to the Loans outstanding as of the Closing Date.

         

        2.7.           [Intentionally
Omitted].

         

        2.8.           Maturity
Date.

         

        (a)           Subject
to Sections 2.8(b) and 2.8(c) hereof, the Maturity Date shall be the Short Term
Maturity Date.

        
          
            
            

          

          
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        (b)           If
the Borrower enters into the Settlement and satisfies all of the conditions
precedent set forth in Section 6A of this Agreement prior to the Short Term
Maturity Date (or ninety (90) days after the Short Term Maturity Date so long as
all interest that would be due and payable on the unpaid principal amount of the
Loans during such ninety (90) day period has been paid prior to the commencement
of such ninety (90) day period), the Borrower shall have the option to extend
the Maturity Date until the First Extended Maturity Date (such extended term an
“Extension Period”).

         

        (c)           If
the Maturity Date is extended pursuant to Section 2.8(b) hereof and Borrower
satisfies all of the conditions precedent set forth in Section 6A of this
Agreement as of the end of the Extension Period then in effect, Borrower shall
have the option to further extend the Maturity Date for up to two (2)
consecutive Extension Periods of six (6) months each.

         

        (d)           Upon
each extension of the Maturity Date pursuant to this Section 2.8, Borrower shall
pay to the Agent a fee in the amount of three percent (3%) of the Loans
outstanding as of the date of the commencement of the applicable Extension
Period, which fee shall be fully paid and earned as of such date and shall be
nonrefundable.

         

        Section
3.               INTEREST.

         

        3.1.           Rate of
Interest.  The Borrower agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the Closing
Date until maturity (whether by acceleration or otherwise) at a rate per annum
(the “Basic Interest Rate”) equal to the greater of (i) the fluctuating rate of
interest announced from time to time in The Wall Street Journal as the “US prime
rate” (or if such rate is no longer published by The Wall Street Journal, such
rate as the Agent shall announce from time to time as its “prime rate”, which
rate is not necessarily the lowest rate that the Agent charges to its customers)
plus 5.50% and (ii) 9.00%.

         

        3.2.           Interest Payment
Dates.  Interest on the Loans shall be payable in advance on
the Closing Date, with respect to the portion of the month of July, 2009
following the Closing Date, and on the last day of each calendar month for the
immediately succeeding month, commencing July 31, 2009.

         

        3.3.           [Intentionally
Omitted].

         

        3.4.           Default Interest
Rate.  Upon the occurrence of any Event of Default, Borrower
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding at a rate per annum equal to the Basic Interest Rate plus 6%
(the “Default Rate”).

         

        3.5.           [Intentionally
Omitted].

         

        3.6.           Changed
Circumstances.  In case the adoption of or any change in any
law, regulation, treaty or official directive or in the interpretation or
application thereof by any court or by any governmental authority charged with
the administration thereof or the compliance with any guideline or request of
any central bank or other governmental authority (whether or not having the
force of law) after the date hereof,

         

        
          
            
            

          

          
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        (a)           subjects
any Bank to any tax with respect to payments of principal or interest or any
other amounts payable hereunder or under any of the other Loan Documents by the
Borrower or otherwise with respect to the transactions contemplated hereby or by
any of the other Loan Documents (except for taxes on the overall net income of
such Bank imposed by the United States of America or any political subdivision
thereof), or

         

        (b)           imposes,
modifies or deems applicable any deposit insurance, reserve, special deposit or
other similar requirements against assets held by, or deposits in or for the
account of, or loans by, any Bank, or

         

        (c)           imposes
upon any Bank any other condition with respect to its or the Borrower’s
performance under this Agreement or any of the other Loan
Documents,

         

        and the
result of any of the foregoing is to increase the cost to such Bank, reduce the
income receivable by such Bank or impose any expense upon the Bank with respect
to any of the Loans, then such Bank shall promptly notify the Borrower and the
Agent thereof.  The Borrower agrees to pay to such Bank the amount of
such increase in cost, reduction in income or additional expense as and when
such cost, reduction or expense is incurred or determined, upon presentation by
such Bank to the Borrower of a written statement of the amount and setting forth
in reasonable detail the Bank’s calculation thereof.

         

        3.7.           Capital
Requirements.  If at any time after the date hereof any Bank
shall determine that (a) the adoption of or change in any law, rule, regulation
or guideline regarding capital requirements for banks or bank holding companies,
or any change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (b) compliance by such
Bank or its parent bank holding company with any guideline, request or directive
of any such entity regarding capital adequacy (whether or not having the force
of law), has the effect of reducing the return on such Bank’s capital to a level
below that which such Bank or such holding company could have achieved but for
such adoption, change or compliance (taking into consideration such Bank’s or
such holding company’s then existing policies with respect to capital adequacy
and assuming the full utilization of such entity’s capital) by any amount deemed
by such Bank to be material, then such Bank shall notify the Borrower and the
Agent thereof.  The Borrower agrees to pay to such Bank the amount of
such reduction in return on capital as and when such reduction is determined,
upon presentation by such Bank of a written statement of the amount and setting
forth such Bank’s calculation thereof.  In determining such amount, a
Bank may use any reasonable averaging and attribution methods.

         

        Section
4.               CLOSING CONSIDERATION

         

        4.1.           Warrants.  Borrower
shall issue Warrants on the Closing Date as follows:  (a) to PAB, as
Bank, Warrants for 166,667 shares; and (b) to Alan Lee, Warrants for 111,111
shares.

         

        4.2.           Current Arrangement
Fee.  Borrower agrees to pay to the Agent a non-refundable fee
(the “Current Arrangement Fee”) of $111,281.35.  Said fee shall be
payable in full on the Closing Date.

         

        
          
            
            

          

          
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        4.3.           Participation Management
Fee.  Borrower agrees to pay to Agent, for the sole benefit of
Agent, on the last day of each month a participation management fee in an amount
equal to 1% per annum of the outstanding principal amount of Loans funded by
participants.

         

        
          Section
5.               PAYMENTS,
ETC.

           

          5.1.           Payments on Non Business
Days; Calculations.  Whenever any payment to be made hereunder
or under any Note shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be extended to the next succeeding Business Day
and interest shall be payable at the applicable rate during such
extension.  Interest (including interest on Loans), commitment
commissions and other fees, hereunder and under the other Loan Documents, shall
be calculated on the basis of a 360 day year and the actual number of days
elapsed.  The Borrower hereby authorizes and directs the Agent and
each Bank to charge any account (including, without limitation, the Reserve
Account) of the Borrower maintained at any office of the Agent or such Bank with
the amount of any principal, interest or fee when the same becomes due and
payable under the terms hereof or of the Notes; provided, however, that neither
the Agent nor any Bank shall be under any obligation to charge any such
account.

           

          5.2.           Net Payments;
Application.  (a)  All payments hereunder and under
the other Loan Documents (including, without limitation, prepayments pursuant to
Section 2) shall be made by the relevant Loan Parties to the Agent in freely
transferable U.S. dollars and in same day funds at the Closing Office by 2:00
p.m. on the date when due without setoff or counterclaim and in such amounts as
may be necessary in order that the amount of all such payments actually received
by the party entitled thereto (after (i) withholding for or on account of any
present or future taxes, levies, imposts, duties or other similar charges of
whatsoever nature imposed on the amounts described above by any Government
Authority, other than any tax (other than such taxes referred to in clause (ii)
below) imposed on a Bank’s net income pursuant to the income tax laws of the
jurisdiction where such Bank’s principal or lending office or offices are
located (collectively, the “Taxes”), and (ii) deduction of an amount equal to
any taxes on or measured by the net income payable to such Bank with respect to
the amount by which the payments required to be made by this Section 5.2 exceed
the amount otherwise specified to be paid under this Agreement and the Notes)
shall not be less than the amounts otherwise specified to be paid under this
Agreement and the Notes.  With respect to each such deduction or
withholding, the relevant Loan Party shall promptly (and in no event later than
30 days thereafter) furnish to the Agent such certificates, receipts and other
documents as may be required to establish any tax credit, exemption or reduction
in rate to which any Bank or holder of a Note may be entitled.  Each
Bank, other than a Bank organized and existing under the laws of the United
States of America or any political subdivision thereof, agrees to furnish the
Borrower, as soon as practicable after any written request of the Borrower to
such effect, any executed form reasonably requested by the Borrower such as
Internal Revenue Service Form W-8ECI or W-8BEN, and any other applicable form as
to such Bank’s entitlement, if any, to exemption from, or a reduced rate of, or
its subjection to, United States withholding tax on amounts payable to it
hereunder or under the Notes and each such Bank undertakes to use its best
efforts promptly to notify the Borrower of any material change in any
information, statement or form so furnished to the Borrower; provided, however,
that any failure on the part of any Bank to furnish any such information,
statements or forms shall in no way affect the obligations of the Borrower or
the rights of any Bank under the terms of this Agreement or of the
Notes.  Notwithstanding the foregoing, in the event any Bank fails to
furnish any such information, statements or forms, the relevant Loan Party shall
only pay to such Bank such amounts under this Agreement and the Notes as are due
without those additions described in clauses (i) and (ii) above that would not
have been required had such information, statements or forms been provided in a
timely fashion.  As promptly as practicable after any Bank becomes
aware of the existence or occurrence of an event giving rise to the imposition
of United States withholding tax upon amounts payable to it hereunder or under
the Notes, such Bank shall use its reasonable efforts to transfer its Loans to
another office of such Bank with a view to avoiding or mitigating the
consequences of such tax but only if such transfer is not disadvantageous to
such Bank.  If any Bank determines that it is unable to effect such
transfer on or before the thirtieth day after the date such Bank becomes aware
of the existence or occurrence of an event giving rise to the imposition of
United States withholding tax, such Bank shall promptly give notice of such
determination to the Borrower.  Notwithstanding anything to the
contrary contained herein, if the Borrower receives notice of such determination
from such Bank, the Borrower may, by notice to such Bank, prepay the Loans in
full without any termination fee (but with all interest accrued to the date of
prepayment on the Loans and all other amounts then payable to such Bank
hereunder) on the tenth Business Day after the date the Borrower provides the
Bank with such notice.  On or before the tenth day after receipt of
any such notice of intention, such Bank may, by notice to the Borrower,
irrevocably elect to receive payments hereunder reduced by the amount of such
withholding.  If such an election is so made, the relevant Loan Party
(i) shall cease to be under any further obligation to pay any such additional
amount in respect of such withholding and (ii) shall cease to be entitled so to
prepay the Loans by virtue of being required to make such
withholding.  Any Bank which is or becomes subject to such withholding
tax agrees to use its reasonable efforts to provide the Borrower with an
affidavit, within 30 days after such Bank files its tax return, setting forth
the amount of any tax credit it received with respect thereto.

          
            
              
              

            

            
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          No Loan
Party shall be required to pay any increased amounts under this Section 5.2 with
respect to any Taxes to the extent that any obligation to withhold, deduct or
pay amounts with respect to the Taxes existed on the Closing Date (and, in such
case, the Loan Party may deduct and withhold such Taxes from
payments).

           

          (b)           Unless
otherwise specifically provided herein, all payments under or pursuant to, or in
satisfaction of, any of the Borrower’s obligations under this Agreement or under
the Notes (including any received in connection with the foreclosure upon or
other realization on any Collateral) will be applied in the following order of
priority:  (i) to any costs, fees or expenses of or incurred by the
Agent in connection with this Agreement or any other Loan Document; (ii) to any
costs, fees or expenses of or incurred by any Bank in connection with this
Agreement or any other Loan Document; (iii) to any fees then due and payable by
Borrower pursuant to any provision of this Agreement; (iv) to any interest on
the Notes (pro rata according to the aggregate amount of interest then due and
payable on the Notes) then due and payable; (v) to any principal amount then due
under the Notes; (vi) to reduce the unpaid principal amount of the Loans; and
(vii) to any amounts not otherwise listed in this Section 5.2(b) then due and
payable under this Agreement, the Notes or the Security Documents.

           

          5.3.           Distribution by
Agent.  All payments received by the Agent on account of
principal and interest under this Agreement or the Notes or with respect to fees
shall be promptly distributed by the Agent to the Banks (in the type of funds
received by the Agent) as follows:  (a) if in respect of principal,
then on a pro rata basis to each of the Banks; (b) if in respect of fees or
interest paid on the Notes pursuant to Section 3, then on a pro rata basis to
each of the Banks; and (c) if in respect of a payment under Section 3.6, 3.7 or
5.2(a) hereof, to each Bank in accordance with its entitlement
thereto.

           

          
            
              
              

            

            
              9

              
                

              

            

            
              
              

            

          

           

          Section
6.               CONDITIONS PRECEDENT TO
EFFECTIVENESS.

           

          The Banks
shall not be obligated to make the Loans and this Agreement shall not be
effective unless the following conditions have been satisfied or
waived:

           

          6.1.           Original Loan
Agreement.  Agent shall have received executed copies of the
Original Loan Agreement and all other Loan Documents relating thereto and such
other information relating to the Original Loan Agreement satisfactory to
Agent.

           

          6.2.           Default,
etc.  On the Closing Date, there shall exist no Default or
Event of Default and all representations and warranties made by the Loan Parties
herein or in the other Loan Documents or otherwise made by the Loan Parties in
writing in connection herewith or therewith shall be true and correct in all
material respects with the same effect as though such representations and
warranties have been made at and as of such time except to the extent such
representations and warranties were made only as of a specific
date.

           

          6.3.           Notes; amendments to Loan
Documents.  The Agent shall have received the Notes in the form
attached hereto as Exhibit A duly executed and completed by the Borrower and
such amendments or modifications to the other Loan Documents in form and
substance satisfactory to the Agent.

           

          6.4.          
Supporting Documents
of the Loan Parties.  There shall have been delivered to the
Agent (with sufficient copies for each of the Banks) such information and copies
of documents, approvals (if any) and records (certified where appropriate) of
corporate and legal proceedings as the Agent or any Bank may have reasonably
requested relating to the Loan Parties’ entering into and performance of this
Agreement and the other agreements and documents related thereto to which each
is a party.  Such documents shall, in any event, include:

           

          (a)           Certified
copies, to the extent obtainable, of the Charter Documents of each Loan
Party;

           

          (b)           certificates
of authorized officers of each Loan Party, certifying the corporate and limited
liability company resolutions of each such entity relating to the entering into
and performance of the Loan Documents executed and delivered on the Closing Date
to which such entity is a party, and the transactions contemplated thereby;
and

           

          (c)           certificates
of authorized officers of each Loan Party, with respect to the incumbency and
specimen signatures of its officers or representatives authorized to execute
such documents and any other documents and papers, and to take any other action,
in connection therewith.

           

          6.5.           Participation Agreement;
Prefunding of Loan Prepayment.  PAB shall have entered into a
participation agreement with Grand Victoria Capital LLC in form and substance
satisfactory to PAB in an amount fully funded on the Closing Date of $1,000,000,
and the Borrower shall have deposited $2,000,000 with the Agent to satisfy the
obligation set forth in Section 2.3(c) above to prepay the Loans.

           

          
            
              
              

            

            
              10

              
                

              

            

            
              
              

            

          

           

          6.6.           Legal
Opinions.  The Agent shall have received a legal opinion (in
sufficient counterparts for each of the Banks), in the form of Exhibit B,
addressed to the Banks and dated the Closing Date, of counsel to the Loan
Parties, and of special gaming counsel to the Loan Parties.

           

          6.7.           Filings and Financial
Statements.  Agent shall have received the public filings,
Financial Statements and corporate tax returns of the Borrower from the last
three (3) calendar years.

           

          6.8.           Approvals and
Consents.  All orders, permissions, consents, approvals,
licenses, authorizations and validations of, and filings, recordings and
registrations with, and exemptions by, any Government Authority, or any other
Person, required to authorize or required in connection with the execution,
delivery and performance of this Agreement, the other Loan Documents and the
transactions contemplated hereby and thereby by any Loan Party shall have been
obtained (and, if so requested, furnished to the Agent, with sufficient copies
for the Banks).

           

          6.9.           Change in Law; No
Opposition.  (a) On the Closing Date, no change shall have
occurred in applicable law, or in applicable regulations thereunder or in
interpretations thereof by any Government Authority which would make it illegal
for such Bank to make the Loan required to be made on such date.

           

          (b)           Except
as may have been disclosed in the SEC Documents or the Offering Circular, no
suit, action or proceeding shall be pending or threatened before or by any
Government Authority seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement or seeking relief which could have a
Material Adverse Effect.

           

          6.10.                      All Proceedings to be
Satisfactory.  All corporate, limited liability company,
partnership and legal proceedings and all instruments in connection with the
transactions contemplated by this Agreement and the other documents referred to
herein shall be satisfactory in form and substance to the Agent, and the Agent
shall have received information and copies of all documents which the Agent may
reasonably have requested in connection herewith and therewith, such documents
where appropriate to be certified by proper corporate officials or governmental
authorities.   Without limiting the foregoing, the Agent shall
have received all satisfactory information deemed necessary or desirable by the
Agent with respect to the Borrower and the Loan Parties in order for the Agent
to comply fully with their obligations under law, including without limitation,
under the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, also known as the USA
PATRIOT Act, as amended from time to time (including all regulations promulgated
thereunder).

           

          6.11.                      Adverse
Change.  (a)  There shall have been no Material
Adverse Change with respect to the Loan Parties taken as a whole, or any member
thereof, since the date of the latest audited Financial Statements of the
Borrower delivered to the Agent prior to the Closing Date.

           

          
            
              
              

            

            
              11

              
                

              

            

            
              
              

            

          

           

          (b)           Neither
the Agent nor any Loan Party shall have become aware of any previously
undisclosed information with respect to the business, properties, operations,
prospects or condition (financial or otherwise) of any Loan Party which could
reasonably have a Material Adverse Effect.

           

          6.12.        Fees and
Expenses.  The Borrower shall have delivered to the Agent the
Warrants due on the Closing Date pursuant to Section 4.1, together with a
registration rights agreement relating thereto, in each case in form and
substance satisfactory to the Agent, and the Current Arrangement Fee due on the
Closing Date pursuant to Section 4.2.  The legal fees and expenses
(through the Closing Date) of the Agent’s New York counsel, the counsel of the
Bank’s participant, and (if any) local or special counsel, in connection with
the transactions contemplated by this Agreement shall (to the extent demand for
payment thereof shall have been made) have been paid in full.

           

          6.13.        Property
List.  The Agent shall have received a list complying with the
requirements of Section 7.1(i) and dated the Closing Date.

           

          6.14.        Collateral.  The
Agent shall have received such assignments relating to the Collateral and the
Security Documents as are satisfactory to Agent to confirm that Agent has a
first lien mortgage on all real property owned by the Borrower and Guarantors
located at Monticello Raceway, Sullivan County, State of New York, and first
lien security interest on all accounts receivable, inventory, leases, permits,
licenses (other than the lottery license issued by the Division of the Lottery
of the State of New York), the Concord Agreement and any other assets owned by
the Borrower and/or the Guarantors to the extent the granting of such security
interest is legally permissible, including, without limitation, (a) an
assignment of mortgage and related title insurance policies in favor of BoS,
with title datedown confirming no intervening liens, (b) assignments of security
agreements and UCC-1 financing statements on the assets of the Borrower and the
Guarantors in favor of BoS, with revised UCC, tax lien, judgment and pending
lawsuit searches confirming first priority status; (c) an assignment of tax
refunds and/or assignment of proceeds of tax refunds, and (d) an assignment of
rents and leases (if applicable).

           

          6.15.        Appraisal.  The
Agent shall have received an appraisal, satisfactory in form and substance to
the Agent, of the value of the Monticello Land, and the ratio of the maximum
Obligations to the appraised value of the Monticello Land shall be less than or
equal to 40%.

           

          6.16.        Insurance.  The
Agent shall have received certificates of insurance from the insurance brokers
of the Borrower, dated as of a date reasonably near the Closing Date,
identifying insurers, types of insurance, insurance limits and policy terms, and
otherwise describing the insurance obtained in accordance with the provisions of
this Agreement, and including endorsements noting that the Agent has been named
as additional insured or (as the case may be) loss payee on such insurance and
providing that the Agent shall receive at least 30 days’ prior written notice of
the cancellation of any such insurance.

           

          
            
              
              

            

            
              12

              
                

              

            

            
              
              

            

          

           

          6.17.        [Intentionally
Omitted].  

           

          6.18.        Environmental
Assessment.  The Agent shall have received, at Borrower’s
expense, a Phase I environmental site assessment or assessments of the
Properties prepared in conformance with the scope and limitations of ASTM
Standard Designation E1527-93 and approved by Agent.  Any recommended
action shall have been completed by the Loan Parties.  If the Phase I
assessment concludes remedial action and a Phase II report is required,
Borrower, at its expense, shall perform such remedial action and provide Agent
with a Phase II report.

           

          6.19.        Evidence of Right to
Occupancy of Properties.  The Agent shall have received a copy
of the permanent certificate of occupancy issued by each applicable Governmental
Authority, evidencing the right of the applicable members of the Empire Group to
use and hold open for the use and occupancy of the public of the Gaming/Racing
Facilities.

           

          6.20.        Gaming/Racing
Permits.  The applicable members of the Empire Group shall have
all Gaming/Racing Permits material to or required for the conduct of its gaming
businesses at the Gaming/Racing Facilities and such Gaming/Racing Permits shall
not then be suspended, enjoined or prohibited (for any length of time) by any
Gaming/Racing Authority or any other Governmental Authority.  The
Agent shall have received copies of those Gaming/Racing Permits issued by each
applicable Gaming/Racing Authority evidencing the right of the applicable
members of the Empire Group to offer pari-mutuel wagering on live horseracing
and simulcast horseracing and to operate video gaming machines at Monticello
Raceway.

           

          6.21.        Operating Accounts; Reserve
Account.  Borrower and its affiliates shall have opened with
PAB the Escrow Reserve Account and operating accounts designated by the Borrower
as the purse escrow account and the capital improvement account.

           

          All
documents, agreements, certificates, financial statements, legal opinions,
analyses, reports and other papers required to be delivered by this Section 6
shall be delivered (with sufficient copies for each Bank) to the Agent at its
Closing Office or as the Agent may otherwise direct.

           

          Section
6A.            CONDITIONS PRECEDENT TO EXTENSION
PERIODS

           

          The
Borrower shall not be permitted to enter into any Extension Period described in
Section 2.8 (except as hereinafter indicated) unless the following conditions
(unless waived in writing by the Required Lenders) have been
satisfied:

           

          6.A.1.      Default,
etc.  On the Closing Date, there shall exist no Default or
Event of Default and all representations and warranties made by the Loan Parties
herein or in the other Loan Documents or otherwise made by the Loan Parties in
writing in connection herewith or therewith shall be true and correct in all
material respects with the same effect as though such representations and
warranties have been made at and as of such time except to the extent such
representations and warranties were made only as of a specific
date.

           

          6.A.2.      Fees and
Expenses.  The Borrower shall paid to the Agent the fee for
such Extension Period described in Section 2.8(d).

           

          
            
              
              

            

            
              13

              
                

              

            

            
              
              

            

          

           

          6.A.3.      Concord
Agreement.  The Concord Agreement shall be in full force and
effect.

           

          Section
7.               AFFIRMATIVE
COVENANTS.

           

          The Loan
Parties party hereto severally covenant and agree hereby that, so long as this
Agreement is in effect and all of the Notes, together with interest, commitment
commission and all other obligations incurred hereunder, are paid in full, such
Loan Parties will perform, and will cause each of their respective Subsidiaries
to perform, the obligations set forth in this Section 7.

           

          7.1.           Financial
Statements.  Borrower will furnish to the Agent (with
sufficient copies for each Bank):

           

          (a)           As
soon as practicable and in any event within ninety (90) days after the close of
each Fiscal Year of the Borrower, as at the end of and for the Fiscal Year just
closed, as the case may be, a consolidated balance sheet of the Borrower and its
consolidated Subsidiaries, and a consolidated statement of income and changes in
retained earnings and a cash flow statement of the Borrower and its consolidated
Subsidiaries for such Fiscal Year, setting forth the corresponding figures of
the previous annual audit (to the extent available) in comparative form, all in
reasonable detail and certified by the Auditors, such statements to be
accompanied by a certificate, in form and substance satisfactory to the Agent
and the Required Lenders, setting forth the certification of the CEO and the CFO
with respect to calculations showing compliance with each of Sections 8.12,
8.16, 8.19 and 8.20;

           

          (b)           Promptly
upon receipt thereof, copies of all detailed financial reports and management
letters, if any, submitted to the Borrower by the Auditors, in connection with
each annual or interim audit of its books by such Auditors;

           

          (c)           As
soon as practicable and in any event within 45 days after the close of each
Fiscal Quarter, an unaudited consolidated statement of income and changes in
retained earnings, consolidating balance sheet and statement of cash flow of the
Borrower and its consolidated Subsidiaries for such Fiscal Quarter, in each case
for such Fiscal Quarter and for the year-to-date, all in reasonable detail and
certified by the CFO and CEO of the Borrower subject to year end audit and
adjustments and setting forth in comparative consolidated form the corresponding
figures for the same Fiscal Quarter and year-to-date period of the prior Fiscal
Year, such statements to be accompanied by a certificate, in form and substance
satisfactory to the Agent and the Required Lenders, setting forth the
certification of the CEO and the CFO with respect to calculations showing
compliance with each of Sections 8.12, 8.16, 8.19 and 8.20;

           

          (d)           As
soon as practicable and in any event within 60 days after the end of each Fiscal
Year, a report in form and substance satisfactory to the Agent as to the
following items or matters relating to the Loan
Parties:  environmental matters, gaming matters and permits, both with
respect to the Fiscal Year just ended and the current Fiscal Year, with such
other information with respect thereto as the Agent or any Bank shall
request;

           

          (e)           As
soon as practicable and in any event within 30 days after the close of each
calendar month, an unaudited consolidated statement of income and changes in
retained earnings, consolidating balance sheet and statement of cash flow and a
statement as to Consolidated EBITDA of the Borrower, in each case for such month
and for the year-to-date, all in reasonable detail and certified by the CFO and
CEO of the Borrower subject to year end audit and adjustments and setting forth
in comparative consolidated form the corresponding figures for the same month
and year-to-date period of the current Fiscal Year’s budget delivered pursuant
to Section 7.1(j) together with a comparison of each of the items referred to
therein to budget (original and latest revised) and together with such
operational statistics as may be requested by the Agent;

           

          
            
              
              

            

            
              14

              
                

              

            

            
              
              

            

          

           

          (f)           As
soon as possible and in any event (A) within 30 days after any Guarantor, the
Borrower or any of their respective ERISA Affiliates knows that any Termination
Event described in clause (i) of the definition of Termination Event with
respect to any Pension Plan has occurred or is expected to occur and (B) within
10 days after any Guarantor, the Borrower or any of their respective ERISA
Affiliates knows that any other Termination Event with respect to any Pension
Plan has occurred or is expected to occur, a statement of the CFO of the
Borrower describing such Termination Event and the action, if any, which the
Borrower or such ERISA Affiliate proposes to take with respect
thereto;

           

          (g)           Promptly
and in any event within five Business Days after receipt thereof by any
Guarantor, the Borrower or any of their respective ERISA Affiliates from the
PBGC, copies of each notice received by any Guarantor, the Borrower or any such
ERISA Affiliate of the PBGC’s intention to terminate any Pension Plan or to have
a trustee appointed to administer any Pension Plan, any notice of noncompliance
issued by the PBGC with respect to a proposed standard termination of a Pension
Plan, and any notice issued by the PBGC with respect to a proposed distress
termination of a Pension Plan;

           

          (h)           Promptly
and in any event within 30 days after the filing thereof with the IRS, copies of
each annual report (Form 5500 Series) with respect to each Pension
Plan;

           

          (i)           So
long as there is no continuing Default, as soon as practicable and in any event
within 45 days after request by the Agent therefor, and during the continuance
of any Default, as soon as possible and in any event within three days of the
Agent’s request therefor, lists with such specificity (including location, book
value and, to the extent possible, the estimated market values) and
categorization as the Agent may reasonably request, of:

           

          (I)           
all Real Property, including fixtures;

           

          (II)           all
vehicles (such term to include, for this purpose, airplanes and trains) of the
Borrower and its consolidated Subsidiaries; provided that the Borrower need not
report any such vehicles until the fair market value of all vehicles owned or
leased by the Borrower exceeds $250,000 at which time it shall submit a list of
all such vehicles for the first such report; provided further that the Borrower
shall report the fair market value of all vehicles owned or leased by the
Borrower if such fair market value is less than $250,000;

           

          (III)         any
contract or the like by a Loan Party with a Governmental Authority where the
consent of that entity (or another procedure because the contracting party is a
Government Authority) is required before a perfected security interest in
receivables generated thereby can be granted to the Banks;

           

          
            
              
              

            

            
              15

              
                

              

            

            
              
              

            

          

           

          (IV)         any
life insurance policy where a Loan Party is a beneficiary;

           

          (V)           tangible
chattel paper and electronic chattel paper (in each case as defined in the UCC)
of any Loan Party;

           

          (VI)         any
right of any Loan Party represented by a judgment (other than a judgment taken
on a right to payment which was collateral);

           

          (VII)        any
certificated or uncertificated securities, certificates of deposit or other
investment property (in each case, as defined in the UCC) of any Loan Party, in
each case other than those held by the Agent in its capacity as
such;

           

          (VIII)       any
Commercial Tort Claim (as defined in the UCC) in which the aggregate amount
sought by a Loan Party is equal to or more than $500,000;

           

          (IX)         any
promissory notes held by any Loan Party;

           

          (X)          any
patents held by any Loan Party;

           

          (XI)         any
copyrights, trademarks or trade names that are material to a Loan Party’s
business or operations;

           

          (XII)        any
letters of credit (as defined in the UCC), commodity accounts or
letter-of-credit rights of any Loan Party;

           

          (XIII)      such
other types of property as the Agent may from time to time reasonably request of
the Borrower in writing.

           

          Each such
list shall be accompanied by a list of all assets (other than inventory sold in
the ordinary course of business) sold by the Loan Parties during such
period.  All such lists shall be accompanied by a certificate, in form
and substance reasonably satisfactory to the Agent, signed by Borrower’s CEO and
CFO stating that each such list is true, correct and complete.

           

          Such
certificate shall also state that “No Loan Party holds any interest (whether as
owner, lessee or otherwise) in any Real Property as to which interest it has not
granted a Lien to the Agent on behalf of the Banks, in connection with the Loan
Agreement, under applicable law” (or words to like effect satisfactory in form
and substance to the Agent) and, if such statement would not be accurate unless
qualified, shall clearly list the exceptions to such statement at the end such
statement.  The Loan Parties shall promptly take all such actions as
the Agent and the Banks shall request in order to grant to the Agent and perfect
any Lien in any real or personal property in which a Lien has not been
previously granted to the Agent on behalf of the Banks.

           

          The
provisions of this Section 7.1(i) are in addition to, and not in lieu of, other
provisions in the Loan Documents.  Without limiting the generality of
the foregoing statement, nothing contained in this Section 7.1(i) shall excuse
Borrower from delivering at the required time any other report, even if of a
similar nature, that other provisions of any of the Loan Documents require
Borrower to deliver.  Nor shall the inclusion of any class or item of
property imply that Borrower is entitled to acquire same if such acquisition is
prohibited, specifically or otherwise, in any of the Loan
Documents.

           

          
            
              
              

            

            
              16

              
                

              

            

            
              
              

            

          

           

          (j)        
   No later than February 15 of each Fiscal Year, commencing with
February 15, 2005, a year-by-year budget with respect to such Fiscal Year and
the succeeding Fiscal Year (in form and detail reasonably satisfactory to the
Agent) for the Loan Parties, setting forth with respect to such Fiscal Year, (x)
the projected balance sheet at the end of such Fiscal Year, (y) the projected
statement of income for such Fiscal Year, and (z) the projected statement of
cash flow for such Fiscal Year, together with a copy of  any “business
plan” or similar document prepared by or on behalf of such parties with respect
to such Fiscal Year;

           

          (k)           Promptly
after the same are available, copies of each annual report, proxy or financial
statement or other report or communication that shall have been sent to the
stockholders of the Borrower, and copies of all annual, regular, periodic and
special reports (including, without limitation, each 10Q and 10K report) and
registration statements which the Borrower shall have filed or be required to
file with the Securities and Exchange Commission under Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, and not otherwise required to
be delivered to the Agent pursuant to other provisions of this Section
7.1.

           

          (l)          
 With reasonable promptness, such other information respecting the
business, properties, operations, prospects or condition (financial or
otherwise) of any Loan Party as the Agent may from time to time reasonably
request;

           

          (m)          Promptly,
(i) the existence of any facts or circumstances which would reasonably be
expected to have a Material Adverse Effect including, without limitation such
facts or circumstances relating to environmental matters, gaming matters,
permits, sale contracts, leases and operations; or (ii) any Material Adverse
Change;

           

          (n)           Promptly,
the existence of any material intellectual property;

           

          (o)           Promptly
and in any event within two Business Days after receipt thereof by any Loan
Party, a copy of each notice received by such Loan Party of any notices of
violations, notices of non-compliance or consent orders from any Government
Authority; and

           

          (p)           No
later than six months prior to the end of the initial Extension Period, a plan
for refinancing the Loans.

           

          7.2.           Notice of Litigation;
Unionization.  Borrower will promptly give written notice to
the Agent (who shall promptly forward same to the Banks) of (i) any action or
proceeding or, to the extent any Loan Party may have any notice thereof, any
claim which may reasonably be expected to be commenced or asserted against the
Borrower or any of its Subsidiaries, in which the amount involved is $250,000 or
more (to the extent not covered by insurance), or (ii) the receipt of any
notice, claim or demand by the Borrower or any of its Subsidiaries and any
Government Authority (including, without limitation, any audit by the IRS or
Environmental Claim) which could reasonably be expected to have a Material
Adverse Effect or (iii) the receipt of any notice, claim or demand by the
Borrower or any of its Subsidiaries from any employees of the Borrower or any
such Subsidiary or any union representing, claiming to represent or seeking to
represent any such employees, which could reasonably be expected to have a
Material Adverse Effect or (iv) notice of any unionization of, or attempt to
unionize (which could reasonably be expected to succeed), the employees of any
member of the Empire Group.

           

          
            
              
              

            

            
              17

              
                

              

            

            
              
              

            

          

           

          7.3.           Payment of
Charges.  The Borrower shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (i) all material
taxes, assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon it or any of
the Guarantors or its properties or any of the  Guarantors’ properties
and (ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a Lien upon its properties or any of the Guarantors’
properties;  provided, however, that the Borrower shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being or
shall be contested in good faith  by appropriate proceedings properly
instituted and diligently conducted for which adequate reserves, to the extent
required under GAAP, have been taken.

           

          7.4.           Insurance.

           

          (a)           Property
Insurance.  The Borrower shall maintain a special causes of
loss (“All Risk” - ISO form or equivalent), perils policy covering the buildings
and improvements, and any other permanent structures of the Loan Parties for one
hundred percent (100%) of the replacement cost.  The Borrower shall
maintain a Ten Million Dollar ($10,000,000.00) limit of coverage for the perils
of flood and earthquake covering the Collateral.  Upon the request of
Agent, replacement cost for insurance purposes will be established by an
independent appraiser mutually selected by the Borrower and the
Agent.  The policy will include agreed amount (waiving co insurance),
replacement cost valuation and building ordinance endorsements.  The
policy will include a standard mortgagee clause (ISO form or equivalent, i.e.
Borrower’s acts will not impair mortgagee’s right to recover, exclusive payment
of loss to mortgagee and automatic notice of cancellation or non-renewal to
mortgagee).  The Borrower waives any and all rights of subrogation
against the Banks resulting from losses to property.

           

          (b)           Personal Property (including
machinery, equipment, furniture, fixtures, stock).  The
Borrower shall maintain a special causes of loss (“All Risk”) perils property
coverage for all personal property owned, leased or for which any Loan Party is
legally liable.  The coverage will include a lenders’ loss payable
endorsement in favor of Agent.

           

          The
policy providing real property and personal property coverages, as specified in
7.4(a) and (b) hereinabove, may include a deductible of no more than Twenty-Five
Thousand Dollars ($25,000.00) for any single occurrence.  Flood and
earthquake deductibles can be no more than Two Hundred Fifty Thousand Dollars
($250,000.00), if a separate deductible applies.

           

          (c)           Business Interruption/Extra
Expense.  The Borrower shall maintain combined business
interruption/extra expense coverage for the Gaming/Racing Facilities with a
limit representing no less than eighty percent (80%) of the net profit plus
continuing expenses (including debt service) for the race track, hotel and
casino facilities (including all video lottery/slot operations). Such coverage
shall include an extensions for off premises power losses at One Million Dollars
($1,000,000.00) and extended period of indemnity of one hundred twenty (120)
days endorsement coverages may have deductible of no greater than forty-eight
(48) hours, or Twenty-Five Thousand ($25,000.00), if a separate deductible
applies.  This coverage will be specifically endorsed to include Agent
as loss payee.

           

          
            
              
              

            

            
              18

              
                

              

            

            
              
              

            

          

           

          (d)           Boiler and
Machinery.  The Borrower shall maintain a boiler and machinery
policy for the Gaming/Racing Facilities written on a comprehensive form with a
combined direct and indirect limit of no less than Ten Million Dollars
($10,000,000.00).  The policy shall include extensions for agreed
amount (waiving co-insurance) and replacement cost valuation.  The
policy may contain deductibles of no greater than Ten Thousand Dollars
($10,000.00) direct and forty-eight (48) hours indirect.

           

          (e)           Crime
Insurance.  The Borrower shall obtain a comprehensive crime
policy with respect to the Loan Parties, including the following
coverages:

           

          
            	
                     
      

                  	
                    (i)

                  	
                    employee
      dishonesty  - One Million Dollars
    ($1,000,000.00);

                  


          

           

          
            	
                     
      

                  	
                    (ii)

                  	
                    money
      and securities (inside) - Five Hundred Thousand Dollars
      ($500,000.00);

                  


          

           

          
            	
                     
      

                  	
                    (iii)

                  	
                    money
      and securities (outside) - Five Hundred Thousand Dollars
      ($500,000.00);

                  


          

           

          
            	
                     
      

                  	
                    (iv)

                  	
                    depositor’s
      forgery - One Million Dollars
($1,000,000.00);

                  


          

           

          
            	
                     
      

                  	
                    (v)

                  	
                    computer
      fraud - One Million Dollars
($1,000,000.00)

                  


          

           

          The
policy may contain deductibles of no greater than Fifty Thousand Dollars
($50,000.00) for all coverages listed above and self insurance by the Borrower
for up to ten percent (10%) of any claim.

           

          (f)           Commercial General Liability
(1998 Form or Equivalent).  The Borrower shall maintain a
commercial general liability policy with respect to the Loan Parties with a One
Million Dollar ($1,000,000.00) combined single limit for bodily injury and
property damage, including products liability, contractual liability, and all
standard policy form extensions.  The policy must provide a Two
Million Dollar ($2,000,000.00) general aggregate (per location, if
multi-location risk) and be written on an “occurrence form”.  The
policy will also include extensions for liquor legal liability, employee
benefits legal liability and spectator liability coverages (if necessary, a
separate policy can be secured for spectator liability).  If the
general liability policy contains a self-insured retention, it shall be no
greater than Ten Thousand Dollars ($10,000.00) per occurrence, with an aggregate
retention of no more than Two Hundred Fifty Thousand Dollars ($250,000.00),
including expenses.

           

          The
policy shall be endorsed to include Agent as an additional insured on behalf of
the Banks.  The definition of additional insured shall include all
officers, directors, employees, agents and representatives of the additional
insured.  The coverage for additional insured shall apply on a primary
basis irrespective of any other insurance whether collectible or not (ISO Form
#CG20261185 Additional Insured -Designated Person or Organization, or
equivalent).

           

          
            
              
              

            

            
              19

              
                

              

            

            
              
              

            

          

           

          (g)           Care, Custody and Control
Liability.  The Borrower shall maintain a care, custody and
control liability policy with a single limit of no less than Two Hundred Fifty
Thousand Dollars ($250,000.00) (in the aggregate) per occurrence for any injury,
damage or death to horses in the care, custody and control of any Loan Party,
with a maximum aggregate annual single limit of no less than One Million Dollars
($1,000,000) for any injury, damage or death to horses in the care, custody and
control of the Loan Parties.  The Agent shall be included as an
additional insured under such policy.

           

          (h)           Automobile.  The
Borrower shall maintain a comprehensive automobile liability insurance policy
written under coverage “symbol 1”, providing a One Million Dollar
($1,000,000.00) combined single limit for bodily injury and property damage
covering all owned, non-owned and hired vehicles of each Loan
Party.  If the policy contains a self insured retention it shall be no
greater than Ten Thousand Dollars ($10,000.00) per occurrence with an aggregate
retention of no more than Two Hundred Fifty Thousand Dollars ($250,000.00),
including expenses, the following additional coverages must be purchased by the
Borrower:

           

          
            	
                     
      

                  	
                    (i)

                  	
                    Garage
      Liability.  A One Million Dollar ($1,000,000.00) combined
      single limit for bodily and property damage for the garage
      operation.

                  


          

           

          
            	
                     
      

                  	
                    (ii)

                  	
                    Garagekeepers Legal
      Liability.  Five Hundred Thousand Dollar ($500,000.00)
      limit for comprehensive and collision coverages for physical damage to
      vehicles in any Loan Party’s care, custody and control.  The
      policy can be subject to a deductible of no greater than Two Thousand Five
      Hundred Dollars ($2,500.00) for each auto and Ten Thousand Dollars
      ($10,000.00) for each loss.

                  


          

           

          (i)           Workers Compensation and
Employers Liability Insurance.  The Borrower shall maintain a
standard workers compensation policy covering the State of New York and any
other state where a Loan Party is operating, including employers liability
coverage subject to a limit of no less than One Million Dollars ($1,000,000.00)
for each Loan Party employee, One Million Dollars ($1,000,000.00) for each
accident, and One Million Dollars ($1,000,000.00) policy limit.  The
policy shall include endorsements for voluntary compensation, stop gap
liability, Long-Shoreman’s and Harbors Workman’s Compensation Act and Maritime
Coverages (as applicable).  If the Borrower has elected to self-insure
workers compensation coverage in the State of New York (or any other state) with
respect to Loan Party employees, the Agent must be furnished with a copy of the
certificate from the state(s) permitting self-insurance and evidence of a stop
loss excess workers compensation policy with a specific retention of no greater
than One Hundred Fifty Thousand Dollars ($150,000.00) per
occurrence.

           

          
            
              
              

            

            
              20

              
                

              

            

            
              
              

            

          

           

          (j)           Retention. If the
Borrower’s general liability and automobile policies include a self insured
retention, it is agreed and fully understood that the Borrower is solely
responsible for payment of all amounts due within said self-insured
retentions.  Any indemnification/hold harmless provision is extended
to cover all liabilities associated with said self-insured
retentions.

           

          (k)           Umbrella
Liability.  An umbrella liability policy shall be purchased by
the Borrower with a limit of not less than Thirty Million Dollars
($30,000,000.00) providing excess coverage over all limits and coverages
indicated in paragraphs (f), (h) and (i) above.  The limits can be
obtained by a combination of primary and excess umbrella policies, provided that
all layers follow form with the underlying policies indicated in (f), (h) and
(i) are written on an “occurrence” form.  This policy shall be
endorsed to include the Agent as an additional insured on behalf of the Banks,
in the same manner set forth in Section 7.4(f) hereinabove.

           

          (l)           Ratings.  All
policies indicated above shall be written with insurance companies licensed and
admitted to do business in all states where the Loan Parties, or any of them, is
operating and shall be rated no lower than “A XII” in the most recent addition
of A.M. Best’s and “AA” in the most recent edition of Standard & Poor’s, or
such other carrier reasonably acceptable to Agent.  All policies
discussed above shall be endorsed to provide that in the event of a
cancellation, non-renewal or material modification, Agent shall receive thirty
(30) days prior written notice thereof.  The Borrower shall furnish
Agent with certificates of insurance executed by an authorized agent evidencing
compliance with all insurance provisions discussed above on an annual
basis.  The Borrower shall also furnish actual policy endorsements
evidencing appropriate status of Agent (as mortgagee, loss payee and additional
insured).  Certificates of insurance executed by an authorized agent
of each carrier providing insurance evidencing continuation of all coverages
will be provided on the Closing Date and annually on or before ten (10) days
prior to the expiration of each policy.  All certificates and other
notices related to the insurance program shall be delivered to Agent
concurrently with the delivery of such certificates or notices to such carrier
or to the Borrower.

           

          (m)           Other
Coverage.  Any other insurance reasonably requested by Agent or
Required Lenders in such amount and covering such risks as may be reasonably
required and customary in the race track/gaming industry in the general location
of the Gaming/Racing Facilities.  Approval of any insurance by Agent
shall not be a representation of solvency of any insurer or sufficiency of any
coverage required under this Agreement.  All requirements are
considered minimum in terms of the purchase and maintenance of insurance under
this Agreement.

           

          7.5.           Maintenance of
Records.  Each Loan Party will keep, and will cause each of its
Subsidiaries to keep, at all times books of record and account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs, and each such Loan Party will provide, and
will cause each of its Subsidiaries to provide, adequate protection against loss
or damage to such books of record and account.

           

          7.6.           Preservation of Corporate
Existence.  Except as otherwise permitted by Section 8.7, the
Borrower shall do or cause to be done, at its own cost and expense, all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate existence of each of its Subsidiaries in accordance with the
respective organizational documents of each such Subsidiary and the material
rights (charter and statutory) and franchises of the Borrower and each such
Subsidiary; provided, however, that the Borrower shall  not be
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of its Subsidiaries, any such existence,
material  right or franchise, if the Board of Directors of the
Borrower, shall determine in good faith that the preservation thereof is no
longer desirable in the conduct of the business of the Borrower and its
Subsidiaries, taken as a whole.

           

          
            
              
              

            

            
              21

              
                

              

            

            
              
              

            

          

           

          7.7.           Preservation of
Assets.  The Borrower shall, and shall cause each of the
Guarantors to, maintain its properties in good working order and condition in
all material respects (subject to ordinary wear and tear) and make all necessary
repairs, renewals, replacements, additions, betterments and improvements thereto
and actively conduct and carry on its business; provided, however, that nothing
in this section 7.7 shall prevent the Borrower or any of the Guarantors from
discontinuing the operation and maintenance of any of its properties if such
discontinuance is, in the good faith judgment of the Board of Directors or other
governing body of the Borrower or the Guarantor concerned, as the case may be,
desirable in the conduct of its businesses and is not disadvantageous in any
material respect to the Banks.

           

          7.8.           Inspection of Books and
Assets.  (a)  Each Loan Party will allow any
authorized representative, officer or accountant of any Bank or the Agent to
visit and inspect any of its property, to examine its books of record and
account (including, without limitation, all financial, accounting, contractual,
production, regulatory, environmental, and all other business and other records
with respect to such Loan Party or its subsidiaries), and to discuss its
affairs, finances, accounts and all other matters relating to its business with
its officers, during normal business hours and as often as the Agent may
reasonably request and, in each such case, cause each of their respective
Subsidiaries so to do.

           

          (b)           Each
Loan Party will allow any authorized representative, officer or accountant of
any Bank or the Agent to discuss the Financial Statements, the other financial
information from time to time delivered hereunder and the financial condition of
each Loan Party with the Auditors.  At any time prior to repayment in
full of the Obligations, each Loan Party hereby irrevocably authorizes the
Auditors to discuss the foregoing with all such Persons.

           

          (c)           The
Borrower agrees to pay the expenses of any accountant engaged by the Agent to
review Financial Statements of any Loan Party.

           

          7.9.           Payment of
Indebtedness.  Each Loan Party will duly and punctually pay, or
cause to be paid, the principal of and the interest on all Indebtedness for
Borrowed Money heretofore or hereafter incurred or assumed by such Loan Party or
any of its Subsidiaries, or in respect of which such Loan Party or any of its
Subsidiaries shall otherwise be liable, unless such Indebtedness for Borrowed
Money be renewed or extended or such Loan Party shall be entitled to set off
against such Indebtedness for Borrowed Money an obligation owed to such Loan
Party by the holder of such Indebtedness for Borrowed Money, and will (and cause
each Subsidiary to) faithfully observe, perform and discharge all the covenants,
conditions and obligations which are imposed on such Loan Party or any of its
Subsidiaries by any and all indentures and other agreements securing, relating
to, or evidencing such Indebtedness for Borrowed Money or pursuant to which such
Indebtedness for Borrowed Money is incurred, and such Loan Party will not permit
any act or omission to occur or exist which is or may be declared to be a
material default thereunder.

           

          
            
              
              

            

            
              22

              
                

              

            

            
              
              

            

          

           

          7.10.        Further
Assurances.  Each Loan Party will, and will cause each of its
Subsidiaries to, make, execute or endorse, and acknowledge and deliver or file,
all such vouchers, invoices, notices, and certifications and additional
agreements, undertakings, conveyances, transfers, assignments, or further
assurances, and take any and all such other action, as the Agent, from time to
time, deems reasonably necessary or proper in connection with this Agreement,
the obligations of such Loan Party hereunder or under the Notes or any of the
other Loan Documents to which such Loan Party is a party, or for the better
assuring and confirming unto the Agent on behalf of the Banks all or any part of
the security for the Obligations, including, without limitation, entering into
amendments to the Mortgages requested by the Agent from time to
time.

           

          7.11.        Notice of
Default.  Forthwith upon any officer of any Loan Party
obtaining knowledge of the existence of a material Default or an Event of
Default, the Borrower will deliver to the Agent a certificate signed by an
officer of the Borrower specifying the nature thereof, the period of existence
thereof, and what action the affected Loan Party proposes to take with respect
thereto.

           

          7.12.        Arms length
Transactions.  Each Loan Party will conduct, and cause each of
their respective Subsidiaries to conduct, all transactions with any of its
respective Affiliates on an arms length basis.

           

          7.13.        Solvency.  Each
Loan Party will continue to be Solvent and ensure that each of their respective
Subsidiaries which are Loan Parties will continue to be Solvent.

           

          7.14.        Environmental
Matters.  (a)  Borrower will promptly notify the
Agent (with a description in reasonable detail) of:

           

          (I)         
  the receipt of any material Environmental Claim;

           

          (II)           the
material violation of, or any condition which might result in a material
violation of, any Environmental Law;

           

          (III)         (A)
the commencement of any judicial or administrative proceeding alleging a
violation of any Environmental Law or (B) the commencement of any investigation
alleging a material violation of any Environmental Law; or

           

          (IV)         any
material change in the representations and warranties in Section
10.12;

           

          and each
Loan Party will, and will cause each of their respective Subsidiaries to,
commence within 90 days after any such request, and diligently prosecute to
completion, such Remedial Action as the Agent or the Required Lenders may
reasonably request, which is required by Environmental Law, in respect of any of
the matters addressed in such notice.  As used in this Section 7.14(a)
in relation to any Environmental Claim or any violation of Environmental Law or
any change in the representations and warranties in Section 10.12 hereof, the
term “material” shall mean that such Environmental Claim, violation or change
(i) involves, or might reasonably be expected to involve Environmental Costs in
excess of $500,000 or (ii) gives rise, or might reasonably be expected to give
rise, to a Default or Event of Default.

           

          
            
              
              

            

            
              23

              
                

              

            

            
              
              

            

          

           

          (b)           Each
Loan Party will, and will cause each of its Subsidiaries to, adopt (to the
extent not already adopted) and maintain prudent practices with respect to
compliance with Environmental Laws, including prudent air and water pollution
control and solid and hazardous waste management practices and including at a
minimum such practices as (i) may be required or dictated by then applicable
Environmental Laws, and (ii) are necessary to maintain the value of the Agent’s
and the Banks’ Liens in the Collateral free from all actual or threatened
Environmental Claims.

           

          7.15.        Consents of and Notice to
Gaming/Racing Authorities.  (a)  Loan Parties shall
make all necessary applications to and procure all necessary consents and
approvals of the applicable Gaming/Racing Authorities to the: (i) pledge of the
stock of the Subsidiaries pursuant to the Pledge Agreement, and (ii) the terms
set forth in this Agreement and each of the other Loan Documents, to the extent
which may be required by the applicable Gaming/Racing Authorities.

           

          (b)           The
Loan Parties shall comply in all material respects with all applicable statutes,
rules and regulations requiring reports and disclosures to all applicable
Gaming/Racing Authorities, including, but not limited to, reporting this
revolving credit transaction, within the time period required by the applicable
Gaming/Racing Authorities.

           

          7.16.        Compliance with Access
Laws.  (a)  Each Loan Party agrees that it, its
Gaming/Racing Facilities and its Properties shall at all times be in material
compliance with the requirements of the Americans with Disabilities Act of 1990,
the Fair Housing Amendments Act of 1988, and other federal, state or local laws
or ordinances related to disabled access, or any statute, rule, regulation,
ordinance, order of Governmental Authorities, or order or decree of any court
adopted or enacted with respect thereto, as now existing or hereafter amended or
adopted (collectively, the “Access Laws”), as may be applicable to the
respective Gaming/Racing Facilities. At any time, Agent may require a
certificate of material compliance with the Access Laws and indemnification
agreement in a form reasonably acceptable to Agent.  Agent may also
require a certificate of material compliance with the Access Laws from an
architect, engineer, or other third party acceptable to Agent.

           

          (b)           Notwithstanding
any provisions set forth herein or in any other document, Loan Parties shall not
alter or permit any tenant or other person to alter the Gaming/Racing Facilities
or the Properties in any manner which would increase Loan Parties’
responsibilities for compliance with the Access Laws without the prior written
approval of Agent.  In connection with such approval, Agent may
require a certificate of material compliance with the Access Laws from an
architect, engineer or other person acceptable to Agent.

           

          (c)           Loan
Parties agree to give prompt written notice to Agent of the receipt by Loan
Parties of any claims of violation of any of the Access Laws and of the
commencement of any proceedings or investigations which relate to compliance
with any of the Access Laws.

           

          (d)           Loan
Parties shall indemnify, defend and hold harmless the Banks and the Agent from
and against any and all claims, demands, damages, costs, expenses, losses,
liabilities, penalties, fines and other proceedings including, without
limitation, reasonable attorneys’ fees and expenses arising directly or
indirectly from or out of or in any way connected with any failure of the
Gaming/Racing Facilities or the Properties to comply with any of the Access Laws
as the same may have been applicable during the term of this Agreement. The
obligations and liabilities of Loan Parties under this section shall survive the
termination of this Agreement, any satisfaction, assignment, judicial or
nonjudicial foreclosure proceeding, or delivery of a deed in lieu of
foreclosure.

           

          
            
              
              

            

            
              24

              
                

              

            

            
              
              

            

          

           

          7.17.        Tradenames, Trademarks and
Servicemarks.  The Loan Parties shall not assign or in any
other manner alienate their respective interests in any material tradenames,
trademarks or servicemarks relating or pertaining to the Gaming/Racing
Facilities during the term of this Agreement except to another Loan
Party.  No Loan Party shall change its name without first giving at
least thirty (30) days prior written notice to Agent.

           

          7.18.        Acquisitions.  If
a Loan Party or any of its Subsidiaries acquires or creates another Subsidiary
after the Closing Date (other than any Immaterial Subsidiary) or any Immaterial
Subsidiary shall cease to constitute an Immaterial Subsidiary, then such Loan
Party shall cause such newly acquired or created Subsidiary, or such former
Immaterial Subsidiary, as applicable, to:

           

          (a)           execute
and deliver to the Agent a supplemental agreement in the form attached hereto as
Exhibit D pursuant to which such Subsidiary shall unconditionally guarantee on a
senior unsecured basis all of the Borrower’s obligations under the Notes and
this Agreement on the terms set forth in this Agreement;

           

          (b)           (i)
execute and deliver to the Agent such amendments to the Security Documents
necessary or advisable in order to grant to the Agent, for the benefit of the
Banks, a first priority perfected security interest in the Capital Stock of such
new Subsidiary, subject to Permitted Liens, which are owned by such Loan Party
or such Subsidiary, and (b) deliver to the Agent any certificates representing
such Capital Stock together with undated stock powers or instruments of
transfer, as applicable, endorsed in blank;

           

          (c)           cause
such new Subsidiary to take such other actions necessary or advisable to grant
to the Agent, as applicable, for the benefit of the Banks, a first priority
perfected security interest in the Collateral of such new Subsidiary, subject to
Permitted Liens, including the filing of UCC financing statements in such
jurisdictions as may be required by the Security Agreement or by
law;

           

          (d)           take
such further action and execute and deliver such other documents specified in
this Agreement to effect the foregoing; and

           

          (e)           deliver
to the Agent an opinion of counsel that such supplemental Agreement and any
other documents required to be delivered have been duly authorized, executed and
delivered by such Subsidiary and constitute a legal, valid, binding and
enforceable obligations of such Subsidiary and such other opinions of counsel
regarding the perfection of such Liens in the Collateral as Agent may
request.

           

          Thereafter,
such Subsidiary shall be a Guarantor for all purposes of this
Agreement.

           

          
            
              
              

            

            
              25

              
                

              

            

            
              
              

            

          

           

          7.19.        Conditions of the Division
of the Lottery of the State of New York.  The Loan Parties
agree to comply with all conditions to the approval of the Agreement by the
Division of the Lottery of the State of New York (the “Lottery”) set forth in a
letter dated January 6, 2005 from the Lottery to counsel for the
Borrower.

           

          7.20.        Operating
Accounts.  Borrower and its affiliates shall maintain deposit,
demand and operating accounts with PBA with an average quarterly balance of at
least $2,000,000; provided, however, that all accounts with a balance in excess
of $250,000 shall be maintained as demand deposit accounts and if the balance in
any account that is not maintained as a demand deposit account in accordance
with the terms hereof shall exceed $250,000, such account shall be automatically
converted to a demand deposit account. Following the Closing Date, Agent and
Borrower shall determine which such accounts of Borrower and its affiliates
shall be maintained with PBA, provided that Borrower will provide to Agent
copies of any agreement with any other bank where Borrower maintains such
accounts prior to the Closing Date that require the Borrower to maintain certain
minimum balances.  PAB will require Borrower and its affiliates to
maintain in the accounts minimum account balance requirements at PAB of
$2,000,000, measured on a quarterly basis, with any shortfall to be subject to a
charge at a rate of the Loan interest rate plus 3% (12% floor) per annum;
Exceptions for accounts other than at PAB will be specified by the Borrower
based on current account agreements and requirements subject to PAB approval,
which approval shall not be unreasonably withheld.

           

          Section
8.               NEGATIVE
COVENANTS.

           

          The Loan
Parties party hereto severally covenant and agree that so long as this Agreement
is in effect and until all of the Notes, together with interest, commitment
commission and all other obligations incurred hereunder, are paid in full, such
Loan Parties will perform, and will cause each of their respective Subsidiaries
to perform, the obligations set forth in this Section 8 (unless it shall first
have procured the written consent of the Required Lenders to do
otherwise).

           

          8.1.           Engage in Same Type of
Business.   No Loan Party will enter into, or permit any
of their respective Subsidiaries to enter into, any business or activity other
than the business or businesses in which it is presently engaged or it intends
to engage in, as set forth in the Borrower’s public filings with the
SEC.

           

          8.2.           Liens.  Each
Loan Party will not, and will not cause or permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or permit or suffer to exist any
Liens (other than Permitted Liens) of any kind against or upon any of the
Collateral whether owned on the Closing Date or acquired after the Closing Date,
or any proceeds therefrom, or assign or otherwise convey any right to receive
income or profits therefrom.

           

          8.3.           Other
Indebtedness.  From and after the Closing Date, no Loan Party
will, nor permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume, guarantee, acquire, become liable, contingently or otherwise,
with respect to, or otherwise become responsible for payment of any Indebtedness
(other than Permitted Indebtedness); provided, however, that if no Default or
Event of Default shall have occurred and be continuing at the time of or as a
consequence of the incurrence of any such Indebtedness, the Borrower or any
Guarantor may incur Indebtedness (including, without limitation, Acquired
Indebtedness) if on the date of the incurrence of such Indebtedness the
Consolidated Fixed Charge Coverage Ratio of the Borrower will be, after giving
effect to the incurrence thereof, greater than 2.0 to 1.0.

           

          
            
              
              

            

            
              26

              
                

              

            

            
              
              

            

          

           

          8.4.           Advances from
Customers.  No Loan Party will contract for, create, incur,
assume or suffer to exist, or permit any of their respective Subsidiaries so to
do, advances or deposits from customers other than in the ordinary course of
business; provided that the aggregate amount of advances or deposits by the Loan
Parties from any one customer (including Persons directly or indirectly
controlling, controlled by, or under common control with such customer) shall
not exceed $1,000,000 at any one time.

           

          8.5.           Advances and
Loans.  Except pursuant to the CLT Line of Credit, no Loan
Party will lend money or credit, or make advances to any Person or permit any of
their respective Subsidiaries so to do; except (i) the sale of products of the
Borrower and its Subsidiaries on credit in the ordinary course of business on
terms not more favorable than those used by other Persons similarly situated and
engaged in the same or similar business; (ii) loans from any member of the
Empire Group to the Borrower, if:  (a)  such loan is
subordinated (in manner, form and scope satisfactory to the Agent) to the
Obligations and unsecured; and (b) such loans are made and accepted at normal
commercial rates of interest for such credits; and (c) such loans are evidenced
by intercompany notes, which notes and any permitted security therefor are
pledged by such Loan Party to the Agent for the benefit of the Banks; (iii)
advances to employees for travel and business expenses not in excess of $50,000
at any time outstanding; and (v) the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business.

           

          8.6.           Purchase or Sale
Agreements.  No Loan Party will enter into or be a party to, or
permit any of their respective Subsidiaries to enter into or be a party to (i)
any contract for the purchase or use of materials, supplies or other property or
for the performance of services if such contract requires that payment for such
materials, supplies or other property, or the use thereof, or for such services,
shall be made by such Loan Party or Subsidiary, as the case may be, regardless
of whether or not delivery is capable of being made of such material, supplies
or other property, or such services are performed, or (ii) any contract for the
sale or use of materials, supplies or other property if such contract provides
that payment to such Loan Party or to any such Subsidiary for such materials,
supplies or other property or the use thereof, shall be subordinated to or
otherwise subjected to the prior payment of any indebtedness (or any instrument
evidencing such indebtedness) owed or to be owed to any Person.

           

          
            
              
              

            

            
              27

              
                

              

            

            
              
              

            

          

           

          8.7.           Consolidation and
Merger.  No Loan Party will wind up, liquidate or dissolve its
affairs or enter into any transaction of merger or consolidation or permit any
of their respective Subsidiaries so to do (or agree to do any of the foregoing
at any future time) except that (i) any wholly owned Subsidiary of the Borrower
may merge into the Borrower; provided that the Borrower shall at all times be
the continuing corporation, and (ii) any wholly owned Subsidiary of the Borrower
may merge into any other wholly-owned Subsidiary of the Borrower provided that
the shares of the continuing corporation are pledged to the Agent for the
benefit of the Banks; and (iii) the Borrower may consolidate or merge with
another Person or dispose of all or substantially all its assets if either (a)
the Borrower shall be the surviving or continuing corporation; or (b) the Person
(if other than the Borrower) formed by such consolidation or into which the
Company is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of the Borrower
(the “Surviving Entity”):  (x) shall be a
corporation  organized and validly existing under the laws of the
United States or any State thereof or the District of Columbia; and (y)
shall  expressly assume, (i) by supplemental agreement (in form and
substance satisfactory to the Agent), executed and delivered to the Agent, all
of the Borrower’s obligations under the Notes, this Agreement and the other Loan
Documents, including, but not limited to, the due and punctual payment of the
principal of, and interest and the performance of every covenant of the Borrower
under the Notes, this Agreement and the other Loan Documents and (ii) by
amendment, supplement or other instrument (in form and substance satisfactory to
the Agent), executed and delivered to the Agent, all obligations of the Borrower
under the Security Documents, and in connection therewith shall cause such
instruments to be filed and recorded in such jurisdictions and take such other
actions as may be required by applicable law to perfect or continue the
perfection of the Lien created thereunder on the Collateral owned by or
transferred to the Surviving Entity; (2) immediately after giving effect to such
transaction and the assumption contemplated by clause (iii)(b)(y) above
(including giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred and any Lien granted in connection with or in
respect of such transaction), no Default or Event of Default shall have occurred
or be continuing; (3) immediately after giving effect to such transaction on a
pro forma basis and the assumption contemplated by clause (iii)(b)(y) above
(including giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred in connection with such transaction), the Borrower
or such Surviving Entity, as the case may be, (a) shall have a Consolidated Net
Worth at least equal to the Consolidated Net Worth of the Borrower immediately
prior to such transaction and (b) shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
Section 8.3; (4) the Borrower or the Surviving Entity, as the case may be, shall
have delivered to the Agent an officer’s certificate and an opinion of counsel,
each stating that such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with the
applicable provisions of the Indenture and that all conditions precedent in the
Indenture relating to such transaction have been satisfied; and (5) the Banks
will not recognize income, gain, or loss for federal income tax purposes as a
result of such transaction and will be subject to federal income tax on the same
amounts, in the same manner and at the same time as would have been the case if
such transaction had not occurred.  For purposes of the foregoing, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of transactions) of all or substantially all of the properties or assets
of one or more of the Borrower’s Subsidiaries which constitutes all or
substantially all of the properties and assets of the Borrower, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Borrower.  Written notice of any merger permitted by this Section
8.7, however, shall be given by the Borrower to the Agent before the effective
date of such merger or within five Business Days thereafter.

           

          
            
              
              

            

            
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          8.8.           Sale of Assets. The
Borrower will not, and will not permit any of its Subsidiaries to consummate any
Transfer of the Monticello Land except a Transfer of the Trust Land to the
United States in trust for an Indian Tribe which is developing a casino in
conjunction with the Borrower.  No Loan Party will, nor permit any of
its Subsidiaries to, consummate an Applicable Asset Sale unless:  (1)
such Loan Party or the applicable Subsidiary, as the case may be, receives
consideration at the time of such Applicable Asset Sale at least equal to the
Fair Market Value of the assets sold or otherwise disposed; (2) at least 85% of
the consideration received by such Loan Party or the Subsidiary, as the case may
be, from such Applicable Asset Sale is in the form of cash or Cash Equivalents
and is received at the time of such disposition; provided that the amount of any
liabilities (as shown on the most recent applicable balance sheet) of such Loan
Party or such Subsidiary (other than liabilities that are by their terms
subordinated to the Loans) that are assumed by the transferee of any such assets
shall be deemed to be cash for purposes of this provision so long as the
documents governing such liabilities provide that there is no further recourse
to such Loan Party or any of its Subsidiaries with respect to such liabilities;
and (3) upon consummation of such Applicable Asset Sale, Borrower shall apply,
or cause such Loan Party to apply, the Net Proceeds relating to such Applicable
Asset Sale within eighty nine (89) days of receipt thereof to make an investment
in properties and assets that replace the properties or assets that were the
subject of such Applicable Asset Sale or in any other properties and assets that
will be used, or Capital Stock of a Person engaged, in the business of the
Borrower and the Guarantors as existing or contemplated on the Closing Date or
in businesses reasonably related thereto (“Replacement
Assets”).  Within ninety (90) days after an Applicable Asset Sale, the
Net Proceeds from such Applicable Asset Sale that shall have not been applied on
or before such date as permitted in clause (3) of the preceding paragraph shall
be applied by the Borrower or such Subsidiary to repay the outstanding principal
amount of the Loans, and accrued and unpaid interest thereon to the date of
repayment as provided in Section 2.4(f); provided, however, that if at any time
any non-cash consideration received by any Loan Party or any Subsidiary thereof,
as the case may be, in connection with any Applicable Asset Sale is converted
into or sold or otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration), then such conversion or
disposition shall be deemed to constitute an Applicable Asset Sale hereunder on
the date of such conversion or disposition, as the case may be, and the Net
Proceeds thereof shall be applied in accordance with this
covenant.  In the event of the transfer of substantially all (but not
all) of the property and assets of the Borrower and its Subsidiaries as an
entirety to a Person in a transaction permitted under Section 8.7 which
transaction does not constitute a Change of Control, the successor entity shall
be deemed to have sold the properties and assets of the Borrower and its
Subsidiaries not so transferred for purposes of this covenant, and shall comply
with the provisions of this covenant with respect to such deemed sale as if it
constituted an Applicable Asset Sale.  In addition, the Fair Market
Value of such properties and assets of the Borrower or its Subsidiaries deemed
to be sold shall be deemed to be Net Proceeds for purposes of this
covenant.

           

          8.9.           Purchase of
Assets.  Except as permitted by Sections 8.7 and 8.12, no Loan
Party will purchase, lease or otherwise acquire all or any substantial part of
the property or assets of any Person, or permit any of their respective
Subsidiaries so to do, or purchase, lease or otherwise acquire property or net
assets, or permit any of their respective Subsidiaries so to do.

           

          8.10.        Related
Transactions.  (a)  No Loan Party will enter into any
transaction with any other member of the Empire Group or any Affiliate of any
member of the Empire Group (or with any relative of such Affiliate) or with
which any officer or director of any member of the Empire Group has a financial
interest on more favorable terms than if such Person was totally unrelated, or
permit any of their respective Subsidiaries to so do.

           

          (b)           No
Loan Party will make, or cause or permit any of their respective Subsidiaries to
make, any payments, directly or indirectly, to any Loan Party or Affiliate or
any officer (other than salary and bonuses consistent with past practices),
director (other than director’s fees and expense reimbursement consistent with
past practices) or stockholder of any Loan Party or Affiliate, except as
permitted by Sections 8.10(a) and 8.14.

           

          
            
              
              

            

            
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          8.11.        Subsidiaries.  No
Loan Party will sell, assign or transfer, or in any way part with control of,
any shares of capital stock of any of their respective Subsidiaries or any
indebtedness or obligations of any character of any of their respective
Subsidiaries, or permit any of their respective Subsidiaries so to do with
respect to any shares of capital stock of any other Subsidiary or any
indebtedness or obligations of any character of such Loan Party or any of its
other Subsidiaries, or issue, or permit any of their respective Subsidiaries to
issue, any additional shares of capital stock except (a) as permitted by Section
8.7, (b) the Borrower may convert its 5-1/2% Convertible Senior Notes Due 2014
to common stock pursuant to the terms of the Indenture, and (c) the Borrower may
issue common stock.

           

          8.12.        Capital
Expenditures.  No Loan Party will make capital expenditures (by
Capitalized Lease Obligations or otherwise) for acquisitions, construction or
improvement of fixed assets, or permit any of its Subsidiaries so to do, unless,
after giving effect thereto, during any Fiscal Year, the aggregate amount of all
capital expenditures by all Loan Parties during such Fiscal Year would not
exceed $1,000,000; provided, however, that
Monticello Raceway Management may spend (a) up to $750,000 on improvements to
the paddock area at Monticello Raceway, (b) any amount that Sections 319 and 527
of the New York Racing, Pari-Mutuel Wagering and Breeding Law prescribes be
spent on capital improvements, and (c) any amount received as a grant from the
State of New York for the purpose of making of capital expenditures, and
provided, further, however, that any Loan Party may make capital expenditures in
connection with the development of (i) a casino developed in conjunction with an
Indian Tribe on the Trust Land and/or (ii) any Native American casino to be
developed by the Seneca Cayuga Tribe of Oklahoma (or any Affiliate thereof) in
conjunction with any member(s) of the Empire Group..

           

          8.13.        Investments.  Except
as permitted by Sections 8.7 and 8.8, no Loan Party will invest in (by capital
contribution or otherwise), or acquire for investment or purchase or make any
commitment to purchase the obligations or stock of, any Person or permit any of
its Subsidiaries so to do, except Cash Equivalents.

           

          8.14.        Dividends, Distributions and
Purchases of Capital Stock.  No Loan Party will declare or pay
any dividends (other than dividends payable in shares of its capital stock), or
return any capital to its stockholders as such or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration (otherwise than in exchange for, or from the proceeds of the
substantially concurrent sale of, other shares of capital stock of the
Borrower), any shares of any class of its capital stock now or hereafter
outstanding, or redeem, return, purchase or otherwise acquire, directly or
indirectly, for a consideration, any subordinated debt or make any payments on
account of the principal thereof, or set aside any funds for any of the
foregoing purposes.

           

          8.15.        Leasebacks.  No
Loan Party will enter into, or permit any of its Subsidiaries to enter into, any
arrangement with any bank, insurance company or other lender or investor
providing for the leasing to any Loan Party or any of its Subsidiaries of real
or personal property (i) which at the time has been or is to be sold or
transferred by any Loan Party or any of its Subsidiaries to such lender or
investor, or (ii) which has been or is being acquired from another person by
such lender or investor or on which one or more buildings or facilities have
been or are to be constructed by such lender or investor for the purpose of
leasing such property to a Loan Party or any such Subsidiary.

           

          
            
              
              

            

            
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          8.16.        Debt Service Coverage
Ratio.  The Borrower and Monticello Raceway Management shall
not permit the Monticello Raceway Debt Service Coverage Ratio to be less than
1.50 to 1 as of the end of any fiscal quarter.

           

          8.17.        Accounting
Changes.  (a)  No Loan Party will make or permit any
of its Subsidiaries to make any significant change in accounting treatment and
reporting practices, except as permitted or required by GAAP.

           

          (b)           No
Loan Party will change its Fiscal Year or permit any of its Subsidiaries to
change its Fiscal Year.

           

          8.18.        Compliance with
ERISA.  No Loan Party will (i) terminate, or permit any of its
Subsidiaries to terminate, any Pension Plan so as to result in any material
liability of the Borrower or any such Subsidiary to the PBGC, (ii) permit to
exist the occurrence of any Reportable Event (as defined in Section 4043 of
ERISA), or any other event or condition, which presents a material risk of such
a termination by the PBGC of any Pension Plan, (iii) allow, or permit any such
Subsidiary to allow, the aggregate amount of “benefit liabilities” (within the
meaning of Section 4001(a)(16) of ERISA) under all Pension Plans of which the
Borrower or any ERISA Affiliate is a “contributing sponsor” (within the meaning
of Section 4001(a)(13) of ERISA) to exceed $100,000, (iv) allow, or permit any
such Subsidiary to allow, any Plan to incur an “accumulated funding deficiency”
(within the meaning of Section 302 of ERISA or Section 412 of the Code), whether
or not waived, (v) engage, or permit any such Subsidiary or any Plan to engage,
in any “prohibited transaction” (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) resulting in any material liability to the Borrower or
any ERISA Affiliate (considered by itself or together with all other such
liabilities of the Borrower and all ERISA Affiliates), (vi) allow, or permit any
such Subsidiary to allow, any Plan to fail to comply with the applicable
provisions of ERISA and the Code in any material respect, (vii) fail, or permit
any such Subsidiary to fail, to make any required contribution to any
Multiemployer Plan, or (viii) completely or partially withdraw, or permit any
such Subsidiary to completely or partially withdraw, from a Multiemployer Plan,
if such complete or partial withdrawal will result in any material withdrawal
liability under Title IV of ERISA.

           

          8.19.        Minimum Net
Worth.  Commencing with the fiscal quarter ending December 31,
2009, the Borrower shall not permit Tangible Net Worth to be less than $15
million as of the end of any fiscal quarter.

           

          8.20.        Maximum Leverage
Ratio.  Commencing with the fiscal quarter ending December 31,
2009, the Borrower shall not permit the Leverage Ratio to be greater than
6.00:1.0 as of the end of any fiscal quarter.

           

          
            
              
              

            

            
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          Section
9.               EVENTS OF
DEFAULT.

           

          Upon the
occurrence of any of the following specified events (each an “Event of
Default”):

           

          9.1.           Principal and
Interest.  The Borrower shall default in the due and punctual
payment of (i) any principal due on any Loan or any Note; or (ii) any interest
on any Loan or Note or in the due and punctual payment of other amounts due
hereunder; provided that failure to duly and punctually make an interest payment
shall not be an Event of Default under this Section 9.1 if such interest payment
is paid within five days after the date it is due and Borrower has not been late
in making an interest payment on any of the Notes more than once in the
preceding 6 months; or

           

          9.2.           Representations and
Warranties.  Any representation, warranty or statement made by
any Loan Party or officer thereof in any Loan Document, or in any certificate or
statement furnished pursuant to or in connection with any of the foregoing,
shall prove to have been untrue in any material respect on the date as of which
made; or

           

          9.3.           Covenants.  Any
Loan Party shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to
Section 7.4, Section 7.11 or Section 8; or

           

          9.4.           Other
Covenants.  Any Loan Party shall default in the due performance
or observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any of the provisions of this Agreement (other than those
referred to in Sections 9.1, 9.2 or 9.3) and such default (which shall be
capable of cure) shall continue unremedied for a period of 30 days after the
earlier of the date on which the Agent gives the Borrower notice of such default
or the date an officer of any Loan Party becomes aware thereof; or

           

          9.5.           Other
Obligations.  Any installment or installments of any
Indebtedness for Borrowed Money of any Loan Party in an aggregate amount in
excess of $250,000 shall not be paid (or set off in good faith against an
obligation owed to such Loan Party by the holder of such Indebtedness for
Borrowed Money) within 30 days of when the same becomes due and payable
including any applicable grace period, or there shall occur and be continuing
any event which constitutes an event of default under any instrument, agreement
or evidence of indebtedness relating to any Indebtedness for Borrowed Money of
any Loan Party in excess of $1,000,000 in aggregate principal amount, the effect
of which is to permit the holder or holders of such instrument, agreement or
evidence of Indebtedness, or a trustee, agent or other representative on behalf
of such holder or holders, to cause the Indebtedness for Borrowed Money
evidenced thereby to become due prior to its stated maturity; or

           

          9.6.           Ownership.  A
Change of Control shall occur; or the Borrower shall at any time own less than
50% of the outstanding capital stock of (directly or indirectly) each of its
Subsidiaries or any such stock (or any other stock issued by any Subsidiary)
shall be the subject of a Lien (other than Liens to the Agent and the Banks
hereunder and Permitted Liens); or

           

          
            
              
              

            

            
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          9.7.           Insolvency.  Any
Loan Party shall dissolve or suspend or discontinue its business, or shall make
an assignment for the benefit of creditors or a composition with creditors,
shall be unable or admit in writing its inability to pay its debts as they
mature, shall file a petition in bankruptcy, shall become insolvent (howsoever
such insolvency may be evidenced), shall be adjudicated insolvent or bankrupt,
shall petition or apply to any tribunal for the appointment of any receiver,
liquidator or trustee of or for it or any substantial part of its property or
assets, shall commence any proceedings relating to it under any bankruptcy,
reorganization, arrangement, readjustment of debt, receivership, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or there shall be commenced against any Loan Party any such proceeding
which shall remain undismissed for a period of 60 days or more, or any order,
judgment or decree approving the petition in any such proceeding shall be
entered; or any Loan Party shall by any act or failure to act indicate its
consent to, approval of or acquiescence in, any such proceeding or in the
appointment of any receiver, liquidator or trustee of or for it or any
substantial part of its property or assets, or shall suffer any such appointment
to continue undischarged or unstayed for a period of 60 days or more; or any
Loan Party shall take any action for the purpose of effecting any of the
foregoing; or any court of competent jurisdiction shall assume jurisdiction with
respect to any such proceeding or a receiver or trustee or other officer or
representative of a court or of creditors, or any court, governmental officer or
agency, shall under color of legal authority, take and hold possession of any
substantial part of the property or assets of any Loan Party; or

           

          9.8.           Security
Documents.  The material breach by any Loan Party of any term
or provision of any Security Document to which such Loan Party is a party,
which, if such breach is susceptible of cure, has not been cured within 10 days
after the earlier of the date on which the Agent gives the Borrower notice
thereof or the date an officer of any Loan Party becomes aware thereof, or any
Security Document is at any time not in full force and effect; or any of the
Security Documents shall fail to grant to the Agent on behalf of the Banks the
Lien and security interest (if any) purported to be created thereby; or any
Guarantor shall assert that it is not liable as a guarantor hereunder;
or

           

          9.9.           Judgments.  Unless
adequately insured, final judgment for the payment of money in excess of
$1,000,000 shall be rendered against any Loan Party, and the same shall remain
undischarged for a period of 30 days during which execution shall not be
effectively stayed or contested in good faith; or

           

          9.10.        Intercreditor
Agreement.  The Intercreditor Agreement is at any time not in
full force and effect when the obligations set forth in the Intercreditor
Agreement as being subordinated are outstanding; or

           

          9.11.        Permits.  Any
Gaming/Racing Permit of any member of the Empire Group shall for any reason be
revoked and not re-issued to such Person within 30 days of such revocation and
such revocation could be reasonably expected to have a Material Adverse Effect;
or

           

          9.12.        ERISA.  Any
ERISA Affiliate of the Borrower which is not a Subsidiary of the Borrower shall
fail in the performance or observance of any term, provision or agreement with
respect to a Plan or a Multiemployer Plan set forth in Section 8.18 (other than
8.18 (v) or (vi)) as if such ERISA Affiliate were a Subsidiary of the Borrower;
or

           

          
            
              
              

            

            
              33

              
                

              

            

            
              
              

            

          

           

          9.13.        Liquidity.  The
Borrower and its subsidiaries, determined on a consolidated basis in accordance
with GAAP, shall have less than $2,000,000 of Liquidity on any
date.

           

          then, and
in any such event, and at any time thereafter, if any Event of Default shall
then be continuing the Agent may (and shall, if instructed in writing by the
Required Lenders) by written notice to the Borrower: (i) declare the principal
of and accrued interest on the Notes to be, whereupon the same shall forthwith
become, due and payable without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and/or (ii) declare
the commitments of the Banks to make Loans, whereupon such commitments of the
Banks shall forthwith terminate immediately; provided that if any Event of
Default described in Section 9.7 shall occur with respect to the Borrower, the
result which would otherwise occur only upon the giving of written notice by the
Agent or the Required Lenders to the Borrower as herein described shall occur
automatically, without the giving of any such notice;

           

          Section
9A.            GUARANTY.

           

          In order
to induce the Banks and the Agent to enter into this Agreement and to extend
credit hereunder and in recognition of the direct benefits to be received by
each of the Guarantors from the proceeds of the Loans, each Guarantor, jointly
and severally, hereby agrees with the Banks and the Agent as
follows.

           

                        
9A.1.       The
Guaranty.  Each Guarantor hereby fully,  irrevocably
and unconditionally, jointly and severally, guarantees (such guarantee to be
referred to herein as the “Guaranty”), to each of the Banks and to the Agent and
their respective successors and assigns that (i) the principal of, premium, if
any and interest on the Loans shall be promptly paid in full when due, subject
to any applicable grace period, whether upon redemption pursuant to the terms of
the Notes, by acceleration or otherwise, and interest on the overdue principal,
if any, and interest on any interest, if any, to the extent lawful, of the Notes
and all other obligations of the Borrower to the Banks and the Agent hereunder,
thereunder or under any other Loan Document shall be promptly paid in full or
performed, all in accordance with the terms hereof, thereof and of the Loan
Documents; and (ii) in case of any extension of time of payment or renewal of
any of the Notes or of any such other obligations, the same shall be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, subject to any applicable grace period, whether at stated maturity,
by acceleration or otherwise, subject, however, in the case of clauses (i) and
(ii) above, to the limitations set forth in Section 9A.3.  The
Guaranty of each Guarantor shall rank senior in right of payment to all
subordinated Indebtedness of such Guarantor and equal in right of payment with
all other senior obligations of such Guarantor.  Each Guarantor hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes, this Agreement, any
Security Document, the absence of any action to enforce the same, any waiver or
consent by any of the Banks with respect to any provisions hereof or thereof,
any release of any other Guarantor, the recovery of any judgment against the
Borrower, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a
Guarantor.  Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Borrower, any right to require a proceeding first against the
Borrower, protest, notice and all demands whatsoever and covenants that this
Guaranty shall not be discharged except by complete performance of the
obligations contained in the Notes, this Agreement and in this
Guaranty.  The obligations of each Guarantor are limited to the
maximum amount which, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guaranty or pursuant to its
contribution obligations under this Agreement, shall result in the obligations
of such Guarantor under the Guaranty not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.  The net worth of any
Guarantor for such purpose shall include any claim of such Guarantor against the
Borrower for reimbursement and any claim against any other Guarantor for
contribution.  Each Guarantor may consolidate with or merge into or
sell its assets to the Borrower or another Guarantor without limitation in
accordance with Sections 8.7 and 8.8.  If any Bank or the Agent is
required by any court or otherwise to return to the Borrower, any Guarantor, or
any custodian, agent, liquidator or other similar official acting in relation to
the Borrower or any Guarantor, any amount paid by the Borrower or any Guarantor
to the Agent or such Bank, this Guaranty, to the extent theretofore discharged,
shall be reinstated in full force and effect.  Each Guarantor further
agrees that, as between each Guarantor, on the one hand, and the Banks and the
Agent, on the other hand, (x) the maturity of the obligations guaranteed hereby
may be accelerated as provided in Section 9 for the purposes of this Guaranty
notwithstanding any stay, injunction or other prohibition preventing
such  acceleration in respect of the obligations guaranteed hereby,
and (y) in the event of any acceleration of such obligations as provided in
Section 9, such obligations (whether or not due and payable) shall forthwith
become due and payable by each Guarantor for the purpose of this
Guaranty.

           

                        
9A.2.       Release Of A
Guarantor.  A Guarantor will be released from its
Guaranty  (and may subsequently dissolve) without any action required
on the part of the Agent or any Bank:  (1) if all of the Capital Stock
issued by such Guarantor or all or substantially all of the assets of such
Guarantor are sold or otherwise disposed of (including by way of merger or
consolidation) to a Person other than the Borrower or any of its Subsidiaries
and the Borrower otherwise complies, to the extent applicable, with the
conditions set forth under Section 8.7 that are required to be satisfied
thereunder either prior to or concurrent with the consummation of the applicable
transaction, or (2) upon satisfaction and discharge of this Agreement or payment
in full of the principal of, premium, if any, accrued and unpaid interest on the
Loans and all other Obligations under the Notes, this Agreement, the Security
Documents and the Guaranties that are then due and payable.  At the
Borrower’s expense, the Agent shall promptly deliver an appropriate instrument
evidencing such release upon receipt of a request by the Borrower accompanied by
an officer’s certificate certifying as to the compliance with this Section
9A.2.  Any Guarantor not so released remains liable for the full
amount of its Guaranty as provided in this Section 9A.

           

                        
9A.3.       Limitation Of Guarantor’s
Liability.  Each Guarantor and, by its acceptance hereof, each
of the Banks hereby confirms that it is the intention of all such parties that
the guarantee by such Guarantor pursuant to its Guaranty not constitute a
fraudulent transfer or conveyance for purposes of any Bankruptcy Code, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar Federal or state law.  To effectuate the foregoing intention,
the Banks and such Guarantor hereby irrevocably agree that the obligations of
such Guarantor under the Guaranty shall be limited to the maximum amount as
shall, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guaranty or pursuant to Section 9A.5, result in the
obligations of such Guarantor under the Guaranty not constituting such
fraudulent transfer or conveyance.

           

          
            
              
              

            

            
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                         9A.4.        Guarantors May Consolidate,
Etc., On Certain Terms.  Each Guarantor (other than any
Guarantor whose Guaranty is to be released in accordance with the terms of the
Guaranty and this Agreement in connection with any transaction complying with
Section 8.7) will not, and the Borrower will not cause or permit any Guarantor
to, consolidate with or merge with or into any Person other than the Borrower or
any other Guarantor unless:  (1) the entity formed by or surviving any
such consolidation or merger (if other than the Guarantor) or to which such
sale, lease, conveyance or other disposition shall have been made is a
corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia; (2) such entity assumes by amendment,
supplement or other instrument (in form and substance reasonably satisfactory to
the Agent), executed and delivered to the Agent, all of the obligations of the
Guarantor under the Guaranty and the performance of every obligation of the
Guaranty, the Agreement, the other Loan Documents and, to the extent applicable,
the Intercreditor Agreement, and in connection therewith shall cause such
instruments to be filed and recorded in such jurisdictions and take such other
actions as may be required by applicable law to perfect or continue the
perfection of the Lien created under the Security Documents on the Collateral
owned by or transferred to the surviving entity; (3) immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing; and (4) immediately after giving effect to such transaction
on a pro forma basis and the assumption contemplated in clause (2) above
(including giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred in connection with such transaction), the Borrower
could satisfy the provisions of Sections 8.7(3)(a) and 8.7(3)(b).

           

                        
9A.5.       Contribution.  In
order to provide for just and equitable contribution among the Guarantors, the
Guarantors agree, inter se, that each Guarantor that makes a payment or
distribution under a Guaranty shall be entitled to a pro rata contribution from
each other Guarantor hereunder based on the net assets of each other
Guarantor.  The preceding sentence shall in no way affect the rights
of the Banks to the benefits of this Agreement, the Notes, the other Loan
Documents or the Guaranties.

           

                        
9A.6.       Waiver of
Subrogation.  Each Guarantor agrees that it shall not be
entitled to any right of subrogation in relation to the Banks in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.

           

                         9A.7.        Waiver of Stay, Extension or
Usury Laws.  Each Guarantor covenants to the extent permitted
by law that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law that would prohibit or forgive such Guarantor from
performing its Guaranty as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Guaranty; and each Guarantor hereby expressly waives to the extent
permitted by law all benefit or advantage of any such law, and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Agent, but shall suffer and permit the execution of every such power as
though no such law had been enacted.

           

          
            
              
              

            

            
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9A.8.       Cumulative
Remedies.  All remedies of the Agent and the Banks against the
Borrower and the Guarantors are cumulative.  All powers of the Agent
and the Banks to exercise any right or remedy against, or to require performance
by, any Loan Party shall remain in full force and effect until specifically
waived or released by an instrument in writing executed by the Agent and the
Required Lenders.

           

          Section
10.            
REPRESENTATIONS AND
WARRANTIES.

           

          In order
to induce the Agent and the Banks to enter into this Agreement and to make the
Loans provided for herein, each of the Loan Parties party hereto makes the
following representations, covenants and warranties, as of the Closing Date,
which representations, covenants and warranties shall survive the execution and
delivery of this Agreement and the other documents and instruments referred to
herein:

           

          10.1.        Status;
Validity.  (a)  Each Loan Party is a duly organized
and validly existing corporation or limited liability company in good standing
under the laws of the jurisdiction of its incorporation or organization and has
the corporate or limited liability company power and authority to own or hold
under lease its property and assets, to transact the business in which it is
engaged, to enter into and perform this Agreement and the other Loan Documents
to which it is party, and, as to the Borrower, to borrow
hereunder.  Each Loan Party is duly qualified or licensed as a foreign
corporation or limited liability company in good standing in each jurisdiction
where failure to so qualify would have a Material Adverse Effect.

           

          (b)           The
execution, delivery and performance by the Loan Parties of this Agreement and
the other Loan Documents to which each is party and the other documents,
agreements or instruments provided for therein to which each is party, the
consummation of the transactions contemplated thereunder and the use of the
proceeds of the Loans contemplated on the Closing Date have been duly authorized
by all necessary corporate or limited liability company and stockholder or
member action.  This Agreement and the other Loan Documents and the
other documents, agreements or instruments provided for therein to which each is
party are the legal, valid and binding obligations of the Loan Parties party
thereto, enforceable in accordance with their respective terms subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization and similar
laws affecting the enforcement of creditors’ rights generally and to general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).

           

          10.2.        Compliance with Other
Instruments.  (a)  No Loan Party or Subsidiary is in
material default under any material contract, indenture or other agreement to
which it is a party, and (b) neither the execution, delivery or performance of
this Agreement and the other Loan Documents nor the consummation of the
transactions herein or therein contemplated, nor compliance with the terms and
provisions hereof or thereof, will (i) contravene any provision of any Legal
Requirement or (ii) conflict or will be inconsistent with or will result in any
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or, except as provided by the Security Documents,
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of such Loan Party pursuant to the
terms of any indenture, mortgage, deed of trust or other agreement to which such
Loan Party is a signatory or by which such Loan Party is bound or to which such
Loan Party may be subject or (iii) violate any provision of the Charter
Documents of such Loan Party except with respect to matters described in the
foregoing clauses (a) and (b) which could not reasonably be expected to have a
Material Adverse Effect.

           

          
            
              
              

            

            
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          10.3.        Litigation.  Except
as disclosed in the SEC Documents or the Offering Circular (or, with respect to
actions, suits and proceedings not pending or threatened prior to the Closing
Date, as notified to the Agent after the Closing Date pursuant to Section 7.2),
there are no actions, suits or proceedings pending or, to the knowledge of any
Guarantor or the Borrower, threatened, against or affecting any Loan Party
before any Government Authority, which, if adversely determined, would have a
Material Adverse Effect on the Borrower or on the Empire Group, taken as a
whole.

           

          10.4.        Compliance with
Law.  Except as disclosed on Schedule 10.4(a) to this Agreement
or matters which could not result in a Material Adverse Change in respect of the
Borrower or the Empire Group taken as a whole:  (a) all business and
operations of each Loan Party have been and are being conducted in accordance
with all applicable Legal Requirements; (b) each Loan Party has obtained all
permits, licenses and authorizations, or consents which are otherwise necessary,
for such Person to conduct its business as it is conducted (including, without
limitation, the ownership and the operation of the Gaming/Racing Facilities) and
all of which are listed on Schedule 10.4(b) to this Agreement; and (c) no Loan
Party or Subsidiary is a party to or to its knowledge has been threatened with,
and to its knowledge there are no facts existing as a basis for any governmental
or other proceeding which might result in a suspension, limitation or revocation
of any such permit, license or authorization.

           

          10.5.        Capitalization.  (a)  Schedule
10.5(a) to this Agreement is a true, correct and complete list (as to each
member of the Empire Group) of such Person’s authorized Capital Stock, the par
value of same, and the number of such shares or membership interests issued and
outstanding.  All of the shares and membership interests of
Subsidiaries of the Borrower listed on said schedule as outstanding have been
duly and validly issued, are fully paid and nonassessable, are now outstanding,
are owned beneficially and of record as indicated on said schedule, and are
owned free and clear of all Liens (except Permitted Liens).

           

          (b)           Except
as disclosed on Schedule 10.5(b) to this Agreement, no member of the Empire
Group has outstanding any option, warrant, bonds, debentures or other right,
put, call or commitment to issue, or any obligation or commitment to purchase
any of its authorized Capital Stock, or any securities convertible into or
exchangeable for any of its authorized Capital Stock.

           

          10.6.        Governmental
Approvals.  No order, permission, consent, approval, license,
authorization, registration or validation of, or filing with, or exemption by,
any Government Authority is required to authorize, or is required in connection
with the execution, delivery and performance of this Agreement or the other Loan
Documents by any Loan Party except for any of the foregoing which shall have
been obtained, received or filed and except for filings necessary for perfection
of Liens in favor of the Banks.

           

          
            
              
              

            

            
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          10.7.        Federal Reserve Margin
Regulations; Proceeds.  (a)  No member of the Empire
Group is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System).  No part of the proceeds of any Loans
will be used to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin
stock.

           

          (b)           The
proceeds of the Loans shall be used solely for working capital purposes and
general corporate purposes of the Borrower and its consolidated
Subsidiaries.

           

          10.8.        Taxes.  (a)  All
tax returns of any nature whatsoever, including but not limited to, all Federal
income and material, payroll, stock transfer, and excise tax returns and all
appropriate and material state and local income, sales, excise, payroll,
franchise and real and personal property tax returns, and corresponding returns
under the laws of any jurisdiction, which are required to be filed by each Loan
Party have been or will be filed by the due date or extended due date of such
returns.

           

          (b)           Except
for amounts which in the aggregate do not exceed $50,000, (i) all tax amounts
due and payable with respect to each member of the Empire Group have been paid
or accrued, and (ii) there are no tax liabilities, interest or penalties payable
which remain unpaid or accrued.

           

          10.9.        Investment
Company Act.  No any Loan Party is an investment company or a company
controlled by an investment company within the meaning of the Investment Company
Act of 1940, as amended.  No Loan Party is a “holding company” as
defined in the Public Utility Holding Company Act of 1935, as amended, or
subject to any other federal or state statute or regulation limiting its ability
to incur Indebtedness for Borrowed Money other than the Gaming/Racing
Law.

           

          10.10.      Properties
of the Borrower.  All Real Property of the Loan Parties and the
locations thereof as of the Closing Date are listed on Schedule 6.4(c) to this
Agreement.  There are no patents, trademarks, copyrights or trade
names that are material to any Loan Party’s business or operations except as set
forth on Schedule 10.10.  All material contracts, indentures and other
agreements or similar commitments of the Loan Parties are in full force and
effect to the knowledge of any of the Loan Parties, none of the parties
thereunder are in material default thereunder and no written notice of default
has been given or received.

           

          10.11.      Financial
Condition.  (a)  The audited consolidated Financial
Statements of the Borrower and its consolidated Subsidiaries for each of its
Fiscal Years ending in December 31, 2008 (inclusive), have been delivered to the
Agent, have been prepared in accordance with GAAP and fairly present the
financial condition and the results of operations of the Borrower and its
consolidated Subsidiaries for the periods covered thereby.

           

          (b)           There
has been no Material Adverse Change in respect of the Empire Group since
December 31, 2008 except as disclosed in the SEC Documents or the Offering
Circular.

           

          
            
              
              

            

            
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          (c)           As
of the Closing Date, each Loan Party possesses, in the opinion of such Loan
Party, sufficient capital to conduct the business in which it is
engaged.

           

          (d)           Schedule
10.11 lists all Capital Leases to which any Loan Party is a party as of the
Closing Date.

           

          10.12.      Environmental
Matters.  Except as set forth in the Environmental Report and
except as would not reasonably be expected to have a Material Adverse
Effect,

           

          (a)           each
Loan Party (and any predecessor in interest of any of them) has been and
continues to be in material compliance with all applicable Environmental
Laws;

           

          (b)           Each
Loan Party has obtained all material permits and approvals required under
Environmental Laws, including all material environmental, health and safety
permits, licenses, approvals, authorization, variances, agreements, and waivers
of Government Authorities (“Environmental Permits”) necessary for the conduct of
its business and the operation of its facility, and all such Environmental
Permits are in good standing and each Loan Party is in compliance with all
material terms and conditions of such Environmental Permits;

           

          (c)           No
Loan Party nor any of its Properties or operations is subject to any outstanding
written order from or written agreement with any Government Authority or other
Person or is subject to any judicial or docketed administrative proceeding
respecting any (x) Environmental Law, (y) Remedial Action or (z) Environmental
Claim or Environmental Costs;

           

          (d)           There
are no conditions or circumstances now or formerly associated with any Property
or operations by any Loan Party (or any predecessor in interest of any of them)
which would reasonably be expected to prevent or interfere with material
compliance by any Loan Party or Subsidiary with any applicable Environmental
Laws or form the basis of any Environmental Claim or give rise to Non-Routine
Environmental Costs;

           

          (e)           No
Environmental Claim (including, without limitation, in respect of any alleged
violation of any Environmental Laws) is pending or threatened against, or has
been received by, any Loan Party;

           

          (f)           No
Environmental Lien and no unrecorded Environmental Lien has attached to any
Property of any Loan Party and no action has been taken by any Person which
would reasonably be expected to subject any such Property to any Environmental
Lien;

           

          (g)           No
Loan Party (nor any predecessor in interest of any of them) has transported or
arranged for the transportation of any Contaminant to any location which is (i)
listed on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, (ii) listed for
possible inclusion on the National Priorities List by the United States
Environmental Protection Agency, or (iii) listed on any similar state
list;

           

          
            
              
              

            

            
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          (h)           Except
as complies with all Environmental Laws, no Loan Party is required to place any
notice of restriction relating to the presence of any Contaminant on, in, under
or emanating from any Property in any deed to such Property; and

           

          (i)          
 Except as complies with all Environmental Laws, no Property is located in,
and no operations by any Loan Party (or any predecessor in interest of any of
them) affect, any Environmentally Sensitive Area.

           

          10.13.      Disclosure.  Neither
this Agreement or any other Loan Document nor any statement, list, certificate
or other document or information, or any Schedule to this Agreement, delivered
or to be delivered to the Agent or the Banks contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.

           

          10.14.      Compliance with
ERISA.  Each Loan Party and each ERISA Affiliate and each Plan
and the trusts maintained pursuant to such plans are in compliance in all
material respects with the presently applicable provisions of Sections 401
through and including 417 of the Code, and of ERISA and (i) no event which
constitutes a Reportable Event as defined in Section 4043 of ERISA has occurred
and is continuing with respect to any Plan which is or was covered by Title IV
of ERISA, (ii) no Plan which is subject to Part 3 of Subtitle B of Title 1 of
ERISA has incurred any “accumulated funding deficiency” (within the meaning of
Section 302 of ERISA or Section 412 of the Code) whether or not waived, and
(iii) no written notice of liability has been received with respect to any Loan
Party or Subsidiary for any “prohibited transaction” (within the meaning of
Section 4975 of the Code or Section 406 of ERISA), nor has any such prohibited
transaction resulting in liability to any Loan Party or ERISA Affiliate
occurred.

           

          No Loan
Party or any ERISA Affiliate (i) has incurred any liability to the PBGC (or any
successor thereto under ERISA), or to any trustee of a trust established under
Section 4049 of ERISA, in connection with any Plan (other than liability for
premiums under Section 4007 or ERISA), (ii) has incurred any withdrawal
liability under Subtitle E of Title IV of ERISA in connection with any Plan
which is a Multiemployer Plan, nor (iii) has contributed or has been obligated
to contribute on or after September 26, 1980, to any “multiemployer plan”
(within the meaning of Section 3(37) of ERISA) which is subject to Title IV of
ERISA.

           

          The
consummation of the transactions contemplated by this Agreement (i) will not
give rise to any liability on behalf of any Loan Party or its ERISA Affiliates
under Title IV of ERISA to the PBGC (other than ordinary and usual PBGC premium
liability), to the trustee of a trust established pursuant to Section 4049 of
ERISA, or to any Multiemployer Plan, and (ii) will not constitute a “prohibited
transaction” under Section 406 of ERISA or Section 4975 of the
Code.

           

          10.15.      The Security
Documents.  (a)  Each Security Document grants a
security interest or lien in the properties or rights intended to be covered
thereby (the “Collateral”) which (i) constitutes a valid and enforceable
security interest under (A) the Uniform Commercial Code of the State by which
any Security Document is governed (as applicable, the “UCC”) or (B) with respect
to the Mortgages, the real estate recording acts of New York and each other
jurisdiction (if any) where real estate owned or leased by a Loan Party is
located (the “Recording Act”), as the case may be, (ii) is entitled to all of
the rights, benefits and priorities provided by the UCC or, with respect to the
Mortgages, the Recording Act, and (iii) are superior and prior to the rights of
all third Persons now existing or hereafter arising whether by way of mortgage,
pledge, lien, security interest, encumbrance or otherwise, including, without
limitation, the collateral agent for the Indebtedness referred to under clause
(1) of the definition of the term “Permitted Indebtedness”, but excluding other
Permitted Liens.  All such action as is necessary in law has been
taken, or prior to the Closing Date will have been taken, to establish and
perfect the security interest of the Agent and the Banks in the Collateral and
to entitle the Banks or the Agent on behalf of the Banks to exercise the rights
and remedies provided in each of the Security Documents and the UCC or the
Recording Act, as applicable, and no filing, recording, registration or giving
of notice or other action is required in connection therewith except such as has
been made or given or will have been made or given prior to such
date.  All filing and other fees and all mortgage recording or other
tax payable with respect to the recording of any of the Security Documents and
UCC financing statements have been paid or provided for.

           

          
            
              
              

            

            
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          (b)           Upon
establishment of the Reserve Account and the deposit of funds therein, Sections
2.4 will create, as security for Borrower’s Obligations, valid, enforceable and
perfected security interests under applicable law in the Reserve Account in
favor of the Agent and the Banks superior and prior to the rights of all third
parties and subject to no other Liens (other than Permitted
Liens).  All such action as is necessary in law will be taken prior to
the date of such deposit to establish and perfect the security interest of the
Agent and the Banks in the Reserve Account and to entitle the Agent and the
Banks to exercise the rights and remedies provided in this Agreement and
applicable law, and no filing, recording, registration or giving of notice or
other action is required or will be required in connection
therewith.

           

          10.16.      Gaming/Racing Permits and
Approvals.  All Gaming/Racing Permits required to be held by
Empire Group are current and in good standing and the Loan Parties presently
hold all Gaming/Racing Permits necessary for the continued operation of the
Gaming/Racing Facilities.

           

          10.17.      Labor
Relations.  There is no strike or work stoppage in existence,
or to the best knowledge of Borrower threatened, involving any Loan Party or the
Gaming/Racing Facilities that reasonably would be expected to result in a
Material Adverse Change.

           

          10.18.      Trademarks, Patents,
Licenses, Franchises, Formulas and Copyrights.  Each of the
Loan Parties owns all the patents, trademarks, permits, service marks, trade
names, copyrights, licenses, franchises and formulas, or has a valid license or
sublicense of rights with respect to the foregoing, and has obtained assignments
of all leases and other rights of whatever nature, necessary for the present
conduct of its respective businesses, without any known conflict with the rights
of others which, or the failure to obtain which, as the case may be, could
reasonably be expected to result in a Material Adverse Change on the business,
operations, property, assets or condition (financial or otherwise) of the Loan
Parties.  Each of the patents, trademarks, servicemarks, tradenames
and copyrights owned by the Loan Parties under the common law or which is
registered with any Governmental Authority is set forth on Schedule
10.10.

           

          
            
              
              

            

            
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          10.19.      FF&E.  The
Empire Group shall furnish, fixture and equip the Gaming/Racing Facilities with
FF&E it reasonably deems appropriate for the operation of the Gaming/Racing
Facilities.  All FF&E that is purchased and installed in the
Gaming/Racing Facilities shall be purchased free and clear of any liens,
encumbrances or claims, other than Permitted Liens.

           

          Section
11.             AGENT.

           

          11.1.        Appointment.  The
Banks hereby irrevocably appoint PAB to act as Agent hereunder and as Agent or
“Assignee” or “Secured Party” or “Mortgagee” or other specified designation (in
each case as applicable) under the Security Documents (in such capacity, the
“Agent”).  Each Bank hereby irrevocably authorizes, and each holder of
any Note by the acceptance of such Note shall be deemed irrevocably to
authorize, the Agent to take such action on its behalf under the provisions of
this Agreement, the Notes, the Security Documents, the other Loan Documents and
any other instruments and agreements referred to therein and to exercise such
powers thereunder as are specifically delegated to or required of it by the
terms thereof and such other powers as are reasonably incidental thereto;
provided that the Agent shall not take any action to foreclose upon any Mortgage
or realize upon any other security interest in any of the Collateral, or release
any Collateral, without the consent of the Required Lenders.  The
Agent may perform any of its duties under any of the Loan Documents by or
through its agents or employees.

           

          11.2.        Nature of
Duties.  The Agent shall have no duties or responsibilities
except those expressly set forth in the Loan Documents.  Neither the
Agent nor any of its officers, directors, employees or agents shall be liable to
any Bank for any action taken or omitted by it under any of the Loan Documents,
or in connection therewith unless caused by its or their gross negligence or
willful misconduct.  Nothing in the Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of the Loan Documents except as expressly set forth
therein.  The duties of the Agent under the Loan Documents shall be
mechanical and administrative in nature and the Agent shall not have by reason
of its duties under the Loan Documents a fiduciary relationship in respect of
any Bank.  The Agent agrees to deliver promptly to each Bank (i)
copies of notices received by it pursuant to Sections 7.1, 7.2, 7.11 and 7.14 of
this Agreement, and (ii) copies of all documents required to be delivered
hereunder by the Borrower to the Banks directly but that are not so delivered to
any Bank (but were delivered to the Agent) if such Bank notifies the Agent that
it has not received such document or documents, specifying same.

           

          11.3.        Lack of
Reliance.  Independently and without reliance on the Agent,
each Bank to the extent it deems appropriate has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
the Loan Parties in connection with the making and the continuance of the Loans
hereunder and the taking or not taking of any action in connection herewith,
(ii) its own appraisal of the credit worthiness of the Loan Parties and (iii)
its own independent investigation and appraisal of the Collateral; and, except
as expressly provided in the Loan Documents, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto, whether coming into
its possession before the date hereof or at any time or times
thereafter.  The Agent shall not be responsible to any Bank for any
recitals, statements, representations or warranties herein or in any certificate
or other document delivered in connection herewith or for the authorization,
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectability, or sufficiency of any of the Loan Documents, the financial
condition of the Loan Parties or the condition of any of the Collateral, or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of any of the Loan Documents, the
financial condition of the Loan Parties or the existence or possible existence
of any Event of Default or Default.

           

          
            
              
              

            

            
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          11.4.        Certain
Rights.  If the Agent requests instructions from the Banks or
Required Lenders with respect to any interpretation, act or action (including
failure to act in connection with this Agreement or any of the other Loan
Documents) the Agent shall be entitled to refrain from such act or taking such
actions unless and until it shall have received instructions from the Banks or
the Required Lenders, as the case may be; and the Agent shall not incur
liability to any Person by so refraining.  Without limiting the
foregoing, no Bank shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting hereunder or under any
of the other Loan Documents in accordance with the instructions of the Required
Lenders (as to matters requiring the consent of the Required Lenders) or all the
Banks (as to matters requiring the consent of all the Banks).  The
Agent shall be fully justified in failing or refusing to take any action under
any Loan Document unless, if it requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking, continuing to take or not taking any such
action.

           

          11.5.        Reliance.  The
Agent shall be entitled to rely upon any written notice or any telephone message
believed by it to be genuine or correct and to have been signed, sent or made by
the proper authorized Person, and, with respect to all legal matters pertaining
to the Loan Documents and its duties thereunder, upon advice of counsel selected
by it.

           

          11.6.        Indemnification.  To
the extent the Agent is not reimbursed or indemnified by the Borrower, the Banks
will reimburse and/or indemnify the Agent, in proportion to the then-outstanding
aggregate principal amount of their Loans, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred or sustained by or asserted against the Agent, acting
pursuant hereto or any of the other Loan Documents in its capacity provided for
in this Section 11, in any way relating to or arising out of this Agreement, or
any of the other Loan Documents, provided, however, that no Bank shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent’s gross negligence or willful misconduct.

           

          11.7.        Agent,
Individually.  With respect to its Loans under this Agreement,
the Loans made by it and any Note issued to or held by it, the Agent shall have
and may exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Bank or holder of a Note.  The terms “Bank” or “holders of Notes” or
any similar terms shall, unless the context clearly otherwise indicates, not
exclude the Agent in its individual capacity as a Bank or holder of a
Note.  The Agent may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with any Loan
Party or any of its Subsidiaries as if it were not acting pursuant hereto, and
may accept fees and other consideration from any Loan Party or any of its
Subsidiaries for services as the Agent in connection with this Agreement and the
other Loan Documents and for services otherwise than as the Agent without having
to account for the same to the Banks.

           

          
            
              
              

            

            
              43

              
                

              

            

            
              
              

            

          

           

          11.8.        Holders of
Notes.  The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment or transfer thereof shall have been received by the
Agent.  Any request, authority or consent of any Person, who at the
time of making such request or of giving such authority or consent is the payee
of any Note, shall be conclusive and binding on any subsequent holder,
transferee, assignee or payee of such Note or of any Note or Notes issued in
exchange therefor.

           

          11.9.        Resignation.  The
Agent may resign at any time from the performance of all its functions and
duties hereunder and under the other Loan Documents by giving 30 days prior
written notice to the Borrower and each Bank.  Such resignation shall
take effect upon the expiration of such 30 day period or upon the earlier
appointment of a successor. In case of the resignation of the Agent, the
Required Lenders may appoint a successor by a written instrument signed by the
Required Lenders; however, any such successor (if not an Affiliate of Agent)
shall be a commercial bank having a combined capital and surplus of at least
$1,000,000,000 and be subject to the prior approval of the Borrower, such
consent not to be unreasonably withheld or delayed.  Any successor
shall execute and deliver to the Agent an instrument accepting such appointment,
and thereupon such successor, without further act, shall become vested with all
the estates, properties, rights, powers, duties and trusts of the Agent
hereunder and with like effect as if originally named as “Agent” herein and
therein, and upon request, the predecessor Agent shall take all actions and
execute all documents necessary to give effect to the foregoing.  In
the event the Agent’s resignation becomes effective at a time when no successor
has been named, all notices, other communications and payments hereunder
required to be given by or to the Agent shall be sufficiently given if given by
the Required Lenders (or all Banks, if the consent of all Banks is required
therefor hereunder) or to each Bank, as the case may be.  In such
event, all powers specifically delegated to the Agent may be exercised by the
Required Lenders and the Required Lenders shall be entitled to all rights of the
Agent hereunder.

           

          11.10.      Reimbursement.  Without
limiting the provisions of Section 11.6, the Banks and the Agent hereby agree
that the Agent shall not be obligated to make available to any Person any sum
which the Agent is expecting to receive for the account of that Person until the
Agent has determined that it has received that sum.  The Agent may,
however, disburse funds prior to determining that the sums which the Agent
expects to receive have been finally and unconditionally paid to the Agent, if
the Agent wishes to do so.  If and to the extent that the Agent does
disburse funds and it later becomes apparent that the Agent did not then receive
a payment in an amount equal to the sum paid out, then any Person to whom the
Agent made the funds available shall, on demand from the Agent:

           

          (a)           refund
the Agent the sum paid to that Person; and

           

          (b)           reimburse
the Agent for the additional amount certified by the Agent as being necessary to
indemnify the Agent against any funding or other cost, loss, expense or
liability sustained or incurred by the Agent as a result of paying out the sums
before receiving it; provided, however, that if such funds were made available
to any Bank, such additional amount shall be limited to interest on the sum to
be repaid, for each day from the date such amount was disbursed until the date
repaid to the Agent, at (for the first three days) the customary rate set by the
Agent for correction of errors among banks, and thereafter at the fluctuating
rate of interest announced from time to time in The Wall Street Journal as the
“US prime rate” (or if such rate is no longer published by The Wall Street
Journal, such rate as the Agent shall announce from time to time as its “prime
rate”, which rate is not necessarily the lowest rate that the Agent charges to
its customers), or, if greater and in respect of a Loan made to the Borrower,
the rate from time to time prevailing on such Loan.

           

          
            
              
              

            

            
              44

              
                

              

            

            
              
              

            

          

           

          Section
12.             MISCELLANEOUS.

           

          12.1.         Calculations and Financial
Data.  Calculations hereunder (including, without limitation,
calculations used in determining, or in any certificate of any Loan Party
reflecting, compliance by any Loan Party with the provisions of this Agreement)
shall be made and financial data required hereby shall be prepared both as to
classification of items and as to amount in accordance with GAAP consistent with
the Financial Statements described in Section 10.11(a); provided that for
purposes of Sections 2.4(e) and 8.12 no effect shall be given to any change in
GAAP from those in effect on November 30, 2004.

           

          12.2.         Amendment and
Waiver.  Except as otherwise provided, no provision of any of
the Loan Documents may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the Required Lenders (or the Agent on
their behalf) and the Borrower, except that waivers of provisions relating to a
Loan Party’s performance or non performance of its obligations hereunder or
thereunder need not be signed by such Loan Party or any other Loan Party;
provided however that: (i) the written consent of the Agent shall also be
required to change, waive, discharge or terminate provisions of Section 11, and
(ii) the written consent of the Guarantors shall also be required to change,
waive, discharge or terminate provisions of Section 9A; and provided further
that without the consent of all of the Banks (or the Agent on their behalf) no
change, waiver, discharge or termination may be made that would decrease the
principal of any Loan; decrease the interest rate payable on any Loan; decrease
the rate of commitment commission payable pursuant to Section 4.1 or the amount
of the fee payable pursuant to Section 4.2; extend the final maturity date of
any Loan (except as expressly provided herein); change the definition of
“Required Lenders” or modify this Section 12.2.  Any such change,
waiver, discharge or termination shall be effective only in the specific
instance and for the specific purposes for which made or given.

           

          12.3.         Expenses.  (a)  Whether
or not the transactions hereby contemplated shall be consummated, the Borrower
shall pay all reasonable out of pocket costs and expenses of (x) the Agent, the
Bank and any Bank Assignee, incurred in connection with the preparation,
execution, delivery, administration, filing and recording of, and (y) of the
Agent, the Banks and any Bank Assignee in the Obligations incurred in connection
with the amendment (including any waiver or consent), modification, and
enforcement of or preservation of any rights under, this Agreement, the other
Loan Documents, the making and repayment of the Loans and the payment of all
interest and fees, including, without limitation, (A) the reasonable fees and
expenses of Hahn & Hessen LLP, counsel for the Agent, and any special or
local counsel retained by the Agent, and with respect to enforcement, the
reasonable fees and expenses of counsel for the Agent, any Bank or any Bank
Assignee, (B) the reasonable fees and expenses of consultants and appraisers
retained by the Agent in connection with the transactions contemplated
hereunder, and (C) printing, travel, title insurance, mortgage recording,
filing, communication and signing taxes and costs.  Without limiting
the foregoing provisions of this Section 12.3(a), the Borrower shall pay all
reasonable out-of-pocket costs and expenses of the Agent and the Banks incurred
from time to time in connection with obtaining appraisals or valuations of the
Collateral.

           

          
            
              
              

            

            
              45

              
                

              

            

            
              
              

            

          

           

          (b)           The
Borrower agrees to pay, and to save the Agent and the Banks harmless from (x)
all present and future stamp, filing and other similar taxes, fees or charges
(including interest and penalties, if any), which may be payable in connection
with the Loan Documents or the issuance of the Notes or any modification of any
of the foregoing, and (y) all finder’s and broker’s fees in connection with the
transactions contemplated by this Agreement and the other Loan
Documents.

           

          (c)           The
Borrower agrees to indemnify, pay and hold harmless the Agent, each Bank, any
Bank Assignee and each holder of a Note, solely in their capacities as such
under or in relation to this Agreement and the other Loan Documents and not in
any other capacity, and their respective present and future officers, directors,
employees and agents (collectively, the “Indemnified Parties”) from and against
all liability, losses, damages and expenses (including, without limitation,
legal fees and expenses) arising out of, or in any way connected with, or as a
result of (i) the execution and delivery of this Agreement, the other Loan
Documents, or the documents or transactions contemplated hereby and thereby or
the performance by the parties hereto or thereto of their respective obligations
hereunder and thereunder or relating thereto; or (ii) any claim, action, suit,
investigation or proceeding (in each case, regardless of whether or not the
Indemnified Party is a party thereto or target thereof) in any way relating to
any Collateral, the Borrower, any other Loan Party or Subsidiary or any
Affiliate of any of the foregoing in respect of this Agreement, any other Loan
Document or any other document or transaction in connection herewith or
therewith or relating thereto; or (iii) any actual or alleged violation by any
Loan Party, Affiliate or Subsidiary (or any predecessor in interest of any of
them) of any Environmental Law, any Environmental Claim or Environmental Cost or
the imposition of any Environmental Lien, or any breach of any covenant set
forth in Section 7.14 or any representation or warranty set forth in Section
10.12; provided that the Borrower shall not be liable to any Indemnified Party
for any portion of such liabilities, losses, damages and expenses sustained or
incurred as a direct result of the gross negligence or willful misconduct of the
Agent or any Bank.

           

          (d)           All
obligations provided for in this Section 12.3 and Sections 3.6, 3.7, 4.1, 5.2
and 11.6 shall survive any termination of this Agreement and the payment in full
of the Loans.

           

          12.4.         Benefits of Agreement;
Descriptive Headings.  (a)  This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns, and, in particular, shall
inure to the benefit of the holders from time to time of the Notes; provided,
however, that no Loan Party may assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Agent and the
Banks and any such purported assignment or transfer shall be void; provided,
further, however, neither the Agent nor the Banks may assign or transfer any of
its rights or obligations hereunder except in compliance with Section 12.4(d)
and any such purported assignment or transfer shall be void.  In
furtherance of the foregoing, each Bank shall be entitled at any time to grant
participations in the whole or any part of its rights and/or obligations under
this Agreement, the Loan Documents or any Loan or Note to any
Person.  No such participation pursuant to this Section 12.4(a) shall
relieve any Bank from its obligations hereunder and the Borrower and the other
Loan Parties need deal solely with the Agent and the Banks with respect to
waivers, modifications and consents to this Agreement, the Loan Documents or the
Notes.  Any such participant is referred to in this Agreement as a
“Bank Assignee”.  The Borrower agrees that the provisions of Sections
3.4, 5.2 and 12.3 shall run to the benefit of each Bank Assignee and its
participations or interests herein, and any Bank may enforce such provisions on
behalf of any such Bank Assignee.  The Borrower hereby further agrees
that any such Bank Assignee may, to the fullest extent permitted by applicable
law, exercise the right of setoff with respect to such participation (and in an
amount up to the amount of such participation) as fully as if such Bank Assignee
were the direct creditor of the Borrower.  Any Bank may furnish any
information concerning the Loan Parties in its possession from time to time to
Bank Assignees (including prospective Bank Assignees).  Each Bank
shall notify Borrower of any participation granted by it pursuant to this
Section 12.4(a) but neither the Borrower’s approval nor that of any other Loan
Party shall be required for any such participation.  Borrower shall
not be responsible for any due diligence costs or legal expenses of such Bank
Assignees in connection with their entering into such
participation.

           

          
            
              
              

            

            
              46

              
                

              

            

            
              
              

            

          

           

          (b)           The
descriptive headings of the various provisions of this Agreement and the other
Loan Documents are inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the provisions
hereof.

           

          (c)           Notwithstanding
anything to the contrary contained herein or in any of the Loan Documents,
unless the Agent, the Borrower or a Bank otherwise requests with respect to any
specific exhibit, exhibits to this Agreement shall not be required to be
attached to the execution or any other copy of this Agreement, and any
references in this Agreement or the other Loan Documents to such exhibits as
“Exhibits hereto,” “Exhibits to this Agreement,” or words of similar effect
shall be deemed to refer to such document as executed by the parties thereto and
delivered on the Closing Date.

           

          (d)           Any
Bank may at any time assign to any other Bank or any affiliate of any Bank, or
to one or more additional banks or financial institutions (“Purchasing Banks”),
all or any part of its Loans (and corresponding Note) pursuant to a Transfer
Supplement (“Transfer Supplement”), substantially in the form of Exhibit C to
this Agreement, executed by such Purchasing Bank, such transferor Bank and the
Agent; provided, however, that without the consent of the Agent (subject to
applicable law) each such assignment shall be limited to an amount equal to the
lesser of (x) such Bank’s Loans then outstanding, or (y) a minimum amount of
$1,000,000 and integral multiples of $500,000 above such amount; provided,
further, however, that unless an Event of Default shall have occurred and be
continuing, no Bank shall transfer any part of its Loan (and corresponding Note)
to any person other than an Affiliate of a Bank without the prior written
consent of the Borrower, which consent will not be unreasonably
withheld.  Such Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank and the resulting adjustment of the percentage
of the Loans and Notes (and related rights and obligations) held by the
transferor Bank and the Purchasing Bank arising from the purchase by such
Purchasing Bank of all or a portion of the rights and obligations of such
transferor Bank pursuant to the Transfer Supplement.  Upon the
consummation of any transfer to a Purchasing Bank pursuant to this Section
12.4(d), the transferor Bank, the Agent and the Borrower shall make appropriate
arrangements so that, if required, a replacement Note (dated the same date as
the Note being replaced) is issued to such transferor Bank and a new Note (dated
the same date as the Note being replaced) or, as appropriate, a replacement Note
(dated the same date as the Note being replaced) issued to such Purchasing Bank,
in each case in principal amounts reflecting their outstanding Loans, as
adjusted pursuant to such Transfer Supplement.

           

          
            
              
              

            

            
              47

              
                

              

            

            
              
              

            

          

           

          12.5.         Notices, Requests, Demands,
etc.  Except as otherwise expressly provided herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered if
sent by Federal Express or other similar overnight delivery service, or when
received (when mailed, postage prepaid, by registered or certified mail, return
receipt requested), or (in the case of telex, telegraphic, telecopier or cable
notice or electronic mail) when received by the telex, telegraph, telecopier or
electronic mail “in-box” of the recipient:  (i) if to the Agent, at
the Closing Office, (ii) if to a Bank, at the address specified with its
signature below, and (iii) if to a Guarantor or the Borrower, at its address
specified with its signature below (Attention: President), or to such other
addresses as any of the parties hereto may hereafter specify to the others in
writing, provided that communications with respect to a change of address shall
be deemed to be effective when actually received.

           

          12.6.         Governing
Law.  THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS EXECUTED WHOLLY WITHIN THE STATE OF NEW YORK
(REGARDLESS OF THE PLACE WHERE THIS AGREEMENT, OR ANY AMENDMENT HERETO, IS
EXECUTED).

           

          12.7.         Counterparts;
Telecopies.  This Agreement and the other Loan Documents may be
executed in any number of counterparts by the different parties hereto and
thereto on separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all counterparts for each Loan Document
shall together constitute one and the same agreement.  Complete sets
of counterparts of this Agreement shall be lodged with the Borrower and the
Agent.  Telecopied and/or emailed signatures hereto and to the other
Loan Documents shall be of the same force and effect as an original of a
manually signed copy.

           

          12.8.         Waiver.  No
failure or delay on the part of the Agent or any Bank in exercising any right,
power or privilege under this Agreement or any other Loan Document, and no
course of dealing between any Loan Party or Subsidiary and the Agent or any Bank
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Agent or any Bank would otherwise have
pursuant to such documents or at law or equity.  No notice to or
demand on any Loan Party in any case shall entitle such Loan Party or any other
Loan Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Agent or any Bank to
any other or further action in any circumstances without notice or
demand.

           

          
            
              
              

            

            
              48

              
                

              

            

            
              
              

            

          

           

          12.9.         Pro Rata
Sharing.  The Banks agree among themselves that, with respect
to all sums received by the Banks applicable to the payment of the principal of
or interest on the Notes (except as otherwise provided in Section 3.6, 3.7, 5.2
or 5.3), equitable adjustment will be made between the Banks so that, in effect,
all such sums shall be shared ratably by each of the Banks (in accordance with
the outstanding principal amounts of their respective Notes) whether received by
voluntary payment, by realization upon security, by the exercise of the right of
set off or banker’s lien, by counterclaim or cross action or by the enforcement
of any or all of the Notes or otherwise.  If any Bank receives any
payment on its Note of a sum or sums in excess of its pro rata portion (except
as otherwise provided in Section 3.6, 3.7, 5.2 or 5.3), then such Bank receiving
such excess payment shall purchase for cash from the other Banks an interest in
their Notes in such amount as shall result in a ratable participation by all of
the Banks in the aggregate unpaid amount of Notes then outstanding; provided,
however, that if all or any portion of such excess payment is thereafter
recovered by such Bank, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.  Each
of the Loan Parties party hereto hereby agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section 12.9 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of setoff) with respect to such participation as fully as if such Bank
were the direct creditor of such Loan Party in the amount of such
participation.

           

          12.10.       Jurisdiction.  EACH
GUARANTOR AND THE BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST SUCH LOAN PARTY WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE
OTHER LOAN DOCUMENTS OR THE DOCUMENTS DELIVERED IN CONNECTION THEREWITH MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS THE AGENT OR ANY BANK MAY
ELECT, and, by execution and delivery hereof, each of the Guarantors and the
Borrower accepts and consents for itself and in respect to its property,
generally and unconditionally, the jurisdiction of the aforesaid courts and
agrees that such jurisdiction shall be exclusive, unless waived by the Required
Lenders in writing, with respect to any action or proceeding brought by it
against the Agent or any Bank and any questions relating to
usury.  Each of the Guarantors and the Borrower agrees that Sections 5
1401 and 5 1402 of the General Obligations Law of the State of New York shall
apply to the Loan Documents and waives any right to stay or to dismiss any
action or proceeding brought before said courts on the basis of forum non conveniens.  Each
Loan Party hereby irrevocably consents that all process served or brought
against such Loan Party with respect to any such proceeding in any such court in
New York shall be effective and binding service in every respect if sent by
registered mail, or (if permitted by law) by Federal Express or other similar
overnight delivery service to such Loan Party at its address set forth
below.  Nothing herein shall affect the right of the Agent or the
Banks to serve process in any other manner permitted by law or shall limit the
right of Agent or any Bank to bring proceedings against any Loan Party in the
courts of any other court or tribunal otherwise having
jurisdiction.

           

          12.11.       Severability.  If
any provision of this Agreement shall be held or deemed to be or shall, in fact,
be illegal, inoperative or unenforceable, the same shall not affect any other
provision or provisions herein contained or render the same invalid, inoperative
or unenforceable to any extent whatever.

           

          
            
              
              

            

            
              49

              
                

              

            

            
              
              

            

          

           

          12.12.       Right of Set
off.  In addition to any rights now or hereafter granted under
applicable law or otherwise and not by way of limitation of any such rights,
upon the occurrence of an Event of Default each of the Banks and Bank Assignees
is hereby authorized at any time or from time to time, without notice to any
Loan Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final) and any other indebtedness at any
time held or owing by such Bank or Bank Assignee to or for the credit or the
account of any Loan Party against and on account of the obligations and
liabilities of such Loan Party now or hereafter existing under any of the Loan
Documents irrespective of whether or not any demand shall have been made
thereunder and although said obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.  The Bank or Banks or Bank Assignee
exercising any rights granted under this Section 12.12 shall thereafter notify
the affected Loan Party and the Agent of such action; provided that the failure
to give such notice shall not affect the validity of such set off and
application.

           

          12.13.       No Third Party
Beneficiaries.  This Agreement is solely for the benefit of the
Agent, the Banks, the Bank Assignees, the Borrower, the Guarantors and their
respective successors and assigns (except as otherwise expressly provided
herein) and nothing contained herein shall be deemed to confer upon anyone other
than the parties hereto and their respective successors and assigns any right to
insist on or to enforce the performance or observance of any of the obligations
contained herein.  All conditions to the obligations of the Banks to
make the Loans hereunder are imposed solely and exclusively for the benefit of
the Banks and their respective successors, assigns and Bank Assignees and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms and no other Person shall under any circumstances be
deemed to be beneficiary of such conditions.

           

          12.14.       Survival;
Integration.  (a)  Each of the representations,
warranties, terms, covenants, agreements and conditions contained in this
Agreement shall specifically survive the execution and delivery of this
Agreement and the other Loan Documents and the making of Loans and shall, unless
otherwise expressly provided, continue in full force and effect until the Loans
together with interest thereon, the commitment commissions, the fees and
compensation of the Agent, and all other sums payable hereunder or thereunder
have been indefeasibly paid in full.

           

          (b)           This
Agreement, together with the other Loan Documents, comprises the complete and
integrated agreement of the parties on the subject matter hereof and thereof and
supersedes all other prior agreements, written or oral, on the subject matter
hereof and thereof.  In the event of any direct conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; provided that the
inclusion of supplemental rights or remedies in favor of the Agent or the Banks
in any other Loan Document shall not be deemed a conflict with this
Agreement.  Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.

           

          
            
              
              

            

            
              50

              
                

              

            

            
              
              

            

          

           

          12.15.       Domicile of
Loans.  Any Bank may make, maintain or transfer any of its
Loans hereunder to, or for the account of, any branch office, subsidiary or
affiliate of such Bank.

           

          12.16.       Waiver of Jury
Trial.  EACH OF THE BORROWER, THE GUARANTORS, THE AGENT AND THE
BANKS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF ANY LOAN PARTY, THE AGENT OR THE
BANKS.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE
BANKS ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

           

          12.17.       Armored
Cars.  PAB shall provide for, at its sole cost and expense,
service by armored car (or other secure conveyance as determined by PAB in its
sole discretion) to transport money from Monticello Raceway to PAB, which money
shall be deposited in deposit, demand, or operating accounts maintained by
Borrower or affiliates of Borrower at PAB.

           

          12.18.       FDIC.  PAB
represents that as of the date hereof, it is a member of the Federal Deposit
Insurance Corporation (“FDIC”).  PAB agrees that so long as the Loan
Agreement has not been repaid in full in cash, PAB shall not withdraw as a
member of the FDIC.

           

          [Remainder
of Page Intentionally Left Blank]

           

          
            
              
              

            

            
              51

              
                

              

            

            
              
              

            

          

           

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

             

            
              	 
      	
                      EMPIRE
      RESORTS, INC.

                    
	 
      	 
      
	
                      c/o
      Monticello Raceway

                    	 
      
	
                      Route
      17B

                    	 
      
	
                      P.O.
      Box 5013

                    	 
      
	
                      Monticello,
      New York, 12701

                    	 
      
	
                      Telecopier
      No.:  (845) 807-0000

                    	
                      By:

                    	/s/
      Joseph E. Bernstein
	 
      	 
      	
                      Name:

                    	Joseph
      E. Bernstein
	 
      	 
      	
                      Title:

                    	Chief
      Executive Officer


            

            


            


            
              	 
      	
                      ALPHA
      MONTICELLO, INC.

                    
	 
      	 
      
	
                      c/o
      Monticello Raceway

                    	 
      
	
                      Route
      17B

                    	 
      
	
                      P.O.
      Box 5013

                    	 
      
	
                      Monticello,
      New York, 12701

                    	 
      
	
                      Telecopier
      No.:  (845) 807-0000

                    	
                      By:

                    	/s/
      Joseph E. Bernstein
	 
      	 
      	
                      Name:

                    	Joseph
      E. Bernstein
	 
      	 
      	
                      Title:

                    	President


            

            


            


            
              	 
      	
                      ALPHA
      CASINO MANAGEMENT INC.

                    
	 
      	 
      
	
                      c/o
      Monticello Raceway

                    	 
      
	
                      Route
      17B

                    	 
      
	
                      P.O.
      Box 5013

                    	 
      
	
                      Monticello,
      New York, 12701

                    	 
      
	
                      Telecopier
      No.:  (845) 807-0000

                    	
                      By:

                    	/s/
      Joseph E. Bernstein
	 
      	 
      	
                      Name:

                    	Joseph
      E. Bernstein
	 
      	 
      	
                      Title:

                    	President


            

            


            


            
              	 
      	
                      MOHAWK
      MANAGEMENT, LLC

                    
	 
      	 
      
	
                      c/o
      Monticello Raceway

                    	 
      
	
                      Route
      17B

                    	 
      
	
                      P.O.
      Box 5013

                    	 
      
	
                      Monticello,
      New York, 12701

                    	 
      
	
                      Telecopier
      No.:  (845) 807-0000

                    	
                      By:

                    	/s/
      Joseph E. Bernstein
	 
      	 
      	
                      Name:

                    	Joseph
      E. Bernstein
	 
      	 
      	
                      Title:

                    	Manager


            

             

            
 

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

            


            
              	 
      	
                      MONTICELLO
      CASINO MANAGEMENT, LLC

                    
	 
      	 
      
	
                      c/o
      Monticello Raceway

                    	 
      
	
                      Route
      17B

                    	 
      
	
                      P.O.
      Box 5013

                    	 
      
	
                      Monticello,
      New York, 12701

                    	 
      
	
                      Telecopier
      No.:  (845) 807-0000

                    	
                      By:

                    	/s/
      Joseph E. Bernstein
	 
      	 
      	
                      Name:

                    	Joseph
      E. Bernstein
	 
      	 
      	
                      Title:

                    	Manager


            

            


            


            
              	 
      	
                      MONTICELLO
      RACEWAY DEVELOPMENT COMPANY, LLC

                    
	 
      	 
      
	
                      c/o
      Monticello Raceway

                    	 
      
	
                      Route
      17B

                    	 
      
	
                      P.O.
      Box 5013

                    	 
      
	
                      Monticello,
      New York, 12701

                    	 
      
	
                      Telecopier
      No.:  (845) 807-0000

                    	
                      By:

                    	/s/
      Joseph E. Bernstein
	 
      	 
      	
                      Name:

                    	Joseph
      E. Bernstein
	 
      	 
      	
                      Title:

                    	Manager


            

            


            


            
              	 
      	
                      MONTICELLO
      RACEWAY MANAGEMENT, INC.

                    
	 
      	 
      
	
                      c/o
      Monticello Raceway

                    	 
      
	
                      Route
      17B

                    	 
      
	
                      P.O.
      Box 5013

                    	 
      
	
                      Monticello,
      New York, 12701

                    	 
      
	
                      Telecopier
      No.:  (845) 807-0000

                    	
                      By:

                    	/s/
      Clifford Ehrlich
	 
      	 
      	
                      Name:

                    	Clifford
      Ehrlich  
	 
      	 
      	
                      Title:

                    	President
      & G.M.


            

            


            


            
              	 
      	
                      THE
      PARK AVENUE BANK,

                      as
      Bank and as Agent

                    
	 
      	 
      
	
                      460
      Park Avenue

                    	 
      
	
                      New
      York, New York 10022

                    	 
      
	
                      Telecopier
      No. (212) __________

                    	
                      By:

                    	/s/
      Donald G. Glascoff, Jr.
	 
      	 
      	
                      Name:

                    	Donald
      G. Glascoff, Jr.
	 
      	 
      	
                      Title:

                    	Chairman


            

            


            


            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            
              TABLE OF
CONTENTS

              [TO BE
UPDATED POST CLOSING]

               

              
                	
                        Section
      1.

                      	 
      	
                        DEFINITIONS

                      	
                        2

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.

                      	 
      	
                        THE
      LOAN FACILITIES.

                      	
                        2

                      
	
                        2.1.

                      	 
      	
                        Loans

                      	
                        2

                      
	
                        2.2.

                      	 
      	
                        [Intentionally
      Omitted].

                      	 
      
	
                        2.3.

                      	 
      	
                        [Intentionally
      Omitted].

                      	 
      
	
                        2.4.

                      	 
      	
                        Reserve
      Account; Mandatory Repayments and Prepayments of Loans

                      	
                        3

                      
	
                        2.5.

                      	 
      	
                        Voluntary
      Repayment of Loans

                      	
                        5

                      
	
                        2.6.

                      	 
      	
                        [Intentionally
      Omitted].

                      	
                        .

                      
	
                        2.7.

                      	 
      	
                        [Intentionally
      Omitted].

                      	
                        5

                      
	
                        2.8.

                      	 
      	
                        Maturity
      Date.

                      	
                        5

                      
	 
      	 
      	 
      	 
      
	
                        Section
      3.

                      	 
      	
                        INTEREST.

                      	
                        6

                      
	
                        3.1.

                      	 
      	
                        Rate
      of Interest

                      	
                        6

                      
	
                        3.2.

                      	 
      	
                        Interest
      Payment Dates

                      	
                        6

                      
	
                        3.3.

                      	 
      	
                        [Intentionally
      Omitted].

                      	
                        6

                      
	
                        3.4.

                      	 
      	
                        Default
      Interest Rate

                      	
                        6

                      
	
                        3.5.

                      	 
      	
                        [Intentionally
      Omitted].

                      	
                        6

                      
	
                        3.6.

                      	 
      	
                        Changed
      Circumstances

                      	
                        6

                      
	
                        3.7.

                      	 
      	
                        Capital
      Requirements

                      	
                        7

                      
	 
      	 
      	 
      	 
      
	
                        Section
      4.

                      	 
      	
                        CLOSING
      CONSIDERATION

                      	
                        7

                      
	
                        4.1.

                      	 
      	
                        Warrants

                      	
                        7

                      
	
                        4.2.

                      	 
      	
                        Current
      Arrangement Fee

                      	
                        7

                      
	 
      	 
      	 
      	 
      
	
                        Section
      5.

                      	 
      	
                        PAYMENTS,
      ETC.

                      	
                        8

                      
	
                        5.1.

                      	 
      	
                        Payments
      on Non Business Days; Calculations

                      	
                        8

                      
	
                        5.2.

                      	 
      	
                        Net
      Payments; Application

                      	
                        8

                      
	
                        5.3.

                      	 
      	
                        Distribution
      by Agent

                      	
                        9

                      
	 
      	 
      	 
      	 
      
	
                        Section
      6.

                      	 
      	
                        CONDITIONS
      PRECEDENT TO EFFECTIVENESS.

                      	
                        10

                      
	
                        6.1.

                      	 
      	
                        Original
      Loan Agreement

                      	
                        10

                      
	
                        6.2.

                      	 
      	
                        Default,
      etc

                      	
                        10

                      
	
                        6.3.

                      	 
      	
                        Notes

                      	
                        10

                      
	
                        6.4.

                      	 
      	
                        Supporting
      Documents of the Loan Parties

                      	
                        10

                      
	
                        6.5.

                      	 
      	
                        [Intentionally
      Omitted].

                      	 
      
	
                        6.6.

                      	 
      	
                        Legal
      Opinions

                      	
                        11

                      
	
                        6.7.

                      	 
      	
                        Filings
      and Financial Statements

                      	
                        11

                      
	
                        6.8.

                      	 
      	
                        Approvals
      and Consents

                      	
                        11

                      
	
                        6.9.

                      	 
      	
                        Change
      in Law; No Opposition

                      	
                        11

                      
	
                        6.10.

                      	 
      	
                        All
      Proceedings to be Satisfactory

                      	
                        11

                      
	
                        6.11.

                      	 
      	
                        Adverse
      Change

                      	
                        11

                      
	
                        6.12.

                      	 
      	
                        Fees
      and Expenses

                      	
                        12

                      


              

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

               

              
                	
                        6.13.

                      	 
      	
                        Property
      List

                      	
                        12

                      
	
                        6.14.

                      	 
      	
                        [Intentionally
      Omitted].

                      	 
      
	
                        6.15.

                      	 
      	
                        Appraisal

                      	
                        12

                      
	
                        6.16.

                      	 
      	
                        Insurance

                      	
                        12

                      
	
                        6.17.

                      	 
      	
                        Diligence

                      	
                        13

                      
	
                        6.18.

                      	 
      	
                        Environmental
      Assessment

                      	
                        13

                      
	
                        6.19.

                      	 
      	
                        Evidence
      of Right to Occupancy of Properties

                      	
                        13

                      
	
                        6.20.

                      	 
      	
                        Gaming/Racing
      Permits

                      	
                        13

                      
	
                        6.21.

                      	 
      	
                        Use
      of Proceeds of Loans

                      	
                        13

                      
	 
      	 
      	 
      	 
      
	
                        Section
      7.

                      	 
      	
                        AFFIRMATIVE
      COVENANTS.

                      	
                        14

                      
	
                        7.1.

                      	 
      	
                        Financial
      Statements

                      	
                        14

                      
	
                        7.2.

                      	 
      	
                        Notice
      of Litigation; Unionization

                      	
                        17

                      
	
                        7.3.

                      	 
      	
                        Payment
      of Charges

                      	
                        18

                      
	
                        7.4.

                      	 
      	
                        Insurance.

                      	
                        18

                      
	
                        7.5.

                      	 
      	
                        Maintenance
      of Records

                      	
                        21

                      
	
                        7.6.

                      	 
      	
                        Preservation
      of Corporate Existence

                      	
                        21

                      
	
                        7.7.

                      	 
      	
                        Preservation
      of Assets

                      	
                        22

                      
	
                        7.8.

                      	 
      	
                        Inspection
      of Books and Assets

                      	
                        22

                      
	
                        7.9.

                      	 
      	
                        Payment
      of Indebtedness

                      	
                        22

                      
	
                        7.10.

                      	 
      	
                        Further
      Assurances

                      	
                        23

                      
	
                        7.11.

                      	 
      	
                        Notice
      of Default

                      	
                        23

                      
	
                        7.12.

                      	 
      	
                        Arms
      length Transactions

                      	
                        23

                      
	
                        7.13.

                      	 
      	
                        Solvency

                      	
                        23

                      
	
                        7.14.

                      	 
      	
                        Environmental
      Matters

                      	
                        23

                      
	
                        7.15.

                      	 
      	
                        Consents
      of and Notice to Gaming/Racing Authorities

                      	
                        24

                      
	
                        7.16.

                      	 
      	
                        Compliance
      with Access Laws

                      	
                        24

                      
	
                        7.17.

                      	 
      	
                        Tradenames,
      Trademarks and Servicemarks

                      	
                        25

                      
	
                        7.18.

                      	 
      	
                        Acquisitions

                      	
                        25

                      
	
                        7.19.

                      	 
      	
                        Conditions
      of the Division of the Lottery of the State of New York

                      	
                        26

                      
	
                        7.20.

                      	 
      	
                        Operating
      Accounts

                      	
                        26

                      
	 
      	 
      	 
      	 
      
	
                        Section
      8.

                      	 
      	
                        NEGATIVE
      COVENANTS.

                      	
                        26

                      
	
                        8.1.

                      	 
      	
                        Engage
      in Same Type of Business

                      	
                        26

                      
	
                        8.2.

                      	 
      	
                        Liens

                      	
                        26

                      
	
                        8.3.

                      	 
      	
                        Other
      Indebtedness

                      	
                        26

                      
	
                        8.4.

                      	 
      	
                        Advances
      from Customers

                      	
                        27

                      
	
                        8.5.

                      	 
      	
                        Advances
      and Loans

                      	
                        27

                      
	
                        8.6.

                      	 
      	
                        Purchase
      or Sale Agreements

                      	
                        27

                      
	
                        8.7.

                      	 
      	
                        Consolidation
      and Merger

                      	
                        27

                      
	
                        8.8.

                      	 
      	
                        Sale
      of Assets

                      	
                        28

                      
	
                        8.9.

                      	 
      	
                        Purchase
      of Assets

                      	
                        29

                      
	
                        8.10.

                      	 
      	
                        Related
      Transactions

                      	
                        29

                      
	
                        8.11.

                      	 
      	
                        Subsidiaries

                      	
                        30

                      
	
                        8.12.

                      	 
      	
                        Capital
      Expenditures

                      	
                        30

                      
	
                        8.13.

                      	 
      	
                        Investments

                      	
                        30

                      
	
                        8.14.

                      	 
      	
                        Dividends,
      Distributions and Purchases of Capital Stock

                      	
                        30

                      


              

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

               

              
                	
                        8.15.

                      	 
      	
                        Leasebacks

                      	
                        30

                      
	
                        8.16.

                      	 
      	
                        Debt
      Service Coverage Ratio

                      	
                        31

                      
	
                        8.17.

                      	 
      	
                        Accounting
      Changes

                      	
                        31

                      
	
                        8.18.

                      	 
      	
                        Compliance
      with ERISA

                      	
                        31

                      
	 
      	 
      	 
      	 
      
	
                        Section
      9.

                      	 
      	
                        EVENTS
      OF DEFAULT.

                      	
                        31

                      
	
                        9.1.

                      	 
      	
                        Principal
      and Interest

                      	
                        32

                      
	
                        9.2.

                      	 
      	
                        Representations
      and Warranties

                      	
                        32

                      
	
                        9.3.

                      	 
      	
                        Covenants

                      	
                        32

                      
	
                        9.4.

                      	 
      	
                        Other
      Covenants

                      	
                        32

                      
	
                        9.5.

                      	 
      	
                        Other
      Obligations

                      	
                        32

                      
	
                        9.6.

                      	 
      	
                        Ownership

                      	
                        32

                      
	
                        9.7.

                      	 
      	
                        Insolvency

                      	
                        32

                      
	
                        9.8.

                      	 
      	
                        Security
      Documents

                      	
                        33

                      
	
                        9.9.

                      	 
      	
                        Judgments

                      	
                        33

                      
	
                        9.10.

                      	 
      	
                        Intercreditor
      Agreement

                      	
                        33

                      
	
                        9.11.

                      	 
      	
                        Permits

                      	
                        33

                      
	
                        9.12.

                      	 
      	
                        ERISA

                      	
                        33

                      
	
                        9.13.

                      	 
      	
                        Liquidity

                      	
                        34

                      
	 
      	 
      	 
      	 
      
	
                        Section
      10.

                      	 
      	
                        REPRESENTATIONS
      AND WARRANTIES.

                      	
                        37

                      
	
                        10.1.

                      	 
      	
                        Status;
      Validity

                      	
                        37

                      
	
                        10.2.

                      	 
      	
                        Compliance
      with Other Instruments

                      	
                        37

                      
	
                        10.3.

                      	 
      	
                        Litigation

                      	
                        38

                      
	
                        10.4.

                      	 
      	
                        Compliance
      with Law

                      	
                        38

                      
	
                        10.5.

                      	 
      	
                        Capitalization

                      	
                        38

                      
	
                        10.6.

                      	 
      	
                        Governmental
      Approvals

                      	
                        38

                      
	
                        10.7.

                      	 
      	
                        Federal
      Reserve Margin Regulations; Proceeds

                      	
                        39

                      
	
                        10.8.

                      	 
      	
                        Taxes

                      	
                        39

                      
	
                        10.9.

                      	 
      	
                        Investment
      Company Act

                      	
                        39

                      
	
                        10.10.

                      	 
      	
                        Properties
      of the Borrower

                      	
                        39

                      
	
                        10.11.

                      	 
      	
                        Financial
      Condition

                      	
                        39

                      
	
                        10.12.

                      	 
      	
                        Environmental
      Matters

                      	
                        40

                      
	
                        10.13.

                      	 
      	
                        Disclosure

                      	
                        41

                      
	
                        10.14.

                      	 
      	
                        Compliance
      with ERISA

                      	
                        41

                      
	
                        10.15.

                      	 
      	
                        The
      Security Documents

                      	
                        41

                      
	
                        10.16.

                      	 
      	
                        Gaming/Racing
      Permits and Approvals

                      	
                        42

                      
	
                        10.17.

                      	 
      	
                        Labor
      Relations

                      	
                        42

                      
	
                        10.18.

                      	 
      	
                        Trademarks,
      Patents, Licenses, Franchises, Formulas and Copyrights

                      	
                        42

                      
	
                        10.19.

                      	 
      	
                        FF&E

                      	
                        43

                      
	 
      	 
      	 
      	 
      
	
                        Section
      11.

                      	 
      	
                        AGENT.

                      	
                        43

                      
	
                        11.1.

                      	 
      	
                        Appointment

                      	
                        43

                      
	
                        11.2.

                      	 
      	
                        Nature
      of Duties

                      	
                        43

                      
	
                        11.3.

                      	 
      	
                        Lack
      of Reliance

                      	
                        43

                      
	
                        11.4.

                      	 
      	
                        Certain
      Rights

                      	
                        44

                      
	
                        11.5.

                      	 
      	
                        Reliance

                      	
                        44

                      


              

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

               

              
                	
                        11.6.

                      	 
      	
                        Indemnification

                      	
                        44

                      
	
                        11.7.

                      	 
      	
                        Agent,
      Individually

                      	
                        44

                      
	
                        11.8.

                      	 
      	
                        Holders
      of Notes

                      	
                        45

                      
	
                        11.9.

                      	 
      	
                        Resignation

                      	
                        45

                      
	
                        11.10.

                      	 
      	
                        Reimbursement

                      	
                        45

                      
	 
      	 
      	 
      	 
      
	
                        Section
      12.

                      	 
      	
                        MISCELLANEOUS.

                      	
                        46

                      
	
                        12.1.

                      	 
      	
                        Calculations
      and Financial Data

                      	
                        46

                      
	
                        12.2.

                      	 
      	
                        Amendment
      and Waiver

                      	
                        46

                      
	
                        12.3.

                      	 
      	
                        Expenses

                      	
                        46

                      
	
                        12.4.

                      	 
      	
                        Benefits
      of Agreement; Descriptive Headings

                      	
                        47

                      
	
                        12.5.

                      	 
      	
                        Notices,
      Requests, Demands, etc

                      	
                        49

                      
	
                        12.6.

                      	 
      	
                        Governing
      Law

                      	
                        49

                      
	
                        12.7.

                      	 
      	
                        Counterparts;
      Telecopies

                      	
                        49

                      
	
                        12.8.

                      	 
      	
                        Waiver

                      	
                        49

                      
	
                        12.9.

                      	 
      	
                        Pro
      Rata Sharing

                      	
                        50

                      
	
                        12.10.

                      	 
      	
                        Jurisdiction

                      	
                        50

                      
	
                        12.11.

                      	 
      	
                        Severability

                      	
                        50

                      
	
                        12.12.

                      	 
      	
                        Right
      of Set off

                      	
                        51

                      
	
                        12.13.

                      	 
      	
                        No
      Third Party Beneficiaries

                      	
                        51

                      
	
                        12.14.

                      	 
      	
                        Survival;
      Integration

                      	
                        51

                      
	
                        12.15.

                      	 
      	
                        Domicile
      of Loans

                      	
                        52

                      
	
                        12.16.

                      	 
      	
                        Waiver
      of Jury Trial

                      	
                        52

                      


              

              


               

              EXHIBITS

              


              A           Form
of Note

              B           Form
of Opinion

              C           Form
of Transfer Supplement

              D           Form
of Guarantor Joinder

               

              
                
                  
                  

                

                
                  
                  

                  
                    

                  

                

                
                  
                  

                

              

              
                ANNEX I

                 

                DEFINITIONS

                 

                As used
in the Agreement to which this Annex I is annexed, the following terms shall
have the meanings herein specified or as specified in the Section of such Loan
Agreement or in such other document herein referenced:

                 

                “Access Laws” –
Section 7.16

                 

                “Acquired
Indebtedness” shall mean Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Borrower or at the time it merges or consolidates with or into the Borrower or
any of its Subsidiaries or assumed in connection with the acquisition of assets
from such Person and in each case not incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Subsidiary
of the Borrower or such acquisition, merger or consolidation and which
Indebtedness is without recourse to the Borrower or any of its Subsidiaries or
to any of their respective properties or assets other than the Person or the
assets to which such Indebtedness related prior to the time such Person became a
Subsidiary of the Borrower or the time of such acquisition, merger or
consolidation.

                 

                “Affiliate” means,
with respect to any Person, any other Person which directly or indirectly
controls, or is under common control with, or is controlled by, such first
Person and, if such first Person is an individual, any member of the immediate
family (including parents, spouse, children and siblings) of such individual and
any trust whose principal beneficiary is such individual or one or more members
of such immediate family and any Person who is controlled by any such member or
trust. For the purposes of this definition, “control” when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.  Unless otherwise indicated, references to
“Affiliate” shall refer to Affiliates of the Loan Parties.

                 

                “Agent” - introductory
paragraph.

                 

                “Agreement” or “Loan Agreement” shall
mean this Loan Agreement as it may from time to time be amended, extended,
restated, supplemented or otherwise modified.

                 

                 “Applicable Asset
Sale” shall mean any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer, including by way of dividend or
distribution, by the Borrower or any of its Subsidiaries to any Person other
than the Borrower or a Guarantor of Collateral; provided, however,
that the transfer of the Trust Land in trust for an Indian Tribe which is
developing a casino in conjunction with the Borrower shall not constitute an
Applicable Asset Sale.

                 

                “Asset Acquisition”
shall mean (1) an investment by the Borrower or any Subsidiary of the Borrower
in any other Person pursuant to which such Person shall become a Subsidiary of
the Borrower or any Subsidiary of the Borrower, or shall be merged with or into
the Borrower or any Subsidiary of the Borrower, or (2) the acquisition by the
Borrower or any Subsidiary of the Borrower of the assets of any Person (other
than a Subsidiary of the Borrower) which constitute all or substantially all of
the assets of such Person or comprise all or substantially all of the assets of
any division or line of business of such Person or any other significant
properties or assets of such Person other than in the ordinary course of
business.

                 

                
                  
                    
                    

                  

                  
                    
                    

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Asset Sale” shall
mean any direct or indirect sale, issuance, conveyance, transfer, lease (other
than operating leases entered into in the ordinary course of business),
assignment or other transfer (other than a Lien in accordance herewith) for
value by the Borrower or any of its Subsidiaries to any Person other than the
Borrower or a Guarantor of (1) any Capital Stock of any Subsidiary of the
Borrower; or (2) any other property or assets of the Borrower or any Subsidiary
of the Borrower other than in the ordinary course of business.

                 

                “Asset Sale Mandatory
Repayment” – Section 2.4(f).

                 

                “Auditors” shall mean
independent certified public accountants of recognized standing selected by the
relevant Loan Party and satisfactory to the Required Lenders.

                 

                “Bank Assignee” -
Section 12.4.

                 

                “Bankruptcy Code”
shall mean the Bankruptcy Reform Act of 1978, as amended, and codified as 11
U.S.C. §§ 101 et seq.

                 

                “Banks” - introductory
paragraph.

                 

                “Basic Interest Rate”
– Section 3.1.

                 

                “Beneficial Owner” has
the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that in calculating the beneficial ownership of any
particular “person” (as that term is used in Section 13(d)(3) of the Exchange
Act), such “person” will be deemed to have beneficial ownership of all
securities that such “person” has the right to acquire by conversion or exercise
of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition.  The
terms “beneficially owns” and “beneficially owned” have meanings correlative to
the foregoing.

                 

                “Board of Directors”
shall mean, as to any Person, the board of directors or similar governing body
of such Person or any duly authorized committee thereof.

                 

                “Board Resolution”
shall mean, with respect to any Person, a copy of a resolution certified by the
Secretary or an Assistant Secretary of such Person to have been duly adopted by
the Board of Directors of such Person and to be in full force and effect on the
date of such certification, and delivered to the Agent.

                 

                “Borrower” -
introductory paragraph.

                 

                “BoS” - introductory
paragraph.

                 

                
                  
                    
                    

                  

                  
                    2

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                 “Business Day” shall
mean any day excluding Saturday, Sunday and any day on which banks in New York
City are authorized by law or other governmental action to close.

                 

                “Capitalized Lease
Obligations” shall mean all rental obligations which, under GAAP, are or
would be required to be capitalized on the books of a Person, in each case taken
at the amount thereof accounted for as indebtedness (net of interest expense) in
accordance with such principles.

                 

                “Capital Leases” shall
mean leases which, under GAAP, are or would be required to be capitalized on the
books of a Person.

                 

                “Capital Stock” shall
mean (1) with respect to any Person that is a corporation, any and all shares,
interests, participations or other equivalents (however designated and whether
or not voting) of corporate stock, including each class of common stock and
preferred stock of such Person; (2) with respect to any Person that is not a
corporation, any and all partnership, membership or other equity interests of
such Person; and (3) any warrants, rights or options to purchase any of the
instruments or interests referred to in clause (1) or (2) above.

                 

                “Cash Equivalents”
shall mean:

                 

                (1)           marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition thereof;

                 

                (2)           marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either
S&P or Moody’s;

                 

                (3)           commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody’s;

                 

                (4)           certificates
of deposit or bankers’ acceptances maturing within one year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined net
capital and surplus of not less than $250.0 million;

                 

                (5)           repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (1) above entered into with any bank meeting the
qualifications specified in clause (4) above; and

                 

                (6)           investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (1) through (5) above.

                 

                
                  
                    
                    

                  

                  
                    3

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “CEO”, as to a Loan
Party, shall mean such Loan Party’s chief executive officer.

                 

                “CFO”, as to a Loan
Party, shall mean such Loan Party’s vice president of finance or chief financial
officer (or, if no one is so designated, such other person designated by such
Loan Party’s board of directors to certify financial reports and statements on
behalf of such Loan Party).

                 

                “Change of Control”
shall mean the occurrence of any of the following:

                 

                (a)           any
direct or indirect sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one transaction or a series of
related transactions, of all or substantially all of the assets of the Borrower
to any Person or group of related Persons for purposes of Section 13(d) of the
Exchange Act (a “Group”), other than a transaction in which the transferee is
controlled by one or more Permitted Holders; or

                 

                (b)           the
Borrower consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Borrower, other than (A) a
transaction in which the surviving or transferee Person is a Person that is
controlled by the Permitted Holders or (B) any such transaction where the Voting
Stock of the Borrower outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Capital
Stock) of the surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee Person
(immediately after giving effect to such issuance); or

                 

                (c)           the
approval by the holders of Capital Stock of the Borrower of any plan or proposal
for the liquidation, winding up or dissolution of the Borrower; or

                 

                (d)           any
Person or Group is or becomes the Beneficial Owner, directly or indirectly, in
the aggregate of more than 50% of the total voting power of the Voting Stock of
the Borrower; or

                 

                (e)           any
transaction or event (whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, binding share exchange, combination,
reclassification, recapitalization or otherwise) in connection with which all or
substantially all of the shares of Common Stock are exchanged for, converted
into, acquired for or constitute solely the right to receive, consideration
which is not all or substantially all common stock that is either (a) listed on,
or immediately after the transaction or event will be listed on, a United States
national securities exchange, or (b) approved, or immediately after the
transaction or event will be approved, for quotation on the Nasdaq National
Market or any similar United States system of automated dissemination of
quotations of securities prices; or

                 

                (f)           individuals
who on the Closing Date constituted the Board of Directors (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Borrower was approved pursuant to a vote of
a majority of the directors then still in office who were either directors on
the Closing Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office.

                 

                
                  
                    
                    

                  

                  
                    4

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Charter Document”
shall mean (a) with respect to a corporation, its certificate or articles of
incorporation or association and its by-laws or memoranda and articles of
association and (b) with respect to a limited liability company, its certificate
of formation and, to the extent one has been adopted, its limited liability
company operating agreement.

                 

                “Closing Date” shall
mean July __, 2009.

                 

                “Closing Date
Payables” – Section 6.10.

                 

                “Closing Office” shall
mean the office of the Agent at 460 Park Avenue, New York, New York or such
other office as may be designated in writing to the Borrower by the
Agent.

                 

                “Closing Office Time”
shall mean the local time in effect at the Closing Office.

                 

                “CLT Line of Credit”
shall mean that certain $2,500,000 Irrevocable Line of Credit, dated January 12,
2004, issued by the Borrower to the Catskill Litigation Trust, a Delaware
statutory trust.

                 

                “Code” shall mean the
Internal Revenue Code of 1986, as the same may be amended from time to
time.

                 

                “Collateral” - Section
10.15.  Without limiting the generality of the foregoing, the term
“Collateral”
also includes all other real and personal property and interests therein granted
or purported to be granted as security to the Agent or the Banks pursuant to any
other Security Document or Mortgage after the Closing Date.

                 

                “Commitment Period”
shall mean the period from the Closing Date to and including the Maturity
Date.

                 

                “Common Stock” shall
mean the Borrower’s common stock, par value $0.01 per share.

                 

                “Concord” shall mean
Concord Associates, L.P.

                 

                “Concord Agreement”
shall mean the agreement, dated March 23, 2009, between Concord and the
Borrower.

                 

                “Consolidated Debt
Service” shall mean, as to any Person as of any date, the sum of (a) the
scheduled payments of principal due on Indebtedness for Borrowed Money of such
Person and its consolidated Subsidiaries during the twelve months after such
date (other than intercompany Indebtedness between Borrower and Guarantors and
any of their respective Affiliates) and (b) the amount of interest expense, both
expensed and capitalized, of such Person and its consolidated Subsidiaries,
determined in accordance with GAAP, during the Four Quarter Period most recently
ending on or prior to such date on the aggregate principal amount of such the
Indebtedness for Borrowed Money of such Person and its consolidated
Subsidiaries.

                 

                
                  
                    
                    

                  

                  
                    5

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Consolidated Debt Service
Coverage Ratio” shall mean, with respect to a Person as of any date, the
ratio of (x) Consolidated EBITDA of such Person during the Four Quarter Period
most recently ending on or prior to such date to (y) Consolidated Debt Service
of such Person at the end of such month, calculated assuming an 8% per annum
interest rate on the Indebtedness for Borrowed Money of such Person and its
consolidated Subsidiaries and a 20-year amortization schedule with respect
thereto.

                 

                “Consolidated EBITDA”
means, with respect to any Person, for any period, the sum (without duplication)
of:

                 

                (1)           Consolidated
Net Income; and

                 

                (2)           to
the extent Consolidated Net Income has been reduced thereby:

                 

                (a)           all
income taxes of such Person and its Subsidiaries paid or accrued in accordance
with GAAP for such period;

                 

                (b)           Consolidated
Interest Expense, and interest attributable to write-offs of deferred financing
costs; and

                 

                (c)           Consolidated
Non-cash Charges less any non-cash items increasing Consolidated Net Income for
such period.

                 

                all as
determined on a consolidated basis for such Person and its Subsidiaries in
accordance with GAAP; provided, however, that in determining Consolidated EBITDA
of the Borrower for (A) the Four Quarter Period ending on or about December 31,
2004, Consolidated EBITDA of the Borrower shall be deemed to be equal to the
product of (x) Consolidated EBITDA of the Borrower for the period from July 1,
2004 to the last day of such period, times (y) two (2), and (B) the Four Quarter
Period ending on or about March 31, 2005, Consolidated EBITDA of the Borrower
shall be deemed to be equal to the product of (x) Consolidated EBITDA of the
Borrower for the period from July 1, 2004 to the last day of such period, times
(y) a fraction, (1) the numerator of which is equal to four (4) and (2) the
denominator of which is equal to three (3).

                 

                “Consolidated Fixed Charge
Coverage Ratio” shall mean, with respect to any Person, the ratio of
Consolidated EBITDA of such Person during the four consecutive full fiscal
quarters (the “Four Quarter Period”) most recently ending on or prior to the
date of the transaction or event giving rise to the need to calculate the
Consolidated Fixed Charge Coverage Ratio for which financial statements are
available (the “Transaction Date”) to Consolidated Fixed Charges of such Person
for the Four Quarter Period.

                 

                In
addition to and without limitation of the foregoing, for purposes of this
definition and the definition of Consolidated Debt Service Coverage Ratio,
“Consolidated EBITDA”, “Consolidated Debt Service” and “Consolidated Fixed
Charges” shall be calculated after giving effect on a pro forma basis for the
period of such calculation to:

                 

                (1)           the
incurrence or repayment of any Indebtedness of such Person or any of its
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period);
and

                 

                
                  
                    
                    

                  

                  
                    6

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                (2)           any
Asset Sale or other disposition or Asset Acquisition (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Subsidiaries (including any
Person who becomes a Subsidiary as a result of any such Asset Acquisition)
incurring, assuming or otherwise being liable for Acquired Indebtedness during
the Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date), as if such Asset Sale
or other disposition or Asset Acquisition (including the incurrence, assumption
or liability for any such Indebtedness or Acquired Indebtedness and also
including any Consolidated EBITDA associated with such Asset Acquisition)
occurred on the first day of the Four Quarter Period provided that the
Consolidated EBITDA of any Person acquired shall be included only to the extent
includible pursuant to the definition of “Consolidated Net
Income.”  If such Person or any of its Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Subsidiary of such Person had directly incurred or otherwise
assumed such guaranteed Indebtedness.

                 

                Furthermore,
in calculating “Consolidated Fixed Charges” for purposes of determining the
denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage
Ratio”:

                 

                (1)           interest
on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date (including Indebtedness actually incurred on the Transaction
Date) and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; and

                 

                (2)           notwithstanding
clause (1) above, interest on Indebtedness determined on a fluctuating basis, to
the extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.

                 

                “Consolidated Fixed
Charges” shall mean, with respect to any Person for any period, the sum,
without duplication, of (1)
Consolidated  Interest  Expense  (excluding
amortization or write-off of deferred financing costs); plus(2) the product of
(x) the amount of all dividend payments on any series of preferred stock of such
Person (other than dividends paid in Qualified Capital Stock)
paid,  accrued or scheduled to be paid or accrued during such period,
times (y) a fraction, the numerator of which is one and the denominator of which
is one minus the then current effective consolidated federal, state and local
tax rate of such Person, expressed as a decimal.

                 

                
                  
                    
                    

                  

                  
                    7

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Consolidated Interest
Expense” shall mean, with respect to any Person for any period, the
aggregate of the interest expense of such Person and its Subsidiaries for such
period, on a consolidated basis, as determined in accordance with GAAP, and
including, without duplication, (a) all amortization or accretion of original
issue discount; (b) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person and its
Subsidiaries during such period; and (c) net cash costs under all Interest Swap
Obligations (including amortization of fees).

                 

                “Consolidated Net
Income” shall mean, with respect to any Person, for any period, the
aggregate net income (or loss) of such Person and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided,
however, that there shall be excluded therefrom:

                 

                (1)           after-tax
gains and losses from Asset Sales or abandonments or reserves relating
thereto;

                 

                (2)           after-tax
items classified as extraordinary gains or losses;

                 

                (3)           the
net income (but not loss) of any Subsidiary of the referent Person to the extent
that the declaration of dividends or similar distributions by that Subsidiary of
that income is restricted by a contract, operation of law or
otherwise;

                 

                (4)           the
net income of any Person, other than the referent Person or a Subsidiary of the
referent Person, except to the extent of cash dividends or distributions paid to
the referent Person or to a Wholly Owned Subsidiary of the referent Person by
such Person;

                 

                (5)           any
restoration to income of any material contingency reserve, except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Closing Date;

                 

                (6)           income
or loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued);

                 

                (7)           all
gains and losses realized on or because of the purchase or other acquisition by
such Person or any of its Subsidiaries of any securities of such Person or any
of its Subsidiaries;

                 

                (8)           the
cumulative effect of a change in accounting principles;

                 

                (9)           interest
expense attributable to dividends on Qualified Capital Stock pursuant to
Statement of Financial Accounting Standards No. 150, “Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity;”

                 

                (10)         non-cash
charges resulting from the impairment of intangible assets; and

                 

                
                  
                    
                    

                  

                  
                    8

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                (11)         in
the case of a successor to the referent Person by consolidation or merger or as
a transferee of the referent Person’s assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of
assets.

                 

                “Consolidated Net
Worth” of any Person shall mean the consolidated stockholders’ equity of
the Person, determined on a consolidated basis in accordance with GAAP, less
(without duplication) amounts attributable to Disqualified Capital Stock of such
Person.

                 

                “Consolidated Non-Cash
Charges” shall mean, with respect to any Person, for any period, the
aggregate depreciation, amortization and other non-cash items and expenses of
such Person and its Subsidiaries to the extent they reduce Consolidated Net
Income of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve for cash charges for any future period).

                 

                “Contaminant” means
any waste, pollutant, chemical, hazardous material, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such pollutant material, substance
or waste, including, without limitation, asbestos, radiation and any pollutant,
material, substance or waste regulated under any Environmental Law.

                 

                “Control” (including
the terms “controlling,” “controlled by” and “under common control with”) shall
mean the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.

                 

                “Currency Agreement”
shall mean any foreign exchange contract, currency swap agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary of the Borrower against fluctuations in currency values.

                 

                “Current Arrangement
Fee” – Section 4.2.

                 

                 “Current Assets”, as
to any Person, shall mean the current assets of such Person determined in
accordance with GAAP; provided that any of such
assets which are subject to a Lien held by any Person other than the Agent or
the Banks to secure payment of any Indebtedness for Borrowed Money which is not
included in Current Liabilities shall be excluded from Current Assets to the
extent of such Indebtedness for Borrowed Money.

                 

                “Current Liabilities”,
as to any Person, shall mean the current liabilities of such Person determined
in accordance with GAAP, and shall in any event include (without duplication),
as of the date of determination thereof:  (i) all Indebtedness for
Borrowed Money payable on demand or maturing within one year after such date
without any option on the part of the obligor to extend or renew beyond such
year, (ii) final maturities, installments, repayments and prepayments of
Indebtedness for Borrowed Money required to be made within one year after such
date, (iii) the unpaid principal balance of the Loans due within one year after
such date, and (iv) all other items (including taxes accrued as estimated and
reserves for deferred income taxes) which, in accordance with GAAP, would be
included on a balance sheet as current liabilities.

                 

                
                  
                    
                    

                  

                  
                    9

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Default” shall mean
any event which with notice or lapse of time, or both, would become an Event of
Default.

                 

                “Default Rate” –
Section 3.4.

                 

                “Disqualified Capital
Stock” shall mean that portion of any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event (other than an event that would constitute a Change of Control), matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof (except in
each case, upon the occurrence of a Change of Control) on or prior to the first
anniversary of the Maturity Date for cash or is convertible into or exchangeable
for debt securities of the Borrower or its Subsidiaries at any time prior to
such anniversary.

                 

                “Dollars”, “U.S. $”, “$” and “U.S. dollars” shall
mean the lawful currency of the United States of America.

                 

                “Empire Group” shall
mean the Borrower and its Subsidiaries.

                 

                “Environmental Audit”
shall mean an environmental audit conducted by an environmental consultant of
recognized standing reasonably satisfactory to the Agent or the Required
Lenders.

                 

                “Environmental Claim”
shall mean any notice, complaint, request for information, claim, demand or
similar communication (whether written or oral) by any Person (including,
without limitation, the environmental protection authorities of the jurisdiction
in which any Property is located or any other national or local regulatory or
administrative body), whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute (including any
Environmental Law, permit, order, approval, authorization, license, variance or
agreement with any Person), arising from or in respect of (i) the presence of
any Contaminant or any other environmental, health or safety conditions or a
Release or threatened Release on, in, under or emanating from any Property or
resulting from any past, present or future operation of any Loan Party or
Subsidiary (or any predecessor in interest of any of them) or any other Person
in connection with the business of any such Loan Party or Subsidiary (or any
predecessor in interest of any of them), (ii) any Release for which any Loan
Party or Subsidiary is otherwise responsible under the Environmental Laws, (iii)
any other circumstance (including, without limitation, any off-site
transportation of a Contaminant) forming the basis of any violation or alleged
violation of, or liability or alleged liability under, any Environmental Law by
any Loan Party or Subsidiary (or any predecessor in interest of any of them),
(iv) any Remedial Action required to be taken by any Loan Party or Subsidiary
under the Environmental Laws, or (v) any harm, injury or damage to real or
personal property, natural resources, the environment or any Person alleged to
have resulted from any of the foregoing.

                 

                “Environmental Costs”
shall mean all expenditures made by, all costs, fees, disbursements and expenses
(including, without limitation, any expenses of engineers, experts, consultants,
attorneys, contractors, surveyors, laboratories and like Persons and costs of
investigation and feasibility studies) incurred by, and all liabilities,
obligations and responsibilities assumed or incurred by, any Loan Party or
Subsidiary for or in respect of (i) any judgments, fines, penalties,
obligations, interest, losses, claims, amounts, impositions, damages, punitive
damages, consequential damages, treble damages or remedial action paid or taken
or agreed to be paid or taken by, due from or assessed against any Loan Party or
Subsidiary in respect of any Environmental Claim and (ii) all Remedial Action
(including, without limitation, any off-site transportation of a Contaminant)
taken by any Loan Party or Subsidiary, whether pursuant to any Environmental
Claim or otherwise.

                 

                
                  
                    
                    

                  

                  
                    10

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Environmental Laws”
means all laws, common law, statutes, rules and regulations, and all judgments,
decrees, franchises, orders or permits, issued, promulgated, approved or entered
thereunder by any Government Authority relating to pollution or protection of
the environment or occupational health and safety, including, without
limitation, those relating to emissions, discharges, releases or threatened
releases of any waste, pollutant, chemical, hazardous material, hazardous
substance, toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, or any constituent of any such pollutant
material, substance or waste, into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any waste, pollutant,
chemical, hazardous material, hazardous substance, toxic substance, hazardous
waste, special waste, petroleum or petroleum-derived substance or
waste.  Environmental Laws shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et
seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the Solid
Waste Disposal Act (42 U.S.C. Section 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air
Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the Food, Drug
and Cosmetic Act (21 U.S.C. Section 301 et seq.), the Medical
Waste Tracking Act of 1988, Pub. L. No. 100-582, 102 Stat. 2950 (1988), the
Federal Surface Mining Control and Reclamation Act of 1977 and the state laws
implementing said act, as such laws have been amended or supplemented from time
to time, and any analogous future federal, or present or future state, local or
foreign laws, statutes, rules and regulations, as such laws have been amended
and supplemented from time to time, and transfer of ownership notification
statutes such as the New Jersey Environmental Clean-up and Responsibility Act
(N.J.S.A. 13:1K-6 et seq.) and the
Connecticut Industrial Transfer Law of 1985 (Conn. Gen. Stat. Section 22a-134
et seq.) and the
regulations promulgated pursuant thereto.

                 

                “Environmental Lien”
shall mean any Lien in favor of any Government Authority for Environmental
Costs.

                 

                “Environmental
Permits” - Section 10.12(b).

                 

                “Environmental
Plan”  shall mean, in respect of any Environmental Audit, a
plan, adopted by the Boards of Directors of the Borrower and each other Loan
Party necessary to effect such plan, and in form and substance satisfactory to
the Agent and the Required Lenders, prepared by the Borrower and the
environmental consultants who conducted such Environmental Audit, detailing
(with an appropriate milestone schedule and good faith estimates of costs) all
material Remedial Action recommended to be undertaken in such Environmental
Audit.

                 

                
                  
                    
                    

                  

                  
                    11

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Environmental Report”
shall mean (i) that certain Environmental Site Assessment Report Update of the
Monticello Land prepared by Langhan Engineering and Environmental Services, Inc.
exclusively for BoS and the Borrower, dated December 2004, and (ii) the
environmental report described in the first sentence of Section
6.18.

                 

                 “Environmentally Sensitive
Area” shall mean (i) a wetland or other “water of the United States” for
purposes of Section 404 of the Clean Water Act (42 U.S.C. 7401 et. seq.) or any similar
area regulated under any state law, (ii) a floodplain or other “flood hazard
area” as defined in any applicable state law, (iii) a portion of the coastal
zone for purposes of the Coastal Zone Management Act (16 U.S.C. 1451 et. seq.), or (iv) any
other area, development of which is specifically restricted under applicable law
by reason of its physical characteristics or prior use.

                 

                “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and the regulations promulgated pursuant thereto.

                 

                “ERISA Affiliate”
shall mean any Person which is from time to time a member of a controlled group
or a group under common control with the Borrower within the meaning of Sections
414(b), 414(c), 414(m) or 414(o) of the Code or Section 4001(a)(14) of
ERISA.

                 

                “Escrow Reserve
Account” shall mean the escrow account in the amount of $100,000 to be
maintained by Borrower at PAB to cover any litigation costs and expenses that
may arise from time to time with respect to the Intercreditor
Agreement.

                 

                “Event of Default”
shall mean each of the Events of Default defined in Section 9.

                 

                “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.

                 

                “Extension Period”
shall mean the period for which the Maturity Date is extended pursuant to
Section 2.8 hereof.

                 

                “Fair Market Value”
shall mean, with respect to any asset or property, the price which could be
negotiated in an arm’s length, free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of whom is under undue
pressure or compulsion to complete the transaction. Fair Market Value shall be
determined by the Board of Directors of the Borrower acting in good faith and
shall be evidenced by a Board Resolution of the Board of Directors of the
Borrower delivered to the Agent; provided, however, that for purposes of section
8.8, if the Fair Market Value of the property or assets in question is so
determined to be in excess of $1.0 million, such determination must be confirmed
by an independent investment banking firm, accounting firm or appraisal firm of
national standing.

                 

                “Federal Funds Rate”
shall mean, for any day, the weighted average of the rates of interest charged
by banks with excess reserves at a Federal Reserve district bank, as published
on the next succeeding Business Day by the Federal Reserve Bank of New York, to
banks needing overnight loans to meet reserve requirements.

                 

                
                  
                    
                    

                  

                  
                    12

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “FF&E” shall mean
reference to the furniture, fixtures and equipment, including, without
limitation, all gaming devices and associated equipment, inventories and
supplied used in connection with the Properties.

                 

                “Financial Statements”
shall mean, with respect to any Person, the statement of financial position
(balance sheet) and the statement of earnings and stockholders’ equity of such
Person.

                 

                “First Extended Maturity
Date” shall mean July 28, 2011.

                 

                “Fiscal Quarter” shall
mean any fiscal quarter within a Fiscal Year.

                 

                “Fiscal Year” shall
mean each January 1 - December 31 period.  “Fiscal Year”
followed by a year means the Fiscal Year with its Fiscal Year-End in such
calendar year.

                 

                “Fiscal Year-End”
shall mean, with respect to any Person, the last day of such Person’s Fiscal
Year.

                 

                “Four Quarter Period”
has the meaning set forth in the definition of the term “Consolidated Fixed
Charge Coverage Ratio.”

                 

                “GAAP” shall mean
generally accepted accounting principles (as promulgated by the Financial
Accounting Standards Board or any successor entity).

                 

                “Gaming/Racing
Authority” shall mean any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States federal or foreign government, any state, province or any city or other
political subdivision or otherwise and whether now or hereafter in existence or
any officer or official thereof, including, without limitation, the New York
State Racing and Wagering Board, the Division of the Lottery of the State of New
York, the National Indian Gaming Commission and the Bureau of Indian Affairs,
with authority to regulate any gaming operation owned, managed or operated by
the Empire Group.

                 

                “Gaming/Racing
Facility” shall mean Monticello Raceway and each other Property at which
any gambling, gaming or casino activities are conducted by any Loan
Party.

                 

                “Gaming/Racing Law”
shall mean all statutes, rules, regulations, ordinances, codes and
administrative or judicial precedents pursuant to which any Gaming/Racing
Authority possesses regulatory, licensing or permit authority over gambling,
gaming or casino activities conducted by any Loan Party within its jurisdiction,
including the New York State Racing, Pari-Mutuel Wagering and Breeding Law and
the related rules and regulations, the New York State Lottery for Education Law
and the related rules and regulations, Part C, Chapter 383, Laws of New York
2001 as amended by Chapter 85 of the Laws of New York 2002, as amended by
Chapter 63 of the Laws of New York 2003 known as the “video lottery gaming
law”.

                 

                “Gaming/Racing
Permits” shall mean the licenses, permit or other authorization required
to own, operate and otherwise conduct unrestricted gaming operation at the
Gaming/Racing Facilities.

                 

                
                  
                    
                    

                  

                  
                    13

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Government Authority”
shall mean any nation or government, any state or political subdivision thereof
and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.  Without
limiting the generality of the foregoing, the United States of America, the
State of New York, and all agencies, departments, commissions and other
subdivisions thereof (including, without limitation, the Federal Reserve Board,
the Environmental Protection Agency, the Department of Labor, the National Labor
Relations Board and the Equal Employment Opportunity Commission of the United
States, the PBGC and the IRS), and the central bank of any nation shall be
considered Government Authorities.

                 

                “Guarantee” shall mean
by any Person, any obligation, contingent or otherwise, of such Person directly
or indirectly guaranteeing any Indebtedness for Borrowed Money or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness for Borrowed Money or other obligation (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness for
Borrowed Money or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part), provided that the
term “Guarantee” shall not include endorsements for collection or deposits in
the ordinary course of business.  The term “Guarantee” used as a verb has a
corresponding meaning.

                 

                “Guaranty” shall mean
the obligations of the Guarantors under Section 9A of the
Agreement.

                 

                “Guarantor” shall mean
each Subsidiary of the Borrower other than any Immaterial
Subsidiary.

                 

                “Immaterial
Subsidiary” shall mean, at any time, any  Subsidiary of the
Borrower having total assets (as determined in accordance with GAAP) of less
than $50,000; provided, however,
that the total assets of all Immaterial Subsidiaries shall not exceed
$500,000.  In the event that the total assets of all Immaterial
Subsidiaries exceed $500,000, the Borrower will designate Subsidiaries that
would otherwise be Immaterial  Subsidiaries to be excluded as
Immaterial  Subsidiaries until such $500,000 threshold is
met.  Notwithstanding the foregoing, no Subsidiary that guarantees any
Obligations hereunder shall be deemed an Immaterial Subsidiary.

                 

                “Indebtedness” means
with respect to any Person, without duplication:

                 

                (1)           all
Indebtedness for Borrowed Money of such Person;

                 

                (2)           all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;

                 

                (3)           all
Capitalized Lease Obligations of such Person;

                 

                
                  
                    
                    

                  

                  
                    14

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                (4)           all
obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under any title
retention agreement (but excluding trade accounts payable and other accrued
liabilities arising in the ordinary course of business that are not overdue by
ninety (90) days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and any deferred
purchase price represented by earn outs consistent with the Borrower’s past
practice);

                 

                (5)           all
obligations for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction, whether or not then
due;

                 

                (6)           guarantees
and other contingent obligations in respect of Indebtedness referred to in
clauses (1) through (5) above and clause (8) below;

                 

                (7)           all
obligations of any other Person of the type referred to in clauses (1) through
(6) which are secured by any Lien on any property or asset of such Person, the
amount of any such Obligation being deemed to be the lesser of the Fair Market
Value of the property or asset securing such Obligation or the amount of such
Obligation;

                 

                (8)           all
Interest Swap Obligations and all obligations under Currency Agreements of such
Person; and

                 

                (9)           all
Disqualified Capital Stock issued by such Person with the amount of Indebtedness
represented by such Disqualified Capital Stock being equal to the greater of its
voluntary or involuntary liquidation preference and its maximum fixed repurchase
price, but excluding accrued dividends, if any.

                 

                Notwithstanding
the foregoing, Indebtedness shall not include any Qualified Capital Stock. For
purposes hereof, the “Maximum Fixed Repurchase Price” of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified
Capital Stock, such Fair Market Value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock.

                 

                “Indebtedness for Borrowed
Money” shall mean (without duplication) (i) all indebtedness of
(including, without limitation, all indebtedness assumed by) a Person in respect
of money borrowed (including, without limitation, the unpaid amount of the
purchase price of any property, incurred for such purpose in lieu of borrowing
money or using available funds to pay said amount, and not constituting an
account payable or expense accrual incurred or assumed in the ordinary course of
business), or evidenced by a promissory note, bond, debenture or other like
obligation to pay money, and including indebtedness under banker’s acceptances
and with respect to letters of credit, (ii) net obligations under interest rate
swap, hedges, caps or similar contracts, or currency exchange or currency risk
avoidance agreements, and (iii) all obligations of (including, without
limitation, all obligations assumed by) a Person (x) constituting a Capitalized
Lease Obligation of such Person, or (y) constituting a Guarantee by such
Person.

                 

                
                  
                    
                    

                  

                  
                    15

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Indemnified Party” -
Section 12.3.

                 

                “Indenture” shall mean
that certain Indenture, dated as of July 26, 2004, among the Borrower, as
issuer, The Bank of New York, as trustee and collateral agent and the
Guarantors.

                 

                “Indian Tribe” shall
mean any Indian tribe, band, nation, or other organized group or community of
Indians which (A) is recognized as eligible by the Secretary of the Interior for
the special programs and services provided by the United States to Indians
because of their status as Indians, and (B) is recognized as possessing powers
of self-government.

                 

                “Intercreditor
Agreement” shall mean that certain Intercreditor Agreement dated as of
July 11, 2005, by and among Original Agent, or any successor or assigns, The
Bank of New York, Borrower and certain subsidiaries of Borrower, as amended,
restated, modified or supplemented from time to time.

                 

                “Interest Swap
Obligations” shall mean the obligations of any Person pursuant to any
arrangement with any other Person, whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.

                 

                “IRS”  shall
mean the Internal Revenue Service of the United States.

                 

                “Labor
Laws”  shall mean all laws, common law, statutes, rules and
regulations, and all judgments, decrees, franchises, orders or permits, issued,
promulgated, approved or entered thereunder by any Government Authority relating
to the workplace or the relationship between employer and employee and/or
between labor and management, including without limitation those relating to
hiring, termination, terms and conditions of employment, wages, overtime,
compensation, hours of work, employee benefits, severance, disability,
collective bargaining, labor-management relations, occupational health
and   safety, discrimination and civil rights, equal employment
opportunity, affirmative action, right-to-work laws and right-to-know
laws.  Labor Laws shall include, without limitation, the Age
Discrimination in Employment Act of 1967 (29 U.S.C. Section 621 et seq.), the Americans
with Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.), Title VII of
the Civil Rights Act of 1964 (42 U.S.C. Section 2000 et seq.), ERISA, the
Fair Labor Standards Act (29 U.S.C. Section 201 et seq.), the Federal
Mines Safety and Health Act of 1977 (30 U.S.C. Section 801 et seq.), the National
Labor Relations Act (29 U.S.C. Section 151 et seq.), the
Occupational Safety and Health Act of 1970 (29 U.S.C. Section 651 et seq.), the Black Lung
Benefits Act (30 U.S.C. Section 901 et seq.), the Railway
Labor Act (45 U.S.C. Section 151 et seq.), the
Immigration Reform and Control Act of 1986 (Public Law 99-603), the Employee
Polygraph Protection Act of 1988 (29 U.S.C. Section 2001 et seq.), the Drug-Free
Workplace Act of 1988 (41 U.S.C. Section 701 et seq.), the
Rehabilitation Act of 1973 (29 U.S.C. Section 701 et seq.), the
Vietnam-Era Veterans’ Readjustment Assistance Act of 1974 (Public Law 93-508),
the Worker Adjustment and Retraining Notification Act (29 U.S.C. Sections 2101
et seq.), the
Labor-Management Relations (Taft-Hartley) Act (29 U.S.C. Section 141 et seq.), Executive
Order No. 11246 (and subsequent Executive Orders governing equal employment
opportunity and for affirmative action), as such laws have been amended from
time to time, and any analogous future federal, or present or future state,
local or foreign, laws, statutes, rules and regulations, as such laws have been
amended or supplemented from time to time, and the regulations promulgated
pursuant thereto.

                 

                
                  
                    
                    

                  

                  
                    16

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                 “Legal
Requirements”  shall mean, with respect to any Person, all
laws, common law, statutes, rules and regulations of any Government Authority to
which such Person or any of its assets is subject or any judgment, decree,
franchise, order or permit of any Government Authority applicable to such Person
or any of its assets.  Without limiting the generality of the
foregoing, the Code, the Margin Regulations, all Environmental Laws, the
Gaming/Racing Laws and all Labor Laws shall be considered Legal Requirements
with respect to any Loan Party.

                 

                “Leverage Ratio” shall
mean, at a particular date, (a) the aggregate amount of all indebtedness,
obligations, liabilities and reserves and any other item which would be listed
as a liability on a consolidated balance sheet of the Borrower and its
Subsidiaries in accordance with GAAP, divided by (b) Tangible Net
Worth.

                 

                 “Lien” shall mean any
mortgage, deed of trust, security deed, pledge, security interest, encumbrance,
lien or other charge of any kind (including any agreement to give any of the
foregoing, any assignment or lease in the nature thereof, and any conditional
sale or other title retention agreement), any lien arising by operation of law,
and the filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction.

                 

                “Liquidity” means,
with respect to any date, (A) unrestricted cash on such date and (B) amounts
available to be drawn under the credit facilities of the Borrower and its
consolidated subsidiaries, including amounts available to be drawn hereunder, so
long as the Borrower and its consolidated subsidiaries can satisfy all
conditions precedent to borrowing such amounts under such
facilities.

                 

                “Loan Documents” shall
mean, individually and collectively, this Agreement, the Notes, the Guaranty,
the Security Documents, the Intercreditor Agreement, and all other instruments
and agreements executed in connection herewith and therewith, in each case as
amended, restated, supplemented or otherwise modified from time to
time.  Without limiting the generality of the foregoing, each
amendment to (or constituting part of) the Agreement or any other Loan Document
and each instrument and agreement (including, without limitation, waivers)
executed in connection with any other Loan Document shall be deemed to be a Loan
Document for all purposes of the Agreement.

                 

                “Loan Party” means any
member of the Empire Group other than any Immaterial Subsidiary.

                 

                “Loans” – Section
2.3.

                 

                “Lottery” - Section
7.19

                 

                “Margin Regulations”
shall mean Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System, as the same have been amended or supplemented from time to time,
and any analogous future regulations.

                 

                
                  
                    
                    

                  

                  
                    17

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Material Adverse
Change” in respect of a Person shall mean a material adverse change in
(i) the business, properties, operations, prospects or condition (financial or
otherwise) of such Person or (ii) if such Person is a Loan Party, the ability of
such Person to perform, or of the Agent or any Bank to enforce, the material
obligations of such Person.

                 

                “Material Adverse
Effect” in respect of a Person shall mean an effect that would result in
a Material Adverse Change.

                 

                “Maturity Date” shall
mean the date on which the Loans are due and payable in full, as provided in
Section 2.8 hereof.

                 

                “Monticello Land”
shall mean those 232 acres of land, located in Monticello, New York, that are
owned by Monticello Raceway Management on the Closing Date.

                 

                “Monticello Raceway”
shall mean the racetrack known as Monticello Raceway and located on Route 17B,
Monticello, New York 12701.

                 

                “Monticello Raceway Debt
Service” shall mean, as of any date, the sum of (a) the scheduled
payments of principal due on Indebtedness for Borrowed Money of Monticello
Raceway Management and its consolidated Subsidiaries during the twelve months
after such date and (b) the amount of interest expense, both expensed and
capitalized, of Monticello Raceway Management and its consolidated Subsidiaries,
determined in accordance with GAAP, during the Four Quarter Period ending on
such date on the aggregate principal amount of the Indebtedness for Borrowed
Money of Monticello Raceway Management and its consolidated
Subsidiaries.

                 

                “Monticello Raceway Debt
Service Coverage Ratio” shall mean, as of the last day of any fiscal
quarter, the ratio of (x) Consolidated EBITDA of Monticello Raceway Management
during the Four Quarter Period ending on such date to (y) Monticello Raceway
Debt Service as of such date.

                 

                “Monticello Raceway
Management” shall mean Monticello Raceway Management, Inc., a New York
corporation, and its permitted successors and assigns.

                 

                “Moody’s” shall mean
Moody’s Investors Service, Inc.

                 

                “Mortgage” shall mean
each mortgage or deed of trust referred to in the Agreement (in each case, as
the same may from time to time be amended, restated, supplemented or otherwise
modified), and (after the same has been executed by the Borrower and delivered
to the Bank) each Mortgage referred to in Sections 7.18.

                 

                “Multiemployer Plan”
shall mean any employee benefit plan which is a “multiemployer plan” within the
meaning of Section 3(37) of ERISA and to which the Borrower or any ERISA
Affiliate of the Borrower contributes or has been obligated to
contribute.

                 

                “Net Current Assets”,
as to any Person, shall mean the amount by which (x) such Person’s Current
Assets exceeds (y) its Current Liabilities.

                 

                
                  
                    
                    

                  

                  
                    18

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Net Income” as to any
Person for any period shall mean the net income of such Person and its
Subsidiaries (or, if the Empire Group, of the respective members thereof) for
such period determined in accordance with GAAP.

                 

                “Net Proceeds”, as
applied to the Transfer of assets referred to in Section 2.4(f) or 8.8 or the
issuance of any debt referred to in Section 2.4(g), shall mean (x) all proceeds
received by any Loan Party or Subsidiary in connection with such transaction
after deduction of all fees and expenses paid, or to be paid within the three
months following such transaction, in connection with such transaction (other
than to Affiliates), less (y) the amount, if any, expected to be used by the
recipient of such proceeds for the payment of taxes, if any, reasonably
attributable to such transaction.

                 

                “Non-Routine Environmental
Costs” shall mean any and all Environmental Costs in excess of Routine
Environmental Costs.

                 

                “Note” shall mean a
promissory note of the Borrower substantially in the form of Exhibit A to this
Agreement, in each case as it may be from time to time amended, restated,
supplemented or otherwise modified.

                 

                “Obligations” shall
mean (x) with respect to each Loan Party other than the Borrower, all
obligations of such Loan Party with respect to the repayment or performance of
any obligations (monetary or otherwise) of the Borrower arising under or in
connection with this Agreement, the Notes and each other Loan Document, and (y)
with respect to the Borrower, all obligations of the Borrower with respect to
the repayment or performance of its obligations (monetary or otherwise) arising
under or in connection with this Agreement, the Notes and each other Loan
Document.

                 

                “Offering Circular”
shall mean the Offering Circular dated July 16, 2004 relating to the Borrower’s
5-1/2% Convertible Senior Notes Due 2014.

                 

                “Original Agent” –
recitals.

                 

                “Original Bank” –
recitals.

                 

                “Original Loan
Agreement” – recitals.

                 

                “PAB” – introductory
paragraph.

                 

                “Participant” shall
mean any participant that shall have entered into a participation agreement with
PAB pursuant to Section 2.6 of this Agreement.

                 

                “PBGC” shall mean the
Pension Benefit Guaranty Corporation established pursuant to Section 4002 of
ERISA.

                 

                “Pension Plan” shall
mean any employee pension benefit plan subject to Title IV of ERISA and
maintained by the Borrower or any ERISA Affiliate of the Borrower or any such
plan to which the Borrower or any ERISA Affiliate is or has been required to
contribute on behalf of any of its employees, other than a Multiemployer
Plan.

                 

                
                  
                    
                    

                  

                  
                    19

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                “Permitted Holders”
shall mean Louis Cappelli, Joseph E. Bernstein and Ralph J. Bernstein and their
respective Affiliates.

                 

                “Permitted
Indebtedness” means, without duplication, each of the
following:

                 

                (1)           Indebtedness
under the Company’s 5-1/2% Convertible Senior Notes Due 2014 in an aggregate
outstanding principal amount not to exceed $65.0 million and the related
Guarantees;

                 

                (2)           Indebtedness
incurred pursuant to this Agreement;

                 

                (3)           other
Indebtedness of the Borrower and its Subsidiaries outstanding on the Closing
Date and set forth on Schedule 8.3;

                 

                (4)           Interest
Swap Obligations of the Borrower or any Subsidiary of the Borrower covering
Indebtedness for Borrowed Money of the Borrower or any of its Subsidiaries;
provided, however, that such Interest Swap Obligations are entered into for the
purpose of fixing or hedging interest rates with respect to any fixed or
variable rate Indebtedness for Borrowed Money that is permitted hereby to be
outstanding to the extent that the notional amount of any such Interest Swap
Obligation does not exceed the principal amount of Indebtedness for Borrowed
Money to which such Interest Swap Obligation relates;

                 

                (5)           Indebtedness
under Currency Agreements; provided that in the case of Currency Agreements
which relate to Indebtedness for Borrowed Money, such Currency Agreements do not
increase the Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;

                 

                (6)           intercompany
Indebtedness for Borrowed Money of the Borrower or a Guarantor for so long as
such Indebtedness is held by the Borrower or a Guarantor; provided that if as of
any date any Person other than the Borrower or a Guarantor owns or holds any
such Indebtedness or holds a Lien in respect of such Indebtedness for Borrowed
Money, such date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness under this clause (6) by the issuer of such Indebtedness
for Borrowed Money;

                 

                (7)           Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business;
provided, however, that such indebtedness is extinguished within three (3)
Business Days of incurrence;

                 

                (8)           Indebtedness
of the Borrower or any of its Subsidiaries represented by letters of credit for
the account of the Borrower or such Subsidiary, as the case may be, in order to
provide security for workers’ compensation claims, payment obligations in
connection with self-insurance or similar requirements in the ordinary course of
business;

                 

                
                  
                    
                    

                  

                  
                    20

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                (9)           obligations
in respect of performance, bid and surety bonds and completion guarantees
provided by the Borrower or of its Subsidiaries in the ordinary course of
business;

                 

                (10)         Refinancing
Indebtedness;

                 

                (11)         Indebtedness
represented by guarantees by the Borrower or a Subsidiary of the Borrower of
Indebtedness for Borrowed Money incurred by the Borrower or a Subsidiary of the
Borrower so long as the incurrence of such Indebtedness for Borrowed Money by
the Borrower or any such Subsidiary is otherwise permitted by the terms
hereof;

                 

                (12)         Indebtedness
arising from agreements of the Borrower or a Subsidiary of the Borrower
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred in connection with the disposition of any
business, assets or Subsidiary of the Borrower, other than guarantees of
Indebtedness for Borrowed Money incurred by any Person acquiring all or any
portion of such business, assets or Subsidiary for the purpose of financing such
acquisition; provided that the maximum aggregate liability in respect of all
such Indebtedness shall at no time exceed the gross proceeds actually received
by the Borrower and the Subsidiary of the Borrower in connection with such
disposition;

                 

                (13)         Indebtedness
of the Borrower or any of its Subsidiaries to the extent the net proceeds
thereof are promptly used to redeem the Obligations in full or deposited to
defease or discharge the Notes, in each case, in accordance
herewith;

                 

                (14)         additional
unsecured Indebtedness for Borrowed Money of the Borrower and its Subsidiaries
in an aggregate principal amount not to exceed $10 million at any time
outstanding (the “Permitted Subordinated Debt”) obtained in connection with
Refinancing Indebtedness.

                 

                For
purposes of determining compliance with Section 8.3, (a) the outstanding
principal amount of any item of Indebtedness shall be counted only once and (b)
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Indebtedness described in clauses (1) through (15)
above or is entitled to be incurred pursuant to the Consolidated Fixed Charge
Coverage Ratio provisions of such covenant, the Borrower shall, in its sole
discretion, classify (or later reclassify) such item of Indebtedness in any
manner that complies with this covenant.  Accrual of interest,
accretion or amortization of original issue discount, the payment of interest on
any Indebtedness in the form of additional Indebtedness with the same terms, and
the payment of dividends on Disqualified Capital Stock in the form of additional
shares of the same class of Disqualified Capital Stock will not be deemed to be
an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for
purposes of Section 8.3.

                 

                “Permitted Liens”
shall mean the following types of Liens:

                 

                (1)           Liens
for taxes, assessments or governmental charges or claims either (a) not
delinquent or (b) contested in good faith by appropriate proceedings and as to
which the Borrower or its Subsidiaries shall have set aside on its books such
reserves as may be required pursuant to GAAP;

                 

                
                  
                    
                    

                  

                  
                    21

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                (2)           statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other Liens imposed by law or pursuant to customary
reservations or retentions of title incurred in the ordinary course of business
for sums not yet delinquent or being contested in good faith, if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall have
been made in respect thereof;

                 

                (3)           Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security, including any Lien securing letters of credit issued in the ordinary
course of business consistent with past practice in connection therewith, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money);

                 

                (4)           any
judgment Lien not giving rise to an Event of Default;

                 

                (5)           easements,
rights-of-way, zoning restrictions and other similar charges or encumbrances in
respect of real property not interfering in any material respect with the
ordinary conduct of the business of the Borrower or any of its
Subsidiaries;

                 

                (6)           Liens
upon specific items of inventory or other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances issued or
created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods;

                 

                (7)           Liens
securing reimbursement obligations with respect to commercial letters of credit
which encumber documents and other property relating to such letters of credit
and products and proceeds thereof;

                 

                (8)           Liens
encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of the Borrower or any of its
Subsidiaries, including rights of offset and set-off;

                 

                (9)           Liens
securing Interest Swap Obligations which Interest Swap Obligations relate to
Indebtedness that is otherwise permitted under hereunder;

                 

                (10)         Liens
securing Indebtedness under Currency Agreements that are permitted
hereunder;

                 

                (11)         Liens
securing Acquired Indebtedness incurred in accordance with Section 8.3, provided
that:

                 

                (a)           such
Liens secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness by the Borrower or a Subsidiary of the
Borrower and were not granted in connection with, or in anticipation of, the
incurrence of such Acquired Indebtedness by the Borrower or a Subsidiary of the
Borrower; and

                 

                
                  
                    
                    

                  

                  
                    22

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                (b)           such
Liens do not extend to or cover any property or assets of the Borrower or of any
of its Subsidiaries other than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of
the Borrower or a Subsidiary of the Borrower and are no more favorable to the
lienholders than those securing the Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Borrower or a Subsidiary of the
Borrower;

                 

                (12)         Liens
existing as of the Closing Date and securing Indebtedness permitted to be
outstanding under clause (3) of the definition of the term “Permitted
Indebtedness” to the extent and in the manner such Liens are in effect on the
Closing Date;

                 

                (13)         Liens
securing the Loans and all other monetary obligations under the Agreement and
the Guaranty;

                 

                (14)         Liens
securing Indebtedness under the Company’s 5-1/2% Convertible Senior Notes Due
2014 to the extent such Indebtedness is permitted under clause (1) of the
definition of the term “Permitted Indebtedness;” and

                 

                (15)         Liens
securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted to be incurred under
Section 8.2 and which has been incurred in accordance with Section
8.3;  provided, however,
that such Liens:  (i) are no less favorable to the Banks and are not
more favorable to the lienholders with respect to such Liens than the Liens in
respect of the Indebtedness being Refinanced; and (ii) do not extend to or cover
any property or assets of the Borrower or any of its Subsidiaries not securing
the Indebtedness so Refinanced.

                 

                “Permitted Subordinated
Debt” has the meaning set forth in the definition of the term “Permitted
Indebtedness.”

                 

                “Person” shall mean
and include an individual, a partnership, a corporation (including a business
trust), a joint stock company, a limited liability company, the Empire Group, a
trust, an unincorporated association, a joint venture or other entity or a
government or an agency or political subdivision thereof.

                 

                “Plan” shall mean any
“employee benefit plan” (within the meaning of Section 3(3) of ERISA) maintained
by the Borrower or any ERISA Affiliate of the Borrower or any such plan to which
the Borrower or any ERISA Affiliate is or has been required to contribute on
behalf of any of its employees, other than a Multiemployer Plan.

                 

                “Pledge Agreement”
shall mean a pledge agreement executed by the Loan Parties set forth therein,
substantially in the form of Exhibit C to this Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to
time.

                 

                
                  
                    
                    

                  

                  
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                “Property” shall mean
any property owned, leased, controlled, used or operated in the past, present or
future by any Loan Party or Subsidiary.

                 

                “Purchasing Banks” -
Section 12.4(d).

                 

                “Qualified Capital
Stock” shall mean any Capital Stock that is not Disqualified Capital
Stock.

                 

                “Real
Property”  shall mean any fee, leasehold or other estate or
interest in real property.

                 

                “Recording Act” -
Section 10.15.

                 

                “Refinance” shall
mean, in respect of any security or Indebtedness, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part.  “Refinanced” and “Refinancing” shall have
correlative meanings.

                 

                “Refinancing
Indebtedness” shall mean any Refinancing by the Borrower or any
Subsidiary of the Borrower of Indebtedness incurred in accordance with Section
8.3 or clauses (1), (3) or (10) of the definition of Permitted Indebtedness, in
each case that does not:

                 

                (1)           have
an aggregate principal amount (or, if such Indebtedness is issued with original
issue discount, an aggregate offering price) greater than the sum of (x) the
aggregate principal amount of the Indebtedness being Refinanced (or, if such
Indebtedness being Refinanced is issued with original issue discount, the
aggregate accreted value) as of the date of such proposed Refinancing plus (y)
the amount of fees, expenses, premium, defeasance costs and accrued but unpaid
interest relating to the Refinancing of such Indebtedness being
Refinanced;

                 

                (2)           create
Indebtedness with: (a) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the Indebtedness being Refinanced; or (b) a
final maturity earlier than the final maturity of the Indebtedness being
Refinanced or;

                 

                (3)           affect
the security, if any, for such Refinancing Indebtedness (except to the extent
that less security is granted to holders of such Refinancing
Indebtedness).

                 

                If such
Indebtedness being Refinanced is subordinate or junior by its terms to the
Loans, then such Refinancing Indebtedness shall be subordinate by its terms to
the Loans at least to the same extent and in the same manner as the Indebtedness
being Refinanced.

                 

                “Release” shall mean
any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, pouring, emptying, escaping, dumping, discarding, leaching
or migration of a Contaminant into the indoor or outdoor environment or into or
out of any property, including without limitation the movement of Contaminants
through, on or in the air, soil, surface water or groundwater or the abandonment
or discarding of barrels, containers and other closed receptacles containing any
Contaminant.

                 

                
                  
                    
                    

                  

                  
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                “Released Matters” –
Section 2.2.

                 

                 “Released Parties” –
Section 2.2.

                 

                 “Remedial Action”
shall mean all actions taken or required to be taken to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment, (ii) prevent a Release or condition that is reasonably likely to
result in a Release or minimize further release of Contaminants so they do not
migrate or endanger or threaten to endanger present or future public health or
welfare or the indoor or outdoor environment, (iii) perform pre-remedial studies
and investigations and post-remedial monitoring and care, or (iv) otherwise cure
any violation of any Environmental Laws.

                 

                “Replacement Asset”
shall mean (x) with respect to an item of equipment Transferred by a Loan Party
(to the extent permitted by Section 8.8 hereof), the same or a similar asset
which performs substantially the same task purchased or expected to be purchased
with the Net Proceeds from such Transfer, and (y) with respect to an insured
item of equipment that has been damaged or destroyed, the same or a similar
asset which performs substantially the same task purchased or expected to be
purchased with the insurance proceeds paid or payable with respect to such
damage or destruction.

                 

                “Reportable Event”
shall mean a Reportable Event described in Section 4043 of ERISA and the
regulations issued thereunder.

                 

                “Required Lenders” as
of a particular date shall mean the holders of at least 66-2/3% of the aggregate
unpaid principal amount of all Loans at the particular time
outstanding.

                 

                “Reserve Account”
shall mean the Reserve Account as defined under Section 2.4(a) of the Original
Loan Agreement.

                 

                “Reserve Account
Amount” shall mean, as of any date, an amount equal to the amount on
deposit in the Reserve Account on such date, after giving effect to all
deposits, transfers and withdrawals from the Reserve Account on such
date.

                 

                “Reserve Account Termination
Date” – Section 2.4(a).

                 

                “Routine Environmental
Costs” shall mean, for any Fiscal Year, Environmental Costs incurred by
the Empire Group during such period which do not exceed the amount of
environmental expenditures for such Fiscal Year set forth in the business plan
most recently delivered to the Agent pursuant to Section 7.1(j).

                 

                “SEC” shall mean the
United States Securities and Exchange Commission.

                 

                “SEC Documents” shall
mean all reports and registration statements filed by the Borrower with the SEC
pursuant to the Securities Act of 1933, as amended, or the Exchange Act prior to
the Closing Date.

                 

                “Security Agreement”
shall mean, a security agreement executed by the Loan Parties set forth therein,
substantially in the form of Exhibit B to this Agreement, covering all of such
Persons’ present and future personal property (including, without limitation,
leases, chattel paper, general intangibles, contract rights, equipment,
instruments, cash, accounts receivable and inventory), as the same from time to
time may be amended, restated, supplemented or otherwise modified.

                 

                
                  
                    
                    

                  

                  
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                “Security Documents”
shall be the collective reference to (i) each of the agreements and other
documents pursuant to which Collateral is intended to be granted, directly or
indirectly, to the Agent on behalf of the Banks, (ii) each agreement and other
document entered into after the Closing Date (including without limitation
pursuant to Sections 7.18) pursuant to which Collateral is intended to be
granted, directly or indirectly, to the Agent on behalf of the Banks,
(iii)  those sections to this Agreement pursuant to which the Reserve
Account is established, and (iv)all amendments, supplements or other
modifications to such agreements, documents and sections or replacements
thereof.   Notwithstanding the foregoing and without limiting the
generality thereof, the Security Agreement, the Pledge Agreement and the
Mortgages shall be considered Security Documents.  However, as to a
Loan Party thereto, the term “Security Document” shall not include any such
document as to which such Loan Party is released from all its obligations
thereunder by the Agent or the Banks in accordance with the terms hereof or
thereof or which, by its terms, has expired.

                 

                “Settlement” shall
mean a settlement between the Borrower and the trustee, collateral agent or
holders of the Indebtedness described in clause (1) of the definition of
Permitted Indebtedness which causes such Indebtedness not to mature (by
acceleration or otherwise) or be mandatorily redeemable, in whole or in part,
prior to the date which is six (6) months following the end of the second
Extension Period, and which otherwise is on terms and conditions satisfactory to
the Agent.

                 

                “Short Term Maturity
Date” shall mean July 28, 2009.

                 

                “Solvent” shall mean,
with respect to any Person, that, as of any date of determination, the amount of
the “present fair saleable value” of the assets of such Person will, as of such
date, exceed the amount that will be required to pay all “liabilities of such
Person, contingent or otherwise”, as of such date (as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors) as such debts become absolute and
matured; and that, as of such date, such Person is able to pay all Indebtedness
for Borrowed Money of such Person as such Indebtedness for Borrowed Money
matures.

                 

                “S&P” shall mean
Standard & Poor’s Ratings Group.

                 

                “Subsidiary” of any
Person shall mean any other firm, corporation, partnership, trust or other
unincorporated organization or association or other enterprise, 50% or more of
the indicia of equity rights (whether capital stock or otherwise) of which is at
the time owned, directly or indirectly, by such Person and/or by one or more of
such Person’s Subsidiaries.  Unless the context indicates otherwise,
references to Subsidiaries shall refer to Subsidiaries of the
Borrower.

                 

                “Surviving Entity” -
Section 8.7.

                 

                
                  
                    
                    

                  

                  
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                “Refinance” shall
mean, in respect of any security or Indebtedness, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part.  “Refinanced” and “Refinancing” shall have
correlative meanings.

                 

                “Tangible Net Worth”
shall mean, at a particular date, (a) the aggregate amount of all assets of the
Borrower and its Subsidiaries as may be properly classified as such in
accordance with GAAP consistently applied excluding such other assets as are
properly classified as intangible assets under GAAP, less (b) the aggregate
amount of all liabilities of the Borrower and its Subsidiaries.

                 

                “Taxes” - Section
5.2.

                 

                 “Termination Event”
shall mean (i) a Reportable Event described in Section 4043 of ERISA and the
regulations issued thereunder (other than a Reportable Event not subject to the
provision for 30-day notice to the PBGC under such regulations), or (ii) the
withdrawal of the Borrower or any of their respective ERISA Affiliates from a
Pension Plan during a plan year in which it was a “substantial employer” as
defined in Section 4001(a)(2) of ERISA, or (iii) the issuance of a notice of
intent to terminate a Pension Plan or the treatment of a Pension Plan amendment
as a termination under Section 4041 of ERISA, or (iv) receipt by the Borrower or
any ERISA Affiliate of the Borrower of notice of the PBGC’s intention to
terminate any Pension Plan or to have a trustee or the PBGC appointed to
administer any Pension Plan or (v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan.

                 

                 “Transaction Date” has
the meaning set forth in the definition of the term “Consolidated Fixed Charge
Coverage Ratio.”

                 

                “Transfer” shall mean
any sale, conveyance, lease or other disposition (and “Transferred”,
“Transferring” and other variations thereof shall have correlative
meanings).

                 

                “Transfer of the Monticello
Land” shall mean any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer, including by way of dividend or
distribution, by the Borrower or any of its Subsidiaries to any Person other
than the Borrower or a Guarantor of all or any portion of the portion of the
Monticello Land upon which the Monticello Raceway or any video gaming machines
are located.

                 

                “Transfer Supplement”
- Section 12.4(d).

                 

                “Trust Land” shall
mean the 29.31 acres of land in Monticello, New York which is to be used for the
development of a casino in conjunction with an Indian Tribe and which is to be
transferred to the United States in trust for such Indian Tribe.

                 

                “UCC” - Section
10.15.

                 

                “United States” or
“U.S.” shall
mean the United States of America.

                 

                
                  
                    
                    

                  

                  
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                “Warrants” shall mean
Common Stock Purchase Warrants issued by the Borrower with respect to its common
stock at an exercise price of $0.01 per share, together with an Investor Rights
Agreement relating thereto, in each case in form and substance satisfactory to
the Agent.

                 

                “Voting Stock” means,
with respect to any Person, securities of any class or classes of Capital Stock
of such Person entitling the holders thereof (whether at all times or only so
long as no senior class of stock has voting power by reason of any contingency)
to vote in the election of members of the Board of Directors (or equivalent
governing body) of such Person.

                 

                “Weighted Average Life To
Maturity” means, when applied to any Indebtedness at any date, the number
of years obtained by dividing (a) the then outstanding aggregate principal
amount of such Indebtedness into (b) the sum of the total of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or other required payment of principal, including
payment at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such date and
the making of such payment.

                 

                “Wholly Owned
Subsidiary” of any Person shall mean any Subsidiary of such Person of
which all the outstanding Capital Stock are owned by such Person or any Wholly
Owned Subsidiary of such Person.

                 

                “written,” “in writing” and other
variations thereof shall mean any form of written communication or a
communication by means of telex, telecopier, telegraph, cable or electronic
mail.

                 

                
                  
                    
                    

                  

                  
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