**Exhibit10.33**

 

 

OPTION AGREEMENT

 

by and among

 

CROWN LIMITED,

 

CROWN CCR GROUPINVESTMENTS ONE, LLC,

 

CROWN CCR GROUPINVESTMENTS TWO, LLC,

 

MILLENNIUM GAMING,INC.,

 

OCM HOLDCO, LLC

 

and

 

CANNERY CASINORESORTS, LLC

 

Dated as of March 12,2009

 

 

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TABLE OF CONTENTS

 
| ** ** | **ARTICLE 1**                                                          | ** ** |
|------------|------------------------------------------------------------------------|------------|
|       |                                                                   |       |
|       | Definitions                                                            |       |
|       |                                                                   |       |
| ** ** | **ARTICLE 2**                                                          | ** ** |
|       |                                                                   |       |
|       | Option                                                                 |       |
|       |                                                                   |       |
| 2.1.       | Grant of Option                                                        | 22         |
| 2.2.       | Purchase Price Upon Exercise of the Option                             | 22         |
| 2.3.       | Exercise of the Option                                                 | 24         |
| 2.4.       | Sellers’ Closing Deliveries                                       | 24         |
| 2.5.       | Buyers’ Closing Deliveries                                        | 25         |
| 2.6.       | Intentionally Omitted                                                  | 26         |
| 2.7.       | Allocation of Purchase Price                                           | 26         |
| ** ** | ** **                                                             | ** ** |
| ** ** | **ARTICLE 3**                                                          | ** ** |
|       |                                                                   |       |
|       | Closing                                                                |       |
|       |                                                                   |       |
| ** ** | **ARTICLE 4**                                                          | ** ** |
|       |                                                                   |       |
|       | Representations and Warranties Regarding Sellers                       |       |
|       |                                                                   |       |
| 4.1.       | Representations of Millennium                                          | 28         |
| 4.2.       | Representations of HoldCo                                              | 28         |
| 4.3.       | Representations of Each Seller                                         | 33         |
| ** ** | ** **                                                             | ** ** |
| ** ** | **ARTICLE 5**                                                          | ** ** |
|       |                                                                   |       |
|       | Representations and Warranties Regarding the  Companies                |       |
|       |                                                                   |       |
| 5.1.       | Company Organization; Good Standing; CCR Authority  and Enforceability | 36         |
| 5.2.       | Capitalization                                                         | 37         |
| 5.3.       | No Litigation                                                          | 38         |
| 5.4.       | Consents and Approvals                                                 | 38         |
| 5.5.       | No Violations                                                          | 38         |
| 5.6.       | Material Contracts                                                     | 39         |
| 5.7.       | Financial Information                                                  | 40         |
| 5.8.       | Liabilities                                                            | 41         |

 

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| 5.9.   | Labor Matters                                                | 41     |
|--------|--------------------------------------------------------------|--------|
| 5.10.  | Employee Benefit Matters                                     | 42     |
| 5.11.  | Taxes                                                        | 44     |
| 5.12.  | Governmental Authorizations                                  | 46     |
| 5.13.  | Insurance                                                    | 46     |
| 5.14.  | Compliance with Laws                                         | 47     |
| 5.15.  | Real Property                                                | 47     |
| 5.16.  | Environmental Matters                                        | 49     |
| 5.17.  | Intellectual Property                                        | 50     |
| 5.18.  | Absence of Certain Changes                                   | 51     |
| 5.19.  | Brokers and Finders                                          | 51     |
| 5.20.  | Solvency                                                     | 51     |
| 5.21.  | Related Party Transactions                                   | 51     |
| 5.22.  | Personal Property                                            | 52     |
| 5.23.  | No Other Representations or Warranties                       | 52     |
|   |                                                         |   |
|   | **ARTICLE 6**                                                |   |
|   |                                                         |   |
|   | Representations and Warranties of the Buyers and the  Parent |   |
|   |                                                         |   |
| 6.1.   | Buyer Organization and Good Standing                         | 52     |
| 6.2.   | Buyer Authority; Enforceability                              | 52     |
| 6.3.   | Consents and Approvals                                       | 53     |
| 6.4.   | No Violations                                                | 53     |
| 6.5.   | Funds Available                                              | 53     |
| 6.6.   | Brokers and Finders                                          | 53     |
| 6.7.   | Securities Act                                               | 53     |
| 6.8.   | No Litigation                                                | 54     |
| 6.9.   | Intentionally Omitted                                        | 54     |
| 6.10.  | Solvency                                                     | 54     |
| 6.11.  | No Other Representations or Warranties                       | 54     |
|   |                                                         |   |
|   | **ARTICLE 7**                                                |   |
|   |                                                         |   |
|   | Covenants of the Parties                                     |   |
|   |                                                         |   |
| 7.1.   | Conduct of the Companies                                     | 55     |
| 7.2.   | Conduct of Blocker and AcquisitionCo.                        | 58     |

 

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| 7.3.   | No Control of Other Party’s Business                                             | 58     |
|--------|---------------------------------------------------------------------------------------|--------|
| 7.4.   | Reasonable Best Efforts                                                               | 58     |
| 7.5.   | Updates to Disclosure Schedules                                                       | 61     |
| 7.6.   | Notifications to Buyers                                                               | 62     |
| 7.7.   | No Alternative Transactions                                                           | 62     |
| 7.8.   | Publicity                                                                             | 62     |
| 7.9.   | Intentionally Omitted                                                                 | 63     |
| 7.10.  | Tax Matters                                                                           | 63     |
| 7.11.  | LandCo Disposition                                                                    | 70     |
| 7.12.  | Excluded Opportunities                                                                | 70     |
| 7.13.  | Assistance and Records                                                                | 71     |
| 7.14.  | Guarantee                                                                             | 71     |
| 7.15.  | Intentionally Omitted                                                                 | 72     |
| 7.16.  | Intentionally Omitted                                                                 | 72     |
| 7.17.  | Intentionally Omitted                                                                 | 72     |
| 7.18.  | Intentionally Omitted                                                                 | 72     |
| 7.19.  | No Assignment if Breach                                                               | 72     |
| 7.20.  | FIRPTA Certificates                                                                   | 73     |
| 7.21.  | Repayment of Loan Obligations                                                         | 73     |
| 7.22.  | Activities of AcquisitionCo and Blocker                                               | 74     |
| 7.23.  | Intentionally Omitted                                                                 | 74     |
| 7.24.  | Amended Nevada Palace Lease; Subordination,  Non-disturbance and Attornment Agreement | 74     |
| 7.25.  | Termination of Affiliate Agreements; Release of Claims                                | 75     |
| 7.26.  | Intentionally Omitted                                                                 | 76     |
| 7.27.  | Impact of New Gaming Taxes                                                            | 76     |
| 7.28.  | Changes in CCR Capital Structure                                                      | 77     |
| 7.29.  | Outside New CCR Equity                                                                | 78     |
|   |                                                                                  |   |
|   | **ARTICLE 8**                                                                         |   |
|   | ** **                                                                            |   |
|   | Conditions to Closing                                                                 |   |
|   |                                                                                  |   |
| 8.1.   | Conditions to the Obligations of All Parties                                          | 78     |
| 8.2.   | Conditions to the Obligations of the Buyers                                           | 79     |

 

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| 8.3.   | Conditions to the Obligations of Sellers                                                                       | 80     |
|--------|----------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                           |   |
|   | **ARTICLE 9**                                                                                                  |   |
|   |                                                                                                           |   |
|   | Termination                                                                                                    |   |
|   |                                                                                                           |   |
| 9.1.   | This Agreement may be terminated and shall be of no  further force and effect at any time prior to the Closing | 80     |
|   |                                                                                                           |   |
|   | **ARTICLE 10**                                                                                                 |   |
|   |                                                                                                           |   |
|   | Indemnification                                                                                                |   |
|   |                                                                                                           |   |
| 10.1.  | Survival                                                                                                       | 81     |
| 10.2.  | Indemnification                                                                                                | 82     |
| 10.3.  | Limits on Indemnification                                                                                      | 85     |
| 10.4.  | Escrow                                                                                                         | 86     |
| 10.5.  | Tax Benefit                                                                                                    | 87     |
| 10.6.  | Intentionally Omitted                                                                                          | 88     |
| 10.7.  | Exclusive Remedy                                                                                               | 88     |
| 10.8.  | Adjustment of Purchase Price                                                                                   | 89     |
|   |                                                                                                           |   |
|   | **ARTICLE 11**                                                                                                 |   |
|   |                                                                                                           |   |
|   | General                                                                                                        |   |
|   |                                                                                                           |   |
| 11.1.  | Entire Agreement                                                                                               | 89     |
| 11.2.  | No Third Party Rights                                                                                          | 89     |
| 11.3.  | Counterparts                                                                                                   | 89     |
| 11.4.  | Headings                                                                                                       | 89     |
| 11.5.  | Applicable Law                                                                                                 | 89     |
| 11.6.  | Enforcement                                                                                                    | 89     |
| 11.7.  | Waiver of Jury Trial                                                                                           | 90     |
| 11.8.  | Waiver of Conditions                                                                                           | 90     |
| 11.9.  | Transaction Expenses                                                                                           | 90     |
| 11.10. | Construction                                                                                                   | 91     |
| 11.11. | Severability                                                                                                   | 91     |
| 11.12. | Amendments                                                                                                     | 91     |
| 11.13. | Assignments                                                                                                    | 91     |
| 11.14. | Notices                                                                                                        | 91     |
| 11.15. | Further Assurances                                                                                             | 93     |

 

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| 11.16. | Confidentiality                       | 93 |
|--------|---------------------------------------|----|
| 11.17. | Additional Rules of Construction | 93 |
| 11.18. | Enforcement of this Agreement         | 94 |
| 11.19. | Knowledge                             | 94 |

 

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EXHIBITS

 
| Exhibit A |   | Unit Ownership                                                        |
|----------------|--------|-----------------------------------------------------------------------|
| Exhibit B |   | Amended Nevada Palace  Lease                                          |
| Exhibit C |   | Escrow Agreement                                                      |
| Exhibit D |   | Payment Percentages                                                   |
| Exhibit E |   | [Intentionally Omitted]                                               |
| Exhibit F |   | [Intentionally Omitted]                                               |
| Exhibit G |   | Title Commitment  Exceptions                                          |
| Exhibit H |   | Form of Sale of  Option Agreement                                |
| Exhibit I |   | Form of Opinion of  Sellers’ Counsel                        |
| Exhibit J |   | [Intentionally Omitted]                                               |
| Exhibit K |   | [Intentionally Omitted]                                               |
| Exhibit L |   | Assignment/Sale  Documentation                                        |
| Exhibit M |   | Form of Cash Log                                                 |
| Exhibit N |   | Form of Releases                                                 |
| Exhibit O |   | Form of  Non-Imputation Endorsement                              |
| Exhibit P |   | Form of  Subordination, Non-disturbance and Attornment Agreement |

 

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**OPTIONAGREEMENT**

 

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

 

**RECITALS**

 

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

 

WHEREAS, OCM Blocker, LLC, a Delaware limitedliability company (“Blocker”), owns all of the issued and outstandingunits of AcquisitionCo (the “Blocker Units”), and AcquisitionCo owns 42%of the CCR Units (the “AcquisitionCo Units”), as set forth on Exhibit Ahereto;

 

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

 

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

 

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

 

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

 

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

 

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WHEREAS, concurrently with the execution of theOriginal Purchase Agreement, GLCP and Crown Two entered into the GLCP PurchaseAgreement, pursuant to which, upon the terms and subject to the conditionstherein, GLCP agreed to sell to Crown Two, and Crown Two agreed to purchasefrom GLCP, the GLCP Units; and

 

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

 

WHEREAS, concurrently with the execution of thisAgreement, Parent, the Buyers and CCR have entered into a Preferred PurchaseAgreement (the “Preferred Purchase Agreement”), pursuant to which theBuyers have agreed to purchase either (i) Series B Preferred Units ofCCR (the “Series B Preferred Units”), which are convertible, at theoption of the Buyers, into Series A2 Preferred Units of CCR (“Series A2Preferred Units”) representing 24.5% of the outstanding equity of CCR or (ii) Series A2Preferred Units representing 4.1% of the outstanding equity of CCR (the “4.1%Interest”);

 

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

 

WHEREAS, if the options granted hereunder areexercised, then upon the consummation of the transactions contemplated by thisAgreement and by the Preferred Purchase Agreement, the Buyers shallcollectively own, directly or indirectly, 100% of the issued and outstandingCCR Units.

 

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

** **

**ARTICLE 1**

 

**Definitions**

 

As used in this Agreement, the following terms shallhave the following meanings:

 

1.1.         “AcquisitionCo” has the meaningset forth in the Recitals.

 

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

 

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

 

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

 

1.5.         **“**AdministrativeAgent” means Bank of America, N.A. in its capacity as administrative agentunder the Bank of America Facilities.

 

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

 

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

 

1.8.         “Agreement” has the meaning setforth in the Preamble.

 

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

 

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

 

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

 

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

 

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

 

3

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

 

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

 

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

 

1.16.       “Blocker” has the meaning set forthin the Recitals.

 

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

 

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

 

1.19.       “Blocker Option” has the meaningset forth in the Recitals.

 

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

 

1.21.       “Blocker Units” has the meaningset forth in the Recitals.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.31.       “Cash Collateral Account” meansthe “Cash Collateral Accounts” established pursuant to the Bank of AmericaFacilities.

 

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

 

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

 

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

 

1.35.       “CCR Units” has the meaning setforth in the Recitals.

 

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

 

1.37.       “Closing” has the meaning setforth in Article III.

 

1.38.       “Closing Date” means the date onwhich the Closing occurs.

 

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

 

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

 

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

 

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

 

5

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

 

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

 

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

 

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

 

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

 

1.48.       “Construction Reserve Account” meansthe “Construction Reserve Account” established pursuant to the Cash Collateraland Disbursement Agreement.

 

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

 

1.50.       “Crown One” has the meaning setforth in the Preamble.

 

1.51.       “Crown Two” has the meaning setforth in the Preamble.

 

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

 

1.53.       “Debt Facilities” means the Bankof America Facilities and the Merrill Lynch Facilities or any successor orreplacement facilities thereto or any other facilities in respect ofIndebtedness of the Companies or any of them, other than debt between or amongthe Companies.

 

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

 

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

 

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

 

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

 

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

 

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

 

1.60.       “ERISA Affiliate” means, withrespect to any Person, any entity (other than such Person) that, together withsuch Person, is required to be treated as a single employer under Sections414(b), (c), (m) or (o) of the Code.

 

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

 

1.62.       “Escrow Agreement” means thatcertain Escrow Agreement by and among the Parent, the Buyers, the Sellers andthe Escrow Agent, substantially in the form of Exhibit C attachedhereto.

 

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

 

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

 

1.65.       “Excluded Opportunity” means anygaming opportunity offered to any of the Companies or their respectivedirectors or officers, including 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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the Nevada State Gaming Control Board, the ClarkCounty Liquor and Gaming Licensing Board, the City of Las Vegas and the City ofNorth Las Vegas, the Pennsylvania Gaming Control Board and the PennsylvaniaHarness Racing Commission.

 

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

 

1.79.       “Gaming Tax Amount” shall mean thedaily local share assessment accrued and unpaid through and including the daybefore Closing by WTA to North Strabane Township and other local GovernmentalEntities in the Commonwealth of Pennsylvania pursuant to Section 1403(c)(3) ofthe Pennsylvania Gaming Act and on the basis of the normal operating reportsgenerated by CCR in the ordinary course of business, less any amount (the “HoldbackTax Amount”) pursuant to which a claim may be made pursuant to the HoldbackAgreement in respect thereof.

 

1.80.       “GLCP” has the meaning set forthin the Recitals.

 

1.81.       “GLCP Purchase Agreement” meansthat certain Purchase Agreement, dated December 11, 2007, by and among theParent, Crown Two and GLCP.

 

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

 

1.83.       “GLCP Units” has the meaning setforth in the Recitals.

 

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

 

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

 

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

 

1.87.                                    “HazardousMaterials” means (a) any petroleum, petroleum products, by-products orbreakdown products, radioactive materials, asbestos-containing materials, ureaformaldehyde foam, heavy metals, polychlorinated biphenyls, lead or lead-basedpaints or materials, radon, fungus, mold, mycotoxins or other substances thatare known or suspected to have an adverse effect on human health or theenvironment, (b) any waste,chemical, pollutant, material or substance defined as toxic or hazardous orotherwise regulated or governed under any Environmental Law or (c) anythingthat is a “hazardous substance” pursuant to CERCLA or any similar EnvironmentalLaw, anything that is a “solid waste” or “hazardous waste” pursuant to RCRA orany similar Environmental Law or any “pesticide,” “pollutant,” “contaminant,” “toxicchemical” or “noise” giving rise to any liability under any Environmental Law.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.96.                                    “HSRNotification” means the notification and report forms contemplated to befiled under the HSR Act.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.104.                              “Indemnity EscrowAmount” means the amount deposited in the Indemnity Escrow Account pursuantto Section 2.2(b).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.113.                              “Liens” means allliens, assessments, governmental charges or levies, security interests, deedsof trust, pledges, charges, conditional sales contracts, mortgages orencumbrances.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.121.                              “Merrill LynchFacility” means the credit facility of CCR established pursuant to thatcertain Amended and Restated Loan Agreement, dated as of May 18, 2007, byand among CCR, WTA, Merrill Lynch Capital, a division of Merrill Lynch BusinessFinancial Services Inc., as administrative agent, and each of 

 

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

 

1.122.                              “Millennium” hasmeaning set forth in the Preamble.

 

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

 

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

 

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

 

1.126.                              “Negative PledgeApproval” means the administrative approval of the Chairman of the NevadaGaming Control Board with respect to any restrictions on transfer or agreementsnot to encumber the equity interests or securities of CCR contained in thisAgreement, and in particular, Section 7.1 hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.137.                              “Option” has themeaning set forth in Section 2.1.

 

1.138.                              “Order” means anyorder, injunction, judgment, decree, ruling, writ, or arbitration or judicialaward.

 

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

 

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

 

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

 

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

 

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

 

1.144.                            “Outside New CCR EquityOption Agreement” shall mean an option agreement providing to the Buyers anexclusive and irrevocable option during the Exercise Period and so long as thisAgreement is not terminated to purchase all but not less than all of suchOutside New CCR Equity from the Outside Equity Investor, containing reasonableand customary terms for the purchase of equity securities on an arms lengthbasis, including representations, warranties and indemnities ordinarilycontained in a securities purchase agreement for a transaction of that nature.

 

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

 

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

 

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

 

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

 

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

 

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

 

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in the March Pro Formas, provided that such title mattersreflected in the March Pro Formas shall be subject to all of theendorsements included in the March Pro Formas; (vi) any state offacts shown or which should have been shown on an existing ALTA survey coveringany of the real property of the Companies that has been delivered or madeavailable to the Buyers; (vii) all presently existing and future Liens ofwater rates, water meter charges, water frontage charges and sewer Taxes, rentsand charges, if any, provided that such items are not due and payable; (viii) anyother matter or thing affecting title to the Real Property that the Buyersshall have expressly agreed in writing to waive; (ix) Liens disclosed on Schedule1.201 of the Sellers Disclosure Schedules; (x) the dedication ofapproximately 2.242 acres of the Meadows Property to North Strabane Township,as set forth in that certain Agreement of Dedication entered into as of December 29,2008, by and between North Strabane Township and CCR Pennsylvania Racing, Inc.,or (xi) any other Liens (excluding any Liens for Indebtedness) that have beenincurred or suffered in the ordinary course of business consistent with pastpractice and are not, individually or in the aggregate, material to theCompanies.

 

1.151.                              “Person” means anyindividual, corporation (including any non-profit corporation), general orlimited partnership, limited liability company, Governmental Entity, jointventure, estate, trust, association, organization or other entity of any kindor nature.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.166.                              “Releasor” meanseither the Sellers or the Buyers.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.181.                              “Series A2Preferred Units” has the meaning set forth in the Recitals.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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1.189.                              “Tax Amount”means, with respect to any period, an amount equal to (i) the lowestaggregate amount of distributions to the Tax Recipients (based on pro ratadistributions to such Tax Recipients) such that each Tax Recipient receives anamount sufficient to equal (x) the amount of taxable income allocated tosuch Tax Recipient in respect of such period (taking into account any Code §704(c) items and annualizing the estimated taxable income (excludingextraordinary items, which shall be taken into account separately) fordistributions with respect to periods of less than a fiscal year), multipliedby (y) the highest maximum combined marginal federal, state and localincome tax rates to which any Tax Recipient may be subject (taking into accountthe deductibility of state income tax for federal income tax purposes), plus (ii) anadditional amount (distributed to Tax Recipients pursuant to the operatingagreement of CCR) such that, after giving effect to distributions of suchadditional amount, each Tax Recipient will satisfy the safe harbor forestimated tax payments based on prior year tax liability under Code §§ 6654 or6655 (and analogous state or local provisions) assuming that each Tax Recipient’sonly income was from CCR.

 

1.190.                              “Tax Authority” meansany Governmental Entity or any subdivision, agency, commission or authoritythereof, or any quasi-governmental or private body having jurisdiction over theassessment, determination, collection or imposition of any Tax.

 

1.191.                              “Tax Benefit”means the sum of the amount by which the actual Tax Liability (after givingeffect to any alternative minimum or similar Tax) of an Indemnified Party tothe appropriate Tax Authority is reduced by the payment of the Liability uponwhich the claim for indemnity (or other claim) is based (including by or as aresult of a deduction, entitlement to refund, or credit) plus any interest (onan after-Tax basis) from such Tax Authority relating to such Tax Liability andtaking into account the Tax treatment of the receipt of indemnificationpayments. Where a Tax Benefit may be realized that may result in the reductionof a payment to the Indemnified Party, the Indemnified Party will as promptlyas practicable take or cause Indemnified Party’s Affiliates to take suchreasonable or appropriate steps (including the filing of an amended Tax Returnor Claim for refund) to obtain at the earliest possible time any suchreasonably available Tax Benefit.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.199.                              “Taxes” means alltaxes, assessments, charges, duties, fees, levies, imposts or othergovernmental charges, including Income Taxes, all federal, state, local,municipal, county, foreign and other franchise, profits, capital gains, capitalstock, capital structure, transfer, gross receipt, sales, use, transfer,service, occupation, ad valorem, property, excise, severance, windfall profits,premium, stamp, license, payroll, employment, social security, unemployment,disability, environmental (including taxes under Code Section 59A),alternative minimum, add-on, value-added, withholding and other taxes of anykind whatsoever (whether payable directly or by withholding and whether or notrequiring the filing of a Tax Return), and all estimated taxes, deficiencyassessments, additions to tax, and additional amounts imposed by anygovernmental authority (domestic or foreign) with respect to a Tax, andpenalties and interest thereon.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

** **

**ARTICLE 2**

 

**Option**

 

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

 

2.2.                              Purchase Price UponExercise of the Option.

###  

### (a)                                  Thepurchase price (the “Purchase Price”) payable upon exercise of theOption shall be an amount in cash equal to the following:

####  

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

####  

#### (ii)                               decreasedby the Remaining Accrued Liabilities, if any;

####  

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

####  

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

###  

### (b)                                 CashAmounts.

####  

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

 

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####  

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

#####  

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

#####  

##### (B)                                anaggregate amount (the “Buyer Loan Payment Amount”) equal to the LoanPayoff Amount, less the Company Loan Payment Amount, payable by wire transferin immediately available funds to the lenders under the Debt Facilities;

#####  

##### (C)                                anamount (the “Stay Bonus Payoff Amount”) equal to the aggregate amountrequired to satisfy in full all Stay Bonuses outstanding as of the ClosingDate, if any, payable by wire transfer in immediately available funds to anescrow account and to be held and distributed pursuant to the Escrow Agreement;and

#####  

##### (D)                               anamount to each Seller equal to the product of (i) the Purchase Price, lessthe Indemnity Escrow Amount, less the Buyer Loan Payment Amount, less the StayBonus Payoff Amount, multiplied by (ii) the Purchase Price percentage setforth on Exhibit D hereto for each Seller, by wire transfer ofimmediately available funds to such account or accounts designated in writingat least three (3) Business Days prior to the Closing Date, by suchSeller.

####  

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

####  

#### (iv)                              CCRagrees that “Remaining Accrued Liabilities” shall be equal to the totalof the Rampart Amount and the Gaming Tax Amount as of the date immediatelypreceding the Closing Date; provided that, in the event that the Cash Log as ofsuch date reflects amounts in the line items “Cash in Bank” and “Investments”and such amounts 

 

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####  

#### have not otherwise been appliedto the Company Loan Payment Amount, then the Sellers may elect to have all orany portion of the “Cash in Bank” and “Investments” amounts retained by CCR (orthe applicable Subsidiary thereof) on the Closing Date for the benefit of theParent and the Buyers, in which event, for purposes of determining the PurchasePrice, the Remaining Accrued Liabilities shall be reduced by the aggregateamount so retained by CCR (or the applicable Subsidiary thereof).

###  

### (c)                                  ClosingStatement and Cash Log.  On theClosing Date, CCR shall deliver to the Parent and the Buyers (i) a closingstatement certified by the Chief Financial Officer of CCR (the “ClosingStatement”), setting forth a reasonably detailed calculation of the CompanyLoan Payment Amount, the Buyer Loan Payment Amount, the Stay Bonus PayoffAmount and the Remaining Accrued Liabilities, and (ii) the Cash Log as ofsuch date, together with bank statements or other reasonable supportingdocumentation in respect of the line items “Cash in Bank” and “Investments”.  In connection with the preparation of the ClosingStatement and the Cash Log, CCR shall permit employees of the Parent or anentity in the gaming business related to the Parent to observe and review thedetermination of Company Cash and Remaining Accrued Liabilities, including thepreparation of the operating reports used for determining the Rampart Amountand the Gaming Tax Amount.

 

2.3.                              Exercise of the Option.

 

### (a)                                  TheOption is exercisable at the election of the Buyers in their sole and absolutediscretion at any time during the period following the date hereof and prior to12:01 a.m., local time, on the first day immediately following the secondanniversary of the date hereof (such period is hereinafter referred to as the “ExercisePeriod”).  The Option may only beexercised a single time during the Exercise Period.

###  

### (b)                                 Ifthe Buyers desire to elect to exercise the Option, the Buyers shall deliver awritten revocable notice (the “Conditional Exercise Notice”) to CCR andthe Sellers of the Buyers’ intention to exercise the Option.  If, after review of the Supplemental SellersDisclosure Schedules, if any, delivered in accordance with Section 7.5,the Buyers elect to exercise the Option, the Buyers shall deliver irrevocablewritten notice (the “Final Exercise Notice”) to CCR and the Sellerswithin thirty (30) days of the delivery of the Supplemental DisclosureSchedules by CCR and the Sellers in accordance with Section 7.5,confirming the Buyers’ exercise of the Option. Subject to Section 7.5(c), if the Buyers deliver the FinalExercise Notice, the closing of the Option and the other transactionscontemplated by this Agreement shall occur in accordance with Article 3.

 

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

 

2.4.                              Sellers’ ClosingDeliveries.  At the Closing, theSellers shall deliver, or cause to be delivered, to the Buyers each of thefollowing (in addition to any other documents required to be delivered to theBuyers by or on behalf of the Sellers pursuant to any other provisions of thisAgreement):

 

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### (a)                                  acertificate duly executed by each of the Sellers certifying to the satisfactionof the conditions in Section 8.2(a) and Section 8.2(b);

 

### (b)                                 theClosing Statement;

###  

### (c)                                  theCash Log dated as of the Closing Date, as certified by the Chief FinancialOfficer of CCR;

###  

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

###  

### (e)                                  thePayoff and Release of Liens as contemplated by Section 7.21;

###  

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

###  

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

###  

### (h)                                 theFIRPTA Certificates required by Section 7.20;

###  

### (i)                                     theopinions of Sellers’ counsels, in substantially the form set forth in Exhibit Iattached hereto, with such further changes as may be reasonably satisfactory tothe Buyers;

###  

### (j)                                     suchinstruments and documents, including affidavits and indemnity agreements, asare required to cause the Title Company to issue full equity transfernon-imputation endorsements in the applicable forms attached hereto as Exhibit Ofor all of the Companies’ title insurance policies, including the new titleinsurance policies to be issued as contemplated by the Title Commitments;

###  

### (k)                                  theEscrow Agreement (and any additional documents or instructions as the EscrowAgent may reasonably require);

###  

### (l)                                     certificatesrepresenting the Millennium Units; and

###  

### (m)                               thebooks and records of the Companies, Blocker and AcquisitionCo, including anycertificates with respect to any stock or units of the Companies, Blocker andAcquisitionCo.

 

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

 

25

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

###  

### (a)                                  anamount equal to the Purchase Price (as calculated pursuant to Section 2.2(a));

###  

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

###  

### (c)                                  theReleases;

###  

### (d)                                 theAssignment Documents duly executed by the applicable Buyer;

###  

### (e)                                  evidenceof the Gaming Approvals reasonably satisfactory to CCR and the Sellers; and

###  

### (f)                                    theEscrow Agreement (and any additional documents or instructions as the EscrowAgent may reasonably require).

2.6.                              Intentionally Omitted.

 

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

 

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(30) daysimmediately following delivery of the Hot Asset Allocation Notice ofDisagreement, the Buyers and Millennium shall seek in good faith to resolve inwriting any differences which they may have with respect to any matterspecified in the Hot Asset Allocation Notice of Disagreement.  Within ten (10) Business Days after theend of such thirty (30) day period, or such longer period as may be mutuallyagreed in writing, the Buyers, on the one hand, and Millennium, on the otherhand, shall submit for review and resolution by an independent accounting firmjointly selected by the Buyers and Millennium (the “Allocation AccountingFirm”) any and all matters which remain in dispute and relate solely tomatters included in the Hot Asset Allocation Notice of Disagreement.  The Allocation Accounting Firm shall bedirected to make a final determination within thirty (30) days of the deadlinefor submissions as set forth in the preceding sentence with respect to theproper allocation of the disputed items which determination shall be final, conclusiveand binding on the parties.  If theBuyers and Millennium are unable to agree on an independent accounting firm,then each shall pick an independent accounting firm and the two accountingfirms shall choose the accounting firm to serve as the “Allocation AccountingFirm” hereunder.  The fees anddisbursements of the Allocation Accounting Firm shall be shared equally by theBuyers, on the one hand, and Millennium, on the other hand.  Each of the Buyers and Millennium agrees thatit will not take any position with any Tax Authority or on any Tax Returns thatis contrary to the final Hot Asset Allocation.

** **

**ARTICLE 3**

 

**Closing**

 

The closing of the sale and purchase of the MillenniumUnits and the HoldCo Units pursuant to this Option and the other transactionscontemplated by this Agreement (the “Closing”) shall take place at theoffices of Munger, Tolles & Olson LLP, Los Angeles, California at10:00 a.m. local time (or such other time, place and date as the Buyersand the Sellers may mutually agree) as soon as practicable, but no later thantwo (2) Business Days after the first date on which all the conditions toClosing (other than those conditions that by their nature are to be satisfiedat the Closing, but subject to the fulfillment or waiver of those conditions)shall have been satisfied or waived.

** **

**ARTICLE 4**

 

**Representationsand Warranties Regarding Sellers**

 

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

 

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for informationalpurposes only and is not intended and does not create any liability for theSellers for any misrepresentation or misstatements on such date.

 

4.1.                              Representations ofMillennium.  Millennium herebyrepresents and warrants to the Parent and the Buyers as follows:  Millennium is the owner of all right, titleand interest (record and beneficial) in and to the number and type of CCR Unitsset forth opposite its name on Exhibit A, free and clear of anyLiens.  The delivery to Crown One of theMillennium Units hereunder will transfer to Crown One good and valid title toall the Millennium Units, free and clear of any Liens (other than Liens createdby Crown One).  Other than the MillenniumUnits listed opposite Millennium’s name on Exhibit A, Millenniumowns no right, title or interest (record or beneficial) to any other CCR Unitsor any other equity interests of CCR or right of any kind to have any suchequity interests issued.  No Person hasany agreement or option or any right or privilege (whether pre-emptive orcontractual) capable of becoming an agreement or option for the acquisition ofthe Millennium Units.  Except as providedin this Agreement, Millennium and, to the knowledge of Millennium, each othermember, partner or other owner of CCR owns no right, title or interest (recordor beneficial) to any other equity interests of CCR or right of any kind tohave any such equity interests.

 

4.2.                              Representations ofHoldCo.  HoldCo hereby represents andwarrants to the Parent and the Buyers as follows:

###  

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

###  

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

 

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###  

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

###  

### (d)                                 NeitherBlocker nor AcquisitionCo has any Subsidiaries or own any stock of, or anyequity participation in, any Person, except as set forth on Exhibit Ato this Agreement.  The equity interestsof each of Blocker and AcquisitionCo as set forth on Exhibit A constituteall of the issued and outstanding equity interests of each of Blocker andAcquisitionCo, respectively.  All of theissued and outstanding equity interests of each of Blocker and AcquisitionCohave been duly authorized and are validly issued, fully paid (if applicable)and nonassessable and none of them has been issued in violation of preemptiveor similar rights.  There are no declaredor accrued but unpaid dividends or distributions with regard to any issued andoutstanding equity interests of Blocker or AcquisitionCo.  There are no equity interests in Blocker orAcquisitionCo reserved for issuance or subject to preemptive rights or anyoutstanding subscriptions, options, warrants, calls, rights, agreements,obligations, convertible, exercisable or exchangeable securities, or othercommitments, contingent or otherwise, relating to membership interests of, orother equity or voting interests in, Blocker or AcquisitionCo.  There are no outstanding or authorizedmembership interests, stock appreciation, phantom stock, profit participation,or similar rights for which Blocker or AcquisitionCo has any Liability, andthere are no issued and outstanding bonds, indentures, notes or otherIndebtedness having the right to vote (or convertible into, exchangeable orexercisable for, or evidencing the right to subscribe for or acquire securitiesthat have the right to vote) on any matters on which owners or members ofBlocker or AcquisitionCo may vote. There are no shareholder agreements,proxies, voting trusts or other agreements or understandings to which Blockeror AcquisitionCo is a party or by which Blocker or AcquisitionCo is boundrelating to the voting or registration of any equity interests of Blocker orAcquisitionCo or preemptive rights with respect thereto.

###  

### (e)                                  NeitherAcquisitionCo nor Blocker has conducted any business or operations since itsdate of formation other than actions taken in connection with holding theBlocker Units, the AcquisitionCo Units, and interests in the Excluded HoldCoSubsidiaries, and neither AcquisitionCo nor Blocker has any Liabilities, otherthan statutory obligations or obligations under their respective GoverningDocuments as in effect on the date hereof, accurate and complete copies ofwhich have been provided or made available to the Buyers.

###  

### (f)                                    Eachof AcquisitionCo and Blocker has duly filed with the appropriate Tax Authorityall Tax Returns required to be filed (or has timely and properly filed validextensions of time with respect to the filing thereof), and each such TaxReturn was complete and accurate in all material respects.

####  

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

 

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####  

#### which adequate reserves (inaccordance with GAAP) have been maintained. All Taxes that AcquisitionCo and Blocker have been required to collector withhold have been duly collected or withheld, and have been, to the extentrequired when due, duly paid to the proper Tax Authority and each Company hascomplied with all material information reporting and record keepingrequirements related to withholding.

####  

#### (ii)           Nodeficiencies for Taxes of AcquisitionCo or Blocker have been claimed, proposedor assessed by any Tax Authority in writing. There are no pending or, to the knowledge of HoldCo, threatened audits,suits, proceedings, actions or claims for or relating to any Liability inrespect of Taxes of AcquisitionCo or Blocker. Schedule 4.2(f) of the Sellers Disclosure Schedules containsa list of all material Tax Returns of AcquisitionCo and Blocker that have beenaudited or are currently under audit and describes any deficiencies or otheramounts that have been paid or are currently being contested. There are nopending claims for refund of any Tax of either AcquisitionCo or Blocker.

####  

#### (iii)          Thereare no Liens for Taxes (other than Permitted Exceptions) upon the assets ofAcquisitionCo or Blocker.

####  

#### (iv)          Noneof the assets of AcquisitionCo or Blocker (i) is property that is requiredto be treated as being owned by any other person or (ii) is treated astax-exempt bond financed property or tax-exempt use property within the meaningof Section 168 of the Code or comparable provision of state or local Taxlaw.

####  

#### (v)           NeitherAcquisitionCo nor Blocker is a party to or bound by any Tax sharing, Taxindemnity or Tax allocation agreement or other similar arrangement with anyother party.

####  

#### (vi)          Atall times since its formation, Blocker has been classified for U.S. federal IncomeTax purposes as a corporation.  At alltimes since its formation, AcquisitionCo has been classified for U.S. federalincome Tax purposes as an entity disregarded as separate from its owner withinthe meaning of Treasury Regulation Section 301.7701-2(c)(2)(i).

####  

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

####  

#### (viii)        NoTax Authority in a jurisdiction in which any of AcquisitionCo or Blocker doesnot file Tax Returns has claimed in writing that 

 

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####  

#### AcquisitionCo or Blocker is ormay be required to file Tax Returns in, or is or may be subject to Tax by, thatjurisdiction.

####  

#### (ix)           Thereare no outstanding waivers, extensions or comparable consents regarding theapplication of the statute of limitations with respect to any Tax or Tax Returnof AcquisitionCo or Blocker.

####  

#### (x)            NeitherAcquisitionCo nor Blocker has distributed the stock of another entity or hadits stock distributed by another entity in a transaction that was purported orintended to be governed in whole or in part by Sections 355 or 361 of the Code.

####  

#### (xi)           NeitherAcquisitionCo nor Blocker is the subject of or bound by any private letterruling, technical advice memorandum or similar ruling, memorandum of agreementwith any Tax Authority.

####  

#### (xii)          NeitherAcquisitionCo nor Blocker will be required to include any item of income in, orexclude any item of deduction from, taxable income for any taxable period (orportion thereof) ending after the Closing Date as a result of any (i) changein method of accounting under Section 481 of the Code (or anycorresponding or similar provision of state, local or foreign tax law) for ataxable period ending on or prior to the Closing Date; (ii) “**closingagreement**”****as described in Section 7121 of the Code (or anycorresponding or similar provision of state, local or foreign tax law) executedon or prior to the Closing Date; (iii) deferred intercompany gain orexcess loss account described in Treasury Regulations under Section 1502of the Code (or any corresponding or similar provision of state, local orforeign tax law); (iv) installment sale or open transaction dispositionmade on or prior to the Closing Date; or (v) prepaid amount received on orprior to the Closing Date.

####  

#### (xiii)         NeitherAcquisitionCo nor Blocker (a) has ever been a member of an affiliated(within the meaning of Section 1504 of the Code), combined or unitarygroup of corporations  filing aconsolidated, combined or unitary Tax Return; (b) is a successor to anyother entity for Tax purposes by way of merger, liquidation or othertransaction; (c) is a party to any Tax sharing or indemnificationagreement or arrangement with any person or entity pursuant to which it wouldhave an obligation with respect to Taxes of another person or entity followingthe Closing; or (d) has liability for the Taxes of any person as a transfereeor successor or under Treasury Regulation § 1.1502-6 (or any comparableprovision of state, local or foreign law), by contract or otherwise.

####  

#### (xiv)        NeitherAcquisitionCo nor Blocker has participated or engaged in any transaction thatgave rise to (x) a registration obligation under 

 

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####  

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

####  

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

###  

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

###  

### (h)                                 Organizationand Good Standing.  Each of Blockerand AcquisitionCo (i) is duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its organization, (ii) hasall requisite power and authority to own, operate and lease its properties andto carry on its business as now conducted and (iii) is qualified totransact business and in good standing in each state or jurisdiction in which theownership of its property or conduct of its business requires suchqualification, except where the failure to so qualify or be in good standingare not reasonably likely to prohibit or materially restrict or delay itsperformance of this Agreement.

###  

### (i)                                     Consentsand Approvals.  Except for HSRNotifications, the Gaming Approvals and the Negative Pledge Approval, nonotices, reports, registrations or other filings are required to be made byBlocker or AcquisitionCo with, nor are any consents, approvals or GovernmentalAuthorizations required to be obtained by Blocker or AcquisitionCo from anyGovernmental Entity, in connection with the execution, delivery or performanceof this Agreement or the Escrow Agreement by HoldCo, except for where thefailure to make such notices, reports, registrations or other filings or toobtain such consents, approval or Governmental Authorizations, individually orin the aggregate with other such failures, are not reasonably likely toprohibit or materially restrict or delay its performance of this Agreement.

 

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### (j)                                     NoLitigation.  There are no Actionspending or, to the knowledge of HoldCo, threatened, against either Blocker orAcquisitionCo or any of their respective properties or assets, nor is there anyOrder outstanding against Blocker or AcquisitionCo or any of their respectiveproperties or assets, other than Actions or Orders, as applicable, that,individually or in the aggregate, are not reasonably likely to prohibit or materiallyrestrict or delay its performance of this Agreement.

###  

### (k)                                  NoViolations.  The execution anddelivery by HoldCo of this Agreement does not, and the consummation by HoldCoof the transactions contemplated hereby and thereby will not:

####  

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

####  

#### (ii)                                  violate,breach, conflict with, or constitute or result in a default, acceleration,termination or modification of the terms of, or entitle any party to declaresuch a default, or give rise to any right to accelerate, terminate, cancel,amend or modify the terms of or under, or the rights or obligations of Blockeror AcquisitionCo under (in each case with or without notice or lapse of time orboth), any provision of  any materialContract to which Blocker or AcquisitionCo is a party or by which any of itsproperties or assets are bound, in each case other than (A) as set forthon Schedule 4.2(k) of the Sellers Disclosure Schedules or (B) aswould not prohibit or materially restrict or delay its performance of thisAgreement;

####  

#### (iii)                               resultin the creation or imposition of any Liens with respect to any of the BlockerUnits or AcquisitionCo Units, in each case, other than (A) as set forth onSchedule 4.2(k) of the Sellers Disclosure Schedules, or (B) aswould not prohibit or materially restrict or delay its performance of thisAgreement; or

####  

#### (iv)                              assumingall notices, reports, registrations, filings, consents, approvals and otherGovernmental Authorizations contemplated by Section 4.2(i) havingbeen made or obtained, as applicable, violate, breach, contravene or conflictwith any Law or Order of any Governmental Entity applicable to Blocker orAcquisitionCo, other than such violations that would not prevent or materiallydelay the consummation of the transactions contemplated hereby.

 

4.3.                              Representations ofEach Seller.  Each Seller, severallyand not jointly, hereby represents and warrants to the Parent and the Buyers asfollows in respect of such Seller:

###  

### (a)                                  Organizationand Good Standing.  The Seller (i) isduly organized, validly existing and in good standing under the laws of thejurisdiction of its organization, (ii) has all requisite power andauthority to own, operate and lease its properties and to carry on its business

 

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###  

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

###  

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

###  

### (c)                                  Consentsand Approvals.  Except for HSRNotifications, the Gaming Approvals and the Negative Pledge Approval, nonotices, reports, registrations or other filings are required to be made by theSeller with, nor are any consents, approvals or Governmental Authorizationsrequired to be obtained by the Seller from, any Governmental Entity, inconnection with the execution, delivery or performance by such Seller of thisAgreement or the Escrow Agreement, except where the failure to make suchnotices, reports, registrations or other filings, or to obtain such consents,approvals or Governmental Authorizations, individually or in the aggregate, arenot material to the Seller’s ability to perform its obligations under thisAgreement or the Escrow Agreement and are not reasonably likely to prohibit ormaterially restrict or delay the performance by the Seller of this Agreement orthe Escrow Agreement.

###  

### (d)                                 NoLitigation.  There are no Actionspending or, to the knowledge of the Seller, threatened, against such Seller orany of its respective properties or assets, other than Actions that,individually or in the aggregate, are not material to its ability to performits obligations hereunder or under the Escrow Agreement and are not reasonablylikely to prohibit or materially restrict or delay the performance of thisAgreement or the Escrow Agreement. Seller is not subject to any Order, other than Orders that, individuallyor in the aggregate, are not material to its ability to perform its obligationshereunder or under the Escrow Agreement and are not reasonably likely toprohibit or materially restrict or delay the performance by Seller of thisAgreement the Escrow Agreement.

###  

### (e)                                  NoViolations.  The execution anddelivery of this Agreement and the Escrow Agreement by the Seller does not, andthe consummation by the Seller of the transactions contemplated hereby andthereby will not:

 

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

 

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

####  

#### (iii)                               resultin the creation or imposition of any Liens with respect to any of theMillennium Units or Holdco Units, in each case, other than (A) as setforth on Schedule 4.3(e) of the Sellers Disclosure Schedules and (B) forany such matters that, individually or in the aggregate, are not material tothe ability of the Seller to perform its material obligations hereunder orunder the Escrow Agreement and are not reasonably likely to prohibit ormaterially restrict or delay its performance of this Agreement or the EscrowAgreement;

####  

#### (iv)                              assumingall notices, reports, registrations, filings, consents, approvals and otherGovernmental Authorizations contemplated by Section 4.3 (c) havingbeen made or obtained, as applicable, violate, breach, contravene or conflictwith any Law or Order of any Governmental Entity applicable to the Seller,other than such violations that, individually or in the aggregate, are notmaterial to the ability of the Seller to perform its material obligationshereunder or under the Escrow Agreement and are not reasonably likely to prohibitor materially restrict or delay its performance of this Agreement or the EscrowAgreement; or

####  

#### (v)                                 assumingall notices, reports, registrations, filings, consents, approvals and otherGovernmental Authorizations contemplated by Section 4.3(c) havingbeen made or obtained, as applicable, violate, breach, contravene or conflictwith or result in the cancellation, modification, revocation or suspension of,any Governmental Authorization required for Seller to lawfully conduct andoperate its business in the manner it currently conducts and operates suchbusiness or to permit it to own, lease, operate and use its assets andproperties in the manner it currently owns, leases, operates and uses

 

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####  

#### them, other than (A) anyviolations, contraventions or conflicts with, or cancellations, modifications,revocations or suspensions of any such authorization that are set forth on Schedule4.3(e) of the Sellers Disclosure Schedules or (B) any violations,contraventions or conflicts with, or cancellations, modifications, revocationsor suspensions of such Governmental Authorization that, individually or in theaggregate, are not material to the ability of the Seller to perform itsmaterial obligations hereunder or the Escrow Agreement and are not reasonablylikely to prohibit or materially restrict or delay its performance of thisAgreement or the Escrow Agreement.

###  

### (f)                                    Brokersand Finders.  Except for DeutscheBank Securities Inc. and Mercanti Securities, LLC whose fees shall be paid bythe Sellers, no agent, broker, investment banker, intermediary, finder, or firmacting on behalf of the Seller is or will be entitled to any broker’s or finder’sfee or any other commission or similar fee, directly or indirectly, from suchSeller in connection with this Agreement or the Escrow Agreement or uponconsummation of the transactions contemplated hereby or thereby.

** **

**ARTICLE 5**

 

**Representationsand Warranties Regarding the Companies**

 

Except as set forth in the corresponding sections ofthe Sellers Disclosure Schedules (provided that a listing of an item in onesection of the Sellers Disclosure Schedules shall be deemed to be a listing ineach section of the Sellers Disclosure Schedules to which such item relatesonly to the extent that it is reasonably apparent from a reading of suchdisclosure that it also qualifies or applies to another section), each of theSellers and CCR, jointly and severally, hereby represent and warrant to theParent and the Buyers as follows. Except for the representations and warrantiesin the first sentence of Section 5.1(a), Section 5.1(b),Section 5.5(a), and Section 5.5(d) (the “CompanyExecution Reps”), the making of the following representations andwarranties on the date of this Agreement is not intended and does not createany liability for the Sellers for any misrepresentation or misstatements onsuch date. The making of these representations and warranties on the date ofthis Agreement is solely for informational purposes and is not intended anddoes not create any liability for the Sellers or CCR for any misrepresentationor misstatements on such date.

 

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

 

### (a)                                  EachCompany (a) is duly organized, validly existing and in good standing underthe laws of its jurisdiction of organization, (b) has all requisite powerand authority to own, operate and lease its properties and to carry on itsbusiness as now conducted, and (c) is duly qualified or licensed totransact business and is in good standing in each state or jurisdiction inwhich the ownership, operation or leasing of its property or conduct of itsbusiness requires such qualification or license, except where the failure to soqualify or be licensed would not have a 

 

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###  

### MaterialAdverse Effect.  Accurate and completecopies of all of the organizational documents of each of the Companies havebeen provided to the Buyers.

###  

### (b)                                 CCRhas the power and authority to execute, deliver, and perform its obligationsunder this Agreement the Escrow Agreement, and to consummate the transactionscontemplated hereby and thereby.  Theexecution, delivery, and performance of this Agreement the Escrow Agreement, andthe consummation of the transactions contemplated hereby and thereby, have beenduly and validly authorized by all necessary action on the part of CCR, and noother company action on the part of CCR or any of its members or shareholdersis necessary to authorize the execution, delivery and performance of thisAgreement and the Escrow Agreement and the consummation of the transactionscontemplated hereby and thereby.  ThisAgreement and the Escrow Agreement, when duly executed by the other partieshereto and thereto, will constitute legally valid and binding obligations ofCCR enforceable against it in accordance with their respective terms, subjectto applicable bankruptcy, insolvency, reorganization, moratorium and similarlaws affecting creditors’ rights and remedies generally and to general principlesof equity.

 

5.2.                              Capitalization.

 

### (a)                                  Exhibit Ato this Agreement contains a complete and accurate description of the ownershipstructure of the Companies (including the identity and percentage ownership ofeach Company and each other member, partner or other owner).  The Companies do not have any otherSubsidiaries or own any stock of, or any equity participation in, any Person,except as set forth on Exhibit A to this Agreement.  Each Company and each other member, partneror other owner, as applicable, is the owner of all right, title and interest(record and beneficial) in and to the issued and outstanding equity interestsof the Companies as set forth on Exhibit A to this Agreement, freeand clear of all Liens, other than Permitted Exceptions.  No Company and no other member, partner orother owner, as applicable, owns any right, title or interest (record orbeneficial) to any other equity interests of the Companies.  The equity interests of each Company as setforth on Exhibit A to this Agreement constitute all of the issuedand outstanding equity interests of such Company.  All of the issued and outstanding equityinterests of each Company have been duly authorized and are validly issued,fully paid (if applicable) and nonassessable (if applicable) and none of themhas been issued in violation of preemptive or similar rights.  There are no declared or accrued but unpaiddividends or distributions with regard to any issued and outstanding equityinterests of any Company, other than distributions by CCR to the Sellers forpayment of Taxes in accordance with the Governing Documents of CCR.

###  

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

 

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###  

### bound relatingto the voting or registration of any equity interests of a Company orpreemptive rights with respect thereto.

 

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

 

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

 

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

###  

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

###  

### (b)                                 violate,breach, conflict with, or constitute or result in a default, acceleration,termination or modification of the terms of, or entitle any party to declaresuch a default, or give rise to any right to accelerate, terminate, cancel,amend or modify the material terms of or under, or the material rights ormaterial obligations of any of the Companies under (in each case with orwithout notice or lapse of time or both) or require the consent or approval ofany other contracting Person under, any Material Contract to which any Companyis a party;

###  

### (c)                                  resultin the creation or imposition of any Liens with respect to any of the assets orproperties of any Company, in each case, other than (i) PermittedExceptions and (ii) as set forth on Schedule 5.5(c) of theSellers Disclosure Schedules;

###  

### (d)                                 assumingall notices, reports, registrations, filings, consents, approvals and otherGovernmental Authorizations contemplated by Section 5.4 having beenmade or obtained, as applicable, violate, breach, contravene or conflict withany Law or Order of any Governmental Entity applicable to any Company, otherthan such violations that would be immaterial or are not reasonably likely toprohibit or materially restrict or delay the consummation of the transactionscontemplated hereby or CCR’s ability to perform its material obligationshereunder; or

###  

### (e)                                  assumingall notices, reports, registrations, filings, consents, approvals and otherGovernmental Authorizations contemplated by Section 5.4 having beenmade or obtained, as applicable, violate, breach, contravene or conflict withor result in the cancellation, 

 

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###  

### modification,revocation or suspension of, any Governmental Authorization required for anyCompany to lawfully conduct and operate its businesses in the manner itcurrently conducts and operates such businesses or to permit it to own, lease,operate and use its properties and assets materially in the manner it currentlyowns, leases, operates and uses them, other than (x) any violations,contraventions or conflicts with, or cancellations, modifications, revocationsor suspensions of any such Governmental Authorization as set forth on Schedule5.5(e) of the Sellers Disclosure Schedules and (y) anyviolations, contraventions or conflicts with, or cancellations, modifications,revocations or suspensions of any such Governmental Authorization that are notreasonably likely to prohibit or materially restrict or delay the consummationof the transactions contemplated hereby or CCR’s ability to perform itsmaterial obligations hereunder.

 

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

###  

### (a)                                  anyContract (other than any Governing Document of such Company) that containsrestrictions with respect to the payment of dividends or distributions inrespect of membership interests or other equity interests of such Company;

###  

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

###  

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

###  

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

###  

### (e)                                  anyContract that restrains or limits the ability of such Company to compete in theBusiness or to operate in any business equivalent to the Business in anygeographic territory or industry;

###  

### (f)                                    anyContract with any Sellers or any of their respective Affiliates or RelatedParties;

###  

### (g)                                 anyContract for the employment, compensation, consulting, retirement, severance orsimilar arrangement of any current employee or consultant providing for aggregateannual payments or benefits in excess of $250,000;

###  

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

 

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

###  

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

###  

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

###  

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

###  

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

 

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

 

5.7.          FinancialInformation.  Attached to Schedule5.7 of the Sellers Disclosure Schedules are (a) audited consolidatedbalance sheets for the Companies as of December 31, 2006 and 2007 andaudited consolidated statements of operations for the fiscal years ended December 31,2006, 2007 and 2008 (such financial statements, including the footnotescontained therein, the “Audited Financial Statements”), and the reportsthereon of Piercy Bowler Taylor & Kern, independent certified publicaccountants, and (b) an unaudited consolidated balance sheet for theCompanies as of September 30, 2008 and an unaudited consolidated statementof operations for the year ended September 30, 2008 (such financialstatements, including the footnotes contained therein, are referred to as the “InterimFinancial Statements”, and, together with the Audited Financial Statements,the “Financial Statements”).  TheFinancial Statements have been prepared in accordance with GAAP consistentlyapplied throughout the periods covered by each such statement, are consistentwith the books and records of the Companies, and fairly present, in allmaterial respects, the consolidated financial condition of the Companies as ofthe respective dates and the results of operations and cash flows of theCompanies for the respective periods then ended, as applicable.

 

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5.8.          Liabilities.  The Companies have no Liabilities of anykind, character or nature whatsoever, contingent or otherwise required by GAAPto be set forth on a consolidated balance sheet or in the notes thereto, otherthan (i) Liabilities set forth or reserved against in the Financial Statements,(ii) Liabilities which have arisen since the date of the FinancialStatements in the ordinary course of business consistent with past practice, (iii) Liabilitiesunder the Holdback Agreement, and (iv) Liabilities disclosed on Schedule5.8 of the Sellers Disclosure Schedules.

 

5.9.          LaborMatters.

 

### (a)           With respect to theCompanies: (i) there are no trade unions, council of trade unions,employee bargaining agencies or affiliated bargaining agents representing,purporting to represent or, to the knowledge of the Sellers, attempting torepresent any employees of any of the Companies by way of certification,interim certification, voluntary recognition, or succession rights, or haveapplied or, to the knowledge of the Sellers, threatened to apply, to becertified as the bargaining agent of any employees of any of the Companies; (ii) tothe knowledge of the Sellers, there has been no such attempt since January 1,2005, and there are no threatened or pending union organizing activitiesinvolving any employees of any of the Companies; (iii) no Company is aparty to any labor contract or collective bargaining agreement with any laborunion or labor organization with respect to employees of any of the Companies; (iv) noCompany is currently negotiating any labor or collective bargaining agreementin respect of employees of any of the Companies; (v) no Company hasbreached or otherwise failed to comply in any material respect with theprovisions of any collective bargaining or union contract; and (vi) since January 1,2005, there has not occurred or, to the knowledge of the Sellers, beenthreatened, any strike, slowdown, picketing, work stoppage, lockout, concertedrefusal to work overtime, claim of unfair labor practice or other similar laboractivity against any of the Companies that would materially disrupt the conductof the Business.

 

### (b)           The Companies are incompliance in all material respects with all Laws respecting employment andemployment practices, including all Laws respecting terms and conditions ofemployment, health and safety, wages and hours, immigration, employmentdiscrimination, disability rights or benefits, equal opportunity, plantclosures and layoffs, affirmation action, workers’ compensation, laborrelations and unemployment insurance, and there are no material Actions,pending or, to the knowledge of the Sellers, threatened against any Company, byor on behalf of any current or former employee or any class of the foregoing,relating to any of the foregoing applicable laws and regulations, or allegingbreach of any express or implied contract of employment, wrongful terminationof employment, or alleging any other discriminatory, wrongful or tortiousconduct in connection with the employment relationship.  From January 1, 2005 to the date of thisAgreement, no Company has received any written notice of the intent of theEqual Employment Opportunity Commission, the National Labor Relations Board,the Department of Labor or any other Governmental Entity responsible for theenforcement of labor or employment laws to conduct an investigation withrespect to any Company, and no such investigation is in progress.

 

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

 

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

 

### (d)           To the knowledge ofthe Sellers, the Companies have, since January 1, 2005, properlyclassified, under applicable law, each of its employees as employees, and eachof its independent contractors as independent contractors, and have treatedeach person classified by it as an employee or independent contractorconsistently with such status.  There isno proceeding pending or, to the knowledge of the Sellers, threatened againstany Company challenging the classification of any person as an employee or anindependent contractor, including any claim for unpaid benefits, for or onbehalf of, any such person.

 

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

 

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

 

5.10.        EmployeeBenefit Matters.

 

### (a)           “Company BenefitPlans” means all employee benefit and compensation plans, programs,agreements and arrangements, including all “employee benefit plans” (within themeaning of Section 3(3) of ERISA), all employment or consultingagreements, all retirement, profit sharing, savings, pension, deferredcompensation, change in control and retention plans, all health, medical,vision, dental, severance, insurance, disability and other employee welfareplans and all incentive, bonus, stock option or other equity-basedcompensation, stock purchase, vacation, fringe benefit and other plans in eachcase, whether oral or written, funded or unfunded, or insured or self-insured,that are maintained, sponsored, contributed to or required to be contributedto, by any of the Companies or by any ERISA Affiliate of the Companies or towhich any of the Companies or any ERISA Affiliate of any of the Companies hasor may have had any material liability (contingent or otherwise), in each casefor or to any current or former employees, directors, officers or consultantsof any of the Companies.  Schedule5.10(a) of the Sellers Disclosure Schedule lists all Company BenefitPlans that currently are maintained, sponsored, contributed to, or required tobe contributed to, by any of the Companies or by any ERISA Affiliate of theCompanies, or in which any of the Companies participates or its futureparticipation has been announced.

 

### (b)           With respect to theCompanies:  (i) no Company or anyERISA Affiliate of such Company sponsors, maintains or contributes to, or hasat any time sponsored, maintained or contributed to, or has participated in orits future participation has been announced in, any 

 

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

 

### (c)           With respect to eachCompany Benefit Plan, the Sellers have made available the Buyers copies of (i) allplan documents (including all amendments and attachments thereto); (ii) allrelated trust agreements, insurance contracts and other funding arrangementsand all amendments thereto, as in effect as of the date hereof; (iii) thetwo most recent annual information filings (Form 5500) and annual reports;(iv) the most recent determination letter or opinion letter from theInternal Revenue Service; and (v) the most recent summary plandescriptions, as applicable.

 

### (d)           As to each of the CompanyBenefit Plans, each of the Companies has complied, in all material respects,with all applicable Laws in the administration thereof, including theprovisions of ERISA and the Code, and each Company Benefit Plan complies in allmaterial respects with its terms and all applicable Laws.  All material contributions required to bemade under the terms of each Company Benefit Plan have been timely made or, ifnot yet due, have been properly reflected or incorporated by reference in theFinancial Statements.  Each CompanyBenefit Plan which is intended to qualify under Section 401(a), Section 401(k),Section 401(m) or Section 4975(e)(7) of the Code and eachtrust established with any Company Benefit Plan which is intended to qualifyunder Section 501(a) of the Code has received a favorabledetermination letter or opinion letter, as applicable, from the InternalRevenue Service as to its qualified status, and to the knowledge of theSellers, no fact or event has occurred that would reasonably be expected to affectadversely the qualified status of any such Company Benefit Plan.

 

### (e)           There has been noprohibited transaction (within the meaning of Section 406 of ERISA or Section 4975of the Code) with respect to any Company Benefit Plan, other than a transactionthat is exempt under a statutory or administrative exemption, with respect toany Company Benefit Plan that is subject to ERISA or the Code that wouldreasonably be expected to result in Liability to any of the Companies.  With respect to each Company Benefit Plan,all Tax, annual reporting and other governmental filings required by ERISA andthe Code have been timely filed with the appropriate Governmental Entity and,to the knowledge of the Sellers, all notices and disclosures have been timelyprovided to participants.

 

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

 

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### by theInternal Revenue Service or the United States Department of Labor (other thanroutine benefits claims).

 

### (g)           Except as requiredby Law, no Company Benefit Plan provides any medical, disability or lifeinsurance benefits for retirees or any such post-employment benefits to anyPerson, except for continuation obligations under the Consolidated OmnibusBudget Reconciliation Act of 1985, as amended from time to time, and theregulations (including the proposed regulations) thereunder (“COBRA”).

 

### (h)           Neither theexecution and delivery of this Agreement nor the consummation or performance ofthe transactions contemplated hereby (either alone or in conjunction with anyother event, including a termination of employment) will (i) result in anypayment (including any bonus, severance, unemployment compensation, deferredcompensation, forgiveness of Indebtedness or golden parachute payment) becomingdue to any current or former employee, officer, director or consultant underany Company Benefit Plan; (ii) increase in any benefit otherwise payableunder any Company Benefit Plan; (iii) result in the acceleration orcreation of any rights of any Person to benefits under any Company Benefit Plan(including the acceleration of the vesting or exercisability of any stockoptions or restricted stock or the acceleration or creation of any rights underany Company Benefit Plan); (iv) result in any obligation to fund any trustor other arrangement with respect to compensation or benefits under a CompanyBenefit Plan; or (v) result in any payment or benefit that will fail to bedeductible under Section 280G of the Code.

 

5.11.        Taxes.

 

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

 

### (b)           Each Company hastimely paid all Taxes due and owing by it, except with respect to Taxes thatare being contested in good faith and have been adequately provided for in theInterim Financial Statements in accordance with GAAP. All Taxes that theCompanies have been required to collect or withhold have been duly collected orwithheld and, to the extent required when due, have been duly paid to theproper Tax Authority and each Company has complied with all materialinformation reporting and record keeping requirements related to withholding.

 

### (c)           No materialdeficiencies for Taxes of the Companies have been claimed, proposed or assessedby any Tax Authority in writing.  Thereare no pending or, to the knowledge of the Sellers and CCR, threatened materialaudits, suits, proceedings, actions or claims for or relating to any Liabilityin respect of Taxes of the Companies.  Schedule5.11 of the Sellers Disclosure Schedules contains a list of all materialTax Returns of the Companies that have been audited or are currently underaudit and describes any deficiencies or other amounts that were paid or arecurrently being contested. There are no pending claims for refund of any Tax ofany of the Companies.

 

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

 

### (e)           At all times sincetheir formation, each Company has been classified for U.S. federal income Taxpurposes either as a partnership or as an entity disregarded as separate fromits owner within the meaning of Treasury Regulation Section 301.7701-2(c)(2)(i) exceptfor those Subsidiaries set forth on Schedule 5.11 of the SellersDisclosure Schedules hereto, which have been classified as corporations forsuch purposes.

###  

### (f)            Each of theCompanies has made available to the Buyers true and correct copies of the TaxReturns listed on Schedule 5.11 of the Sellers Disclosure Schedules.

###  

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

###  

### (h)           There are nooutstanding waivers, extensions or comparable consents regarding the applicationof the statute of limitations with respect to any Tax or Tax Return of anyCompany.

###  

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

###  

### (j)            None of theCompanies is the subject of or bound by any private letter ruling, technicaladvice memorandum or similar ruling, memorandum or agreement with any TaxAuthority.

###  

### (k)           None of theCompanies will be required to include any item of income in, or exclude anyitem of deduction from, taxable income for any taxable period (or portionthereof) ending after the Closing Date as a result of any (i) change inmethod of accounting under Section 481 of the Code (or any correspondingor similar provision of state, local or foreign tax law) for a taxable periodending on or prior to the Closing Date; (ii) “**closing agreement**”****as describedin Section 7121 of the Code (or any corresponding or similar provision ofstate, local or foreign tax law) executed on or prior to the Closing Date; (iii) deferredintercompany gain or excess loss account described in Treasury Regulationsunder Section 1502 of the Code (or any corresponding or similar provisionof state, local or foreign tax law); (iv) installment sale or opentransaction disposition made on or prior to the Closing Date; or (v) prepaidamount received on or prior to the Closing Date.

###  

### (l)            None of theCompanies (a) has ever been a member of an affiliated (within the meaningof Section 1504 of the Code), combined or unitary group ofcorporations  filing a consolidated,combined or unitary Tax Return; (b) is a successor to any other entity forTax purposes by way of merger, liquidation or other transaction; (c)  is aparty to any Tax sharing or indemnification agreement or arrangement with anyperson or entity (other than CCR or any of its subsidiaries) pursuant to whichit would have an obligation with respect to Taxes of another person or entityfollowing the Closing; or (d) has liability for the Taxes of any person(other than 

 

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

###  

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

###  

### (n)           None of theCompanies has participated or engaged in any transaction that gave rise to (x) aregistration obligation under section 6111 of the Code or the TreasuryRegulations thereunder, (y) a list maintenance obligation under section6112 of the Code or the Treasury Regulations thereunder, or (z) adisclosure obligation as a “reportable transaction” under section 6011 of theCode and the Treasury Regulations thereunder (or in each of clauses (x), (y) or(z) any corresponding or similar provision of state, local or foreign Taxlaw).

###  

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

 

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

 

5.13.        Insurance.

 

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

 

### (b)           No written notice ofcancellation or termination or any other notice or indication of intent tocancel or not to renew any insurance policy of any Company has been receivedwith respect to any such policy, and each such policy is legally valid,binding, 

 

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### enforceableand in full force and effect.  EachCompany has paid all premiums due, and has otherwise performed all of itsrespective material obligations under each such policy as and when due, exceptto the extent that the failure to duly pay the premiums or perform suchobligations is not reasonably expected to result in the loss of coverage undersuch policies.

 

### (c)           During the past fiveyears, to the knowledge of any Seller, no Company has been denied insurance forany reason with respect to any insurance policy for which it applied. NoCompany is in breach or default under any policy listed on Schedule 5.13,and to the knowledge of the Sellers, no event has occurred which, with noticeor the lapse of time or both, would constitute such a breach or default orpermit termination, revocation, modification or acceleration, under suchpolicy; and to the knowledge of any Seller, no Company has received any noticefrom the insurer disclaiming coverage or reserving rights with respect to aparticular claim or such policy in general or otherwise indicating that theinsurer is not willing or able to perform its obligations thereunder orthat the insurer disputes or intends to dispute the validity of its obligationsunder any such policy.  As of the datehereof, no policy limits for any Company have been exhausted or materiallyreduced.

 

(d)           Theproceeds under each insurance policy for any Company have not been assigned ormortgaged in favor of a third party, except in connection with the DebtFacilities.

 

5.14.        Compliancewith Laws.

 

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

 

### (b)           To the knowledge ofthe Sellers, none of the Sellers or any Company, nor any of their respectivedirectors, officers, managers or agents, has made any contribution or giftusing funds of any Company, which contribution or gift is in material violationof any applicable Law.  None of theSellers or any Company, nor, to the knowledge of the Sellers, any of theirrespective directors, officers, managers or agents, has (i) made anybribe, rebate, payoff, influence payment, kickback or other payment to anyPerson, private or public, regardless of form, whether in money, property orservices, in each case which is in material violation of any applicable Law, or(ii) established or maintained any unlawful fund or asset of any Companyfunds or other properties.

 

5.15.        RealProperty.

 

### (a)           As of the datehereof, the Companies own in fee simple the real properties listed on  Schedule 5.15(a) of the SellersDisclosure Schedules (the “Owned Real Property”). With respect to eachOwned Real Property, (i) the Companies have good and marketable title tosuch Owned Real Property, free and clear of all Liens, tenancies, orrestrictive covenants, other than Permitted Exceptions, and (ii) there areno outstanding options or rights of first refusal in favor of any other partyto purchase such Owned Real Property or any portion thereof or interesttherein.  As of the date hereof, none ofthe Companies has received notice of any pending, and to 

 

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### the knowledgeof the Companies there is no threatened, condemnation proceeding with respectto any of the Owned Real Properties.

 

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

###  

### (c)           Intentionallyomitted.

###  

### (d)           Intentionallyomitted.

###  

### (e)           Except as set forthon Schedule 5.15(d) of the Sellers Disclosure Schedules and thePermitted Exceptions:

####  

#### (i)         no parties other than theCompanies have a right to occupy, use or own any Owned Real Property or realproperty subject to a Real Property Lease;

####  

#### (ii)        the Owned Real Propertyand real property subject to a Real Property Lease is used only for the currentoperation of the Business of the Companies (subject to the PermittedExceptions), and includes all real property necessary for the business of theCompanies as currently conducted;

####  

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

 

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

####  

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

####  

#### (v)           the Companies have notreceived any notice of material violation of any Law governing the use oroccupancy of the Owned Real Property or real property subject to a RealProperty Lease.

 

5.16.        EnvironmentalMatters.

 

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

###  

### (b)           The Companies havenot received any written notice, or to the knowledge of Sellers any othernotice, that remains unresolved of any actual, alleged or potential materialnoncompliance with, Liabilities under, or claimed material violation of, anyEnvironmental Laws and, to the knowledge of the Sellers, there is no event orcondition which would reasonably be expected to cause material noncompliancewith, Liabilities under, or material violation of, any Environmental Laws.

###  

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

###  

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

###  

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

 

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### investigation,sampling, monitoring, treatment, remediation, removal or cleanup of anyHazardous Materials.

 

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

 

### (g)           There is noEnvironmental Claim pending or threatened against any of the Companies oragainst any person or entity whose liability for any Environmental Claim any ofthe Companies has retained or assumed either contractually or by operation oflaw.

 

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

 

### (i)            Neither the Sellersnor any of the Companies are required by virtue of the transactions set forthherein and contemplated hereby, or as a condition to the effectiveness of anytransactions contemplated hereby, (1) to perform a site assessment forHazardous Materials, (2) to remove or remediate Hazardous Materials, (3) toreceive approval from any Governmental Entity, other than with respect to thetransfer of any Governmental Authorization related to the normal operation ofthe Business, or (4) to record or deliver to any Person any disclosuredocument or statement pertaining to environmental matters.

 

5.17.        Intellectual Property.

###  

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

###  

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

###  

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

###  

### (d)           To the knowledge of theSellers, the conduct of the Business does not infringe upon or violate anyIntellectual Property right owned or controlled by any third party in anymaterial manner.  No Actions are pendingand no written demand or notice has been received by any Company or the Sellersalleging any such infringement and, to the knowledge of the Sellers, no suchclaim has been verbally threatened.

 

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

###  

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

 

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

 

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

 

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

 

5.21.        Related Party Transactions.

###  

### (a)           There is noIndebtedness between any Company, on the one hand, and any Seller, anyAffiliate of any Seller, or any Related Party, on the other hand (other thansolely with another Company).

###  

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

###  

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

###  

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

###  

### (e)           No Company made anypayment to any Seller or its Affiliates or any Related Party since the date ofthe Interim Financial Statements (other than pursuant to existing contractualor tax sharing arrangements disclosed on Schedule 5.21 of the SellersDisclosure Schedule, Real Property Leases, or compensation to employees of theCompanies).

 

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Such transactionsdescribed in each of (a) through (e) collectively and with regard tothe parentheticals contained therein or exceptions set forth on the SellersDisclosure Schedules, the “Related Party Transactions”.

 

5.22.        PersonalProperty.  The Companies have goodand valid title to, or an adequate leasehold interest in, or other legal rightto, all material tangible Personal Property necessary to conduct its Businessas presently conducted free and clear of all Liens, other than PermittedExceptions. For the purposes of this Section 5.22, “PersonalProperty” means all tangible assets, including furniture, fixtures andequipment owned or leased by any of the Companies on the date of thisAgreement.

 

5.23.        NoOther Representations or Warranties. Except for the representations and warranties made by the Sellers inthis Article 5, neither the Sellers nor any other person makes anyrepresentation or warranty with respect to the Companies or their respectivebusiness, operations, assets, liabilities, condition (financial or otherwise)or prospects, notwithstanding the delivery or disclosure to the Parent, theBuyers or any of their Affiliates or Representatives of any documentation,forecasts or other information with respect to any one or more of theforegoing.  Specifically, withoutlimitation, the Sellers make no representation or warranty with respect to anyprojection, estimates or budgets delivered to or made available to the Parent,the Buyers or their Representatives of future revenues, future results ofoperations (or any component thereof), future cash flows or future financialcondition (or any component thereof) of the Companies.

 

**ARTICLE 6**

 

**Representationsand Warranties of the Buyers and the Parent**

 

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

 

6.1.          BuyerOrganization and Good Standing.  Eachof the Buyers and the Parent (a) is a limited liability company orcorporation, as applicable, duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its organization (except wheresuch concepts are not applicable), (b) has all requisite power andauthority to own, operate and lease its properties and assets and to carry onits business as now conducted and (c) is duly qualified to transactbusiness and in good standing in each state or jurisdiction in which theownership of its property or the conduct of its business requires suchqualification, except for failures to so qualify or be in good standing that,individually or in the aggregate, are not material to its ability to performits obligations hereunder and are not reasonably likely to prohibit ormaterially restrict or delay the performance of this Agreement by either of theBuyers or the Parent.

 

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

 

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been duly and validlyauthorized by all necessary action on the part of the Buyers or the Parent, asapplicable.  This Agreement and theEscrow Agreement, when executed by the other parties hereto and thereto, willconstitute legally valid and binding obligations of the Buyers or the Parent,as applicable, enforceable against it in accordance with their terms, subjectto applicable bankruptcy, insolvency, reorganization, moratorium and similarlaws affecting creditors’ rights and remedies generally and to generalprinciples of equity.

 

6.3.          Consentsand Approvals.  Except for (a) theHSR Notification, (b) the Gaming Approvals, and (c) such filings asmay be required in connection with the Taxes described in Section 7.10,****no notices, reports, registrations or other filings arerequired to be made by the Buyers or the Parent with, nor are any consents,approvals or authorizations required to be obtained by the Buyers or the Parentfrom, any Governmental Entity in connection with the execution, delivery andperformance of this Agreement or, at the time of their execution, the EscrowAgreement, by the Buyers or the Parent, in each case except for those thefailure of which to make or obtain, individually or in the aggregate, are notmaterial to its ability to perform the Buyers’ or the Parent’s obligationshereunder and are not reasonably likely to prohibit or materially restrict ordelay the performance of this Agreement by either of the Buyers or the Parent.

 

6.4.          NoViolations.  The execution anddelivery of this Agreement and the Escrow Agreement by the Parent or any Buyerdo not, and the consummation by the Parent or any Buyer of the transactionscontemplated hereby or thereby will not, conflict with or result in a breach ofor constitute a default (with or without notice or lapse of time or both) under(a) any provision of the Governing Documents of the Buyers or the Parent, (b) anyagreement, instrument, permit, franchise, license, judgment or order,applicable to the Buyers or the Parent or its properties or assets, other thansuch conflicts, violations, defaults, terminations, cancellations oraccelerations which, individually or in the aggregate, are not material to itsability to perform its obligations hereunder and are not reasonably likely toprohibit or materially restrict or delay the performance of this Agreement byeither of the Buyers or the Parent.

 

6.5.          FundsAvailable.  The Buyers or the Parentwill have available at the Closing, all the funds necessary to pay the PurchasePrice to the Sellers. The Buyers’ ability to consummate the transactionscontemplated hereby is not contingent upon their or the Parent’s ability toobtain financing.

 

6.6.          Brokersand Finders.  Neither the Buyers northe Parent has retained any agent, broker, investment banker, intermediary,finder, or firm acting on behalf of the Buyers or the Parent in connection withthis Agreement or the transactions contemplated hereby.  The Buyers and the Parent have not incurred,and shall not incur, directly or indirectly, any liability for any broker’s orfinder’s fees or any other commission or similar fee in connection with thisAgreement or any transaction contemplated hereby.

 

6.7.          SecuritiesAct.  The Buyers are acquiring theMillennium Units and the HoldCo Units, as applicable, for their own account andnot with a view to their distribution within the meaning of Section 2(11)of the Securities Act of 1933, as amended (the “Securities Act”), in anymanner that would be in violation of the Securities Act.  Neither of the Buyers has, directly orindirectly, offered the Millennium Units, the HoldCo Units or the CCR Units to 

 

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

 

6.8.          NoLitigation.  As of the date hereof,there are no claims, actions or proceedings pending or, to the knowledge of theBuyers or the Parent, threatened, against any of the Buyers or any of itsassets, other than claims, actions or proceedings that, individually or in theaggregate, are not material to its ability to perform its obligations hereunderand are not reasonably likely to prohibit or materially restrict or delay theperformance of this Agreement by the Buyers. Neither any Buyer nor the Parent nor any of their respectiveSubsidiaries or Affiliates is a party to or subject to the provisions of anyOrder of any Governmental Entity including any Gaming Authority, whichindividually or in the aggregate would reasonably be expected to prohibit ormaterially restrict or delay the performance of this Agreement by the Buyers orthe Parent.

 

6.9.          IntentionallyOmitted.

 

6.10.        Solvency.  Neither any Buyer nor the Parent is enteringinto the transactions contemplated by this Agreement with the actual intent tohinder, delay or defraud either present or future creditors of the Companies.  Assuming that the representations andwarranties of the Sellers contained in this Agreement are true and correct inall material respects, at and immediately after the Closing, and after givingeffect the transactions contemplated by this Agreement, the Companies will besolvent (in that both the fair value of its assets will not be less than thesum of its debts and that the present fair saleable value of its assets willnot be less than the amount required to pay its probable liabilities or itsdebts as they become absolute and matured); (b) will have adequate capitaland liquidity with which to engage in its business; and (c) will not haveincurred and does not plan to incur debts beyond its ability to pay as theybecome absolute and matured.

 

6.11.        NoOther Representations or Warranties. Except for the representations and warranties expressly made by theBuyers and the Parent in this Article 6 or in the Escrow Agreement,neither the Parent nor the Buyers make any other representation or warranty inconnection with the transactions contemplated hereby.  Each of the Buyers and the Parent acknowledgethat the Sellers, the Companies and their respective Affiliates andRepresentatives have not made and do not make any representations or warrantiesas to any matter whatsoever except as expressly set forth in this Agreement andspecifically (but without limiting the generality of the foregoing) that theSellers, the Companies and their respective Affiliates and Representatives havenot made and do not make any representations with respect to (i) anyprojections, estimates or budgets delivered to or made available to the Parentor the Buyers (or their respective Affiliates or Representatives) of futurerevenues, results of operations (or any components thereof), cash flows orfinancial condition (or any components thereof) of the Companies or (ii) thefuture business and operations of the Companies.  Except for the representations and warrantiesexpressly made by the Sellers in Article 4, Article 5or in the Escrow Agreement, none of the Sellers or any Affiliates or any oftheir Representatives will have 

 

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or be subject to anyliability to the Buyers, the Parent or any other person resulting from thedistribution to the Buyers, the Parent or their Representatives or the Buyers’use of, any such information, including any memoranda or materials distributedon behalf of the Sellers relating to the Companies or other publications ordata room information provided to the Buyers, the Parent or theirRepresentatives, or any other document or information in any form provided tothe Buyers, the Parent or their representatives in connection with the sale ofthe Companies and the transactions contemplated hereby.

** **

**ARTICLE 7**

 

**Covenantsof the Parties**

 

7.1.          Conduct of the Companies.  Except for matters (x) set forth on Schedule7.1 of the Sellers Disclosure Schedules or as otherwise specificallyprovided in this Agreement, or (y) consented to in writing by the Buyers(which consent shall not be unreasonably withheld, conditioned or delayed),from the Exercise Date until the Closing Date, each of the Sellers and CCRshall, and shall cause each of the other Companies to, conduct business in theordinary course consistent with past practice, make capital expenditures  consistent with past practice, and use allcommercially reasonable efforts to maintain and preserve intact their businessorganizations, including the services of their key employees on terms andconditions substantially comparable to those currently in effect and thegoodwill of any Governmental Authorities, customers, distributors, suppliersand other Persons with which the Companies have material businessrelationships.  Without limiting thegenerality of the foregoing, and except for matters set forth on Schedule7.1 of the Sellers Disclosure Schedules, or as otherwise specificallyprovided in this Agreement, without the prior written consent of the Buyers(which consent shall not be unreasonably withheld, conditioned or delayed),from the Exercise Date until the Closing Date, each of the Sellers and CCRshall not, and shall not permit any of the other Companies to:

 

### (a)           propose or adopt anychange in the Governing Documents of the Companies, other than in the GoverningDocuments of the Excluded HoldCo Subsidiaries;

 

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

 

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

 

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

 

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

###  

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

###  

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

###  

### (g)           make anyacquisitions of any equity interests, business or assets of any other Person,or make any loans, advances or capital contributions to, or investments in, anyother Person, with an aggregate value in excess of $500,000 after the datehereof, except (i) loans, advances, capital contributions or investmentssolely among the Companies or (ii) with respect to the ExcludedOpportunities;

###  

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

###  

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

###  

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

###  

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

 

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

 

### (m)          enter into, modify oramend any Material Contract, except in the ordinary course of businessconsistent with past practice, Material Contracts that (i) do not providefor annual expenditures by any of the Companies in excess of $1,000,000, (ii) areterminable by the Company party thereto on thirty (30) days notice or less or (iii) arerelated to the Excluded Opportunities; provided, that, for the purpose ofclarity, the parties acknowledge and agree that renewals of Material Contractson substantially the same terms shall be deemed to be in the ordinary course ofbusiness;

###  

### (n)           enter into, modifyor amend any Related Party Transaction;

###  

### (o)           close or shutdownany casino, hotel, racetrack or other facility of the Companies except for suchclosure or shutdowns which are (i) required by action, order, writ,injunction, judgment or decree or otherwise required by Law; or (ii) dueto acts of God or other force majeure events;

###  

### (p)           fail to maintain,repair and keep in good operating condition (and commit appropriate capitalexpenditures for such purposes) all casino, hotel, racetrack and otherfacilities of the Companies in the ordinary course of business consistent withpast practice;

###  

### (q)           other than in theordinary course of business consistent with past practice and with respect tothe litigation set forth in Schedule 7.1(o) of the SellersDisclosure Schedules, settle or compromise any litigation, or release, dismissor otherwise dispose of any claim or arbitration other than settlements orcompromises of litigation, claims or arbitration, that involve the payment ofmonetary damages not in excess of $1,000,000 individually or $5,000,000 in theaggregate by the Companies and do not involve any material injunctive or othernon-monetary relief or impose material restrictions on the business oroperations of the Companies;

###  

### (r)            write up or writedown the value of any asset or make any material change in financial accountingmethods or material method of Tax accounting, principles or practicesmaterially affecting the reported consolidated assets, liabilities or resultsof operations of the Companies, except insofar as may have been required by achange in or interpretation of GAAP or Law;

###  

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

 

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

###  

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

###  

### (u)           fail to exercisecommercially reasonable efforts to keep in force insurance policies orreplacement or revised provisions providing insurance coverage with respect toany casinos and any related assets andany other material assets, operations and activities (including constructionactivities) of the Companies as is currently in effect, other than immaterialvariations in policies in the ordinary course consistent with past practice; or

###  

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

###  

### (w)          authorize, agree orcommit to do any of the foregoing.

 

7.2.          Conduct of Blocker and AcquisitionCo.

Except formatters (x) set forth on Schedule 7.2 of the Sellers DisclosureSchedules or as otherwise specifically provided in this Agreement, or (y) consentedto in writing by the Buyers (which consent shall not be unreasonably withheld,conditioned or delayed), from the Exercise Date until the Closing Date, HoldCoshall not cause, authorize or agree to cause Blocker or AcquisitionCo to takeany actions or incur any Liabilities that would make the representations andwarranties set forth in Section 4.2(e) to become untrue orincorrect.

 

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

 

7.4.          Reasonable Best Efforts.

###  

### (a)           Subject to the termsof this Agreement and applicable Law (including Gaming Laws and antitrustLaws), following the Exercise Date, each party will use its reasonable bestefforts to take, or cause to be taken, all appropriate actions, to file, orcause to be filed, all documents and to do, or cause to be done, all thingsnecessary, proper or advisable to consummate the transactions contemplated bythis Agreement, including preparing and filing as promptly as reasonablypracticable all documentation to effect all Governmental Authorizations, includingall necessary filings, consents, waivers, approvals, Authorizations, permits ororders from all Governmental Entities (including Gaming Authorities) or otherPersons, including any licenses, permits, approvals, authorizations,registrations, findings of suitability, franchises, entitlements, waivers andexemptions issued by any Gaming Authority required to permit the 

 

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

###  

### (b)           Following theEffective Date, each of the Parent and the Buyers, on the one hand, and theSellers and CCR, on the other hand, shall, in connection with the effortsreferenced in Section 7.4(a) to obtain all requisite approvalsand authorizations for the transactions contemplated by this Agreement, use itsreasonable best efforts to (i) cooperate in all respects with each otherin connection with any filing or submission and in connection with anyinvestigation or other inquiry, including any proceeding initiated by a privateparty; (ii) keep the other party reasonably informed of any communicationreceived by such party from, or given by such party to, the Federal TradeCommission (the “FTC”), the Antitrust Division of the Department ofJustice (the “DOJ”), or any other Governmental Entity and of anycommunication received or given in connection with any proceeding by a privateparty, in each case regarding any of the transactions contemplated hereby; and (iii) permitthe other party to review any communication given by it to, and consult witheach other in advance of any meeting or conference with, the FTC, the DOJ, orany other Governmental Entity or, in connection with any proceeding by aprivate party, with any other person, and to the extent permitted by the FTC,the DOJ, or such other applicable Governmental Entity or other person, give theother party the opportunity to attend and participate in such meetings andconferences.

###  

### (c)           In furtherance andnot in limitation of the covenants of the parties contained in Section 7.4(a) andSection 7.4(b), if any objections are asserted with respect to thetransactions contemplated hereby under any Law or if any suit is instituted (orthreatened to be instituted) by the FTC, the DOJ, or any other applicableGovernmental Entity or any private party challenging any of the transactionscontemplated hereby as violative of any material Law or which would otherwiseprevent, materially impede or materially delay the consummation of thetransactions contemplated hereby, each of the parties shall use its reasonablebest efforts to resolve any such objections or suits so as to permit consummationof the transactions contemplated by this Agreement as promptly as reasonablypracticable.

###  

### (d)           In the event thatany administrative or judicial action or proceeding is instituted (orthreatened to be instituted) by a Governmental Entity or private partychallenging the transactions contemplated by this Agreement, each of theparties shall cooperate in all respects 

 

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### with eachother and use its respective reasonable best efforts to contest and resist anysuch action or proceeding and to have vacated, lifted, reversed or overturnedany decree, judgment, injunction or other order, whether temporary, preliminaryor permanent, that is in effect and that prohibits or materially restricts ordelays consummation of the transactions contemplated by this Agreement.

###  

### (e)           Notwithstandinganything herein to the contrary, each of the Sellers and CCR shall, and shallcause its respective directors, officers, employees and Subsidiaries to, usetheir respective reasonable best efforts in working with the Parent, the Buyersand their counsel to obtain the Gaming Approvals; provided that nothingcontained herein shall require any expenditure by the Companies (other than anyexpenditures relating to counsel fees of such parties).

###  

### (f)            The Sellers agreeto use their reasonable best efforts to (i) continue to cause CCR and theother Companies to maintain any licenses required under applicable Gaming Lawswith respect to the operation of the Business, including obtaining or renewingall other licenses, permits, approvals, authorizations, registrations, findingsof suitability, entitlements, waivers and exemptions issued in connection withsuch licenses and necessary to continue to operate the Business and (ii) pursuingany renewal application process applicable to such licenses, including anyfollow-up submissions and requests.  .

###  

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

###  

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

 

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### such claim aspromptly as reasonably practicable by mutual agreement with such counterpartythat no such consent or approval was required or to obtain appropriateconsents, amendments or waivers under such Specified Material Contract toresolve such claim.  Notwithstandinganything to the contrary contained herein, CCR shall, or shall cause theapplicable Company to, pay any fees, costs and expenses payable or incurred inconnection with resolving such claim or obtaining such consent, amendment orwaiver (including all consent fees required by the applicable counterparty tosuch Specified Material Contract), and each of the Sellers and CCR shallindemnify, defend and hold harmless the Buyer Indemnified Parties from andagainst any and all Damages (without duplication) incurred by any of themarising out of, relating to or in connection with any claim by a counterpartyfor breach of any such Specified Material Contract due to the failure to haveobtained the consent or approval of any counterparty to the execution and/ordelivery of this Agreement, or any action taken by any Seller or CCR pursuantto this Section 7.4(h). Neither any Buyer nor the Parent shall be entitled to assert a breach ofany representation, warranty or covenant made by the Sellers or CCR in thisAgreement due to a claim by any counterparty to any Specified Material Contractas a result of the failure by any Seller or any Company to obtain the consentor approval of such counterparty to the execution and delivery of thisAgreement.

 

7.5.          Updates to Disclosure Schedules.

###  

### (a)           If the Buyersdeliver the Conditional Exercise Notice pursuant to Section 2.3,within twenty (20) Business Days of delivery of the Conditional ExerciseNotice, the Sellers shall deliver to the Buyers in writing supplementaldisclosure schedules (the “Supplemental Disclosure Schedules”). TheSupplemental Disclosure Schedules shall replace the original schedules, withthe intention of the parties that no liability shall attach to Sellers or CCRas a result of any changes to the Sellers Disclosure Schedules reflected in theSupplemental Disclosure Schedules, except with respect to the Company ExecutionReps.

###  

### (b)           In the event thatthe Sellers or CCR become aware (i) of facts or circumstances that shouldhave been included on the Supplemental Sellers Disclosure Schedules in orderfor the Sellers’ and/or CCR’s representations and warranties to be true andaccurate as of the date of the delivery of the Supplemental DisclosureSchedules but were not so included (“Omitted Items”) and/or (ii) thatany representation and warranty that was true and accurate as of the date ofthe delivery of the Supplemental Disclosure Schedules becomes untrue orinaccurate due to events occurring or circumstances arising from the date ofthe delivery of the Supplemental Disclosure Schedules (“Pre-Closing Events”),the Sellers and CCR may deliver to the Buyers in writing supplementaldisclosure schedules setting forth the additions or changes to the SupplementalDisclosure Schedules that are required to reflect such Omitted Items and/or Pre-ClosingEvents (the “Final Disclosure Schedules”).  The Supplemental Disclosure Schedules, assupplemented by the Final Disclosure Schedules, shall be deemed to modify theapplicable representation and warranty set forth in this Agreement for purposesof determining whether the condition set forth in Section 8.2(a) shallhave been satisfied as of the Closing Date and shall be deemed to cure breachesof representations and warranties as described in the Supplemental DisclosureSchedules for purposes of indemnification by the Sellers pursuant to thisAgreement, including in accordance with Section 7.10 and Article 10.

 

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### (c)                                  Notwithstandinganything to the contrary herein, after the Final Sellers Disclosure Schedulesare delivered in accordance with this Section 7.5, the Buyers mayrescind the Final Exercise Notice within five (5) Business Days of thedelivery of the Final Disclosure Schedules and such Final Exercise Notice shallbe void and of no force or effect and the Buyers shall have no furtherobligations under this Agreement.

 

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

 

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

 

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

 

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7.9.                              Intentionally Omitted.

 

7.10.                        Tax Matters.

 

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

###  

### (b)                                 TaxIndemnification.

 

(i)                                     After the Closing Date, HoldCo shallindemnify, defend and hold harmless the Buyer Indemnified Parties from andagainst and in respect of all Damages (without duplication) incurred or paid byany of the Buyer Indemnified Parties arising out of, relating to or resultingfrom (a) Taxes imposed on Blocker or AcquisitionCo for taxable periodsending on or before the Closing Date (“Pre-Closing Periods”) and, withrespect to any period that begins on or before and that ends after the ClosingDate (in each case, a “Straddle Period”), the portion of such StraddlePeriod deemed to end on and include the Closing Date; (b) Taxes imposed onBlocker or AcquisitionCo as a result of the LandCo Disposition; (c) anybreach of or inaccuracy in any representation or warranty contained in Section 4.2(f) (withoutregard to any “materiality” modifier); (d) Taxes imposed on any of Blockeror AcquisitionCo under Treasury Regulations Section 1.1502-6 (and allcorresponding provisions of state, local, or foreign Law) as a result of beinga member of any consolidated, unitary, combined or similar group for anyPre-Closing Period or portion of any Straddle Period deemed to end on andinclude the Closing Date; and (e) the breach or nonperformance of anycovenant or agreement on the part of HoldCo or Blocker or AcquisitionCo withrespect to Taxes set forth in this Section 7.10. Any cash left inBlocker or AcquisitionCo at Closing shall be credited against any HoldCoindemnification obligation arising under this Section 7.10.

 

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

 

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

###  

### (c)                                  Allocationof Straddle Period Taxes.  In orderto apportion appropriately any Taxes relating to a Straddle Period, the partiesshall, to the extent permitted or required under applicable Law, treat theClosing Date as the last day of the taxable year or period of each relevantentity for all Tax purposes.  In any casewhere applicable Law does not permit the parties to treat the Closing Date asthe last day of the taxable year or period, the portion of any Taxes that areallocable to the portion of the Straddle Period ending on the Closing Dateshall be as follows:

 

(i)                                     Taxes that are imposed on a periodicbasis and not based on income or receipts (e.g., property taxes), shall beequal to the product of such Taxes attributable to the entire Taxable periodand a fraction, the numerator of which is the total number of days in suchperiod that elapsed through the Closing Date and the denominator of which isthe number of days in such Taxable period; provided, however, that, if theamount of periodic Taxes imposed for such Taxable period reflects differentrates of Tax imposed for different periods within such Taxable period, theformula described in the preceding clause shall be applied separately withrespect to each such period within the Taxable period; and

 

(ii)                                  Taxes (other than those described inclause (i)) shall be computed as if such Taxable period ended on and includedthe Closing Date.

###  

### (d)                                 BlockerBuyer.  Buyers agree that thepurchaser of the HoldCo Units will be subject to U.S. federal income taxationas a United States “C” Corporation (“Blocker Buyer”) and that Blockerwill join the federal consolidated group of which Blocker Buyer is a memberafter the Closing Date, such that Blocker’s federal taxable year will close asof the Closing Date.

###  

### (e)                                  ExtraordinaryTransactions.

 

(i)                                     Notwithstanding anything to the contraryin this Agreement, Parent, Buyers and Blocker Buyer jointly and severally agreeto indemnify and hold harmless Seller Indemnified Parties for any Damagesattributable to Taxes resulting from any transaction engaged in by Parent,Buyers, Blocker Buyer, Blocker, AcquisitionCo or any Company not in theordinary course of business, other than payment of the Company Loan PaymentAmount paid by CCR at the Closing pursuant to Section 2.2(b)(i) ofthis Agreement and any repayment, or contribution to any of Blocker,AcqusitionCo or the Companies of the Blocker Note (as such term is defined in Schedule4.2(e)), occurring on or after the Closing Date after Buyers’ and

 

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

 

(ii)                                  Notwithstanding anything to the contraryin this Agreement, Parent, Buyers, Blocker Buyer, Blocker, AcquisitionCo, eachCompany, and Sellers agree to allocate all transactions not in the ordinarycourse of business, other than payment of the Company Loan Payment Amount paidby CCR at the Closing pursuant to Section 2.2(b)(i) of thisAgreement and any repayment, or contribution to any of Blocker, AcqusitionCo orthe Companies of the Blocker Note (as such term is defined in Schedule4.2(e)), occurring on or after the Closing Date after Buyers’ and BlockerBuyer’s purchase of the Millennium Units, the HoldCo Units, and the BlockerOption Agreement to a Post-Closing Period or, with respect to a StraddlePeriod, that portion of such Straddle Period deemed to begin immediately afterthe Closing Date, as applicable, and to report such transactions on Buyers’ orBlocker Buyer’s federal Income Tax Return, as applicable, to the extentpermitted by Treas. Reg. §1.1502-76(b)(1)(ii)(B) or similar principles.

###  

### (f)                                    Returns.  (i)  After the Closing Date, HoldCoshall, at its own expense, prepare or cause to be prepared and timely file orcause to be timely filed all Tax Returns for Blocker and AcquisitionCo for allPre-Closing Periods, and shall pay all Taxes due for the taxable periodscovered by such Tax Returns.  HoldCoshall provide Buyers with a copy of such Tax Returns at least thirty (30) daysprior to the due date for filing such Tax Returns (after taking into accountany applicable extensions or waivers) (the “HoldCo Due Date”). Buyersshall provide HoldCo with its comments, if any, to such Tax Returns at leasttwenty (20) days prior to the HoldCo Due Date. If the Buyers object in good faith to any item reflected on such a TaxReturn, HoldCo and Buyers shall attempt to resolve the disagreement in goodfaith.  If the parties are unable toresolve the disagreement, the dispute shall be referred to an independentaccounting firm jointly selected by the Buyers and the Sellers or, if the Buyersand the Sellers are unable to agree on such accounting firm within fifteen (15)days, an independent accounting firm jointly selected within ten (10) daysby the Buyers’ accounting firm and an accounting firm identified by the Sellers(such firm, the “Independent Accounting Firm”), which shall resolve thedispute no later than three (3) days prior to the HoldCo Due Date andwhose determination shall be binding on the parties. The fees and expenses ofthe Independent Accounting Firm shall be borne equally by HoldCo, on the onehand, and the Buyers, on the other hand. If the dispute has not been resolvedor the Independent Accounting Firm has not made its determination three (3) daysprior to the HoldCo Due Date, such Tax Return shall be filed as originallyproposed by HoldCo, reflecting any items previously objected to by the Buyersand agreed to by HoldCo.  When the amountof Taxes due in respect of such Tax Return is finally determined by theIndependent Accounting Firm, a settlement payment shall be made from HoldCo tothe Buyers in an amount equal to the excess, if any, of (i) the amountfinally determined to be due over (ii) the amount of Taxes actually paidby HoldCo pursuant to this Section 7.10(f)(i) with respect tosuch taxable period, or from the Buyers to HoldCo in an amount equal to theexcess, if any, of (i) the amount of Taxes actually paid by HoldCopursuant to this Section 7.10(f)(i) with respect to suchtaxable period over (ii) the amount finally determined to be due.

 

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

 

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covered by such Tax Returns.  The Sellers shall provide Buyers with a copyof such Tax Returns at least thirty (30) days prior to the due date for filingsuch Tax Returns (after taking into account any applicable extensions orwaivers) (the “Sellers Due Date”). Buyers shall provide the Sellers withits comments, if any, to such Tax Returns at least twenty (20) days prior tothe Sellers Due Date.  If the Buyersobject in good faith to any item reflected on such a Tax Return, the Sellersand Buyers shall attempt to resolve the disagreement in good faith.  If the parties are unable to resolve thedisagreement, the dispute shall be referred to the Independent Accounting Firm,which shall resolve the dispute no later than 3 days prior to the Sellers DueDate and whose determination shall be binding on the parties The fees andexpenses of the Independent Accounting Firm shall be borne equally by theSellers, on the one hand, and the Buyers, on the other hand. If the dispute hasnot been resolved or the Independent Accounting Firm has not made itsdetermination three (3) days prior to the Sellers Due Date, such TaxReturn shall be filed as originally proposed by the Sellers, reflecting anyitems previously objected to by the Buyers and agreed to by Sellers.  When the amount of Taxes due in respect ofsuch Tax Return is finally determined by the Independent Accounting Firm, asettlement payment shall be made from the Sellers to the Buyers in an amountequal to the excess, if any, of (i) the amount finally determined to bedue over (ii) the amount of Taxes actually paid by the Sellers pursuant tothis Section 7.10(f)(ii) with respect to such taxable period,or from the Buyers to the Sellers in an amount equal to the excess, if any, of (i) theamount of Taxes actually paid by HoldCo pursuant to this Section 7.10(f)(ii) withrespect to such taxable period over (ii) the amount finally determined tobe due.

 

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

 

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

 

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

###  

### (g)                                 Refundsand Tax Benefits. Any Tax refunds that are received by Buyers,AcquisitionCo, Blocker or any Company, and any amounts credited against Taxeswhich Buyers, AcquisitionCo, Blocker or any Company Actually Realizes, thatrelate to Pre-Closing Periods, or, with respect to any Straddle Period, to theportion of such Straddle Period deemed to end on and include the Closing Dateand which relates solely to Blocker, AcquisitionCo or the Companies (and notBuyers or any of their Affiliates), shall be for the account of Sellers, andBuyers shall pay over to Sellers any such refund or the amount of any such credit,net of any Taxes or expenses incurred by Buyers, AcquisitionCo, Blocker or anyCompany relating to such Tax refund or credit, within 10 Business Days afterreceipt or entitlement thereto. Notwithstanding the foregoing, any Tax refunds or credits that arereceived by Buyers, AcquisitionCo, Blocker or any Company that are attributableto the operations or activities of AcquisitionCo, Blocker, or any Company (i) inany Post-Closing Period or in that portion of any Straddle Period deemed tobegin immediately after the Closing Date, or (ii) in any Pre-ClosingPeriod or in that portion of a Straddle Period deemed to end on and include theClosing Date to the extent such refund relates or is attributable to thecarryback of any credit, loss, deduction or other Tax item arising in orattributable to any Post-Closing Period or in that portion of any StraddlePeriod deemed to begin immediately after the Closing Date shall be for theaccount of the Buyers. In addition, refunds of Taxes paid by Buyers pursuant toSection 7.10(e)(i) shall be for the account of Buyers.

 

### (h)                                 TaxProceedings.

 

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

 

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

 

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good faith with the Buyer Indemnified Parties andoffer the Buyer Indemnified Parties a reasonable opportunity to comment beforesubmitting any written materials prepared or furnished in connection with theTax Proceeding (including, to the extent practicable, any documents furnishedto the applicable Tax Authority in connection with any discovery request) tothe extent such materials concern matters in the Tax Proceeding that maymaterially adversely affect the Buyer Indemnified Parties, (iii) conductthe Tax Proceeding diligently and in good faith, (iv) not pay, discharge,settle, compromise, litigate, or otherwise dispose (collectively, “dispose”) ofany item subject to such Tax Proceeding to the extent such item may materiallyadversely affect the Buyer Indemnified Parties without obtaining the priorwritten consent of the Buyer Indemnified Parties; which consent shall not beunreasonably withheld, conditioned or delayed, and (v) if applicable, paythe Buyer Indemnified Parties their allocable share, as provided for in thissection, of the amount of Taxes or payments due pursuant to such dispositionwithin five (5) Business Days of the due date of the payment of suchamount.

 

(iii)                               To the extent that any Tax Proceedinginvolves Taxes of Blocker, AcquisitionCo or the Companies for any StraddlePeriods or Post-Closing Periods, the Buyer Indemnified Parties shall at theirown expense control the conduct of such Tax Proceeding. The Buyer IndemnifiedParties shall (i) consult in good faith with HoldCo or the Sellers, asapplicable, before taking any significant action in connection with the TaxProceeding that may materially adversely affect the Seller Indemnified Parties,(ii) consult in good faith with HoldCo or the Sellers, as applicable, andoffer HoldCo or the Sellers, as applicable, a reasonable opportunity to commentbefore submitting any written materials prepared or furnished in connectionwith the Tax Proceeding (including, to the extent practicable, any documentsfurnished to the applicable Tax Authority in connection with any discoveryrequest) to the extent such materials concern matters in the Tax Proceeding thatmay materially adversely affect the Seller Indemnified Parties, (iii) conductthe Tax Proceeding diligently and in good faith, (iv) use reasonable bestefforts to provide HoldCo and Sellers, as applicable, with an opportunity toattend at their own expense, as an observer, settlement discussions and otherconferences and meetings relating thereto to the extent such item maymaterially adversely affect the Seller Indemnified Parties, and (v) notpay, discharge, settle, compromise, litigate, or otherwise dispose(collectively, “dispose”) of any item subject to such Tax Proceeding to theextent such item may materially adversely affect the Seller Indemnified Partieswithout obtaining the prior written consent of HoldCo or the Sellers, asapplicable, which consent shall not be unreasonably withheld, conditioned ordelayed. HoldCo or the Sellers, as applicable, shall pay the Buyer IndemnifiedParties their allocable share, as provided for in this section, of the amountof Taxes or payments due pursuant to such disposition within five (5) BusinessDays of the due date of the payment of such amount.

###  

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

###  

### (j)                                     TransferTaxes.  Except with respect to thePennsylvania Gaming Fee, all transfer, documentary, sales, use, stamp,registration and other such Taxes and fees (including any penalties andinterest) incurred in connection with the transactions contemplated by thisAgreement shall be paid 50% by the Buyers, on the one hand, and 50% by theSellers, on the

 

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

###  

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

###  

### (l)                                     Cooperation.  The Buyers and Blocker and AcquisitionCo onthe one hand, and HoldCo and the Sellers on the other hand, shall cooperatefully, as and to the extent reasonably requested by the other party, inconnection with the filing of Tax Returns pursuant to this Section 7.10and any Tax Proceeding subject to Section 7.10(h) and shallprovide prompt notice to the other party of any notice received from any TaxAuthority that could reasonably affect the Tax liability of such otherparty.  Such cooperation shall includethe retention and (upon the other party’s request) the provision of records andinformation that are reasonably relevant to any such Tax Proceeding  and filing of Returns and making employees availableon a mutually convenient basis to provide additional information andexplanation of any material provided hereunder. The Buyers, Blocker,AcquisitionCo, HoldCo, and the Sellers shall each preserve and keep all booksand records with respect to Taxes and Tax Returns of Blocker, AcquisitionCo,and the Companies in such party’s possession as of the Closing Date, or aslater come into such party’s possession, until the expiration of the applicablestatute of limitations and shall give reasonable written notice to the otherparty prior to transferring, destroying or discarding any such information,returns, books, records or documents and, if the other party so requests, allowthe other party to take possession of such information, returns, books, recordsor documents.  The party requestingassistance hereunder shall reimburse the other for reasonable out-of-pocketcosts and expenses incurred in providing such assistance.  The Buyers and Blocker and AcquisitionCo onthe one hand, and HoldCo and the Sellers on the other hand, further agree, uponrequest, to use their reasonable efforts to obtain any certificate or otherdocument from any Tax Authority or any other Person as may be necessary tomitigate, reduce or eliminate any Tax that could be imposed (including withrespect to the transactions contemplated by this Agreement).

###  

### (m)                               Exceptfor matters set forth on Schedule 7.10 of the Sellers DisclosureSchedules or as otherwise specifically provided in this Agreement, without theprior written consent of the Buyers (which consent shall not be unreasonablywithheld, conditioned or delayed), each of Blocker and AcquisitionCo from thedate hereof until the Closing Date shall not: (i) make, amend or revokeany material Tax election, (ii) settle or compromise any material Taxliability, claim or assessment, or agree to any adjustment of any material Taxattribute, (iii) file any amended material Tax Return, (iv) enterinto any material “closing agreement” within the

 

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

###  

### (n)                                 Survival.  The indemnification obligations pursuant tothis Section 7.10 shall survive the Closing until ninety (90) daysfollowing the expiration of the applicable statute of limitations (includingany extensions thereof) relevant to each particular item provided that ifnotice of indemnification under Section 7.10 is provided to theindemnifying party, as applicable, prior to any such expiration date, anyobligation to indemnify for any claim described in such notice shall continueindefinitely until such claim is finally resolved.  For the avoidance of doubt, notwithstandinganything to the contrary in this Agreement, the representations set forth in Section 4.2(f) andSection 5.11 of this Agreement shall survive until 90 days afterthe expiration of the applicable statutes of limitation.

###  

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

 

7.11.                        LandCo Disposition.  Following the Exercise Date and prior to theClosing, HoldCo shall cause (i) all of the equity interests in LandCo or (ii) allof the assets and liabilities of LandCo, to be sold or otherwise transferred toa third party that will be unaffiliated with CCR after the Closing; provided,Bill Wortman and any entities that he controls or is affiliated with shall notbe considered an Affiliate of the Companies after the Closing.  In the event that the assets and liabilitiesof LandCo are sold or otherwise transferred, then HoldCo shall cause LandCo toeither be liquidated or otherwise removed as a direct or indirect subsidiary ofBlocker and AcquisitionCo.  Theagreements and arrangements relating to the sale or transfer of such interests,or assets and liabilities, shall include a full and unconditional release andindemnification of each of the Companies, which shall survive the Closing, forany and all Liabilities of, or arising in connection with or related to, LandCoincluding all Liabilities of the Companies under the existing Nevada Palacelease, but excluding any Liabilities arising after the Closing under theAmended Nevada Palace Lease.  Thetransactions described in the previous two sentences shall be referred to asthe “LandCo Disposition.”

 

7.12.                        Excluded Opportunities.  The Buyers acknowledge that neither any Buyernor its Affiliates nor the Companies has any right, title or interest to thegaming opportunity at Rockingham Park in New Hampshire (the “RockinghamOpportunity”), the gaming opportunity at Tejon Ranch in California (the “TejonOpportunity”), any other Excluded Opportunity or the agreement set forth onSchedule 7.12 of the Sellers Disclosure Schedules.  The agreements and arrangements relating tothe transfer of the assets, liabilities, contracts and agreements related toeach Excluded Opportunity shall include a full and unconditional release andindemnification of each of the Companies, which shall survive the Closing, forany and all Liabilities of, or arising in connection with or related to, theExcluded Opportunities.  Any moneysreceived by the Companies on or prior to the Closing Date with respect toreceivables related to the Rockingham Opportunity may be included in theCompany Loan Amount and/or applied to repay any of the Debt Facilities or mayreduce the amount of the Remaining Accrued Liabilities.  The Parent and the Buyers acknowledge andagree that nothing contained herein shall (i) prevent CCR or the

 

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

 

7.13.                        Assistance and Records.  If the Closing occurs, the Buyers shallretain, and cause each Company to retain, all books and records relating to theconduct of the Business prior to the Closing Date for a period of at least sixyears from the date hereof.  The Sellersand their Representatives shall have the right during business hours, uponreasonable notice to the Buyers, to inspect and make copies of any such recordsin order to prepare its financial statements, Tax returns and other documentsand reports that the Sellers or any of their Affiliates are required to filewith Governmental Entities or any stock exchange on which their securities maybe listed, all at the sole cost and expense of the Seller(s) requestingsuch records.

 

7.14.                        Guarantee.

 

### (a)                                  TheParent absolutely, unconditionally and irrevocably guarantees to the Sellersthe due and punctual observance, performance and discharge of all of thecovenants, agreements, obligations and liabilities of the Buyers pursuant tothis Agreement, whether fixed, contingent, now existing or hereafter arising,created, assumed, incurred or acquired from the Exercise Date through theClosing Date (the “Obligations”).

###  

### (b)                                 TheParent agrees that the obligations of the Parent hereunder shall not bereleased or discharged, in whole or in part, or otherwise affected by (i) thefailure of the Sellers to assert any claim or demand or to enforce any right orremedy against the any of Buyers, (ii) any change in the time, place ormanner of payment of any of the Obligations or any rescission, waiver,compromise, consolidation or other amendment or modification of any of theterms of provisions of this Agreement, (iii) any change in the corporateexistence, structure or ownership of any of the Buyers, (iv) anyinsolvency, bankruptcy, reorganization or other similar proceeding affectingany of the Buyers, (v) any lack of validity or enforceability of thisAgreement, (vi) the existence of any claim, set-off or other rights whichthe Parent may have at any time against the Sellers or any of the Buyers,whether in connection with the Obligations or otherwise, and (vii) anyother act or omission which might in any manner or to any extent vary the riskof the Parent or otherwise operate as a release or discharge of the Parent, allof which may be done without notice to the Parent.  The Sellers shall not be bound or obliged toexhaust their recourse against the Buyers or pursue any other remedy whatsoeverbefore being entitled to demand the satisfaction of the Obligations by theParent hereunder.  To the fullest extentpermitted by law, the Parent hereby expressly waives any and all rights ordefenses arising by reason of any law which would otherwise require anyelection of remedies by the Sellers.  TheParent acknowledges that it will receive substantially direct and indirectbenefits from the transactions contemplated by this Agreement and that thewaivers set forth herein are knowingly made in contemplation of such benefits.Notwithstanding anything to the contrary herein, the Parent’s obligations underthis guarantee shall be subject to any and all claims, defenses, setoffs orother rights of or available to the Buyers.

 

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### (c)                                  Thisguarantee shall remain in full force and effect and shall be binding on theParent, its successors and assigns until all of the Obligations have beenindefeasibly paid, observed, performed or satisfied in full.

 

7.15.                        Intentionally Omitted.

 

7.16.                        Intentionally Omitted.

 

7.17.                        Intentionally Omitted.

 

7.18.                        Intentionally Omitted.

 

7.19.                        No Assignment if Breach.

 

### (a)                                  Followingthe Exercise Date, the Sellers agree to use commercially reasonable efforts toobtain all consents listed on Schedule 7.19 of the Sellers DisclosureSchedules.  Notwithstanding anythingcontained in this Agreement to the contrary, this Agreement shall notconstitute an agreement to effect a change in, or transfer, assign or assume,any Contract, if the attempted change in, or transfer, assignment or assumptionof the same, as a result of the absence of the consent or authorization of athird party, would constitute a breach or default under any Contract, wouldviolate any Law or would materially increase the obligations of the Buyers orthe Sellers with respect thereto.  If anysuch consent or authorization is not obtained, then the Buyers and the Sellersshall enter into such cooperative arrangements as may be reasonably acceptableto the Buyers and the Sellers, but which shall not, in any event, result in abreach or default under any Contract, violate any Law or materially increasethe obligations of the Buyers or the Sellers with respect thereto.

###  

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

###  

### Commencing assoon as practicable following the Exercise Date and continuing until theearlier to occur of Closing or the receipt of the “Consent and EstoppelCertificates” and “NDAs” (as defined below), the Sellers shall use commerciallyreasonable efforts (a) to cause the sublandlord and prime landlord toexecute and deliver any consents of the sublandlord and the prime landlordrequired in connection with the transactions contemplated by this Agreement, aswell as estoppel certificates from the sublandlord and prime landlord(collectively, the “Consent and Estoppel Certificates”), and (b) ifthere are any feehold or leasehold mortgage(s) or deed(s) of trustencumbering the interest(s) of the sublandlord or the prime landlord inthe premises described by the Contract identified on Schedule 7.19(b),to obtain fully executed nondisturbance agreements from the mortgagees orbeneficiaries thereof (the “NDAs”), in each case in form and substanceacceptable to the Buyers, such acceptance not to be unreasonably conditioned,withheld or delayed.  The Buyers shallreasonably cooperate in the Sellers’ efforts to obtain such

 

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### Consent and Estoppel Certificates and NDAs,and such cooperation shall include (x) providing such informationregarding the Buyers or Parent and their respective personnel, plans for thepremises described by the Contract identified on Schedule 7.19(b) orcasino operations as reasonably requested by prime landlord or sublandlord and (y) executingany amendments to the Contract identified on Schedule 7.19(b) orother documents or agreements that are not materially adverse to thesublandlord or to the Buyers or their Affiliates.  In the event the Consent and EstoppelCertificates (and the NDAs, if applicable) are delivered to the Buyers prior toClosing, the Purchase Price shall not be reduced by the Property AdjustmentAmount.

 

7.20.                        FIRPTA Certificates.

 

### (a)                                  Atthe Closing, the Buyers shall have received from Holdco a duly executedcertificate (“FIRPTA Certificate”) that complies with the requirementsof either Section 1445(b)(2) or Section 1445(b)(3) of theCode and the Treasury Regulations promulgated thereunder; notwithstandinganything to the contrary herein, if Holdco fails to deliver a FIRPTACertificate, the parties shall proceed with the Closing and the Buyers shall beentitled to withhold the amount required to be withheld pursuant to Section 1445of the Code from the Purchase Price.

###  

### (b)                                 Atthe Closing, the Buyers shall have received from Millennium a duly executedFIRPTA Certificate that complies with the requirements of either Section 1445(b)(2) orSection 1445(e)(5) of the Code and the Treasury Regulations promulgatedthereunder; notwithstanding anything to the contrary herein, if Millenniumfails to deliver a FIRPTA Certificate, the parties shall proceed with theClosing and the Buyers shall be entitled to withhold the amount required to bewithheld pursuant to Section 1445 of the Code from the Purchase Price.

 

7.21.                        Repayment of LoanObligations.

 

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

###  

### (b)                                 Ifthe Option is exercised, at or prior to the Closing, in connection with theforegoing and with respect to any Encumbrances on any assets of the Companiesthat in whole or in part were security for the Debt Facilities (the “CompanyLiens”), each of the Sellers and CCR shall, and shall cause each of theother Companies to, negotiate and enter into appropriate agreements with thelenders under the Debt Facilities to obtain as of the Closing evidence of therepayment of the Loan Payoff Amount and the release of all Company Liens (the “Payoffand Release of Liens”).  To theextent applicable, such Payoff and Release of Liens shall include (i) payoffletters and other written documentation evidencing the release, as of theClosing Date and after giving effect to the payments contemplated by suchpayoff letters pursuant to this Section 7.21(b), of the Companiesfrom any and all obligations and Liens under or in connection with anyIndebtedness under the Debt Facilities, including the release of all Liens uponor in any of the respective properties and assets of, and any guarantees by,any of the Companies arising under or in connection with the Debt Facilities;and (ii) the delivery of Uniform Commercial Code amendments or collateralchange statements (in each case terminating Uniform Commercial Code

 

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

###  

### (c)                                  Ifthe Option is exercised, at the Buyers’ request, the Sellers and the Companiesshall use commercially reasonable efforts (at Buyers’ expense) to cooperatewith the Buyers to enable the Companies to refinance the Debt Facilities at theClosing; provided that there shall be no adverse consequence to Sellers or theCompanies therefrom; and, provided further, that the Sellers and the Companiesshall not (1) have any liability or obligation arising from suchrefinancing, except any liability or obligation of the Companies (and notSellers) arising on or after the Closing; (2) be required to take anyaction that would interfere with the ongoing operations of the Companies,conflict with or violate any of the Sellers’ or the Companies’ organizationaldocuments, laws or agreements, require the approval of any Gaming Authorities,cause any representations or warranties in this Agreement to be breached or anycondition to Closing in Article 8 to fail to be satisfied or otherwisecause a breach of this Agreement; (3) execute or deliver any agreements ordocuments in connection with such refinancing or become subject to any lien orsecurity interest thereunder, except by or with respect to the Companies if noapproval or consent of any Gaming Authority is required and if effective onlyon or after the Closing; or (4) be required to pay any fees or expenses inconnection therewith, including commitment fees.  The Sellers, the Companies and the Buyersagree to negotiate in good faith to amend the provisions related to the flow offunds to effectuate such refinancing, if appropriate and without any adverseconsequence to the Sellers or the Companies. The Parent and the Buyers shall jointly and severally indemnify, defend,save and hold harmless the Seller Indemnified Parties from and against any andall Damages (without duplication) arising out of, relating to, resulting fromor in connection with such refinancing.

###  

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

 

7.22.                        Activities of AcquisitionCoand Blocker.  During the time periodbetween the Exercise Date and the Closing Date, neither AcquisitionCo norBlocker shall conduct any business or operations, other than actions taken inconnection with holding the AcquisitionCo Units, the CCR Units and interests inthe Excluded HoldCo Subsidiaries, and shall not incur any Liabilities, otherthan statutory obligations or obligations under their respective GoverningDocuments as in effect on the date hereof.

 

7.23.                        Intentionally Omitted.

 

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

 

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

 

7.25.                        Termination of AffiliateAgreements; Release of Claims.

 

### (a)                                  If the Option isexercised, (i) each of the Sellers shall, and shall cause each of theapplicable Companies to, terminate the Millennium Management Agreementeffective at the Closing, and (ii) each of the Sellers shall cause theOaktree Purchase Agreement to be terminated with respect to any and all of therights and obligations of each of the Companies thereunder.

###  

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

###  

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

###  

### (d)                                 EachReleasor expressly waives all rights afforded by Section 1542 of the CivilCode of California (“Section 1542”) or any statute or common lawprinciple of similar effect in any jurisdiction with respect to theCompanies.  Section 1542 states asfollows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THECREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OFEXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLYAFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

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

 

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

 

7.26.                        Intentionally Omitted.

 

7.27.                        Impact of New Gaming Taxes

.

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

###  

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

 

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

###  

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

###  

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

 

7.28.                        Changes in CCR CapitalStructure.  The parties understandand acknowledge that the purpose and intent of the Option is that, uponexercise thereof and consummation of the transactions contemplated hereby, theBuyers will own, either directly or indirectly, one hundred percent (100%) ofthe outstanding equity capital of CCR. Accordingly, in the event that CCR issues any units or other equitysecurities (“New CCR Equity”) after the date hereof, the Sellers and CCRagree that any such New CCR Equity shall be issued either for cash or as valuedunder the operating agreement of CCR and further agree as follows:

###  

### (a)                                  Inthe event that such New CCR Equity is purchased by the Buyers (other than inconnection with the purchase of the Series B Preferred Units or Series A2Preferred Units pursuant to the Preferred Purchase Agreement), then thePurchase Price shall remain unchanged.

###  

### (b)                                 Inthe event that such New CCR Equity is purchased, directly or indirectly, by theSellers (“Sellers New CCR Equity”), then the Purchase Price shall beincreased on a dollar for dollar basis by the amount of equity contributed,directly or indirectly, by the Sellers in respect of such Sellers New CCREquity and this Option shall represent, in addition to an Option to purchasethe Millennium Units and the Holdco Units, an exclusive and irrevocable optionduring the Exercise Period to purchase all but not less than all of suchSellers New CCR Equity from the Sellers, directly or indirectly, as theirrespective interests may appear, in accordance with the terms of thisAgreement.

 

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

####  

#### (i)            the Outside EquityInvestor shall enter into an Outside New CCR Equity Option Agreement with theBuyers providing for the purchase by the Buyers of the Outside New CCR Equityowned by such Outside Equity Investor for a dollar amount (the “Outside NewCCR Equity Purchase Price”) equal to the dollar amount of equitycontributed by such Outside Equity Investor in respect of such Outside New CCREquity; and

####  

#### (ii)           the purchase by theBuyers of the Outside New CCR Equity pursuant to the Outside New CCR EquityOption Agreement shall occur contemporaneously with, and shall be a conditionto, the Closing under this Agreement.

 

7.29.                        Outside New CCR Equity.  CCR shall not, and the Sellers shall causeCCR not to, sell any Outside New CCR Equity unless the Outside Equity Investorenters into, simultaneous with the purchase of such Outside New CCR Equity, anOutside New CCR Equity Option Agreement with the Buyers reflecting the termsset forth in this Agreement with respect thereto.

 

**ARTICLE 8**

 

**Conditionsto Closing**

 

8.1.                              Conditions to theObligations of All Parties.  Theobligations of each party hereto to consummate the transactions contemplated bythis Agreement shall be subject to the fulfillment or waiver, at or prior tothe Closing, of each of the following conditions.

###  

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

###  

### (b)                                 RegulatoryApproval.  Any and all GamingApprovals required to be obtained prior to the Closing to consummate thetransactions contemplated by this Agreement shall remain in full force andeffect.

###  

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

 

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8.2.                              Conditions to theObligations of the Buyers.  Theobligation of the Buyers to consummate the transactions contemplated by thisAgreement shall be subject to the fulfillment or waiver, at or prior to theClosing, of each of the following conditions:

###  

### (a)                                  Representationsand Warranties.  The representationsand warranties of the Sellers contained in this Agreement, shall be true andcorrect in all material respects (except for such representations andwarranties as are qualified by materiality or Material Adverse Effect, whichrepresentations and warranties shall be true and correct in all respects), asof the date of the delivery of the Supplemental Sellers Disclosure Schedules(or the Final Disclosure Schedules, if applicable) in accordance with Section 7.5and as of the Closing Date as though made on and as of the Closing Date (otherthan such representations and warranties that are expressly made as of anearlier date which need only be true and correct in all material respects ortrue and correct, as the case may be, as of such earlier date), except wherethe failure of such representations and warranties to be in compliance with thestandard set forth above would not have a Material Adverse Effect.  The Buyers shall have received a certificatefrom CCR, signed by a manager of CCR with respect to the representations andwarranties in Article 5 and from the Sellers with respect to theirrespective representations and warranties in Article 4 of theSellers, certifying as to the matters set forth in this Section 8.2(a).

###  

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

###  

### (c)                                  NoLitigation.  There shall be no bonafide Actions pending against or affecting any of the Sellers, Blocker,AcquisitionCo or the Companies or any of their respective properties, assets orrights that (i) would, if determined adversely, have a Material AdverseEffect,  (ii) challenges theownership by the Sellers and their ability to sell to the Buyers, and for theBuyers to have and hold the right, title and interest in the Millennium Units,the HoldCo Units or the Blocker Option, as applicable, or (iii) arereasonably likely to succeed and would, if determined adversely, prevent theconsummation of the transactions contemplated hereby.

###  

### (d)                                 MaterialAdverse Effect.  Since the ExerciseDate, there shall not have been any Effect that would, individually or in theaggregate, have a Material Adverse Effect.

###  

### (e)                                  ClosingDeliveries.  The Buyers shall havereceived the Amended Nevada Palace Lease, the Assignment Documents, the Payoffand Release of Liens and the Releases, in each case executed by the appropriatecounterparties.

###  

### (f)                                    ExcludedAssets.  Each of (i) theExcluded HoldCo Subsidiaries shall have been sold or transferred to a thirdparty or dissolved in accordance with Section 7.11, and (ii) thetransfer of the Excluded Opportunities and the agreement set forth in Section 7.12of the Sellers Disclosure Schedule shall have been completed in accordance withSection 7.12.

###  

### (g)                                 GLCPClosing.  The closing of the purchaseby Crown Two of the GLCP Units from GLCP shall have simultaneously occurred.

 

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

 

8.3.                              Conditions to theObligations of Sellers.  The obligationof the Sellers to consummate the transactions contemplated by this Agreementshall be subject to the fulfillment or waiver, at or prior to the Closing, ofeach of the following conditions:

###  

### (a)                                  Representationsand Warranties.  The representationsand warranties of  the Buyers containedin this Agreement shall be true and correct in all material respects (exceptfor such representations and warranties as are qualified by materiality, whichrepresentations and warranties shall be true and correct in all respects), asof the Closing Date as though made on and as of the Closing Date (other thansuch representations and warranties that are expressly made as of an earlierdate which need only be true and correct in all material respects or true andcorrect, as the case may be, as of such earlier date), except where the failureof such representations and warranties to be in compliance with the standardset forth above would not materially affect its ability to perform itsobligations hereunder and would not prohibit or materially restrict theperformance of this Agreement by the Buyers. The Sellers shall have received a certificate, signed by an executiveofficer of each of the Buyers, certifying as to the matters set forth in this Section 8.3(a).

###  

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

###  

### (c)                                  NevadaPalace Lease.  The Buyers shall havedelivered a fully executed copy of the Amended Nevada Palace Lease.

###  

### (d)                                 Receiptof Purchase Price.  The Sellers shallhave received from the Buyers the payment of the Purchase Price required by Section 2.2hereof.

 

**ARTICLE 9**

 

**Termination**

 

9.1.                              This Agreement may beterminated and shall be of no further force and effect at any time prior to theClosing

 

### (a)                                  immediately, without action of the parties,

####  

#### (i)                                     uponthe termination of the Preferred Purchase Agreement or the closing of thepurchase thereunder by the Buyers of the 4.1% Interest; or

####  

#### (ii)                                  ifthe Option has not been exercised prior to the expiration of the ExercisePeriod; or

 

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

###  

### (c)                                  byeither the Sellers or the Buyers, if:

####  

#### (i)            ifthe Closing shall not have occurred by the sixtieth (60th) day after the delivery of the FinalExercise Notice, provided that in order for a party to seek to terminate thisAgreement pursuant to this Section 9.1(c)(i), it must not be inmaterial breach of its covenants and agreements under this Agreement such thatthe conditions set forth in Sections 8.2(a) or8.2(b) orSections 8.3(a) or 8.3(b), as applicable, are incapable of beingsatisfied; or

####  

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

####  

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

 

**ARTICLE10**

 

**Indemnification**

 

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

 

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this Agreementshall survive the Closing Date.  Ifwritten notice of a claim has been given in accordance with Section 10.2(e) priorto the expiration of the applicable representations, warranties, covenants oragreements, then the applicable representations, warranties, covenants oragreements shall survive as to such claim, until such claim has been finallyresolved.  Notwithstanding anything tothe contrary contained in this Agreement, it is the explicit intent of eachparty hereto that no party hereto is making any representations or warrantieswhatsoever, express or implied, to any other party hereto except thoserepresentations and warranties contained in Article 4, Article 5and Article 6 or Section 11.15.

 

10.2.        Indemnification

.

### (a)           By Sellers.  From and after the Closing, the Sellers shallindemnify, defend, save and hold harmless the Buyers and the Parent and theirAffiliates (including the Companies), successors and assigns and each of theforegoing’s respective officers, directors, managers, members, employees andagents (collectively, the “Buyer Indemnified Parties”), from and againstany and all Damages (without duplication) arising out of, relating to,resulting from or in connection with:

####  

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

####  

#### (ii)           thebreach of or failure to perform any covenant or agreement made or to beperformed by any of the Sellers or CCR contained in this Agreement, the EscrowAgreement or any other agreement contemplated hereby or thereby;

####  

#### (iii)          theExcluded HoldCo Subsidiaries; and

####  

#### (iv)          theExcluded Opportunities and the agreements and arrangements related thereto.

###  

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

 

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### result or could be expected toresult in a Material Adverse Effect, and any such qualification shall in allrespects be disregarded).

###  

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

###  

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

####  

#### (i)                                     thebreach or failure to be true and correct of any representation or warranty madeby the Buyers and the Parent in Article 6 of this Agreement (itbeing agreed that for purposes of such right to indemnification, suchrepresentations and warranties shall be deemed not to be qualified by anyreferences therein to knowledge or materiality generally, and any such qualificationshall in all respects be disregarded); and

####  

#### (ii)                                  thebreach of or failure to perform any covenant or agreement by any Buyer or theParent contained in this Agreement, the Escrow Agreement or any other agreementcontemplated hereby or thereby.

###  

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

 

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### shall be governed by andcontingent upon the following additional terms and conditions: if anIndemnified Party shall receive notice of any Third Party Claim, the IndemnifiedParty shall give the Indemnifying Party notice of such Third Party Claim assoon as reasonably practicable; provided*,*thatthe failure to provide such notice shall not release the Indemnifying Partyfrom any of its obligations under this Section 10.2 except to theextent the Indemnifying Party is materially prejudiced by such failure.  The Indemnifying Party shall be entitled toassume and control the defense of such Third Party Claim at its expense andthrough counsel of its choice if it gives notice of its intention to do so tothe Indemnified Party within thirty (30) days of the receipt of such noticefrom the Indemnified Party; provided*,*that if theIndemnified Party shall have been advised by counsel that there are one or morelegal or equitable defenses available to it that are different from or inaddition to those available to the Indemnifying Party and representation ofboth parties by the same counsel would be inappropriate due to the actual orpotential differences between them, then the Indemnified Party shall beentitled to retain its own counsel, at the expense of the Indemnifying Party,so long as the Indemnifying Party shall not be obligated to pay the reasonablefees and expenses of more than one separate counsel for all Indemnified Parties,taken together.  If the IndemnifyingParty shall not assume the defense of any Third Party Claim or litigationresulting therefrom, the Indemnified Party may defend against such claim orlitigation in such manner as it may deem appropriate and may settle such claimor litigation on such terms as it may deem appropriate; provided*,*that in settling any claim or litigation in respect ofwhich indemnification is payable under this Article 10, it shallobtain the consent of the Indemnifying Party which shall not be unreasonablywithheld.  In the event the IndemnifyingParty exercises its right to undertake any such defense against any such ThirdParty Claim as provided above, the Indemnified Party shall cooperate with theIndemnifying Party in such defense, including by making available to theIndemnifying Party all witnesses, pertinent records, materials and informationin the Indemnified Party’s possession or under the Indemnified Party’s controlrelating thereto and all personnel, premises and properties of the IndemnifiedParty relating thereto, in each case, as is reasonably required by theIndemnifying Party.  Similarly, in theevent the Indemnified Party is, directly or indirectly, conducting the defenseagainst any such Third Party Claim, the Indemnifying Party shall cooperate withthe Indemnified Party in such defense, including by making available to theIndemnified Party all such witnesses, records, materials and information in theIndemnifying Party’s possession or under the Indemnifying Party’s controlrelating thereto and all personnel, premises and properties of the IndemnifyingParty relating thereto, in each case, as is reasonably required by theIndemnified Party.  The IndemnifyingParty shall not, without the written consent of the Indemnified Party, (i) settleor compromise any Third Party Claim or consent to the entry of any judgmentwhich does not include an unconditional written release by the claimant orplaintiff of the Indemnified Party from all liability in respect of such ThirdParty Claim or (ii) settle or compromise any Third Party Claim if thesettlement imposes equitable remedies or material obligations on theIndemnified Party other than financial obligations for which such IndemnifiedParty will be indemnified hereunder.  NoThird Party Claim which is being defended in good faith by the IndemnifyingParty in accordance with the terms of this Agreement shall be settled orcompromised by the Indemnified Party without the written consent of theIndemnifying Party.

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

 

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

 

10.3.        Limitson Indemnification.  Notwithstandinganything in this Agreement to the contrary:

###  

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

###  

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

###  

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

###  

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

 

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### under one of the IndemnifiedParty’s policies and except to the extent that the grant of subrogation rightsto the Indemnifying Party is prohibited by the terms of the applicableinsurance policy.

###  

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

 

10.4.        Escrow

.

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

###  

### (b)           The Indemnity EscrowAmount shall be held for three (3) years after the Closing Date (the “EscrowPeriod”), except that, to the extent permitted under the Escrow Agreement,the Indemnity Escrow Amount may be withheld after the expiration of the EscrowPeriod to satisfy (i) claims for indemnification that are the subject ofan indemnity claim by a Buyer Indemnified Party pursuant to a notice deliveredto the Sellers prior to the expiration of the Escrow Period or (ii) claimsfirst being pursued against third parties in accordance with Section 10.3(b) orSection 10.7. Within one (1) Business Day after the finalresolution of a particular claim (such final resolution to be evidenced by (i) jointwritten instructions to the Escrow Agent (“Joint Instructions”), or (ii) afinal non-appealable order of a court of competent jurisdiction), the Buyersand the Sellers shall deliver Joint Instructions to the Escrow Agent to (x) payto the Buyers from the Indemnity Escrow Account an amount equal to the Damagesin respect of such claim to which the Buyer Indemnified Parties shall have beendetermined to be entitled and, if such final resolution has occurred after theEscrow Period, (y) pay to the Sellers the excess, if any, of (A) theremaining amount in the Indemnity Escrow Account over (B) the aggregateamount of unresolved claims, in accordance with each Seller’s paymentpercentage as set forth in Exhibit D, by wire transfer ofimmediately available funds.

###  

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

 

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### payment actually recovered bythe Buyer from any third party with respect thereto, net of any Taxes imposedon receipt of such amounts, plus (ii) out-of-pocket costs of collectionthereof, co-pays, increases in premiums or deductibles and related expenses.

 

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

###  

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

###  

### (b)           Within 15 days afterthe Indemnified Party’s receipt of a Tax Benefit Dispute Notice, unless thematters in the Tax Benefit Dispute Notice have otherwise been resolved bymutual agreement of the parties, the Indemnified Party and the IndemnifyingParty shall jointly select a nationally-recognized independent certified publicaccountant (the “Tax Benefit Accountant”); provided, however, that ifthe Indemnified Party and the Indemnifying Party are unable to agree upon theTax Benefit Accountant within such 15-day period, then the Indemnified Partyand the Indemnifying Party shall each select a nationally-recognizedindependent certified public accountant which shall then jointly choose the TaxBenefit Accountant within 15 days thereafter. The Tax Benefit Accountant shall conductsuch review of the work papers and such other materials and information, andthe Tax Benefit Dispute Notice, and any supporting documentation as the TaxBenefit Accountant in the Tax Benefit Accountant’s

 

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### sole discretion deemsnecessary, and the Tax Benefit Accountant shall conduct such hearings or hearsuch presentations by the parties or obtain such other information as the TaxBenefit Accountant in the Tax Benefit Accountant’s sole discretion deemsnecessary.

###  

### (c)           The Tax BenefitAccountant shall, as promptly as practicable and in no event later than 45 daysfollowing the date of the Tax Benefit Accountant’s retention, deliver to theIndemnifying Party and the Indemnified Party a report (the “Tax BenefitReport”) in which the Tax Benefit Accountant shall, after reviewing thedisputed items set forth in the Tax Benefit Dispute Notice, determine whatadjustments, if any, should be made to the amount of the Tax Benefit ActuallyRealized. The Tax Benefit Report shall set forth, in reasonable detail, the TaxBenefit Accountant’s determination with respect to the disputed items oramounts specified in the Tax Benefit Dispute Notice, and the revisions, if any,to be made to the amount of the Tax Benefit Actually Realized, together withsupporting calculations.  All fees andexpenses relating to this work of the Tax Benefit Accountant shall be borneequally by the Indemnified Party and the Indemnifying Party.  The Tax Benefit Report shall be final andbinding upon the Indemnified Party and the Indemnifying Party, shall be deemeda final arbitration award that is binding on each of the Indemnified Party andthe Indemnifying Party, and no Party shall seek further recourse to courts,other arbitral tribunals or otherwise. The amount, if any, of the Tax Benefit Actually Realized set forth inthe Tax Benefit Report shall reduce the payment of the Liability upon which theclaim for indemnity is based and the net amount of such payment shall be paidto the Indemnified Party.

###  

### (d)           If the IndemnifyingParty has not paid the Indemnified Party the Damages attributable to the claimgiving rise to a Tax Benefit being Actually Realized at the time that such TaxBenefit is Actually Realized and either (i) the Tax Benefit Statement hasbeen accepted or (ii) the Tax Benefit Report has been finalized, asapplicable, the amount to be paid by the Indemnifying Party to the IndemnifiedParty shall be reduced by the amount of such Tax Benefit.  If the Indemnifying Party has paid the claimof the Indemnified Party at the time that such Tax Benefit is Actually Realizedand either (x) the Tax Benefit Statement has been accepted or (y) theTax Benefit Report has been finalized, as applicable, the Indemnified Partyshall pay the Indemnifying Party the amount of such Tax Benefit no later thantwenty (20) business days after such date.

 

10.6.        IntentionallyOmitted

.

10.7.        ExclusiveRemedy.  Other than claims for or inthe nature of fraud or willful misrepresentation, each party hereby acknowledgesand agrees that, from and after the Closing, without limitation of anyavailable equitable remedies, its sole remedy relating to the CCR Units, theBlocker Units, the Business or the subject matter of this Agreement shall bepursuant to the indemnification provisions of this Article 10, Section 7.10,Section 7.4(h) and Section 7.21(c).  In furtherance of the foregoing, each partyhereby waives, from and after the Closing, to the fullest extent permitted bylaw, any and all other rights, claims, and causes of action it may have againstthe other parties or their respective Representatives and Affiliates relatingto the Millennium Units, the HoldCo Units, the Blocker Units, the Business orthe subject matter of this Agreement, other than claims for or in the nature offraud.

 

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10.8.        Adjustmentof Purchase Price.  All payments forindemnification made pursuant to this Agreement shall be treated for all Taxpurposes as an adjustment to the Purchase Price.

** **

**ARTICLE11General**

 

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

 

11.2.        NoThird Party Rights.  Nothing in thisAgreement, express or implied, is intended to confer upon any Person other thanthe parties hereto, any rights or remedies of any nature whatsoever under or byreason of this Agreement or any provision of this Agreement.  This Agreement and all of its provisions andconditions are for the sole and exclusive benefit of the parties to thisAgreement and their respective successors and permitted assigns.

 

11.3.        Counterparts.  This Agreement may be executed simultaneouslyin any number of counterparts, each of which shall be deemed an original, butall of which together shall constitute one and the same instrument.  The parties agree and acknowledge thatdelivery of a signature by facsimile shall constitute execution by suchsignatory.

 

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

 

11.5.        ApplicableLaw.  This Agreement shall begoverned by and construed and enforced in accordance with the internal laws ofthe State of Delaware, regardless of the laws that might otherwise govern underthe applicable principles of conflicts of laws.

 

11.6.        Enforcement.  The parties agree that irreparable damagewould occur and that the parties would not have any adequate remedy at law inthe event that any of the provisions of this Agreement were not performed inaccordance with their specific terms or were otherwise breached. It isaccordingly agreed that the parties shall be entitled to an injunction orinjunctions to prevent breaches of this Agreement and to enforce specificallythe terms and

 

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

 

11.7.        Waiverof Jury Trial.  EACH PARTY TO THISAGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHTIT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT ORPROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

11.8.        Waiverof Conditions

.

### (a)           No claim or rightarising out of this Agreement or the documents referred to in this Agreementcan be discharged by one party, in whole or in part, by a waiver orrenunciation of the claim or right unless in writing signed by the otherparty.  No waiver that may be given by aparty will be applicable except in the specific instance for which it isgiven.  No notice to or demand on oneparty will be deemed to be a waiver of any obligation of such party or of theright of the party giving such notice or demand to take further action withoutnotice or demand as provided in this Agreement or the documents referred to inthis Agreement.

### ** **

### **(b)          **Exceptas otherwise set forth herein, the rights and remedies of the parties heretoare cumulative and not alternative. Except where a specific period for actionor inaction is provided herein, neither the failure nor any delay on the partof any party in exercising any right, power or privilege under this Agreementor the documents referred to in this Agreement shall operate as a waiverthereof, nor shall any waiver on the part of any party of any such right, poweror privilege, nor any single or partial exercise of any such right, power orprivilege, preclude any other or further exercise thereof or the exercise ofany other such right, power or privilege. The failure of a party to exercise any right conferred herein within thetime required shall cause such right to terminate with respect to the transactionor circumstances giving rise to such right, but not to any such right arisingas a result of any other transactions or circumstances.

 

11.9.        TransactionExpenses.  Whether or not thetransactions contemplated by this Agreement or the Escrow Agreement areconsummated, each party shall pay its own fees and expenses incident to thenegotiation, preparation, execution, delivery and performance hereof andthereof, including the fees and expenses of its counsel, accountants and otherexperts, except as expressly provided herein. All fees associated with the investment banking services provided byDeutsche Bank and Mercanti Securities, LLC and legal services of Munger, Tolles &Olson, LLP, Santoro, Driggs, Walch, Kearney, Holley and Thompson, BrownstenHyatt Farber Schreck, DLA Piper US LLP, and Fox Rothschild LLP and all otherservice providers to the Sellers in connection with this Agreement and thetransactions contemplated hereby shall not be expenses of the Companies, andshall be paid by the Sellers at the Closing.

 

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

 

11.11.      Severability.  In case any one or more of the provisionscontained herein shall, for any reason, be held to be invalid, illegal orunenforceable in any respect, such provision or provisions shall be ineffectiveonly to the extent of such invalidity, illegality or unenforceability, withoutinvalidating the remainder of such provision or provisions or the remainingprovisions of this Agreement, and this Agreement shall be construed as if suchinvalid, illegal or unenforceable provision or provisions had never beencontained herein, unless such a construction would be unreasonable.

 

11.12.      Amendments.  This Agreement may only be amended by awritten document signed by the Buyers and the Sellers.  Until such an amendment is signed by bothparties, any other agreements, understandings, writings or oral promises orrepresentations that are at odds with the terms of this Agreement will be of noeffect and will not in any way be binding upon the parties.

 

11.13.      Assignments.

 

### (a)           None of the Buyersnor the Parent may assign any of their rights or obligations under thisAgreement without the prior written consent of the Sellers and any purportedassignment without such consent shall be void, except that each Buyer mayassign this Agreement to its direct or indirect wholly-owned Affiliate.

###  

### (b)           The Sellers may notassign any of their rights or obligations under this Agreement without theprior written consent of the Buyers and any purported assignment without suchconsent shall be void.

 

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

 
| If to the Buyers:                                                  |
|--------------------------------------------------------------------|
|                                                               |
| The Corporation  Trust Company                                     |
| 1209 Orange  Street                                                |
| Wilmington,  Delaware  19801                                  |
| Attention:   Scott Lascala                               |
|       Service  of Process Department |
| Facsimile:  (302) 655-7813                                    |

 

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| With a copy to:                                    |
|----------------------------------------------------|
|                                               |
| Crown Limited                                      |
| 8 Whiteman Street                                  |
| Southbank, Victoria  3006                          |
| Australia                                          |
| Attn: Company Secretary                            |
| Facsimile: + 61 3 9292  8815                       |
|                                               |
| and                                                |
|                                               |
| Skadden, Arps, Slate,  Meagher & Flom LLP |
| Four Times Square                                  |
| New York, New York  10036                          |
| Attn: Patricia Moran                               |
| Facsimile: (212)  735-2000                         |
|                                               |
| If to the Parent:                                  |
|                                               |
| Crown Limited                                      |
| 8 Whiteman Street                                  |
| Southbank, Victoria  3006                          |
| Australia                                          |
| Attn: Company Secretary                            |
| Facsimile: + 61 3 9292  8815                       |
|                                               |
| With a copy to:                                    |
|                                               |
| Skadden, Arps, Slate,  Meagher & Flom LLP |
| Four Times Square                                  |
| New York, New York  10036                          |
| Attn: Patricia Moran                               |
| Facsimile: (212)  735-2000                         |
|                                               |
| If to the Sellers:                                 |
|                                               |
| Millennium  Gaming, Inc.                      |
| 9107 West Russell Road                             |
| Las Vegas, Nevada 89148                            |
| Attn: Chief Executive  Officer                     |
| Facsimile: (702)  856-5101                         |
|                                               |
| and                                                |

 

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| OCM Holdco, LLC                          |
|------------------------------------------|
| 333 South Grand Avenue,  28th Floor |
| Los Angeles, California 90071            |
| Attn: Stephen A. Kaplan                  |
| Facsimile: (213)  830-6377               |
|                                     |
| With a copy to:                          |
|                                     |
| Munger,  Tolles & Olson LLP     |
| 355 South Grand Avenue,  35th Floor |
| Los Angeles, California 90071            |
| Attn: Sandra A. Seville-Jones            |
| Facsimile: (213)  683-5126               |

 

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

 

11.15.      FurtherAssurances.  Without limiting theprovisions of Section 7.4, the parties hereto shall usecommercially reasonable efforts to do and perform or cause to be done andperformed all such further acts and things and shall execute and deliver allsuch other agreements, certificates, instruments or documents as any otherparty may reasonably request in order to carry out the intent and purposes of thisAgreement and the consummation of the transactions contemplated hereby.

 

11.16.      Confidentiality.  The disclosure of confidential or proprietaryinformation by the Sellers or the Buyers to the other shall be governed by theterms and conditions of the Confidentiality Agreement.  Notwithstanding anything to the contrary setforth herein or in any other understanding or agreement between the partieshereto, the parties acknowledge and agree that any obligations of confidentialitycontained herein and therein shall not apply to the tax treatment and taxstructure of this Agreement upon the earlier to occur of (i) the date ofthe public announcement of discussions relating to the sale and purchasedescribed herein, (ii) the date of the public announcement of sale andpurchase described herein, or (iii) the date of the execution of thisAgreement, all within the meaning of Treasury Regulations Section 1.6011-4;provided, however, that theforegoing is not intended to affect each party’s privilege to maintain, in itssole discretion, the confidentiality of communications with its attorneys orwith a federally authorized tax practitioner under Section 7525 of theInternal Revenue Code.

 

11.17.      AdditionalRules of Construction.  Thefollowing provisions shall be applied wherever appropriate herein:

###  

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

 

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### (b)           all definitions setforth herein shall be deemed applicable whether the words defined are usedherein in the singular or the plural;

###  

### (c)           all pronouns and anyvariations thereof refer to the masculine, feminine or neuter, singular orplural, as the context may require;

###  

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

###  

### (e)           all accounting termsnot specifically defined herein shall be construed in accordance with GAAP;

###  

### (f)            the captions anddescriptive headings herein are included for convenience of reference only andshall be ignored in the construction or interpretation hereof;

###  

### (g)           any referencesherein to a particular Section, Article, Exhibit or Schedule means a Section orArticle of, or an Exhibit or Schedule to, this Agreement unlessanother agreement is specified;

###  

### (h)           the Exhibits and theSellers Disclosure Schedules attached hereto are incorporated herein byreference and shall be considered part of this Agreement as if fully set forthherein; and

###  

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

 

11.18.      Enforcementof this Agreement.  Subject to Section 11.6above, the parties hereto agree that money damages or other remedy at law wouldnot be sufficient or adequate remedy for any breach or violation of, or defaultunder, this Agreement by them and that in addition to all other remediesavailable to them, each of them shall be entitled to the fullest extentpermitted by law to an injunction restraining such breach, violation or defaultand to other equitable relief, including specific performance, with bond orother security being required.

 

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

** **

**[SignaturePages Follow]**

 

94

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

 

 
| Signed for CROWN LIMITED by its         |   |                      |
|-----------------------------------------|--------|---------------------------|
| attorney under power of attorney in the |   |                      |
| presence of:                            |   |                      |
|                                    |   |                      |
| /s/ Garry Besson                        |   | /s/Guy Jalland            |
| Signature of witness                    |   | Signature of attorney     |
|                                    |   |                      |
| Garry Besson                            |   | Guy Jalland               |
| Name of witness (print)                 |   | Name of attorney (print)  |
|                                    |   |                      |
|                                    |   |                      |
| Signed for CROWN CCR GROUP              |   |                      |
| INVESTMENTS ONE, LLC by its             |   |                      |
| attorney under power of attorney in the |   |                      |
| presence of:                            |   |                      |
|                                    |   |                      |
| /s/ Garry Besson                        |   | /s/Guy Jalland            |
| Signature of witness                    |   | Signature of attorney     |
|                                    |   |                      |
| Garry  Besson                           |   | Guy  Jalland              |
| Name  of witness (print)                |   | Name  of attorney (print) |
|                                    |   |                      |
|                                    |   |                      |
| Signed for CROWN CCR GROUP              |   |                      |
| INVESTMENTS TWO, LLC by its             |   |                      |
| attorney under power of attorney in the |   |                      |
| presence of:                            |   |                      |
|                                    |   |                      |
| /s/ Garry Besson                        |   | /s/Guy Jalland            |
| Signature of witness                    |   | Signature of attorney     |
|                                    |   |                      |
| Garry  Besson                           |   | Guy  Jalland              |
| Name  of witness (print)                |   | Name  of attorney (print) |

 

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**SELLERS:**

 
| **MILLENNIUM  GAMING, INC.** |                   |
|------------------------------|------------------------|
|                         |                   |
|                         |                   |
| By:                          | /s/  William J. Paulos |   |
| Name:                        | William J. Paulos      |   |
| Title:                       | President              |   |
|                         |                   |
|                         |                   |
| **OCM  HOLDCO, LLC**         |                   |
|                         |                   |
|                         |                   |
| By:                          | /s/  Stephen A. Kaplan |   |
| Name:                        | Stephen A. Kaplan      |   |
| Title:                       | Manager                |   |
|                         |                   |
|                         |                   |
| By:                          | /s/  Ronald N. Beck    |   |
| Name:                        | Ronald N. Beck         |   |
| Title:                       | Manager                |   |
|                              |                        |  |  |

 

 

**COMPANY**:

 
| **CANNERY  CASINO RESORTS, LLC** |                    |
|----------------------------------|-------------------------|
|                             |                    |
|                             |                    |
| By:                              | /s/  William C. Wortman |   |
| Name:                            | William C. Wortman      |   |
| Title:                           | Manager                 |   |
|                                  |                         |  |  |

 

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