Document:

EXHIBIT
10.4

 

AMENDMENT NO. 4 TO BRIDGE LOAN AGREEMENT

 

AMENDMENT NO. 4 TO BRIDGE LOAN
AGREEMENT (“Amendment”),
dated effective August 10, 2009, is made by and among Granite City Food &
Brewery Ltd. (“Granite City”), and Granite City Restaurant Operations, Inc.
(“GCROI”) and Harmony Equity Income Fund, L.L.C. and Harmony Equity Income Fund
II, L.L.C., each South Dakota limited liability companies.

 

RECITALS

 

1.                                       This Amendment amends the Bridge Loan
Agreement by and among the foregoing parties dated March 30, 2009 (as
amended, the “Agreement”).

 

2.                                       All capitalized terms used in this
Amendment and not otherwise defined shall have the meanings set forth in the
Agreement.

 

3.                                       The parties hereto desire to extend the
date by which the Lenders are required to make additional loans to the
Borrowers.

 

In consideration of the foregoing, the parties hereto
agree as follows:

 

(a)           Loans. 
The reference to “April 30, 2009” in Section 2.1 of the
Agreement is hereby replaced with “September 30, 2009.”

 

(b)           Remainder of Agreement. 
Except as provided herein, the terms of the Agreement unaffected by the
Amendment shall remain in full force and effect.

 

[Signature Pages Follow]

 

 

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

 

	
  BORROWERS:

  	
   

  	
  GRANITE CITY FOOD &
  BREWERY LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James G. Gilbertson

  
	
   

  	
   

  	
   

  	
  Name: James G.
  Gilbertson

  
	
   

  	
   

  	
   

  	
  Its: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  5402 Parkdale Drive,
  Suite 101

  
	
   

  	
   

  	
  Minneapolis, MN 55416

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GRANITE CITY RESTAURANT
  OPERATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James G. Gilbertson

  
	
   

  	
   

  	
   

  	
  Name: James G.
  Gilbertson

  
	
   

  	
   

  	
   

  	
  Its: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  5402 Parkdale Drive,
  Suite 101

  
	
   

  	
   

  	
  Minneapolis, MN 55416

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ADMINISTRATIVE AGENT:

  	
   

  	
  HARMONY EQUITY INCOME FUND,
  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Eugene E. McGowan

  
	
   

  	
   

  	
   

  	
  Name: Eugene E. McGowan

  
	
   

  	
   

  	
   

  	
  Its: Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  201 S. Phillips Avenue,
  Suite 100

  
	
   

  	
   

  	
  Sioux Falls, SD 57104

  
					

 

 

	
  LENDERS:

  	
   

  	
  HARMONY EQUITY INCOME FUND,
  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Eugene E. McGowan

  
	
   

  	
   

  	
   

  	
  Name: Eugene E. McGowan

  
	
   

  	
   

  	
   

  	
  Its: Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  201 S. Phillips Avenue,
  Suite 100

  
	
   

  	
   

  	
  Sioux Falls, SD 57104

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HARMONY EQUITY INCOME FUND,
  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Eugene E. McGowan

  
	
   

  	
   

  	
   

  	
  Name: Eugene E. McGowan

  
	
   

  	
   

  	
   

  	
  Its: Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
  201 S. Phillips Avenue,
  Suite 100

  
	
   

  	
   

  	
  Sioux Falls, SD 57104Exhibit 4.1

 

EXECUTION VERSION

 

PENN NATIONAL GAMING, INC.,

 

and

 

Wells Fargo Bank, National Association,

as Trustee

 

$325,000,000

83/4% SENIOR SUBORDINATED NOTES
DUE 2019

 

INDENTURE

 

Dated as of August 14, 2009

 

 

CROSS-REFERENCE
TABLE*

 

	
  Trust
  Indenture

  Act Section

  	
   

  	
  Indenture Section

  
	
  310(a)(1)

  	
   

  	
  7.10

  
	
        (a)(2)

  	
   

  	
  7.10

  
	
        (a)(3)

  	
   

  	
  N.A.

  
	
        (a)(4)

  	
   

  	
  N.A.

  
	
        (a)(5)

  	
   

  	
  7.10

  
	
        (b)

  	
   

  	
  7.10

  
	
        (c)

  	
   

  	
  N.A.

  
	
  311(a)

  	
   

  	
  7.11

  
	
        (b)

  	
   

  	
  7.11

  
	
        (c)

  	
   

  	
  N.A.

  
	
  312(a)

  	
   

  	
  2.05

  
	
        (b)

  	
   

  	
  13.03

  
	
        (c)

  	
   

  	
  13.03

  
	
  313(a)

  	
   

  	
  7.06

  
	
        (b)(1)

  	
   

  	
  10.02

  
	
        (b)(2)

  	
   

  	
  7.07

  
	
        (c)

  	
   

  	
  7.06; 13.02

  
	
        (d)

  	
   

  	
  7.06

  
	
  314(a)

  	
   

  	
  4.03; 13.02

  
	
        (c)(1)

  	
   

  	
  13.04

  
	
        (c)(2)

  	
   

  	
  13.04

  
	
        (c)(3)

  	
   

  	
  N.A.

  
	
        (e)

  	
   

  	
  13.05

  
	
        (f)

  	
   

  	
  N.A.

  
	
  315(a)

  	
   

  	
  7.01

  
	
        (b)

  	
   

  	
  7.05; 13.02

  
	
        (c)

  	
   

  	
  7.01

  
	
        (d)

  	
   

  	
  7.01

  
	
        (e)

  	
   

  	
  6.11

  
	
  316(a)
  (last sentence)

  	
   

  	
  2.09

  
	
        (a)(1)(A)

  	
   

  	
  6.05

  
	
        (a)(1)(B)

  	
   

  	
  6.04

  
	
        (a)(2)

  	
   

  	
  N.A.

  
	
        (b)

  	
   

  	
  6.07

  
	
        (c)

  	
   

  	
  2.12

  
	
  317(a)(1)

  	
   

  	
  6.08

  
	
        (a)(2)

  	
   

  	
  6.09

  
	
        (b)

  	
   

  	
  2.04

  
	
  318(a)

  	
   

  	
  13.01

  
	
        (b)

  	
   

  	
  N.A.

  
	
        (c)

  	
   

  	
  13.01

  

 

N.A.  means not applicable.

·      This Cross-Reference Table
is not part of this Indenture.

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE 1

  
	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  
	
   

  
	
  Section 1.01.

  	
  Definitions

  	
  1

  
	
  Section 1.02.

  	
  Other Definitions

  	
  33

  
	
  Section 1.03.

  	
  Incorporation by Reference of Trust Indenture Act

  	
  33

  
	
  Section 1.04.

  	
  Rules of Construction

  	
  34

  
	
   

  
	
  ARTICLE 2

  
	
   

  
	
  THE NOTES

  
	
   

  
	
  Section 2.01.

  	
  Form and Dating

  	
  34

  
	
  Section 2.02.

  	
  Execution and Authentication

  	
  35

  
	
  Section 2.03.

  	
  Registrar and Paying Agent

  	
  36

  
	
  Section 2.04.

  	
  Paying Agent To Hold Money in Trust

  	
  36

  
	
  Section 2.05.

  	
  Holder Lists

  	
  36

  
	
  Section 2.06.

  	
  Transfer and Exchange

  	
  36

  
	
  Section 2.07.

  	
  Replacement Notes

  	
  48

  
	
  Section 2.08.

  	
  Outstanding Notes

  	
  48

  
	
  Section 2.09.

  	
  Treasury Notes

  	
  48

  
	
  Section 2.10.

  	
  Temporary Notes

  	
  49

  
	
  Section 2.11.

  	
  Cancellation

  	
  49

  
	
  Section 2.12.

  	
  Defaulted Interest

  	
  49

  
	
  Section 2.13.

  	
  Issuance of Additional Notes

  	
  49

  
	
  Section 2.14.

  	
  Designation

  	
  50

  
	
  Section 2.15.

  	
  CUSIP Numbers

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
   

  
	
  REDEMPTION AND PREPAYMENT

  
	
   

  
	
  Section 3.01.

  	
  Notices to Trustee

  	
  50

  
	
  Section 3.02.

  	
  Selection of Notes To Be Redeemed

  	
  50

  
	
  Section 3.03.

  	
  Notice of Redemption

  	
  51

  
	
  Section 3.04.

  	
  Effect of Notice of Redemption

  	
  52

  
	
  Section 3.05.

  	
  Deposit of Redemption or Purchase Price

  	
  52

  
	
  Section 3.06.

  	
  Notes Redeemed or Purchased in Part

  	
  52

  
	
  Section 3.07.

  	
  Optional Redemption and Gaming Redemption

  	
  52

  
	
  Section 3.08.

  	
  Mandatory Redemption

  	
  53

  
	
  Section 3.09.

  	
  Offer To Purchase by Application of Excess Proceeds

  	
  54

  

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  
	
  ARTICLE 4

  
	
   

  
	
  COVENANTS

  
	
   

  
	
  Section 4.01.

  	
  Payment of Notes

  	
  55

  
	
  Section 4.02.

  	
  Maintenance of Office or Agency

  	
  56

  
	
  Section 4.03.

  	
  Reports

  	
  56

  
	
  Section 4.04.

  	
  Compliance Certificate

  	
  56

  
	
  Section 4.05.

  	
  Taxes

  	
  57

  
	
  Section 4.06.

  	
  Stay, Extension and Usury Laws

  	
  57

  
	
  Section 4.07.

  	
  Restricted Payments

  	
  57

  
	
  Section 4.08.

  	
  Dividend and Other Payment Restrictions Affecting
  Subsidiaries

  	
  62

  
	
  Section 4.09.

  	
  Incurrence of Indebtedness and Issuance of Preferred Stock

  	
  64

  
	
  Section 4.10.

  	
  Asset Sales

  	
  68

  
	
  Section 4.11.

  	
  Transactions with Affiliates

  	
  70

  
	
  Section 4.12.

  	
  Liens

  	
  71

  
	
  Section 4.13.

  	
  Corporate Existence

  	
  72

  
	
  Section 4.14.

  	
  Offer To Repurchase upon Change of Control and Ratings
  Decline

  	
  72

  
	
  Section 4.15.

  	
  No Senior Subordinated Debt; No Guarantees of Senior
  Subordinated Debt Securities

  	
  74

  
	
  Section 4.16.

  	
  Payments for Consent

  	
  74

  
	
  Section 4.17.

  	
  Designation of Restricted and Unrestricted Subsidiaries

  	
  74

  
	
  Section 4.18.

  	
  Business Activities

  	
  75

  
	
  Section 4.19.

  	
  Payment of Liquidated Damages

  	
  75

  
	
  Section 4.20.

  	
  Covenant Suspension

  	
  75

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
   

  
	
  SUCCESSORS

  
	
   

  
	
  Section 5.01.

  	
  Merger, Consolidation or Sale of Assets

  	
  76

  
	
  Section 5.02.

  	
  Successor Corporation Substituted

  	
  77

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  
	
   

  
	
  DEFAULTS AND REMEDIES

  
	
   

  
	
  Section 6.01.

  	
  Events of Default

  	
  78

  
	
  Section 6.02.

  	
  Acceleration

  	
  80

  
	
  Section 6.03.

  	
  Other Remedies

  	
  80

  
	
  Section 6.04.

  	
  Waiver of Past Defaults

  	
  80

  
	
  Section 6.05.

  	
  Control by Majority

  	
  80

  
	
  Section 6.06.

  	
  Limitation on Suits

  	
  81

  
	
  Section 6.07.

  	
  Rights of Holders of Notes To Receive Payment

  	
  81

  
	
  Section 6.08.

  	
  Collection Suit by Trustee

  	
  81

  
	
  Section 6.09.

  	
  Trustee May File Proofs of Claim

  	
  81

  
	
  Section 6.10.

  	
  Priorities

  	
  82

  
	
  Section 6.11.

  	
  Undertaking for Costs

  	
  82

  

 

ii

 

	
   

  	
   

  	
  Page

  
	
  ARTICLE 7

  
	
   

  
	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Duties of Trustee

  	
  82

  
	
  Section 7.02.

  	
  Rights of Trustee

  	
  83

  
	
  Section 7.03.

  	
  Individual Rights of Trustee

  	
  84

  
	
  Section 7.04.

  	
  Trustee’s Disclaimer

  	
  85

  
	
  Section 7.05.

  	
  Notice of Defaults

  	
  85

  
	
  Section 7.06.

  	
  Reports by Trustee to Holders of the Notes

  	
  85

  
	
  Section 7.07.

  	
  Compensation and Indemnity

  	
  85

  
	
  Section 7.08.

  	
  Replacement of Trustee

  	
  86

  
	
  Section 7.09.

  	
  Successor Trustee by Merger, etc.

  	
  87

  
	
  Section 7.10.

  	
  Eligibility; Disqualification

  	
  87

  
	
  Section 7.11.

  	
  Preferential Collection of Claims Against Company

  	
  87

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  
	
   

  
	
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  
	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Option To Effect Legal Defeasance or Covenant Defeasance

  	
  87

  
	
  Section 8.02.

  	
  Legal Defeasance and Discharge

  	
  87

  
	
  Section 8.03.

  	
  Covenant Defeasance

  	
  88

  
	
  Section 8.04.

  	
  Conditions to Legal or Covenant Defeasance

  	
  88

  
	
  Section 8.05.

  	
  Deposited Money and Government Securities To Be Held in
  Trust; Other Miscellaneous Provisions

  	
  89

  
	
  Section 8.06.

  	
  Repayment to Company

  	
  90

  
	
  Section 8.07.

  	
  Reinstatement

  	
  90

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  
	
   

  
	
  AMENDMENT, SUPPLEMENT AND WAIVER

  
	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
  Without Consent of Holders of Notes

  	
  91

  
	
  Section 9.02.

  	
  With Consent of Holders of Notes

  	
  92

  
	
  Section 9.03.

  	
  Compliance with Trust Indenture Act

  	
  93

  
	
  Section 9.04.

  	
  Revocation and Effect of Consents

  	
  93

  
	
  Section 9.05.

  	
  Notation on or Exchange of Notes

  	
  93

  
	
  Section 9.06.

  	
  Trustee To Sign Amendments, etc.

  	
  93

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  
	
   

  
	
  SUBORDINATION

  
	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Agreement To Subordinate

  	
  94

  
	
  Section 10.02.

  	
  Liquidation; Dissolution; Bankruptcy

  	
  94

  
	
  Section 10.03.

  	
  Default on Designated Senior Debt

  	
  94

  
	
  Section 10.04.

  	
  Acceleration of Securities

  	
  95

  
	
  Section 10.05.

  	
  When Distribution Must Be Paid Over

  	
  95

  
	
  Section 10.06.

  	
  Notice by Company

  	
  96

  
	
  Section 10.07.

  	
  Subrogation

  	
  96

  

 

iii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 10.08.

  	
  Relative Rights

  	
  96

  
	
  Section 10.09.

  	
  Subordination May Not Be Impaired by Company

  	
  96

  
	
  Section 10.10.

  	
  Distribution or Notice to Representative

  	
  96

  
	
  Section 10.11.

  	
  Rights of Trustee and Paying Agent

  	
  97

  
	
  Section 10.12.

  	
  Authorization To Effect Subordination

  	
  97

  
	
  Section 10.13.

  	
  Amendments

  	
  97

  
	
   

  	
   

  	
  96

  
	
  ARTICLE 11

  
	
   

  
	
  SUBSIDIARY GUARANTEES

  
	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Guarantee

  	
  97

  
	
  Section 11.02.

  	
  Subordination of Subsidiary Guarantee

  	
  98

  
	
  Section 11.03.

  	
  Limitation on Guarantor Liability

  	
  99

  
	
  Section 11.04.

  	
  Execution and Delivery of Subsidiary Guarantee and
  Supplemental Indenture

  	
  99

  
	
  Section 11.05.

  	
  Guarantors May Consolidate, etc., on Certain Terms

  	
  99

  
	
  Section 11.06.

  	
  Releases Following Sale

  	
  100

  
	
  Section 11.07.

  	
  Discharge of Subsidiary Guarantee

  	
  100

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  
	
   

  
	
  SATISFACTION AND DISCHARGE

  
	
   

  	
   

  	
   

  
	
  Section 12.01.

  	
  Satisfaction and Discharge

  	
  101

  
	
  Section 12.02.

  	
  Application of Trust Money

  	
  102

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  
	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 13.01.

  	
  Trust Indenture Act Controls

  	
  102

  
	
  Section 13.02.

  	
  Notices

  	
  102

  
	
  Section 13.03.

  	
  Communication by Holders of Notes with Other Holders of
  Notes

  	
  103

  
	
  Section 13.04.

  	
  Certificate and Opinion as to Conditions Precedent

  	
  104

  
	
  Section 13.05.

  	
  Statements Required in Certificate or Opinion

  	
  104

  
	
  Section 13.06.

  	
  Rules by Trustee and Agents

  	
  104

  
	
  Section 13.07.

  	
  No Personal Liability of Directors, Officers, Employees and
  Stockholders

  	
  104

  
	
  Section 13.08.

  	
  Governing Law

  	
  105

  
	
  Section 13.09.

  	
  No Adverse Interpretation of Other Agreements

  	
  105

  
	
  Section 13.10.

  	
  Successors

  	
  105

  
	
  Section 13.11.

  	
  Severability

  	
  105

  
	
  Section 13.12.

  	
  Counterpart Originals

  	
  105

  
	
  Section 13.13.

  	
  Table of Contents, Headings, etc.

  	
  106

  
	
  Section 13.14.

  	
  Force Majeure

  	
  106

  
	
  Section 13.15.

  	
  U.S.A. Patriot Act

  	
  106

  

 

iv

 

EXHIBITS

 

	
  Exhibit
  A

  	
   

  	
  FORM
  OF NOTE

  
	
  Exhibit
  B

  	
   

  	
  FORM
  OF CERTIFICATE OF TRANSFER

  
	
  Exhibit
  C

  	
   

  	
  FORM
  OF CERTIFICATE OF EXCHANGE

  
	
  Exhibit
  D

  	
   

  	
  FORM
  OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

  
	
  Exhibit
  E

  	
   

  	
  FORM
  OF SUBSIDIARY GUARANTEE

  
	
  Exhibit
  F

  	
   

  	
  FORM
  OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT GUARANTORS

  

 

v

 

INDENTURE dated as of August 14, 2009 between Penn
National Gaming, Inc., a Pennsylvania corporation (the “Company”) and
Wells Fargo Bank, National Association, as trustee (the “Trustee”).

 

The Company and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 83/4% Series A Senior
Subordinated Notes due 2019 (the “Series A Notes”) and the 83/4% Series B Senior Subordinated Notes due 2019 (the “Series
B Notes” and, together with the Series A Notes, the “Notes”) in the
form of Initial Notes (as defined below), and, if and when issued, such
Additional Notes (as defined below) that the Company may from time to time
choose to issue pursuant to this Indenture, in each case issuable as provided
in this Indenture.  References herein to
the “Notes” shall include the Initial Notes and the Additional
Notes.  All things necessary to make this
Indenture a valid and legally binding agreement of the Company, in accordance
with its terms, have been done, and the Company has done all things necessary
to make the Notes, when executed by the Company, and authenticated and
delivered by the Trustee hereunder and duly issued by the Company, valid and legally
binding obligations of the Company.

 

ARTICLE 1

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.                             Definitions.

 

“111/8% Issue Date” means March 12,
2001.

 

“Acquired Debt”
means, with respect to any specified Person:

 

(a)           Indebtedness of any other Person existing at the time such
other Person is merged with or into or becomes a Restricted Subsidiary
(including by designation) of such specified Person, whether or not such
Indebtedness is incurred in connection with, or in contemplation of, such other
Person merging with or into, or becoming a Restricted Subsidiary of, such
specified Person; and

 

(b)           Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person;

 

provided that, for the avoidance of doubt, if such
Indebtedness is repurchased, redeemed, retired, defeased (whether by covenant or
legal defeasance), discharged or otherwise repaid (or if irrevocable deposit
has been made for the purpose of such repurchase, redemption, retirement,
defeasance (whether by covenant or legal defeasance), discharge or repayment)
at the time, or substantially concurrently with the consummation, of the
transaction by which such Person is merged with or into or became a Restricted
Subsidiary (including by designation) of such specified Person, then such
Indebtedness shall not constitute Acquired Debt.  Acquired Debt shall be deemed to be incurred
on the date of the related acquisition of assets from a Person or the date a
Person becomes a Restricted Subsidiary.

 

“Additional Notes”
means, subject to the Company’s compliance with Sections 2.13 and 4.09, 83/4% Senior Subordinated Notes due 2019 substantially
in the form of Exhibit A and, if required, containing the Private
Placement Legend, issued from time to time after the Issue Date under the terms
of this Indenture (other than issuances pursuant to Section 2.06, 2.07, 2.10,
3.06, 4.14 or 9.05 of this Indenture and any Exchange Notes Issued in respect
thereof).

 

 

“Affiliate” of
any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified
Person.  For purposes of this definition,
“control,” as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; provided that Beneficial Ownership of 10%
or more of the Voting Stock of a Person will be deemed to be control.  For purposes of this definition, the terms “controlling,” “controlled by” and “under
common control with” have correlative meanings.

 

“Agent” means
any Registrar, Paying Agent or co-registrar.

 

“Applicable Procedures”
means, with respect to any transfer or exchange of or for beneficial interests
in any Global Note, the rules and procedures of the Depositary, Euroclear and
Clearstream that apply to such transfer or exchange.

 

“Asset Sale”
means:

 

(a)           the sale, lease, conveyance or other disposition of any
assets; provided that the sale, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole or any disposition that constitutes a Change
of Control shall not constitute an Asset Sale and shall be governed by the
provisions of Section 4.14 and/or Section 5.01 hereof and not by the provisions
of Section 4.10; and

 

(b)           the issuance or sale of Equity Interests in any of the
Company’s Restricted Subsidiaries (other than preferred stock issued in
compliance with the provisions of Section 4.09 hereof);

 

provided, however, that notwithstanding the preceding, the following
items will not be deemed to be Asset Sales:

 

(i)            any single transaction or series of related transactions
that involves assets or Equity Interests having a fair market value of less
than $20.0 million;

 

(ii)           a transfer of assets between or among the Company and any
of its Restricted Subsidiaries;

 

(iii)          an issuance of Equity Interests by any Restricted
Subsidiary to the Company or to any other Restricted Subsidiary;

 

(iv)          the sale, exchange for replacement items or lease of
equipment, inventory, accounts receivable or other assets in the ordinary
course of business;

 

(v)           (A) sales, transfers or other dispositions of used, worn
out, obsolete, damaged or surplus property, or property otherwise unsuitable
for use in connection with the business, by the Company and its Restricted
Subsidiaries in the ordinary course of business, and (B) the abandonment or
other sale, transfer or other disposition of intellectual property that is, in
the judgment of the Company, no longer economically practicable to maintain or
useful in the conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole;

 

(vi)          the sale or other disposition of cash or Cash Equivalents
or Investment Grade Securities;

 

2

 

(vii)         a Restricted Payment or Permitted Investment that is
permitted by Section 4.07 hereof;

 

(viii)        (A) the issuance or sale of directors’
qualifying shares or (B) the issuance, sale or transfer of Equity Interests of
foreign Restricted Subsidiaries to foreign nationals to the extent required by
applicable law;

 

(xi)           leases (as lessor or sublessor) of real or personal
property and guaranties of any such lease in the ordinary course of business;

 

(x)            licenses and sublicenses by the Company or any of its
Restricted Subsidiaries of software, intellectual property and other general
intangibles in the ordinary course of business;

 

(xi)           terminations of Hedging Obligations;

 

(xii)          any settlement, release, waiver or surrender of contract
rights or contract, tort or other litigation claims in the ordinary course of
business;

 

(xiii)         sales of Unrestricted Subsidiaries or
joint ventures, or Equity Interests or other Investments therein, or assets
thereof;

 

(xiv)        the occurrence of any Trigger Event; and

 

(xv)         the grant of any Liens not prohibited by this Indenture and
any exercise of remedies in respect thereof.

 

In addition, for the avoidance of doubt,
conveyances, sales, leases, assignments, transfers or other dispositions which
would otherwise constitute Asset Sales but for the dollar thresholds contained
in the definition of Asset Sales shall be permitted.

 

“Bankruptcy Law”
means Title 11, U.S.  Code or any similar
federal or state law for the relief of debtors.

 

“Beneficial Owner”
has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the
Exchange Act.  The terms “Beneficially Owns” and “Beneficially Owned”
have a corresponding meaning.

 

“Board of Directors”
means:

 

(a)           with respect to a corporation, the board of directors of
the corporation;

 

(b)           with respect to a partnership, the Board of Directors of
the general partner of the partnership; and

 

(c)           with respect to any other Person, the board or committee
of such Person serving a similar function.

 

“Broker-Dealer”
has the meaning set forth in the Registration Rights Agreement.

 

“Business Day”
means any day other than a Legal Holiday.

 

3

 

“Capital Lease Obligation”
means, at the time any determination is to be made, the amount of the liability
in respect of a capital lease that would at that time be required to be capitalized
on a balance sheet in accordance with GAAP.

 

“Capital Stock”
means:

 

(1)           in
the case of a corporation, corporate stock;

 

(2)           in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock;

 

(3)           in
the case of a partnership or limited liability company, partnership or membership
interests (whether general or limited); and

 

(4)           any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.

 

“Cash Equivalents”
means:

 

(1)           United
States dollars, Canadian dollars, Euros or any national currency of any participating
member state of the European Union or such local currencies held by the Company
and its Subsidiaries from time to time in the ordinary course of business;

 

(2)           securities
issued or directly and fully guaranteed or insured by the United States
government, Canada or any country that is a member of the European Union or any
agency or instrumentality thereof (provided that
the full faith and credit of the United States is pledged in support of those
securities that are issued by the United States government) having maturities
of not more than two years after the date of acquisition;

 

(3)           securities
issued or directly and fully guaranteed or insured by any state of the United
States of America or any agency or instrumentality thereof (and that are rated
at the time of acquisition within one of the two highest ratings for such
securities by Moody’s or S&P) having maturities of not more than two years
after the date of acquisition;

 

(4)           certificates
of deposit, time deposits and Eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers’ acceptances with maturities
not exceeding one year and overnight bank deposits, in each case, with any
lender party to the Credit Facilities or with any commercial bank having
capital and surplus of at least $250.0 million at the time of acquisition;

 

(5)           repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clauses (2) through (4) above entered into with any
financial institution meeting the qualifications specified in clause (4) above
at the time of acquisition;

 

(6)           commercial
paper rated at the time of acquisition within one of the two highest ratings
obtainable for such securities by Moody’s or S&P and maturing within two
years after the date of acquisition;

 

(7)           marketable
short term money market and similar securities having the highest rating
obtainable from Moody’s and S&P at the time of acquisition and in each case
maturing within two years after the date of acquisition;

 

4

 

(8)           other
dollar denominated securities issued by any Person incorporated in the United
States rated at least “A” or the equivalent by S&P or at least “A2” or the
equivalent by Moody’s and maturing not more than two years after the date of
acquisition; and

 

(9)           money
market funds that invest primarily in Cash Equivalents of the kinds described
in clauses (1) through (8) of this definition.

 

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

 

(1)           the
direct or indirect sale, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole to any “person” (as that term is used
in Section 13(d) of the Exchange Act) other than a Principal or a Related Party
of a Principal or to the Company or any of its Restricted Subsidiaries;

 

(2)           the
adoption by shareholders of a plan relating to the liquidation or dissolution
of the Company;

 

(3)           the
consummation of any transaction (including any merger or consolidation) the result
of which is that any “person” (as defined above), other than the Principals and
their Related Parties or any holding company which owns 100% of the Voting
Stock of the Company (so long as no Change of Control would otherwise have
occurred in respect of the Voting Stock of such holding company), becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock
of the Company, measured by voting power rather than number of shares;

 

(4)           the
consummation of any transaction (including any merger or consolidation) the result
of which is that the Principals and their Related Parties (or any one of them)
(other than any holding company which owns 100% of the Voting Stock of the
Company (so long as no Change of Control would otherwise have occurred in
respect of the Voting Stock of such holding company)), becomes the Beneficial
Owner, directly or indirectly, of more than 662/3% of the Voting Stock of the Company, measured by voting power rather than
number of shares; or

 

(5)           the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors.

 

“Change of Control
Triggering Event” means the occurrence of both (1) a Change of
Control and (2) a Rating Decline.

 

“Clearstream”
means Clearstream Banking, S.A.

 

“Company Order”
means a written request or order signed in the name of the Company by officers
who sign an Officers’ Certificate.

 

“Comparable Treasury Issue”
means the United States Treasury security selected by a Reference Treasury
Dealer appointed by the Company as having a maturity comparable to the
remaining term of the Notes (as if the final maturity of the Notes was August 15,
2014) that would be utilized at the time of selection and in accordance with
customary financial practice in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the Notes (as if the final
maturity of the Notes was August 15, 2014).

 

“Comparable Treasury Price”
means, with respect to any redemption date:

 

5

 

(1)           the
average of the bid and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) on the third business day
preceding such redemption date, as set forth in the daily statistical release
(or any successor release) published by the Federal Reserve Bank of New York
and designated “Composite 3:30 p.m.  Quotations
for U.S. Government Securities;” or

 

(2)           if
such release (or any successor release) is not published or does not contain
such prices on such business day, (A) the average of the Reference Treasury
Dealer Quotations for such redemption date, after excluding the highest and
lowest such Reference Treasury Dealer Quotation or (B) if the Company obtains
fewer than three such Reference Treasury Dealer Quotations, the average of all
such Reference Treasury Dealer Quotations.

 

“Consolidated Cash Flow”
means, with respect to any specified Person for any period, the Consolidated
Net Income of such Person for such period plus (without
duplication):

 

(1)           provision
for taxes based on income or profits or capital gains, plus franchise or
similar taxes, of such Person and its Restricted Subsidiaries for such period,
to the extent deducted in computing such Consolidated Net Income; plus

 

(2)           consolidated
interest expense of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued and whether or not capitalized (including any
amortization or write-off of deferred financing costs or debt issuance costs,
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations and the interest component of all payments associated
with Capital Lease Obligations, (net of the effect of all payments made or
received pursuant to Hedging Obligations related to interest rates), to the extent
that any such expense was deducted in computing such Consolidated Net Income; plus

 

(3)           any
cost, charge, fee or expense (including discounts and commissions and including
fees and charges incurred in respect of letters of credit or bankers acceptance
financings) or loss associated with any Financing Activity, to the extent
deducted in computing such Consolidated Net Income; minus
any gain associated with any Financing Activity to the extent increasing Consolidated
Net Income; plus

 

(4)           depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period on or prior to the final Stated Maturity of the notes or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income (or Net Income); plus

 

(5)           to
the extent deducted in computing such Consolidated Net Income, any Pre-Opening
Expenses; plus

 

(6)           the
amount of any restructuring charges or reserve (including those relating to
severance, relocation costs and one-time compensation charges) and any unusual
or non-recurring items of loss or expense deducted in such period in computing
Consolidated Net Income, minus any
unusual or non-recurring items of income or gain to the extent increasing
Consolidated Net Income for such period; plus

 

6

 

(7)           without
duplication, any other non-cash charges or items of expense, including any
write off or write downs, reducing Consolidated Net Income for such period,
excluding any such charge that represents an accrual or reserve for a cash
expenditure for a future period on or prior to the final Stated Maturity of the
Notes; plus

 

(8)           in
any fiscal quarter during which a purchase of property subject to any operating
lease shall occur and during the three following fiscal quarters, an amount
equal to the quarterly payment in respect of such lease (as if such purchase
did not occur) times (a) 4 (in the case of the quarter in which such purchase occurs),
(b) 3 (in the case of the quarter following such purchase), (c) 2 (in the case
of the second quarter following such purchase) and (d) 1 (in the case of the
third quarter following such purchase), all as determined on a consolidated
basis for the Company and its Restricted Subsidiaries; minus

 

(9)           non-cash
items increasing such Consolidated Net Income for such period, other than the
accrual of revenue in the ordinary course of business, and other than any items
which represent the reversal of any accrual of, or cash reserve for,
anticipated cash charges for any prior period subsequent to the issue date, plus

 

(10)         the
amount of insurance proceeds received during such period or after such period
and on or prior to the date the calculation is made with respect to such
period, attributable to any property which has been closed or had operations
curtailed for any period; provided that
such amount of insurance proceeds shall only be included pursuant to this
clause (10) to the extent that such amount of insurance proceeds plus
Consolidated Cash Flow attributable to such property for such period (without
giving effect to this clause (10)) does not exceed Consolidated Cash Flow
attributable to such property during the most recently completed four fiscal
quarters for which financial results are available that such property was fully
operational (or if such property has not been fully operational for four
consecutive fiscal quarters for which financial results are available prior to
such closure or curtailment, the Consolidated Cash Flow attributable to such
property during the period prior to such closure or curtailment (for which
financial results are available) annualized over four fiscal quarters);

 

in each case, on a consolidated basis and determined in accordance with
GAAP.  Consolidated Cash Flow shall be
further adjusted, in the event of any Expansion Capital Expenditures, by
multiplying the Consolidated Cash Flow attributable to such Expansion Capital
Expenditures (as determined by the Company) during the first three complete
fiscal quarters following completion of such Expansion Capital Expenditures by (x)
4 (with respect to the first such quarter), (y) 2 (with respect to the first
two such quarters), and (z) 4/3 (with respect
to the first three such quarters).

 

“Consolidated Leverage
Ratio” means, with respect to any Person, as of any date of determination,
the ratio of (x) Consolidated Total Indebtedness of such Person as of such date
of determination (the “Calculation Date”), after giving effect to all
transactions to occur on the Calculation Date (including, without limitation,
the merger or consolidation comprising or giving rise to the Change of Control
giving rise to the need to make the calculation of the Consolidated Leverage
Ratio and other mergers, consolidations and transactions to occur in connection
therewith), to (y) Consolidated Cash Flow of such Person for the most recently
ended four full fiscal quarters for which internal financial statements are
available (the “reference period”) immediately
preceding the Calculation Date.  For
purposes of this definition, “Consolidated Cash Flow” shall be calculated after
giving effect on a pro forma basis, without duplication, to:

 

(i)            acquisitions
(including the occurrence of a Reverse Trigger Event) or investments that have
been made by the specified Person or any of its Restricted Subsidiaries and mergers

 

7

 

and consolidations
(including, without limitation, any merger or consolidation comprising or
giving rise to the Change of Control giving rise to the need to make the calculation
of the Consolidated Leverage Ratio and other mergers, consolidations and
transactions to occur in connection therewith) during the four-quarter reference
period or subsequent to such reference period and on or prior to the
Calculation Date, and the change in Consolidated Cash Flow resulting therefrom)
will be given pro forma effect as if they had occurred on the first day of the
four-quarter reference period, and Consolidated Cash Flow for such reference
period:

 

(a)           shall
include the Consolidated Cash Flow of the acquired entities or applicable to
such investments, and related transactions, and shall otherwise be calculated
on a pro forma basis in accordance with Regulation S-X under the Securities
Act; and

 

(b)           such
pro forma calculations shall, without duplication, give effect to cost savings
and other operating expense reductions and improvements that have been realized
or that are reasonably expected to be realized within 12 months of the
Calculation Date, as determined by the chief financial officer or other senior
financial officer of the Company (in his or her reasonable judgment), in
connection with the transaction which is being given pro forma effect,
including, but not limited to, the execution or termination of any contracts,
reduction of costs related to administrative functions, the termination of any
personnel or the closing (or the approval by the Board of Directors of the
Company or any other Person acquiring the Company or having control over the
Company after giving effect to such Change of Control of any closing) of any
facility, as applicable (regardless of whether those cost savings and operating
expense reductions could then be reflected in pro forma financial statements
under GAAP, Regulation S-X promulgated by the SEC or any other regulation or
policy of the SEC);

 

(ii)           any
Person that is a Restricted Subsidiary on the Calculation Date will be deemed
to have been a Restricted Subsidiary at all times during the applicable
four-quarter reference period, and any Person that is not a Restricted
Subsidiary on the Calculation Date will be deemed not to have been a Restricted
Subsidiary at any time during the applicable four-quarter reference period;

 

(iii)          the
Consolidated Cash Flow attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, will be excluded; and

 

(iv)          the
occurrence of a Trigger Event during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date,
and the change in Consolidated Cash Flow resulting therefrom, will be given pro
forma effect as if it had occurred on the first day of the four-quarter
reference period.

 

“Consolidated Net Income”
means, with respect to any specified Person for any period, the aggregate of
the Net Income of such Person and its Restricted Subsidiaries (on the
applicable date of determination) for such period, on a consolidated basis,
determined in accordance with GAAP; provided that,
without duplication:

 

(1)           any
gain or loss (together with any related provision for taxes thereon) realized
in connection with (a) any Asset Sale or (b) any disposition of any securities
by such Person or any of its Restricted Subsidiaries, and any extraordinary
gain or loss (together with any related provision for taxes thereon) shall be
excluded;

 

8

 

(2)           the
Net Income of any Person that is not a Restricted Subsidiary or that is accounted
for by the equity method of accounting or that is an Unrestricted Subsidiary or
Restricted Subsidiary (or former Restricted Subsidiary) with respect to which a
Trigger Event has occurred following the occurrence and during the continuance
of such Trigger Event shall be excluded; provided that
Consolidated Net Income of such Person shall be increased by the amount of dividends
or distributions or other payments (including management fees) that are
actually paid or are payable in cash to such Person or a Restricted Subsidiary
thereof in respect of such period (or to the extent converted into cash);

 

(3)           solely
for the purpose of determining the amount available for Restricted Payments
pursuant to Section 4.07(a)(iv)(3)(A) hereof, the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders, other than limitations imposed
either (x) pursuant to Acquired Debt which has been irrevocably called for
redemption, repurchase or other acquisition or in respect of which the required
steps have been taken to have such Acquired Debt defeased (whether by covenant
or legal defeasance) or discharged, or a deposit has been made for such purpose
(provided such Acquired Debt is in fact
redeemed, repurchased, repaid, defeased, discharged or otherwise acquired
within 100 days of the incurrence of the Acquired Debt), or (y) by Gaming Laws
of general applicability within the jurisdiction in which such Restricted
Subsidiary operates or applicable to all Persons operating a business similar
to that of such Restricted Subsidiary within such jurisdiction, unless, in
either case, such restriction with respect to the payment of dividends or
similar distributions has been waived; provided that
Consolidated Net Income of such Restricted Subsidiary will be included to the
extent of dividends or other distributions or other payments actually paid or
permitted to be paid in cash (or to the extent converted into cash) by such
Restricted Subsidiary in respect of such period, to the extent not already
included therein;

 

(4)           any
goodwill or other asset impairment charges or other asset write-offs or write
downs, including any resulting from the application of Financial Accounting
Standards Board Statement Nos. 142 and No. 144, and any expenses or charges
relating to the amortization of intangibles as a result of the application of
Financial Accounting Standards Board Statement No. 141, shall be excluded;

 

(5)           any
non-cash charges or expenses related to the repurchase of stock options to the
extent not prohibited by this Indenture, and any non-cash charges or expenses
related to the grant, issuance or repricing of, or any amendment or
substitution with respect to, stock appreciation or similar rights, stock
options, restricted stock, or other Equity Interests or other equity based
awards or rights or equivalent instruments, shall be excluded;

 

(6)           the
cumulative effect of a change in accounting principles shall be excluded;

 

(7)           any
expenses or reserves for liabilities shall be excluded to the extent that such
Person or any of its Restricted Subsidiaries is entitled to indemnification
therefor under binding agreements; provided, that
any such liabilities for which such Person or such Restricted Subsidiaries is
not actually indemnified shall reduce Consolidated Net Income for the period in
which it is determined that such Person or such Restricted Subsidiary will not
be indemnified (to the extent such liabilities would otherwise reduce
Consolidated Net Income without giving effect to this clause (7));

 

9

 

(8)           to
the extent covered by insurance and actually reimbursed, or, so long as the
Company has made a determination that there exists reasonable evidence that
such amount will in fact be reimbursed by the insurer and only to the extent
that such amount is (a) not denied by the applicable carrier in writing within
180 days and (b) in fact reimbursed within 365 days of the date of such
evidence (with a deduction for any amount so added back to the extent not so
reimbursed within 365 days), expenses with respect to liability or casualty
events or business interruption shall be excluded; and

 

(9)           gains
and losses resulting solely from fluctuations in currency values and the related
tax effects shall be excluded, and charges relating to Financial Accounting
Standards Board Statements Nos. 133 and 157 shall be excluded.

 

For purposes of calculating Consolidated Net Income,
any non-recurring charges or expenses of such Person or of a company or
business acquired by such Person (in each case, including those relating to
severance, relocation costs and one time compensation charges and any charges
or expenses in connection with conforming accounting policies or reaudited,
combining or restating financial information), in each case, incurred in
connection with the purchase or acquisition of such acquired company or
business by such Person shall be added to the Consolidated Net Income of such
Person, to the extent any such charges or expenses were deducted in computing
such Consolidated Net Income of such Person.

 

“Consolidated Total
Indebtedness” means, with respect to any Person as at any date of
determination, (a) an amount equal to the aggregate amount of all outstanding
Indebtedness of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, excluding (i) Indebtedness
which has been repaid, discharged, defeased (whether by covenant or legal
defeasance), retired, repurchased or redeemed on or prior to such date or which
a Person has irrevocably made a deposit to repay, defease (whether by covenant
or legal defeasance), discharge, repurchase, retire or redeem or called for
redemption, defeasance (whether by covenant or legal defeasance), discharge,
repurchase or retirement, on or prior to such date, (ii) Indebtedness
constituting letters of credit, Hedging Obligations and Investment Guarantees
to the extent such Investment Guarantee would not be reflected as indebtedness
on the Company’s consolidated balance sheet (excluding references in footnotes
not otherwise reflected on the balance sheet) in accordance with GAAP, and (iii)
Indebtedness used to finance, or incurred for the purpose of financing,
Expansion Capital Expenditures (including interest costs related thereto) until
the fiscal quarter following completion of such Expansion Capital Expenditures,
less (b) cash and Cash Equivalents of
such Person and its Restricted Subsidiaries.

 

“Continuing Directors”
means, as of any date of determination, any member of the Board of Directors of
the Company who:

 

(1)           was
a member of such Board of Directors on the date of this Indenture; or

 

(2)           was
nominated for election or elected to such Board of Directors with the approval
of a majority of the Continuing Directors who were members of such Board at the
time of such nomination or election.

 

“Corporate Trust Office of
the Trustee” shall be at the address of the Trustee specified in Section
13.02 hereof or such other address as to which the Trustee may give notice to
the Company.

 

“Credit Facilities”
means one or more debt facilities or commercial paper facilities providing for
revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed
to borrow from such lenders against such receivables), letters of credit or
other debt securities, including any related notes, guarantees, collateral 

 

10

 

documents, agreements
relating to Hedging Obligations, and other instruments, agreements and documents
executed in connection therewith, in each case as amended, restated, modified,
renewed, refunded, replaced, restructured or otherwise refinanced in whole or
in part from time to time by one or more agreements, facilities (whether or not
in the form of a debt facility or commercial paper facility) or instruments.

 

“Custodian”
means the Trustee, as custodian with respect to the Notes in global form, or
any successor entity thereto.

 

“Debt Securities”
means any debt securities, as such term is commonly understood, issued in any
public offering or private placement in an aggregate principal amount of $100.0
million or more.

 

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

 

“Designated
Non-Cash Consideration” means the fair market value of non-cash consideration
received by the Company or any of its Restricted Subsidiaries in connection
with an Asset Sale that is so designated as Designated Non-Cash Consideration
pursuant to an Officers’ Certificate setting forth the basis of such valuation,
executed by a financial officer of the Company, less the amount of cash or Cash
Equivalents received in connection with a subsequent sale of or collection on
such Designated Non-Cash Consideration.

 

“Definitive Note”
means a certificated Note registered in the name of the Holder thereof and issued
in accordance with Section 2.06 hereof, substantially in the form of Exhibit
A hereto except that such Note shall not bear the Global Note Legend and
shall not have the “Schedule of Exchanges of Interests in the Global Note”
attached thereto.

 

“Depositary”
means, with respect to the Notes issuable or issued in whole or in part in
global form, the Person specified in Section 2.03 hereof as the Depositary with
respect to the Notes, and any and all successors thereto appointed as
depositary hereunder and having become such pursuant to the applicable
provision of this Indenture.

 

“Designated Senior Debt”
means:

 

(1)           any
Indebtedness outstanding under the Senior Credit Facilities; and

 

(2)           after
payment in full of all Obligations under the Senior Credit Facilities, any
other Senior Debt permitted under this Indenture the principal amount of which
is $25.0 million or more and that has been designated by the Company as “Designated
Senior Debt.”

 

“Development Services”
means the provision (through retained professionals or otherwise) of
development, design or construction or management services with respect to any
Gaming Facility or the development, design or construction thereof.

 

“Disqualified Stock”
means any Capital Stock that, by its terms (or by the terms of any security
into which it is convertible, or for which it is exchangeable, in each case at
the option of the holder of the Capital Stock), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder of the
Capital Stock, in whole or in part, on or prior to the date that is 91 days
after the date on which the Notes mature; provided, however, only the portion of Capital Stock which is so
redeemable or repurchasable prior to 

 

11

 

such date will be deemed to
be Disqualified Stock.  Notwithstanding
the preceding sentence, any Capital Stock that would constitute Disqualified
Stock solely because the holders of the Capital Stock have the right to require
the Company to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem any
such Capital Stock pursuant to such provisions (x) unless such repurchase or
redemption complies with Section 4.07 hereof or (y) prior to any purchase of
the Notes as are required to be purchased pursuant to Section 4.14 and Section 4.10.

 

“DTC” means The
Depository Trust Company in New York, New York.

 

“Equity Interests”
means Capital Stock and all warrants, options or other rights to acquire
Capital Stock (but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).

 

“Equity Offering”
means any public or private issuance or sale of Equity Interests (other than
Disqualified Stock) of the Company.

 

“Euroclear”
means Euroclear Bank S.A./N.V., as operator of the Euroclear system.

 

“Event of Default”
means an event described under Article 6 hereof.

 

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

 

“Exchange Notes”
means the Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof.

 

“Exchange Offer”
has the meaning set forth in the Registration Rights Agreement.

 

“Exchange Offer
Registration Statement” has the meaning set forth in the
Registration Rights Agreement.

 

“Existing Indebtedness”
means (a) the existing Guarantees of the Company with respect to the
Indebtedness of Pennwood, (b) the Indebtedness of the Company under the
Existing Notes (and the guarantees related thereto, including guarantees
required of persons that become Restricted Subsidiaries after the date of this
Indenture), (c) Purchase Money Indebtedness and Capital Lease Obligations
outstanding on the date of this Indenture, (d) up to $500,000 in aggregate
principal amount of other Indebtedness of the Company and its Subsidiaries
(other than Indebtedness under the Senior Credit Facilities) in existence on
the date of this Indenture, until such amounts are repaid, and (e) any
Indebtedness incurred, or Disqualified Stock or preferred stock issued, during
a Suspension Period to the extent it would not be permitted to be incurred or
issued pursuant to other provisions of Section 4.09 hereof.

 

“Existing Notes”
means the Company’s 67/8% senior subordinated notes
due 2011 and 63/4% senior subordinated notes
due 2015.

 

“Existing
Unrestricted Subsidiaries” means (i) HWCC-Shreveport Inc., a
Louisiana corporation; (ii) Delvest Corp., a Delaware corporation; (iii) Delvest
Sub Corp., a Delaware corporation; (iv) Penn Cecil Maryland, Inc., a Maryland
corporation; (v) Penn Ventures, LLC, a Delaware limited liability company; (vi)
Westland Real Estate Venture, LLC, a Ohio limited liability company; (vii) Penn
Hollywood Kansas, Inc., a Delaware corporation; and (viii) Nevada Gaming
Ventures, Inc., a Nevada corporation.

 

12

 

“Expansion Capital Expenditures”
means any capital expenditure by the Company or any of its Restricted
Subsidiaries in respect of the purchase or other acquisition of any fixed or
capital assets or the refurbishment of existing assets or properties that adds
to or significantly improves the property of the Company and its Restricted
Subsidiaries, excluding any such capital expenditures constituting a Permitted
Investment or a Restricted Payment or financed with Net Proceeds of an Asset
Sale and excluding capital expenditures in the ordinary course made to
maintain, repair, restore or refurbish the property of the Company and its
Restricted Subsidiaries in its then existing state or to support the
continuation of such Person’s day to day operations as then conducted.

 

“Financing Activity”
means any of the following: (a) the actual or attempted incurrence of any
Indebtedness or the issuance of any Equity Interests by the Company or any
Restricted Subsidiary, activities related to any such actual or attempted
incurrence or issuance, or the issuance of commitments in respect thereof, (b) amending
or modifying, or redeeming, refinancing, tendering for, refunding, defeasing
(whether by covenant or legal defeasance), discharging, repaying, retiring or
otherwise acquiring for value, any Indebtedness prior to the Stated Maturity
thereof (including any premium, penalty, commissions or fees) or (c) the termination
of any Hedging Obligations or other derivative instruments or any fees paid to
enter into any Hedging Obligations or other derivative instruments.

 

“Fixed Charge Coverage
Ratio” means with respect to any specified Person and its Restricted
Subsidiaries for any period, the ratio of (a) the Consolidated Cash Flow of
such Person and its Restricted Subsidiaries for such period to (b) the Fixed
Charges of such Person for such period.

 

For purposes of calculating the Fixed Charge
Coverage Ratio:

 

(1)           in
the event that the specified Person or any of its Restricted Subsidiaries
incurs, assumes, Guarantees, repays, defeases (whether by covenant or legal
defeasance), discharges, repurchases, retires or redeems (or makes an
irrevocable deposit in furtherance thereof) any Indebtedness (other than
ordinary working capital borrowings) or issues, repurchases or redeems preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated and on or prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
“Calculation Date”), then the Fixed
Charge Coverage Ratio will be calculated giving pro forma effect thereto, and
the use of the proceeds therefrom (including any such transaction giving rise
to the need to calculate the Fixed Charge Coverage Ratio), in each case, as if
the same had occurred at the beginning of the applicable four-quarter reference
period and Fixed Charges relating to any such Indebtedness or preferred stock
that has been repaid, defeased (whether by covenant or legal defeasance),
discharged, repurchased, retired or redeemed (or with respect to which an
irrevocable deposit has been made in furtherance thereof) shall be excluded;

 

(2)           acquisitions
(including the occurrence of a Reverse Trigger Event) or investments that have
been made by the specified Person or any of its Restricted Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date, and the change in
Consolidated Cash Flow resulting therefrom) will be given pro forma effect as
if they had occurred on the first day of the four-quarter reference period, and
Consolidated Cash Flow for such reference period:

 

(a)           shall
include the Consolidated Cash Flow of the acquired entities or applicable to
such investments, and related transactions, and shall otherwise be calculated
on a pro forma basis in accordance with Regulation S-X under the Securities
Act, and

 

13

 

(b)           such pro forma calculations shall, without
duplication, give effect to cost savings and other operating expense reductions
and improvements that have been realized or that are reasonably expected to be
realized within 12 months of the Calculation Date, as determined by the chief
financial officer or other senior financial officer of the Company (in his or
her reasonable judgment), in connection with the transaction which is being
given pro forma effect, including, but not limited to, the execution or termination
of any contracts, reduction of costs related to administrative functions, the
termination of any personnel or the closing (or the approval by the Board of
Directors of the Company of any closing) of any facility, as applicable
(regardless of whether those cost savings and operating expense reductions
could then be reflected in pro forma financial statements under GAAP, Regulation
S-X promulgated by the SEC or any other regulation or policy of the SEC);

 

(3)           (a) any Person that is a Restricted Subsidiary
on the Calculation Date will be deemed to have been a Restricted Subsidiary at
all times during the applicable four-quarter reference period, and (b) any
Person that is not a Restricted Subsidiary on the Calculation Date will be
deemed not to have been a Restricted Subsidiary at any time during the
applicable four-quarter reference period;

 

(4)           the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, will be excluded;

 

(5)           the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, will be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted Subsidiaries
following the Calculation Date;

 

(6)           Fixed Charges attributable to Expansion Capital
Expenditures, or, for the avoidance of doubt, Indebtedness used to finance or
incurred for the purpose of financing Expansion Capital Expenditures (including
interest costs related thereto) shall be excluded until the first complete
fiscal quarter following completion of such Expansion Capital Expenditures;

 

(7)           the occurrence of a Trigger Event during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date, and the change in Consolidated Cash Flow and
Fixed Charges resulting therefrom, will be given pro forma effect as if it had
occurred on the first day of the four-quarter reference period;

 

(8)           interest on a Capital Lease Obligation shall be
deemed to accrue at an interest rate reasonably determined by a responsible
financial or accounting officer of such specified Person to be the rate of
interest implicit in such Capital Lease Obligation in accordance with GAAP; and

 

(9)           interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime or similar rate,
a eurocurrency interbank offered rate, or other rate, shall be deemed to have
been based upon the rate actually chosen, or, if none, then based upon such
optional rate as such specified Person may designate.

 

“Fixed Charges”
means, with respect to any specified Person and its Restricted Subsidiaries for
any period, the sum, without duplication, of:

 

14

 

(1)           the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued, (x) including
amortization of original issue discount, non-cash interest payments (but
excluding any non-cash interest expense attributable to the movement in the
mark to market valuation of Hedging Obligations or other derivative instruments
pursuant to Financial Accounting Standards Board Statement No. 133 or 157
and excluding interest expense associated with a Permitted Joint Venture
Investment (including any related Investment Guarantee or Investment Guarantee
Indebtedness) except as provided in clause (3) below), the interest
component of any deferred payment obligations constituting Indebtedness, the
interest component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers’ acceptance financings, and net of the effect of all payments
made or received pursuant to Hedging Obligations, but (y) excluding any
amortization or write-off of deferred financing costs or debt issuance costs
and excluding commitment fees and other transaction expenses associated with
undertaking, or proposing to undertake, any Financing Activity; plus

 

(2)           the consolidated interest of such Person and its
Restricted Subsidiaries that was capitalized during such period, whether paid
or accrued; plus

 

(3)           any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon (provided that any interest expense in respect of any
Permitted Joint Venture Investment (including any related Investment Guarantee
or Investment Guarantee Indebtedness) or the Pennwood Debt will not be counted
pursuant to this clause (3) except to the extent that the Company or any
of its Restricted Subsidiaries actually makes payments in respect thereof or is
imminently required to actually make payments thereunder in which case, pro
forma effect shall be given to all such payments that the Company, in good
faith, reasonably expects to be required to pay during the next four quarters
as though such payments had been made for the relevant period (but without duplication
of amounts paid so that, in any event, no more than four quarters of payments
are counted); plus

 

(4)           all dividends, whether paid or accrued and whether
or not in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividends on Equity Interests payable
solely in Equity Interests of the Company (other than Disqualified Stock) or to
the Company or a Restricted Subsidiary of the Company, on a consolidated basis
and in accordance with GAAP.

 

“Foreign Subsidiary”
means any Subsidiary of the Company that (1) is not organized under the
laws of the United States, any state thereof or the District of Columbia, and (2) conducts
substantially all of its business operations outside the United States.

 

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
have been approved by a significant segment of the accounting profession which
were in effect on March 9, 2005.

 

“Gaming Approval”
means any governmental approval or license relating to any gaming business
(including pari-mutuel betting) or enterprise.

 

15

 

“Gaming Authority”
means any governmental agency, authority, board, bureau, commission,
department, office or instrumentality with regulatory, licensing or permitting
authority or jurisdiction over any gaming business or enterprise or any Gaming
Facility, or with regulatory, licensing or permitting authority or jurisdiction
over any gaming operation (or proposed gaming operation) owned, managed or
operated by the Company or any of its Restricted Subsidiaries.

 

“Gaming Facility”
means any gaming or pari-mutuel wagering establishment, including any casino or
“racino,” and other property or assets ancillary thereto or used in connection
therewith, including any casinos, hotels, resorts, racetracks, off-track
wagering sites, theaters, parking facilities, recreational vehicle parks,
timeshare operations, retail shops, restaurants, other buildings, restaurants,
theatres, related or ancillary businesses, land, golf courses and other
recreation and entertainment facilities, marinas, vessels, barges, ships and
equipment.

 

“Gaming Laws”
means all applicable provisions of all:  (a) constitutions,
treaties, statutes or laws governing Gaming Facilities (including card club
casinos and pari-mutuel racetracks) and rules, regulations, codes and
ordinances of, and all administrative or judicial orders or decrees or other
laws pursuant to which, any Gaming Authority possesses regulatory, licensing or
permit authority over gambling, gaming or Gaming Facility activities conducted
by the Company or any of its Restricted Subsidiaries within its jurisdiction; (b) Gaming
Approvals; and (c) orders, decisions, determinations, judgments, awards
and decrees of any Gaming Authority.

 

“Global Note Legend”
means the legend set forth in Section 2.06(g)(ii) which is required
to be placed on all Global Notes issued under this Indenture.

 

“Global Notes”
means, individually and collectively, each of the Restricted Global Notes and
the Unrestricted Global Notes, substantially in the form of Exhibit A
hereto issued in accordance with Sections 2.01 and 2.06 hereof.

 

“Government Securities”
means direct obligations of, or obligations guaranteed by, the United States of
America, and for the payment of which the United States pledges its full faith
and credit.

 

“Guarantee” means a guarantee other
than by endorsement of negotiable instruments for collection in the ordinary
course of business, direct or indirect, in any manner, including by way of a
pledge of assets, of all or any part of any Indebtedness.

 

“Guarantor”
means a Restricted Subsidiary that is required to provide a senior subordinated
guarantee in respect of the Notes pursuant to Section 4.15.

 

“Hedging Obligations”
means, with respect to any specified Person, the obligations of such Person
under:

 

(1)           interest rate swap agreements, currency swap
agreement, interest rate cap agreements, interest rate collar agreements,
commodity swap agreement, commodity cap agreement, commodity collar agreement
or foreign exchange contract; and

 

(2)           other agreements or arrangements designed to hedge
or protect such Person against, or transfer or mitigate, fluctuations in
interest rates or currency exchange rates.

 

“Holder” means a
Person in whose name a Note is registered.

 

16

 

“IAI Global Note”
means the Global Note substantially in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee that shall be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

 

“Indebtedness”
means, with respect to any specified Person, any indebtedness of such Person,
whether or not contingent:

 

(1)           in respect of borrowed money;

 

(2)           evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or, without double counting, reimbursement
agreements in respect thereof);

 

(3)           in respect of banker’s acceptances;

 

(4)           representing Capital Lease Obligations;

 

(5)           representing the balance deferred and unpaid of the
purchase price of any property, except any such balance that constitutes an
accrued expense or trade payable or insurance premium financing or is payable
through the issuance of Equity Interests (other than Disqualified Stock) of the
Company; or

 

(6)           representing net obligations under any Hedging
Obligations,

 

if and to the extent any of the preceding items (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of the specified Person prepared in accordance with GAAP.  In addition, the term “Indebtedness” includes
all Indebtedness of others secured by a Lien on any asset of the specified
Person (whether or not such Indebtedness is assumed by the specified Person)
and, to the extent not otherwise included, the Guarantee by the specified
Person of any indebtedness of the types referred to in clauses (1) through
(6) above of any other Person, other than by endorsement of negotiable
instruments for collection in the ordinary course of business.

 

Notwithstanding the foregoing, in no event shall
obligations of the Company or any Affiliate of the Company pursuant to the put
or indemnity provisions set forth in the Pocono Downs Sale Documents constitute
Indebtedness.

 

The amount of any Indebtedness outstanding as of any
date will be:

 

(a)           the accreted value of the Indebtedness, in the case
of any Indebtedness issued with original issue discount;

 

(b)           the principal amount of the Indebtedness, together
with any interest on the Indebtedness that is more than 30 days past due, in
the case of any other Indebtedness;

 

(c)           in the case of Indebtedness of others secured by a
Lien on any assets of the specified Person, the lesser of the amount of such
Indebtedness and the fair market value of such assets; and

 

(d)           in the case of clause (5) above, the net
present value thereof determined in accordance with GAAP.

 

17

 

“Indenture”
means this Indenture, as amended or supplemented from time to time.

 

“Indirect Participant”
means a Person who holds a beneficial interest in a Global Note through a
Participant.

 

“Initial Notes”
means $325,000,000 aggregate principal amount of 83/4% senior subordinated notes due 2019 issued on the Issue Date,
substantially in the form of Exhibit A.

 

“Institutional Accredited
Investor” means an institution that is an “accredited investor” as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act
that is not also a QIB.

 

“Interest Payment Date”
has the meaning set forth in paragraph 1 of Exhibit A.

 

“Investment Grade Rating”
means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P or an equivalent rating by any other Rating
Agency.

 

“Investment Grade
Securities” means:

 

(a)           securities issued or directly and fully guaranteed
or insured by the United States government or any agency or instrumentality
thereof (other than Cash Equivalents);

 

(b)           debt securities or debt instruments with an
Investment Grade Rating at the time of acquisition, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries;

 

(c)           investments in any fund that invests exclusively in
investments of the type described in clauses (a) and (b) which fund
may also hold immaterial amounts of cash pending investment or distribution;
and

 

(d)           corresponding instruments in countries other than
the United States customarily utilized for high quality investments.

 

“Investment Guarantee”
means (1) any guarantee, directly or indirectly, by the Company or any of
its Restricted Subsidiaries of Indebtedness of a Permitted Joint Venture (or
any completion guarantee with respect to a Permitted Joint Venture or any
agreement to advance funds, property or services on behalf of a Permitted Joint
Venture to maintain the financial condition of such Permitted Joint Venture),
and (2) any guarantee, directly or indirectly, by the Company or any of
its Restricted Subsidiaries of obligations of any Person to whom the Company or
any of its Restricted Subsidiaries provides Development Services (or any
completion guarantee with respect to any such person or any agreement to
advance funds, property or services on behalf of such Person to maintain the
financial condition of such Person); provided that
any such guarantee  will continue to
constitute an Investment Guarantee in the event that the Permitted Joint
Venture whose obligations are so guaranteed ceases to qualify as a Permitted
Joint Venture after such guarantee was entered into.

 

“Investment Guarantee
Indebtedness” means the obligations of a Permitted Joint Venture to
the extent guaranteed by the Company or one of its Restricted Subsidiaries or
subject to an Investment Guarantee, on and after the time the Company or one of
its Restricted Subsidiaries makes any interest, debt service payment or other
comparable payment under such Investment Guarantee with respect to such
guaranteed obligations.

 

18

 

“Investment Guarantee
Payments” means any payments made pursuant to any Investment
Guarantee.

 

“Investments”
means, with respect to any Person, all direct or indirect investments by such
Person in other Persons (including Affiliates) in the forms of loans including
Guarantees (or other obligations), advances or capital contributions (excluding
(x) commission, travel and similar advances to officers and employees made
in the ordinary course of business, (y) advances to customers made in the
ordinary course of business, and (z) accounts receivable, trade credits,
endorsements for collection or deposits arising in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP.  For purposes of determining the
amount of any Investment at any time outstanding, (a) the amount of an
Investment will equal the aggregate amount of such Investments, minus (b) the amounts received by the Company and its
Restricted Subsidiaries with respect to such Investment, including (as
applicable) principal, interest, dividends, distributions, repayments of loans
or advances, other transfers of assets, the satisfaction, release, expiration,
cancellation or reduction (other than by means of payments by the Company or
any of its Restricted Subsidiaries) of Indebtedness or other obligations
(including any such Indebtedness or other obligation which have been guaranteed
by the Company or any of its Restricted Subsidiaries, including any Investment
Guarantee), and payments under relevant management contracts or services
agreements.  In addition:

 

(1)           “Investments” shall not include the occurrence of a
Trigger Event; and

 

(2)           if the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Company such that, after giving effect to
any such sale or disposition, such Person is no longer a Restricted Subsidiary
of the Company, the Company will be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Restricted Subsidiary not sold or disposed of in an
amount determined as provided in Section 4.07(c) hereof.

 

“Issue Date”
means August 14, 2009.

 

“Legal Holiday”
means a Saturday, a Sunday or a day on which commercial banking institutions in
the City of New York or at a place of payment are authorized by law,
regulation or executive order to remain closed. 
If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue on such payment for the intervening period.

 

“Letter of Transmittal”
means the letter of transmittal to be prepared by the Company and sent to all
Holders of the Notes for use by such Holders in connection with the Exchange
Offer.

 

“Lien” means,
with respect to any asset, any mortgage, lien, pledge, or security interest of
any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title
retention agreement and any lease in the nature thereof.

 

“Liquidated Damages”
means additional interest payable to Holders of Notes (a) following the
occurrence of a Registration Default on the principal amount of Transfer
Restricted Notes held by such Holders as described under the Registration
Rights Agreement or (b) pursuant to the last paragraph of Section 6.01
hereof.

 

“Moody’s” means
Moody’s Investors Service, Inc.  and
its successors.

 

19

 

“Net Income”
means, with respect to any specified Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends.

 

“Net Proceeds”
means the aggregate cash proceeds received by the Company or any of its
Restricted Subsidiaries in respect of any Asset Sale, net of (a) any
payments, fees, commissions, costs and other expenses incurred in connection
with or relating to such Asset Sale, including legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses incurred as a
result of the Asset Sale, (b) taxes paid or payable as a result of the
Asset Sale, in each case, after taking into account any available tax credits or
deductions and any tax sharing arrangements, (c) amounts required to be
applied to the repayment of Indebtedness, other than Indebtedness pursuant to
the Senior Credit Facilities, secured by a Lien on the asset or assets that
were the subject of such Asset Sale, (d) any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance
with GAAP, (e) all distributions and other payments required to be made as
a result of such Asset Sale to any person (other than the Company and its
Restricted Subsidiaries) having a beneficial interest in the assets subject to
such Asset Sale, and (f) amounts reserved, in accordance with GAAP,
against any liabilities associated with the Asset Sale and related thereto,
including pension and other retirement benefit liabilities, purchase price
adjustments, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale.

 

“Non-U.S.  Person” means a Person who is not
a U.S.  Person.

 

“Notes” has the
meaning assigned to it in the preamble to this Indenture.

 

“Obligations”
means any principal, interest, penalties, fees, indemnifications, reimbursements,
liquidated damages, other damages and other liabilities and obligations payable
under the documentation governing any Indebtedness, including interest after
the commencement of any bankruptcy proceeding at the rate specified in the
applicable instrument governing or evidencing such Indebtedness.

 

“Officer” means,
with respect to any Person, the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Vice-President of such Person.

 

“Officers’ Certificate”
means a certificate signed on behalf of the Company by two Officers of the
Company, one of whom must be the principal executive officer, the principal
financial officer, the treasurer or the principal accounting officer of the
Company, that meets the requirements of Section 13.05 hereof.

 

“144A Global Note”
means a Global Note substantially in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.

 

“Opinion of Counsel”
means an opinion from legal counsel who is reasonably acceptable to the Trustee
that meets the requirements of Section 13.05 hereof.  The counsel may be an employee of or counsel
to the Company or any Subsidiary of the Company.

 

“Participant”
means, with respect to the Depositary, Euroclear or Clearstream, a Person who
has an account with the Depositary, Euroclear or Clearstream, respectively
(and, with respect to DTC, shall include Euroclear and Clearstream).

 

20

 

“Pennwood”
collectively, means Pennwood Racing, Inc., a Delaware corporation, and its
subsidiaries, including GS Park Services, L.P., FR Park Services, L.P., GS Park
Racing, L.P.  and FR Park Racing, L.P.

 

“Pennwood Debt”
means the existing Indebtedness of Pennwood Racing, Inc.  pursuant to that certain Term Loan and Security
Agreement dated July 29, 1999, as amended, by and among FR Park Racing,
L.P., GS Park Racing, L.P.  and Commerce
Bank, N.A., that is guaranteed by the Company.

 

“Permitted Business”
means any business of the type in which the Company and its Restricted
Subsidiaries are engaged on the date of this Indenture, or any business
reasonably related, incidental or ancillary thereto (including assets or
businesses complementary thereto).

 

“Permitted Business Assets”
means (a) one or more Permitted Businesses, (b) a controlling equity
interest in any Person whose assets consist primarily of one or more Permitted
Businesses, (c) assets that are used or useful in a Permitted Business, or
(d) any combination of the preceding clauses (a), (b) and (c), in
each case, as determined by the Company’s Board of Directors or management in
its good faith judgment.

 

“Permitted Investments”
means:

 

(1)           any Investment in the Company or in a Restricted
Subsidiary of the Company;

 

(2)           any Investment in cash and Cash Equivalents;

 

(3)           any Investment by the Company or any Subsidiary of
the Company in a Person if, as a result of, or in connection with, such
Investment:

 

(a)           such Person becomes a Restricted Subsidiary of the
Company; or

 

(b)           such Person, in one transaction or a series of
related transactions, is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company;

 

(4)           any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof or any other disposition not
constituting an Asset Sale;

 

(5)           any Investment solely in exchange for the issuance
of Equity Interests (other than Disqualified Stock) of the Company or made with
the proceeds of a substantially concurrent sale of such Equity Interests made
for such purpose;

 

(6)           any Investments received (a) in exchange for or
in compromise of obligations incurred in the ordinary course of business,
including in satisfaction of judgments, in settlement of delinquent or overdue
accounts or pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of any trade creditor, customer or other debtor,
or (b) as a result of a foreclosure by the Company or any of its
Restricted Subsidiaries with respect to a secured Investment or transfer of
title with respect to any secured Investment in default;

 

(7)           Hedging Obligations;

 

21

 

(8)           the extension of credit to customers of the Company
or its Restricted Subsidiaries consistent with gaming industry practice in the
ordinary course of business;

 

(9)           loans and advances to officers, directors and
employees for payroll, business-related travel expenses, moving or relocation
expenses, drawing accounts and other similar expenses, in each case, incurred
in the ordinary course of business;

 

(10)         loans and advances to officers, directors and
employees other than incurred pursuant to clause (9) of this definition in
an aggregate amount not to exceed $10.0 million outstanding at any time;

 

(11)         receivables owing to the Company or any of its
Restricted Subsidiaries if created or acquired in the ordinary course of business;

 

(12)         Investments in any Person to the extent such
Investments consist of prepaid expenses, negotiable instruments held for
collection and lease, utility and workers’ compensation, performance and other
similar deposits (including deposits made with respect to gaming licenses) made
in the ordinary course of business;

 

(13)         Investments in Pennwood arising from any payment in
respect of the Existing Indebtedness related to Pennwood;

 

(14)         any Investment existing on the issue date of the
Notes;

 

(15)         Investments of any Person in existence at the time
such Person becomes a Subsidiary of the Company, provided
such Investment was not made in connection with or in anticipation of such
Person becoming a Subsidiary of the Company;

 

(16)         Indebtedness under the Notes, the Senior Credit
Facilities, the Existing Notes, any other Indebtedness, Disqualified Stock or
preferred stock incurred in accordance with this Indenture and, in each case,
the guarantees related thereto (other than any of the foregoing constituting
Indebtedness subordinated in right of payment to the Notes);

 

(17)         (a) a Permitted Joint Venture Investment and (b) any
Investment Guarantee Payments with respect to a guarantee, agreement or other
extension of credit that qualified as a Permitted Joint Venture Investment at
the time the guarantee or extension of credit was made or the agreement was
entered into, unless, in the case of this clause (b), such guarantee, agreement
or extension of credit no longer qualifies as a Permitted Joint Venture Investment
(whether by reason of a change in the ownership thereof, the continued
existence of a written control or management arrangements or of a written
agreement for Development Services or otherwise) (it being understood that, in
such circumstance, such Investment Guarantee Payments will be permitted to be
made but shall be included (at the option of the Company) (to the extent that
the Permitted Joint Venture Investment to which such Investment Guarantee
Payment relates was not previously included in the second proviso of the
definition of “Permitted Joint Venture Investment” or in clause (x), (y) or
(z) of the last proviso of the definition of “Permitted Joint Venture
Investment”) in (x) the calculation of Investments utilizing the basket
set forth in the second proviso of the definition of “Permitted Joint Venture
Investment” or (y) Permitted Investments (other than this clause (17)) or (z) the
calculation of the aggregate amount of Restricted Payments available pursuant
to clause (3) of Section 4.07(a)(iv) hereof (as if such
Investment were not a Permitted Investment), in which case for the purposes of
clause (z) but not clause (x) or (y), any payments 

 

22

 

received at any time in
respect of such Investment will be included in clause (3)(C) of such Section);

 

(18)         any Investment in a Permitted Business having an
aggregate fair market value, taken together with all other Investments made
pursuant to this clause (18) or clause (20) that are at that time outstanding,
not to exceed 15% of Total Assets, less the amount of any Investments made and
outstanding under the second proviso of the definition of “Permitted Joint
Venture Investment” and calculated at the time of such Investment (with the
fair market value of each Investment being measured at the time made and
without giving effect to subsequent changes in value); provided
however, that if an Investment made pursuant to this
clause (18) is made in any Person that is not a Restricted Subsidiary as
of the date of the making of such Investment and such Person becomes a
Restricted Subsidiary after such date, such Investment shall thereafter be
deemed to have been made pursuant to clause (1) above and shall cease
to have been made pursuant to this clause (18) for so long as such Person
continues to be a Restricted Subsidiary;

 

(19)         the occurrence of a Reverse Trigger Event; and

 

(20)         any Investment in any Person having an aggregate
fair market value, taken together with all other Investments made pursuant to
this clause (20) that are at that time outstanding, not to exceed 3% of
Total Assets, calculated at the time of such Investment (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value); provided,
however, that if an Investment made pursuant to this
clause (20) is made in any Person that is not a Restricted Subsidiary as
of the date of the making of such Investment and such Person becomes a
Restricted Subsidiary after such date, such Investment shall thereafter be
deemed to have been made pursuant to clause (1) above and shall cease
to have been made pursuant to this clause (20) for so long as such Person
continues to be a Restricted Subsidiary.

 

“Permitted Joint Venture”
means any joint venture arrangement (which may be structured as an
unincorporated joint venture, corporation, partnership, association or limited
liability company or as a management contract or services agreement but other
than an Unrestricted Subsidiary) with respect to which the Company or any of
its Restricted Subsidiaries (i) owns directly or indirectly in the aggregate
at least 25% but not more than 50% of the voting power thereof or (ii) controls
or manages the day-to-day gaming operation of another person pursuant to a
written agreement or (iii) provides, has provided, or has entered into a
written agreement to provide, Development Services with respect to such entity
or the applicable Gaming Facility, including, without limitation, with respect
to or on behalf of any Native North American tribe or any agency or
instrumentality thereof, in any such case; provided, however, (a) such joint venture is primarily engaged in
a Permitted Business (or the development thereof) and (b) none of the
Principals or any Affiliate of such Persons, other than the Company or its
Restricted Subsidiaries, is a direct or indirect obligor, contingently or
otherwise, of any Indebtedness of such entity or a direct or indirect holder of
any Capital Stock of such entity, other than through their respective direct or
indirect ownership interests in the Company (it being understood, for the
avoidance of doubt, that the Principals and Affiliates of the Principals shall
not be deemed to be obligors of any such entity or holders of any Capital Stock
of such entity to the extent the interest of the Principals in such entity are
held through the Company and/or any of its Restricted Subsidiaries).

 

“Permitted Joint Venture
Investment” means any Investment in a Permitted Joint Venture,
including by means of any Investment Guarantee; provided
that, at the time of and after giving effect to any such Investment (and any
other adjustments pursuant to the definition of “Fixed Charge
Coverage Ratio”), the Fixed Charge Coverage Ratio of the Company is
at least 2.25 to 1.0; provided, however, that the Company and its Restricted Subsidiaries
may make a Permitted Joint Venture Investment while the 

 

23

 

pro forma Fixed Charge
Coverage Ratio is less than 2.25 to 1.0 so long as such Permitted Joint Venture
Investment to be made, together with all other Permitted Joint Venture
Investments made while the pro forma Fixed Charge Coverage Ratio is less than
2.25 to 1.0 (or which have ceased to qualify as Permitted Joint Venture
Investments and the Company has elected to include as Investments under this
proviso as provided in clause (x) of the final proviso of this definition
or clause (17)(b)(x) of the definition of “Permitted Investments,” do not
exceed $300.0 million in the aggregate at any time outstanding; provided, further, that
if a Permitted Joint Venture Investment (other than Permitted Joint Venture
Investments made pursuant to the second proviso of this definition) would, at
any time after the date such Permitted Joint Venture Investment is made or a
binding agreement to make such Permitted Joint Venture Investment is entered
into, cease to qualify as a Permitted Joint Venture Investment pursuant to this
definition due to a failure of the relevant investee to constitute a Permitted
Joint Venture for any reason (whether by reason of a change in the ownership
thereof, the continued existence of a written control or management
arrangements or of a written agreement for Development Services or otherwise),
then the outstanding amount of such Permitted Joint Venture Investment at such
time and additional Investments pursuant to such agreements as then in effect
shall, for the period such Investment does not so qualify, be included (at the
option of the Company) (to the extent not previously included in clause
(17)(b)(x), (y) or (z) of the definition of “Permitted Investments”)
in (x) the calculation of Investments utilizing the basket set forth in
the immediately preceding proviso or (y) Permitted Investments (other than
clause (17) of such definition) or (z) the calculation of the aggregate
amount of Restricted Payments available pursuant to clause (3) of Section 4.07(a)(iv) hereof
(as if such Investment were not a Permitted Investment, in which case, for the
purposes of clause (z) but not clause (x) or (y), any payments
received at any time in respect of such Investment will be included in clause
(3)(C) of such Section).

 

“Permitted Junior
Securities” means:

 

(1)           Equity Interests in the Company, or

 

(2)           Debt Securities of the Company that are subordinated
to all Senior Debt and any debt securities issued in exchange for Senior Debt
to substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt under this Indenture.

 

“Permitted Liens”
means:

 

(1)           (a) Liens on property of the Company or any
Restricted Subsidiary securing obligations under Senior Debt of the Company or
in respect of any Credit Facilities evidencing obligations (other than
Indebtedness subordinated to or pari passu with
the Notes), in each case that is permitted by the terms of this Indenture to be
incurred and (b) Liens on property of any Restricted Subsidiary securing
obligations of such Restricted Subsidiary (other than guarantees of Debt
Securities of the Company that are subordinate or junior in right of payment to
any Senior Debt of the Company), it being understood that distinctions between
categories of Indebtedness that exist by reason of any Liens securing some but
not all of such Indebtedness or securing such Indebtedness with greater or
lesser priority or with different collateral will not result in Indebtedness
being subordinate or junior in right of payment;

 

(2)           Liens in favor of the Company or any Restricted
Subsidiary;

 

(3)           Liens on property of a Person existing at the time
such Person is merged with or into or consolidated with the Company or any
Subsidiary of the Company or otherwise becomes a Subsidiary of the Company and
amendments or modifications thereto and replacements or refinancings thereof; provided that such Liens were not granted in connection
with, or in anticipation 

 

24

 

of, such merger or consolidation
or acquisition and do not extend to any assets other than those of such Person
merged into or consolidated with the Company or the Subsidiary;

 

(4)           Liens (including extensions, renewals or
replacements thereof) on property existing at the time of acquisition of the
property by the Company or any Subsidiary of the Company, provided
that such Liens were in existence prior to the contemplation of such
acquisition;

 

(5)           (a) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (b) Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of insurance or
social security or premiums with respect thereto; (c) Liens imposed by
Gaming Laws or Gaming Authorities, and Liens on deposits made to secure gaming
license applications or to secure the performance of surety or other bonds; and
(d) Liens securing obligations with respect to letters of credit issued in
connection with any of the items referred to in this paragraph (5);

 

(6)           Liens to secure Indebtedness (including Purchase
Money Indebtedness and Capital Lease Obligations) permitted by clause (4) of
the second paragraph of Section 4.09 hereof covering only the assets being
financed with such Indebtedness (and directly related assets, including
proceeds and replacements thereof or assets which were financed with
Indebtedness permitted by such clauses that has been refinanced (including
successive refinancings));

 

(7)           Liens existing on the date of this Indenture;

 

(8)           Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings, provided that
any reserve required by GAAP has been made therefor;

 

(9)           Liens incurred during any Suspension Period;

 

(10)         Liens securing obligations to the trustee pursuant
to the compensation and indemnity provisions of this Indenture and Liens owing
to an indenture trustee in respect of any other Indebtedness permitted to be incurred
under Section 4.09 hereof;

 

(11)         Liens on trusts, cash or Cash Equivalents or other
funds provided in connection with the defeasance (whether by covenant or legal
defeasance), discharge or redemption of Indebtedness;

 

(12)         Liens arising out of judgments or awards not
resulting in a default;

 

(13)         Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of goods entered
into by the Company or any of its Restricted Subsidiaries in the ordinary
course of business;

 

(14)         bankers’ Liens, rights of setoff and other similar
Liens existing solely with respect to cash and Cash Equivalents on deposit in
one or more accounts maintained by the Company or any of its Restricted
Subsidiaries, in each case granted in the ordinary course of business in favor
of the bank or banks with which such accounts are maintained, securing amounts
owing to such bank with respect to cash management and operating account
arrangements, including those involving pooled accounts and netting
arrangements;

 

25

 

(15)         Permitted Vessel Liens;

 

(16)         the filing of UCC financing statements solely as a
precautionary measure in connection with operating leases or consignment of
goods; and

 

(17)         other Liens securing Indebtedness that is permitted
by the terms of this Indenture to be outstanding having an aggregate principal
amount at any one time outstanding not to exceed $25.0 million.

 

“Permitted Refinancing
Indebtedness” means any Indebtedness or Disqualified Stock of the
Company or any of its Restricted Subsidiaries issued within 60 days after
repayment of, in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease (whether by covenant or legal defeasance),
discharge, redeem, tender for, repay, refund or otherwise retire or acquire for
value, in whole or in part (collectively, a “refinancing”), any Indebtedness or
Disqualified Stock of the Company or any of its Restricted Subsidiaries (other
than intercompany Indebtedness); provided that:

 

(1)           the principal amount (or accreted value or
liquidation preference, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount (or accreted value or liquidation
preference, if applicable) of the Indebtedness or Disqualified Stock refinanced
(plus all accrued interest on the Indebtedness, all accrued dividends on the
Disqualified Stock and the amount of all fees, expenses and premiums incurred
in connection therewith);

 

(2)           such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of the Indebtedness or
Disqualified Stock being refinanced (or, if earlier, 91 days after the Stated
Maturity of the Notes), and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the Indebtedness or  Disqualified Stock being refinanced;

 

(3)           if the Indebtedness being refinanced is subordinated
in right of payment to the Notes, such Permitted Refinancing Indebtedness is
subordinated in right of payment to, the Notes on terms at least as favorable,
taken as a whole, to the Holders of Notes as those contained in the
documentation governing the Indebtedness being refinanced; and

 

(4)           such Indebtedness or Disqualified Stock is incurred
either by the Company or by the Restricted Subsidiary who is the obligor (as
primary obligor or guarantor) or issuer on the Indebtedness or Disqualified
Stock being refinanced.

 

“Permitted Vessel Liens”
shall mean maritime Liens on ships, barges or other vessels for damages arising
out of a maritime tort, wages of a stevedore, when employed directly by a
person listed in 46 U.S.C.  Section 31341,
crew’s wages, salvage and general average, whether now existing or hereafter
arising and other maritime Liens which arise by operation of law during normal
operations of such ships, barges or other vessels.

 

“Person” means
any individual, corporation, partnership, joint venture, association, joint-
stock company, trust, unincorporated organization, limited liability company or
government or other entity.

 

“Pocono Downs Assets”
shall mean the “Partnership Interests,” as such term is defined in the Pocono
Downs Sale Documents.

 

26

 

“Pocono Downs Sale
Documents” shall mean the Purchase Agreement, dated as of October 14,
2004, by and between PNGI Pocono, Corp. 
(“PNGI Corp.”), PNGI, LLC (“PNGI LLC” and together with PNGI Corp., “Pocono Sellers”) and the Mohegan Tribal Gaming Authority,
and all documents thereto and all exhibits, appendices, schedules and annexes
to any thereof relating to the sale of the Pocono Downs Assets as in effect on
the date hereof or as amended or modified after the date hereof to the extent
such amendment or modification is not materially adverse to the Holders of
Notes.

 

“Pre-Opening Expenses”
shall mean, with respect to any fiscal period, the amount of expenses
(including Fixed Charges) incurred with respect to capital projects which are
classified as “pre-opening expenses” on the applicable financial statements of
the Company and its Restricted Subsidiaries for such period, prepared in
accordance with GAAP.

 

“Principals”
means Peter D.  Carlino,
Peter M.  Carlino,
Richard T.  Carlino, Harold Cramer
and The Carlino Family Trust.

 

“Private Placement Legend”
means the legend set forth in Section 2.06(g)(i) to be placed on all
Notes issued under this Indenture except where otherwise permitted by the
provisions of this Indenture.

 

“Purchase Money
Indebtedness” means Indebtedness of the Company or any of its Restricted
Subsidiaries incurred for the purpose of financing, within 270 days of
incurrence, all or any part of the purchase price or cost of installation,
construction or improvement of any property.

 

“QIB” means a “qualified
institutional buyer” as defined in Rule 144A.

 

“Rating Agencies”
mean (a) Moody’s and S&P or (b) if Moody’s or S&P or both
shall not make a rating on the Notes publicly available, a nationally
recognized statistical rating agency or agencies, as the case may be, selected
by the Company (as certified by a resolution of the Company’s Board of Directors)
which shall be substituted for Moody’s or S&P or both, as the case may be.

 

“Rating Category”
means (a) with respect to S&P, any of the following categories: BB, B,
CCC, CC, C and D (or equivalent successor categories); (b) with respect to
Moody’s, any of the following categories: 
Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (c) the
equivalent of any such category of S&P or Moody’s used by another Rating
Agency selected by the Company.  In determining
whether the rating of the Notes has decreased by one or more gradations,
gradations within Rating Categories ((i) + and – for S&P; (ii) 1, 2
and 3 for Moody’s; and (iii) the equivalent gradations for another Rating
Agency selected by the Company) shall be taken into account (e.g., with respect
to S&P, a decline in a rating from BB+ to BB, as well as from BB- to B+,
will constitute a decrease of one gradation).

 

“Rating Date”
means the date which is 90 days prior to the earlier of (a) a Change of
Control or (b) public notice of the occurrence of a Change of Control or
of the intention by the Company to effect a Change of Control.

 

“Rating Decline”
shall be deemed to occur if, within 90 days after public notice of the
occurrence of a Change of Control (which period shall be extended so long as
the rating of the Notes is under publicly announced consideration for possible
downgrade by either of the Rating Agencies), the rating of the Notes by either
Rating Agency shall be decreased by one or more gradations (including gradations
within Rating Categories as well as between Rating Categories) as compared to
the rating of the Notes on the Rating Date.

 

27

 

“Redeemable Preferred Stock” means the Series B
Redeemable Preferred Stock, par value $0.01 per share, of the Company issued
and outstanding as of the Issue Date.

 

“Reference
Treasury Dealer Quotation” means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Company by such Reference Treasury Dealer at 5:00 p.m., New
York City time, on the third business date preceding such redemption date.

 

“Reference
Treasury Dealer” means any primary U.S.  government securities dealer in the City of
New York (a “Primary Treasury Dealer”)
selected by the Company.

 

“refinancing”
has the meaning set forth in the definition of “Permitted Refinancing Indebtedness”
and “refinance” has a corresponding meaning.

 

“Registration Default”
means Registration Default as defined in the Registration Rights Agreement.

 

“Registration Rights
Agreement” means, (a) the registration rights agreement dated as
of the date of this Indenture among the Company and Deutsche Bank Securities
Inc., Wells Fargo Securities, LLC, Banc of America Securities LLC and RBS
Securities Inc., as representatives of the several initial purchasers, or (b) any
future registration rights agreement entered into by the Company relating to
Additional Notes, in the case of each of clauses (a) and (b), as such
agreement may be amended, modified or supplemented from time to time.

 

“Regulation S”
means Regulation S promulgated under the Securities Act.

 

“Regulation S Global Note”
means a Global Note bearing the Private Placement Legend and deposited with or
on behalf of the Depositary and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.

 

“Related Party”
means:

 

(1)           any controlling stockholder, 80% (or more) owned
Subsidiary, or immediate family member (in the case of an individual) of any
Principal; or

 

(2)           any trust, corporation, partnership or other entity,
the beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest of which consist of any one or more
Principals and/or such other Persons referred to in the immediately preceding
clause (1).

 

“Representative”
means the indenture trustee or other trustee, agent or representative for any
Senior Debt.

 

“Responsible Officer,”
when used with respect to the Trustee, means any officer within the Corporate
Trust Office of the Trustee (or any successor group of the Trustee) or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter
is referred because of his knowledge of and familiarity with the particular
subject.

 

28

 

“Restricted Definitive Note”
means a Definitive Note bearing the Private Placement Legend.

 

“Restricted Global Note”
means a Global Note bearing the Private Placement Legend.

 

“Restricted Investment”
means an Investment other than a Permitted Investment.

 

“Restricted Period,”
with respect to any Notes, means the period of 40 consecutive days beginning on
and including the later of (a) the day on which such Notes are first
offered to persons other than distributors (as defined in Regulation S under
the Securities Act) in reliance on Regulation S, notice of which day shall be
promptly given by the Company to the Trustee, and (b) the Issue Date, and
with respect to any Additional Notes that are Transfer Restricted Notes, it
means the comparable period of 40 consecutive days.

 

“Restricted Subsidiary”
of a Person means any Subsidiary of such Person that is not an Unrestricted
Subsidiary.

 

“Reverse Trigger
Event” means after the occurrence of a Trigger Event, the transfer
of the shares of the capital stock of Empress Casino Corporation or the Equity
Interests of any other Person that was previously a Restricted Subsidiary to
the Company or any of its Restricted Subsidiaries pursuant to the terms of any
Trust Agreement.

 

“Rule 144”
means Rule 144 promulgated under the Securities Act.

 

“Rule 144A”
means Rule 144A promulgated under the Securities Act.

 

“Rule 903”
means Rule 903 promulgated under the Securities Act.

 

“Rule 904”
means Rule 904 promulgated the Securities Act.

 

“S&P”
means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, and its successors.

 

“SEC” means the
Securities and Exchange Commission.

 

“Securities Act”
means the Securities Act of 1933, as amended.

 

“Senior Credit Facilities”
means the Credit Agreement, dated as of October 3, 2005, by and among the
Company, the subsidiary guarantors party thereto, Deutsche Bank
Securities Inc., Goldman Sachs Credit Partners L.P. and Lehman
Brothers Inc., as Joint Lead Arrangers and Joint Bookrunners, Goldman
Sachs Credit Partners L.P. and Lehman Commercial Paper Inc., as
Co-Syndication Agents, Deutsche Bank Trust Company Americas, as Swingline
Lender, Administrative Agent and as Collateral Agent, and Calyon New York
Branch, Wells Fargo Bank, National Association and Bank of Scotland, as
Co-Documentation Agents, and the lenders from time to time party thereto,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, restructured, replaced or refinanced from time to
time including increases in principal amount (whether the same are provided by
the original agents and lenders under such Senior Credit Facilities or other
agents or other lenders).

 

“Senior Debt”
means, with respect to the Company, as applicable:

 

29

 

(1)           any Indebtedness of the Company under the Credit
Facilities or otherwise permitted to be incurred under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it shall not be senior in right of payment to any Indebtedness
of the Company; and

 

(2)           all Obligations with respect to the items listed in
the preceding clause (1).

 

Notwithstanding anything to the contrary in
the preceding, Senior Debt will not include:

 

(a)           any liability for federal, state, local or other
taxes owed or owing by the Company;

 

(b)           any Indebtedness of the Company to any of its
Subsidiaries;

 

(c)           any trade payables;

 

(d)           any Existing Notes or guarantees thereof; or

 

(e)           the portion of any Indebtedness that is incurred in
violation of this Indenture.

 

“Senior Guarantees”
means the Guarantees by the Guarantors of Obligations under the Senior Credit
Facilities.

 

“Shelf Registration
Statement” means the Shelf Registration Statement as defined in the
Registration Rights Agreement.

 

“Significant Subsidiary”
means any Subsidiary that would be a “significant subsidiary” as defined in Article I,
Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act,
as such Regulation is in effect on the date hereof.

 

“Stated Maturity”
means, with respect to any installment of interest or principal on any series
of Indebtedness, the date on which the payment of interest or principal was
scheduled to be paid in the original documentation governing such Indebtedness,
and will not include any contingent obligations to repay, redeem or repurchase
any such interest or principal prior to the date originally scheduled for the
payment thereof.

 

“Subsidiary”
means, with respect to any specified Person:

 

(1)           any corporation, association or other business
entity of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees of the corporation, association
or other business entity is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and

 

(2)           any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are that Person or one or
more Subsidiaries of that Person (or any combination thereof).

 

30

 

“Subsidiary Guarantees”
means any senior subordinated Guarantee required to be provided pursuant to Section 4.15
by any Guarantor of the Company’s payment obligations under this Indenture and
on the Notes, executed pursuant to the provisions of this Indenture.

 

“TIA” means the
Trust Indenture Act of 1939 (15 U.S.C. 
§§ 77aaa-77bbbb) as in effect on the date on which this Indenture
is qualified under the TIA, except as provided in Section 9.03 hereof.

 

“Total Assets”
means the total assets of the Company and its Restricted Subsidiaries, as shown
on the most recent balance sheet of the Company.

 

“Transfer Restricted Notes”
means Transfer Restricted Notes as defined in the Registration Rights
Agreement.

 

“Treasury Rate”
means, with respect to any redemption date, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such
redemption period.

 

“Trigger Event”
shall mean the transfer of shares of capital stock of Empress Casino Corporation
or the Equity Interests of any other Restricted Subsidiary into trust pursuant
to the terms of any Trust Agreements.

 

“Trust Agreements”
means (a) the Transfer of Ownership Agreement by and among Argosy Gaming
Company, Empress Casino Corporation and the Illinois Gaming Board and the Trust
Agreement by and between Argosy Gaming Company and LaSalle Bank National
Association, each dated as of July 24, 2001, and (b) any other trust
or similar arrangement required by any Gaming Authority or any other
governmental agency or authority (whether in connection with an acquisition or
otherwise) from time to time, in the case of each of clauses (a) and (b),
together with any agreements, instruments and documents executed or delivered
pursuant to or in connection with such agreements, in each case as such
agreements, instruments or documents may be amended, supplemented, extended, renewed
or otherwise modified from time to time.

 

“Trustee” means
the party named as such above until a successor replaces it in accordance with
the applicable provisions of this Indenture and thereafter means the successor
serving hereunder.

 

“Unrestricted Definitive
Note” means one or more Definitive Notes that do not bear and are
not required to bear the Private Placement Legend.

 

“Unrestricted Global Note”
means a permanent Global Note substantially in the form of Exhibit A
attached hereto that bears the Global Note Legend and that has the “Schedule of
Exchanges of Interests in the Global Note” attached thereto, and that is
deposited with or on behalf of and registered in the name of the Depositary,
representing a series of Notes that do not bear the Private Placement Legend.

 

“Unrestricted Subsidiary”
means any Subsidiary of the Company (other than a Permitted Joint Venture) that
is designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution, but only to the extent that as of the time of such
designation:

 

(1)           either (A) such Subsidiary to be so designated
has total assets of $100,000 or less or (B) immediately after giving pro
forma effect to such designation, either (x) the Company could incur $1.00
of Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in 

 

31

 

the first paragraph of Section 4.09
or (y) the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries would be greater than the Fixed Charge Coverage Ratio for the Company
and its Restricted Subsidiaries immediately prior to such designation;

 

(2)           such Subsidiary is not, at the time of such
designation, party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms
of any such agreement, contract, arrangement or understanding are no less
favorable to the Company or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of the Company, or
would otherwise be permitted if entered into at the time of such designation
pursuant to Section 4.11; and

 

(3)           such Subsidiary is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect Investment (including, without duplication, a deemed Investment at the
time of designation in an amount equal to the fair market value of the
Investment in the relevant Subsidiary owned by the Company and its Restricted Subsidiaries)
that could not have been made at the time of such designation pursuant to Section 4.07
(including, without limitation, as a Permitted Investment);

 

provided that the Existing Unrestricted
Subsidiaries shall initially be designated as Unrestricted Subsidiaries.  An Unrestricted Subsidiary shall also
automatically include (without any further action required by the Board of
Directors, compliance with the preceding conditions or otherwise) any
Subsidiary of an Unrestricted Subsidiary.

 

Any designation of a Subsidiary of the Company
(other than any of the Existing Unrestricted Subsidiaries) as an Unrestricted
Subsidiary will be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers’ Certificate certifying that such designation complied with the
preceding conditions. If any Unrestricted Subsidiary failed to meet the
preceding requirements as an Unrestricted Subsidiary, it will thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under Section 4.09 hereof, the
Company will be in default of such Section. 
The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided
that such designation will be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation will only be permitted if (1) such
Indebtedness is permitted under Section 4.09 hereof, calculated on a pro
forma basis as if such designation had occurred at the beginning of the
four-quarter reference period; and (2) no Default or Event of Default
would be in existence following such designation.

 

“U.S.  Person” means a U.S.  person as defined in Rule 902(o) under
the Securities Act.

 

“Voting Stock”
of any Person as of any date means the Capital Stock of such Person that is at
the time entitled to vote in the election of the Board of Directors of such
Person.

 

“Weighted Average Life To
Maturity” means, when applied to any Indebtedness at any date, the
number of years obtained by dividing: (1) the sum of the products obtained
by multiplying (a) the amount of each then remaining installment, sinking
fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect of the Indebtedness, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment; by (2) the then
outstanding principal amount of such Indebtedness.

 

32

 

Section 1.02.          Other Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  	
   

  
	
  “Affiliate Transaction”

  	
   

  	
  4.11

  	
   

  
	
  “Asset Sale Offer”

  	
   

  	
  3.09

  	
   

  
	
  “Asset Sale Payment Date”

  	
   

  	
  4.10

  	
   

  
	
  “Change of Control Offer”

  	
   

  	
  4.14

  	
   

  
	
  “Change of Control Payment”

  	
   

  	
  4.14

  	
   

  
	
  “Change of Control Payment Date”

  	
   

  	
  4.14

  	
   

  
	
  “Company”

  	
   

  	
  Preamble

  	
   

  
	
  “Covenant Defeasance”

  	
   

  	
  8.03

  	
   

  
	
  “Covenant Suspension Event”

  	
   

  	
  4.20

  	
   

  
	
  “Excess Proceeds”

  	
   

  	
  4.10

  	
   

  
	
  “incur”

  	
   

  	
  4.09

  	
   

  
	
  “Legal Defeasance”

  	
   

  	
  8.02

  	
   

  
	
  “Note Asset Sale Offer”

  	
   

  	
  4.10

  	
   

  
	
  “Offer Amount”

  	
   

  	
  3.09

  	
   

  
	
  “Offer Period”

  	
   

  	
  3.09

  	
   

  
	
  “Other Senior Subordinated Debt Securities”

  	
   

  	
  4.15

  	
   

  
	
  “Pari Passu Asset Sale
  Offer”

  	
   

  	
  4.10

  	
   

  
	
  “Paying Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Payment Blockage Notice”

  	
   

  	
  10.03

  	
   

  
	
  “Payment Default”

  	
   

  	
  6.01

  	
   

  
	
  “Permitted Debt”

  	
   

  	
  4.09

  	
   

  
	
  “Purchase Date”

  	
   

  	
  3.09

  	
   

  
	
  “Registrar”

  	
   

  	
  2.03

  	
   

  
	
  “Reinstatement Date”

  	
   

  	
  4.20

  	
   

  
	
  “Reports Default Notice”

  	
   

  	
  6.01

  	
   

  
	
  “Restricted Payments”

  	
   

  	
  4.07

  	
   

  
	
  “Series A Notes”

  	
   

  	
  Preamble

  	
   

  
	
  “Series B Notes”

  	
   

  	
  Preamble

  	
   

  
	
  “Suspended Covenants”

  	
   

  	
  4.20

  	
   

  
	
  “Suspension Period”

  	
   

  	
  4.20

  	
   

  

 

Section 1.03.          Incorporation by Reference of Trust Indenture Act.

 

Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in and made a part of this
Indenture.

 

The following TIA terms used
in this Indenture have the following meanings:

 

“indenture securities”
means the Notes;

 

33

 

“indenture security Holder”
means a Holder of a Note;

 

“indenture to be qualified”
means this Indenture;

 

“indenture trustee”
or “institutional trustee” means the
Trustee; and

 

“obligor” on the
Notes means the Company and any successor obligor upon the Notes.

 

All other terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute or defined by
SEC rule under the TIA have the meanings so assigned to them.

 

Section 1.04.          Rules of Construction.

 

Unless the context otherwise
requires:

 

(a)           a term has the meaning
assigned to it;

 

(b)           an accounting term not
otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(c)           “or” is not exclusive;

 

(d)           words in the singular
include the plural, and in the plural include the singular;

 

(e)           the words “include,” “including”
and other words of similar import mean “include, without limitation” or “including,
without limitation,” regardless of whether any reference to “without limitation”
or words of similar import is made; and the included items do not limit the
scope of the more general terms; and the listed included items are covered
whether or not they are within the scope of the more general terms;

 

(f)            references to “defeasance”
shall mean both covenant defeasance and legal defeasance, unless otherwise
specified’

 

(g)           provisions apply to
successive events and transactions; and

 

(h)           references to sections of or
rules under the Securities Act shall be deemed to include substitute,
replacement or successor sections or rules adopted by the SEC from time to
time.

 

ARTICLE 2

 

THE NOTES

 

Section 2.01.          Form and Dating.

 

(a)           General.  The Notes and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibit A
hereto.  The Notes may have notations,
legends or endorsements required by law, stock exchange rule or
usage.  Each Note shall be dated the date
of its authentication.  The Notes shall
be in denominations of $2,000 and integral multiples of $1,000.

 

The terms and provisions contained in the Notes
shall constitute, and are hereby expressly made, a part of this Indenture, and
the Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.  However, to the 

 

34

 

extent any provision of any
Note conflicts with the express provisions of this Indenture, the provisions of
this Indenture shall govern and be controlling.

 

(b)           Global Notes.  Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including
the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the
Global Note” attached thereto).  Notes
issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and without the “Schedule
of Exchanges of Interests in the Global Note” attached thereto).  Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time
to time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions.  Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

 

(c)           Euroclear and Clearstream
Procedures Applicable.  The
provisions of the “Operating Procedures of the Euroclear System” and “Terms and
Conditions Governing Use of Euroclear” and the “General Terms and Conditions of
Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable
to transfers of beneficial interests in the Regulation S Global Notes that are
held by Participants through Euroclear or Clearstream.

 

Section 2.02.          Execution and Authentication.

 

The Notes shall be executed by an Officer or an
authorized signatory as identified in an Officers’ Certificate (pursuant to a
power of attorney or other similar instrument). 
The signature of any such Officer (or authorized signatory) on the Notes
shall be by manual or facsimile signature in the name and on behalf of the
Company.

 

If an Officer whose signature is on a Note no longer
holds that office at the time the Trustee or authenticating agent authenticates
the Note, the Note shall be valid nevertheless.

 

A Note shall not be valid until the Trustee or
authenticating agent manually signs the certificate of authentication on the
Note.  The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.

 

The Trustee or an authenticating agent shall, upon
receipt of a Company Order, authenticate Initial Notes for original issue in an
aggregate principal amount of $325,000,000. 
The aggregate principal amount of the Initial Notes may not exceed
$325,000,000 except as provided in Section 2.07 hereof.  The Company may issue, without the consent of
the Holders, an unlimited aggregate principal amount of Additional Notes under
the Indenture in accordance with Section 2.13, provided
that such issuance is not prohibited by Section 4.09.

 

The Trustee or an authorized agent, shall upon
receipt of a Company Order and an Officers’ Certificate and Opinion of Counsel
pursuant to Section 13.04 authenticate Additional Notes for original issue
in an aggregate principal amount set forth in the Company Order.

 

The Trustee may appoint an authenticating agent to
authenticate Notes.  An authenticating
agent may authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to
authentication by the Trustee includes authentication by such authentication
agent.  An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the
Company.

 

35

 

The Notes shall be issuable only in registered form
without coupons and only in minimum denominations of $2,000 in principal amount
and any integral multiples of $1,000 in excess thereof.

 

Section 2.03.          Registrar and Paying Agent.

 

The Company shall maintain an office or agency where
Notes may be presented for registration of transfer or for exchange (“Registrar”)
and an office or agency where Notes may be presented for payment (“Paying
Agent”).  The Registrar shall keep a
register of the Notes and of their transfer and exchange.  The Company may appoint one or more
co-registrars and one or more additional paying agents.  The term “Registrar” includes any
co-registrar and the term “Paying Agent” includes any additional paying
agent.  The Company may change any Paying
Agent or Registrar without notice to any Holder.  The Company shall notify the Trustee in
writing of the name and address of any Agent not a party to this Indenture.  If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as
such.  The Company or any of its
Subsidiaries may act as Paying Agent or Registrar.

 

The Company initially appoints DTC to act as Depositary
with respect to the Global Notes.

 

The Company initially appoints the Trustee to act as
the Registrar and Paying Agent and to act as Custodian with respect to the
Global Notes.

 

Section 2.04.          Paying Agent To Hold Money in Trust.

 

The Company shall require each Paying Agent other
than the Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Trustee all money held by the Paying Agent
for the payment of principal, premium or Liquidated Damages, if any, or
interest on the Notes, and will notify the Trustee of any default by the
Company in making any such payment. 
While any such default continues, the Trustee may require a Paying Agent
to pay all money held by it to the Trustee. 
The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee.  Upon payment over
to the Trustee, the Paying Agent (if other than the Company or a Subsidiary)
shall have no further liability for the money. 
If the Company or a Subsidiary acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.  Upon any
bankruptcy or reorganization proceedings relating to the Company, the Trustee
shall serve as Paying Agent for the Notes.

 

Section 2.05.          Holder Lists.

 

The Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA
§ 312(a).  If the Trustee is not the
Registrar, the Company shall furnish to the Trustee at least seven Business Days
before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of the Holders of Notes and the
Company shall otherwise comply with TIA § 312(a).

 

Section 2.06.          Transfer and Exchange.

 

(a)           Transfer and Exchange of Global
Notes.  A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a 

 

36

 

successor Depositary or a nominee of such
successor Depositary.  All Global Notes
will be exchanged by the Company for Definitive Notes if:

 

(i)      the Company delivers to the
Trustee notice from the Depositary that it is unwilling or unable to continue
to act as Depositary or that it is no longer a clearing agency registered under
the Exchange Act and, in either case, a successor Depositary is not appointed
by the Company within 120 days after the date of such notice from the
Depositary; or

 

(ii)     the Company in its sole discretion
determines that the Global Notes (in whole but not in part) should be exchanged
for Definitive Notes and delivers a written notice to such effect to the
Trustee.

 

Upon the occurrence of either of the preceding
events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee.  Global Notes also may be exchanged or replaced,
in whole or in part, as provided in Sections 2.07 and 2.10 hereof.  Every Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to
this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated
and delivered in the form of, and shall be, a Global Note.  A Global Note may not be exchanged for
another Note other than as provided in this Section 2.06(a), however,
beneficial interests in a Global Note may be transferred and exchanged as
provided in Section 2.06(b), (c) or (f) hereof.

 

(b)           Transfer and Exchange of
Beneficial Interests in the Global Notes.  The transfer and exchange of beneficial
interests in the Global Notes shall be effected through the Depositary, in accordance
with the provisions of this Indenture and the Applicable Procedures.  Beneficial interests in the Restricted Global
Notes shall be subject to restrictions on transfer comparable to those set
forth herein to the extent required by the Securities Act.  Transfers of beneficial interests in the
Global Notes also shall require compliance with either subparagraph (i) or
(ii) below, as applicable, as well as one or more of the other following
subparagraphs, as applicable:

 

(i)      Transfer
of Beneficial Interests in the Same Global Note.  Beneficial interests in any Restricted Global
Note may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend; provided, however, that
prior to the expiration of the Restricted Period, transfers of beneficial interests
in the Regulation S Global Note may not be made to a U.S.  Person or for the account or benefit of a
U.S.  Person (other than an Initial Purchaser).  Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note.  No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described in
this Section 2.06(b)(i).

 

(ii)     All
Other Transfers and Exchanges of Beneficial Interests in Global Notes.  In connection with all transfers and
exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above,
the transferor of such beneficial interest must deliver to the Registrar
either:

 

(A)          (1) a
written order from a Participant or an Indirect Participant given to the Depositary
in accordance with the Applicable Procedures directing the Depositary to credit
or cause to be credited a beneficial interest in another Global Note in an
amount equal to the beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase; or

 

37

 

(B)           (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding the
Person in whose name such Definitive Note shall be registered to effect the
transfer or exchange referred to in (1) above.  Upon consummation of an Exchange Offer by the
Company in accordance with Section 2.06(f) hereof, the requirements
of this Section 2.06(b)(ii) shall be deemed to have been satisfied
upon receipt by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Notes.  Upon satisfaction
of all of the requirements for transfer or exchange of beneficial interests in
Global Notes contained in this Indenture and the Notes or otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Note(s) pursuant to Section 2.06(h) hereof.

 

(iii)    Transfer
of Beneficial Interests to Another Restricted Global Note.  A beneficial interest in any Restricted
Global Note may be transferred to a Person who takes delivery thereof in the
form of a beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:

 

(A)          if the
transferee will take delivery in the form of a beneficial interest in the 144A
Global Note, then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;

 

(B)           if the
transferee will take delivery in the form of a beneficial interest in the
Regulation S Global Note, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (2) thereof;
and

 

(C)           if the
transferee will take delivery in the form of a beneficial interest in the IAI
Global Note, then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications and certificates and Opinion of Counsel
required by item (3) thereof, if applicable.

 

(iv)    Transfer
and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial
Interests in the Unrestricted Global Note.  A beneficial interest in any Restricted
Global Note may be exchanged by any holder thereof for a beneficial interest in
an Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note if
the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above
and:

 

(A)          such exchange
or transfer is effected pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144)
of the Company;

 

(B)           such transfer
is effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

38

 

(C)           such transfer
is effected by a Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement; or

 

(D)          the Registrar
receives the following:

 

(1)           if the holder
of such beneficial interest in a Restricted Global Note proposes to exchange
such beneficial interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or

 

(2)           if the holder
of such beneficial interest in a Restricted Global Note proposes to transfer
such beneficial interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;

 

and, in each such case
set forth in this subparagraph (D), if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of Counsel in form reasonably
acceptable to the Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.

 

If any such transfer is
effected pursuant to subparagraph (B) or (D) above at a time when an
Unrestricted Global Note has not yet been issued, the Company shall issue and,
upon receipt of a Company Order in accordance with Section 2.02 hereof,
the Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the aggregate principal amount of
beneficial interests transferred pursuant to subparagraph (B) or (D) above.  Beneficial interests in an Unrestricted
Global Note cannot be exchanged for, or transferred to Persons who take
delivery thereof in the form of, a beneficial interest in a Restricted Global
Note.

 

(c)           Transfer or Exchange of
Beneficial Interests for Definitive Notes.

 

(i)      Beneficial
Interests in Restricted Global Notes to Restricted Definitive Notes.  If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:

 

(A)          if the holder
of such beneficial interest in a Restricted Global Note proposes to exchange
such beneficial interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the certifications
in item (2)(a) thereof;

 

(B)           if such
beneficial interest is being transferred to a QIB in accordance with Rule 144A
under the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;

 

(C)           if such
beneficial interest is being transferred to a Non-U.S.  Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a 

 

39

 

certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;

 

(D)          if such
beneficial interest is being transferred pursuant to an exemption from the
registration requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a) thereof;

 

(E)           if such
beneficial interest is being transferred to an Institutional Accredited
Investor in reliance on an exemption from the registration requirements of the
Securities Act other than those listed in subparagraphs (B) through (D) above,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;

 

(F)           if such
beneficial interest is being transferred to the Company or any of its
Subsidiaries, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(b) thereof; or

 

(G)           if such
beneficial interest is being transferred pursuant to an effective registration
statement under the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof,

 

the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the Person designated
in the instructions a Definitive Note in the appropriate principal amount.  Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall
be registered in such name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant.  The Trustee shall deliver such Definitive
Notes to the Persons in whose names such Notes are so registered.  Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall
bear the Private Placement Legend and shall be subject to all restrictions on
transfer contained therein.

 

(ii)     Beneficial
Interests in Restricted Global Notes to Unrestricted Definitive Notes.  A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:

 

(A)          such exchange
or transfer is effected pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of such beneficial interest, in
the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144)
of the Company;

 

(B)           such transfer
is effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

(C)           such transfer
is effected by a Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement; or

 

40

 

(D)          the Registrar
receives the following:

 

(1)           if the holder
of such beneficial interest in a Restricted Global Note proposes to exchange
such beneficial interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(b) thereof; or

 

(2)           if the holder
of such beneficial interest in a Restricted Global Note proposes to transfer
such beneficial interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;

 

and, in each such case
set forth in this subparagraph (D), if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of Counsel in form reasonably
acceptable to the Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.

 

(iii)    Beneficial
Interests in Unrestricted Global Notes to Unrestricted Definitive Notes.  If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon satisfaction of
the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee
shall cause the aggregate principal amount of the applicable Global Note to be
reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount.  Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall
be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant.  The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are so
registered.  Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall
not bear the Private Placement Legend.

 

(d)           Transfer and Exchange of
Definitive Notes for Beneficial Interests.

 

(i)      Restricted
Definitive Notes to Beneficial Interests in Restricted Global Notes.  If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted Global
Note or to transfer such Restricted Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in a Restricted Global
Note, then, upon receipt by the Registrar of the following documentation:

 

(A)          if the Holder
of such Restricted Definitive Note proposes to exchange such Note for a
beneficial interest in a Restricted Global Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications in
item (2)(b) thereof;

 

(B)           if such
Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A
under the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;

 

41

 

(C)           if such
Restricted Definitive Note is being transferred to a Non-U.S.  Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2) thereof;

 

(D)          if such
Restricted Definitive Note is being transferred pursuant to an exemption from
the registration requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a) thereof;

 

(E)           if such
Restricted Definitive Note is being transferred to an Institutional Accredited
Investor in reliance on an exemption from the registration requirements of the
Securities Act other than those listed in subparagraphs (B) through (D) above,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications, certificates and Opinion of Counsel required by item (3) thereof,
if applicable;

 

(F)           if such
Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or

 

(G)           if such
Restricted Definitive Note is being transferred pursuant to an effective
registration statement under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,

 

the Trustee shall cancel
the Restricted Definitive Note, increase or cause to be increased the aggregate
principal amount of, in the case of clause (A) above, the appropriate
Restricted Global Note, in the case of clause (B) above, the 144A
Global Note, in the case of clause (C) above, the Regulation S Global
Note, and in all other cases, the IAI Global Note.

 

(ii)     Restricted
Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of a Restricted
Definitive Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Restricted Definitive Note to a
Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:

 

(A)          such exchange
or transfer is effected pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of an exchange, or
the transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a Broker-Dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;

 

(B)           such transfer
is effected pursuant to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;

 

(C)           such transfer
is effected by a Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement; or

 

(D)          the Registrar
receives the following:

 

(1)           if the Holder
of such Definitive Notes proposes to exchange such Notes for a beneficial
interest in the Unrestricted Global Note, a certificate from 

 

42

 

such
Holder in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or

 

(2)           if the Holder
of such Definitive Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;

 

and, in each such case
set forth in this subparagraph (D), if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of Counsel in form reasonably
acceptable to the Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.

 

Upon satisfaction of the
conditions of any of the subparagraphs in this Section 2.06(d)(ii), the
Trustee shall cancel the Definitive Notes and increase or cause to be increased
the aggregate principal amount of the Unrestricted Global Note.

 

(iii)    Unrestricted
Definitive Notes to Beneficial Interests in Unrestricted Global Notes.  A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note at any time.  Upon receipt of a request for such an
exchange or transfer, the Trustee shall cancel the applicable Unrestricted
Definitive Note and increase or cause to be increased the aggregate principal
amount of one of the Unrestricted Global Notes.

 

If any such exchange or transfer from a
Definitive Note to a beneficial interest is effected pursuant to
subparagraph (ii)(B), (ii)(D) or (iii) above at a time when an
Unrestricted Global Note has not yet been issued, the Company shall issue and,
upon receipt of a Company Order in accordance with Section 2.02 hereof,
the Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of Definitive Notes so
transferred.

 

(e)           Transfer and Exchange of
Definitive Notes for Definitive Notes.  Upon request by a Holder of Definitive Notes
and such Holder’s compliance with the provisions of this Section 2.06(e),
the Registrar shall register the transfer or exchange of Definitive Notes.  Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. 
In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 2.06(e):

 

(i)      Restricted
Definitive Notes to Restricted Definitive Notes.  Any Restricted Definitive Note may be
transferred to and registered in the name of Persons who take delivery thereof
in the form of a Restricted Definitive Note if the Registrar receives the following:

 

(A)          (if the
transfer will be made pursuant to Rule 144A under the Securities Act, then
the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;

 

43

 

(B)           if the transfer
will be made pursuant to Rule 903 or Rule 904, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; and

 

(C)           if the transfer
will be made pursuant to any other exemption from the registration requirements
of the Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if applicable.

 

(ii)     Restricted
Definitive Notes to Unrestricted Definitive Notes.  Any Restricted Definitive Note may be
exchanged by the Holder thereof for an Unrestricted Definitive Note or
transferred to a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note if:

 

(A)          such exchange
or transfer is effected pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of an exchange, or
the transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a Broker-Dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;

 

(B)           any such
transfer is effected pursuant to the Shelf Registration Statement in accordance
with the Registration Rights Agreement;

 

(C)           any such
transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

 

(D)          the Registrar
receives the following:

 

(1)           if the Holder
of such Restricted Definitive Notes proposes to exchange such Notes for an
Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof; or

 

(2)           if the Holder
of such Restricted Definitive Notes proposes to transfer such Notes to a Person
who shall take delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;

 

and, in each such case
set forth in this subparagraph (D), if the Registrar so requests, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such exchange or transfer is in compliance with the Securities Act and
that the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the Securities
Act.

 

(iii)    Unrestricted
Definitive Notes to Unrestricted Definitive Notes.  A Holder of Unrestricted Definitive Notes may
transfer such Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note.  Upon
receipt of a request to register such a transfer, the Registrar shall register
the Unrestricted Definitive Notes pursuant to the instructions from the Holder
thereof.

 

44

 

(f)            Exchange Offer.  Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of a Company Order in accordance with Section 2.02, the
Trustee shall authenticate

 

(i)      one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
the beneficial interests in the Restricted Global Notes tendered for acceptance
by Persons that certify in the applicable Letters of Transmittal that (x) they
are not broker-dealers, (y) they are not participating in a distribution
of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144)
of the Company, and accepted for exchange in the Exchange Offer; and

 

(ii)     Unrestricted Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.

 

Concurrently with the issuance of such Notes, the Trustee shall cause
the aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.

 

(g)           Legends.  The following legends shall appear on the
face of all Global Notes and Definitive Notes issued under this Indenture
unless specifically stated otherwise in the applicable provisions of this
Indenture.

 

(i)      Private
Placement Legend.  (A)  Except
as permitted by subparagraph (B) below, each Global Note and each
Definitive Note (and all Notes issued in exchange therefor or substitution
thereof) shall bear the legend in substantially the following form:

 

THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFF-SHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE
501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT (AN “ACCREDITED
INVESTOR”), (2) AGREES THAT IT WILL NOT WITHIN ONE YEAR AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS 

 

45

 

SECURITY),
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN ONE YEAR AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.

 

(B)           Notwithstanding
the foregoing, any Global Note or Definitive Note issued pursuant to
subparagraph (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or
(f) of this Section 2.06 (and all Notes issued in exchange therefor
or substitution thereof) shall not bear the Private Placement Legend.

 

(ii)     Global
Note Legend.  Each Global
Note shall bear a legend in substantially the following form:

 

“THIS
GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING
THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS
HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT
(I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE
REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF PENN NATIONAL GAMING, INC.”

 

(h)           Cancellation and/or Adjustment of
Global Notes.  At such
time as all beneficial interests in a particular Global Note have been
exchanged for Definitive Notes or a particular Global Note has been redeemed,
repurchased or canceled in whole and not in part, each such Global Note shall
be returned to or retained and canceled by the Trustee in accordance with Section 2.11
hereof.  At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for or
transferred to a 

 

46

 

Person who will take delivery thereof in the
form of a beneficial interest in another Global Note or for Definitive Notes,
the principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note, such other Global Note shall be increased accordingly and
an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

 

(i)            General Provisions Relating to
Transfers and Exchanges.

 

(i)      To permit registrations of
transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Global Notes and Definitive Notes upon receipt of a Company Order
or at the Registrar’s request.

 

(ii)     No service charge shall be
made to a holder of a beneficial interest in a Global Note or to a Holder of a
Definitive Note for any registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05 hereof).

 

(iii)    The Registrar shall not be
required to register the transfer of or exchange any Note selected for
redemption in whole or in part, except the unredeemed portion of any Note being
redeemed in part.

 

(iv)    All Global Notes and
Definitive Notes issued upon any registration of transfer or exchange of Global
Notes or Definitive Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this Indenture,
as the Global Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.

 

(v)     The Company shall not be
required (A) to issue, to register the transfer of or to exchange any
Notes during a period beginning at the opening of business 15 days before the
mailing of a notice of redemption under Section 3.03 hereof and ending at
the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part or (C) to
register the transfer of or to exchange a Note between a record date and the
next succeeding Interest Payment Date.

 

(vi)    Prior to due presentment for
the registration of a transfer of any Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name any Note is registered as
the absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and none of
the Trustee, any Agent or the Company shall be affected by notice to the
contrary.

 

(vii)   The Trustee shall
authenticate Global Notes and Definitive Notes in accordance with the
provisions of Section 2.02 hereof.

 

(viii)  All certifications,
certificates and Opinions of Counsel required to be submitted to the Registrar
pursuant to this Section 2.06 to effect a registration of transfer or
exchange may be submitted by facsimile.

 

(ix)    The Trustee shall have no
obligation or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under applicable law
with 

 

47

 

respect to any transfer of
any interest in any Notes (including any transfers between or among depositary
participants or beneficial owners of interests in any Global Note) other than
to require delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required by the
terms of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.

 

Section 2.07.                             Replacement Notes.

 

If any mutilated Note is surrendered to the Trustee
or the Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the
Trustee, upon receipt of a Company Order, shall authenticate a replacement Note
if the Trustee’s requirements are met. 
An indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the
Trustee, any Agent and any authenticating agent from any loss that any of them
may suffer if a Note is replaced.  The Company
may charge for its expenses in replacing a Note.

 

Every replacement Note is an additional obligation
of the Company and shall be entitled to all of the benefits of this Indenture
equally and proportionately with all other Notes duly issued hereunder.

 

Section 2.08.                             Outstanding Notes.

 

The Notes outstanding at any time are all the Notes authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this Section as
not outstanding.  Except as set forth in Section 2.09
hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note; however, Notes held by the Company or
a Subsidiary of the Company shall not be deemed to be outstanding for purposes
of Section 3.07(a) hereof.

 

If a Note is replaced pursuant to Section 2.07
hereof, it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona fide purchaser.

 

If the principal amount of any Note is considered
paid under Section 4.01 hereof, it ceases to be outstanding and interest
on it ceases to accrue.

 

If the Paying Agent (other than the Company, a
Subsidiary or an Affiliate of any thereof) holds, on a redemption date or
maturity date, money sufficient to pay Notes payable on that date, then on and
after that date such Notes shall be deemed to be no longer outstanding and
shall cease to accrue interest.

 

Section 2.09.                             Treasury Notes.

 

In determining whether the Holders of the required
principal amount of Notes have concurred in any direction, waiver or consent,
Notes owned by the Company, or by any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company,
shall be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded.

 

48

 

Section 2.10.                             Temporary Notes.

 

Until certificates representing Notes are ready for
delivery, the Company may prepare and the Trustee, upon receipt of a Company
Order, shall authenticate temporary Notes. 
Temporary Notes shall be substantially in the form of certificated Notes
but may have variations that the Company considers appropriate for temporary
Notes and as shall be reasonably acceptable to the Trustee.  Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.

 

Holders of temporary Notes shall be entitled to all
of the benefits of this Indenture.

 

Section 2.11.                             Cancellation.

 

The Company at any time may deliver Notes to the
Trustee for cancellation.  The Registrar
and Paying Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange or payment. 
The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall dispose of canceled Notes in accordance with its customary procedures
(subject to the record retention requirement of the Exchange Act).  The Trustee shall notify the Company in
writing upon cancellation of any Notes. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.

 

Section 2.12.                             Defaulted Interest.

 

If the Company defaults in a payment of interest on
the Notes, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, in each case at the rate
provided in the Notes and in Section 4.01 hereof.  The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. 
The Company shall fix or cause to be fixed each such special record date
and payment date; provided that no such special
record date shall be less than 10 days prior to the related payment date
for such defaulted interest.  At least
15 days before the special record date, the Company (or, upon the written
request of the Company, the Trustee in the name and at the expense of the
Company) shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest
to be paid.

 

Section 2.13.                             Issuance of Additional Notes.

 

The Company shall be entitled to issue, without the
consent of the Holders, Additional Notes under this Indenture that shall have
identical terms as the Initial Notes, other than with respect to the date of
issuance, issue price, and amount of interest payable on the first Interest
Payment Date applicable thereto; provided that
such issuance is not prohibited by Section 4.09.  Any 
such Additional Notes may be issued as the same series as the Initial
Notes or any other Notes previously issued (provided that
such Additional Notes will be fungible with the Notes of such series for United
States federal income tax purposes) or as a separate series.  The Initial Notes and any Additional Notes
and all Exchange Notes shall be treated as a single class for all purposes
under this Indenture.

 

49

 

With respect to any
Additional Notes, the Company shall set forth in a resolution of its Board of
Directors and in a Company Order, a copy of each of which shall be delivered to
the Trustee, the following information:

 

(1)           the aggregate
principal amount of such Additional Notes to be authenticated and delivered
pursuant to this Indenture; and

 

(2)           the issue
price, the issue date, the “CUSIP” number (if then generally in use) of such
Additional Notes, the first Interest Payment Date and the amount of interest
payable on such first Interest Payment Date applicable thereto and the date
from which interest shall accrue; provided, however,
that no Additional Notes may be issued at a price that would cause such
Additional Notes to have “original issue discount” within the meaning of Section 1273
of the Internal Revenue Code of 1986, as amended.

 

Section 2.14.                             Designation.

 

Any Additional Notes issued under this Indenture
will rank pari passu in right of payment with the
Initial Notes.

 

Section 2.15.                             CUSIP Numbers.

 

The Company in issuing the Notes may use “CUSIP”
numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP”
numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of a redemption and that reliance
may be placed only on the other identification numbers printed on the Notes,
and any such redemption shall not be affected by any defect in or omission of
such numbers.  The Company will promptly
notify the Trustee in writing of any change in the “CUSIP” numbers.

 

ARTICLE 3

 

REDEMPTION AND
PREPAYMENT

 

Section 3.01.                             Notices to Trustee.

 

If the Company elects to redeem Notes pursuant to
the optional redemption provisions of Section 3.07 hereof, it shall
furnish to the Trustee, at least 30 days but not more than 60 days before a redemption
date, an Officers’ Certificate setting forth (i) the clause of this
Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the
redemption price.

 

Section 3.02.                             Selection of Notes To Be
Redeemed.

 

If less than all of the Notes are to be redeemed or
purchased in an offer to purchase at any time, the Trustee will select Notes to
be redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other
method the Trustee considers fair and appropriate; provided
that any redemption pursuant to Section 3.07(b) hereof shall be
effected on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to DTC procedures)
unless such method is otherwise prohibited or is not practicable.  In the event of partial 

 

50

 

redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.

 

The Trustee shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be
redeemed.  Notes and portions of Notes
selected shall be in amounts of $2,000 or whole multiples of $1,000; except
that if all of the Notes of a Holder are to be redeemed, the entire outstanding
amount of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed.  Except as provided in the
preceding sentence, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.

 

Section 3.03.                             Notice of Redemption.

 

Subject to the provisions of Section 3.09
hereof, at least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address, except that (i) redemption notices may be mailed more than 60
days prior to a redemption date if the notice is issued in connection with a
defeasance of the Notes (whether by covenant or legal defeasance) or a
satisfaction and discharge of this Indenture and (ii) redemption notices
may be mailed less than 30 or more than 60 days prior to a redemption date if
so required by any applicable Gaming Authority in connection with a redemption
described under Section 3.07(d) hereof.  Notices of redemption may not be conditional.

 

The notice shall identify
the Notes (including CUSIP number(s)) to be redeemed and shall state:

 

(a)           the redemption date;

 

(b)           the redemption price;

 

(c)           if any Note is being
redeemed in part, the portion of the principal amount of such Note to be
redeemed and that, after the redemption date upon surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed portion shall be
issued upon cancellation of the original Note;

 

(d)           the name and address of the
Paying Agent;

 

(e)           that Notes called for
redemption must be surrendered to the Paying Agent to collect the redemption
price;

 

(f)            that, unless the Company
defaults in making such redemption payment, interest on Notes called for
redemption ceases to accrue on and after the redemption date;

 

(g)           the paragraph of the Notes
and/or Section of this Indenture pursuant to which the Notes called for
redemption are being redeemed; and

 

(h)           that no representation is
made as to the correctness or accuracy of the CUSIP number, if any, listed in
such notice or printed on the Notes.

 

At the Company’s written request, the Trustee shall
give the notice of redemption in the Company’s name and at its expense; provided, however, that
the Company shall have delivered to the 

 

51

 

Trustee, at least 45 days
prior to the redemption date (unless a shorter period is acceptable to the
Trustee), an Officers’ Certificate requesting that the Trustee give such notice
and setting forth the information to be stated in such notice as provided in
the preceding paragraph.

 

Section 3.04.                             Effect of Notice of
Redemption.

 

Once notice of redemption is mailed in accordance
with Section 3.03 hereof, Notes called for redemption become irrevocably
due and payable on the redemption date at the redemption price.  A notice of redemption may not be
conditional.

 

Section 3.05.                             Deposit of Redemption or
Purchase Price.

 

No later than 10:00 a.m. New York City time on
the redemption or purchase date, the Company shall deposit with the Trustee or
with the Paying Agent money sufficient to pay the redemption or purchase price
of and accrued interest on all Notes to be redeemed or purchased on that
date.  The Trustee or the Paying Agent
shall promptly return to the Company any money deposited with the Trustee or
the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption or purchase price of, and accrued interest on, all Notes to be
redeemed or purchased.

 

If the Company complies with the provisions of the
preceding paragraph, on and after the redemption or purchase date, interest
shall cease to accrue on the Notes or the portions of Notes called for
redemption or purchase.  If a Note is
redeemed or purchased on or after an interest record date but on or prior to
the related interest payment date, then any accrued and unpaid interest shall
be paid to the Person in whose name such Note was registered at the close of
business on such record date.  If any
Note called for redemption or purchase shall not be so paid upon surrender for
redemption or purchase because of the failure of the Company to comply with the
preceding paragraph, interest shall be paid on the unpaid principal, from the
redemption or purchase date until such principal is paid, and to the extent
lawful on any interest not paid on such unpaid principal, in each case at the
rate provided in the Notes and in Section 4.01 hereof.

 

Section 3.06.                             Notes Redeemed or Purchased
in Part.

 

Upon surrender of a Note that is redeemed or purchased
in part, the Company shall issue and, upon the Company’s written request, the
Trustee shall authenticate for the Holder at the expense of the Company a new
Note equal in principal amount to the unredeemed or unpurchased portion of the
Note surrendered.

 

Section 3.07.                             Optional Redemption and
Gaming Redemption.

 

(a)           At any time prior to August 15,
2014, the Company may redeem the Notes for cash at its option, in whole or in
part, at any time or from time to time, upon not less than 30 days nor
more than 60 days notice to each Holder of notes, at a redemption price
equal to the greater of (1) 100% of the principal amount of the Notes
being redeemed and (2) the sum of the present values of the principal
amount of the Notes being redeemed and scheduled payments of interest on such
notes to August 15, 2014, discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 50 basis points, together in either case with accrued
and unpaid interest, if any, to the date of redemption.

 

(b)           At any time prior to August 15,
2012, the Company may on any one or more occasions redeem Notes issued under
this Indenture at a redemption price of 108.750% of the principal amount, plus
accrued and unpaid interest to the redemption date, with the net cash proceeds
of one or 

 

52

 

more Equity Offerings; provided that:  (1) at least 65% of the aggregate
principal amount of Notes originally issued under this Indenture remains
outstanding immediately after the occurrence of such redemption (excluding
Notes held by the Company and its Subsidiaries); and (2) the redemption
occurs within 180 days after the date of the closing of such Equity
Offering.

 

(c)           Except as described in
subparagraphs (a) and (b) above, the Notes will not be redeemable at
the Company’s option prior to August 15, 2014.  On and after August 15, 2014, the Company
may redeem all or a part of the Notes upon not less than 30 nor more than 60 days’
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest on the Notes redeemed, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on August 15 of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2014

  	
   

  	
  104.375

  	
  %

  
	
  2015

  	
   

  	
  102.917

  	
  %

  
	
  2016

  	
   

  	
  101.458

  	
  %

  
	
  2017 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(d)           In addition to the
foregoing, if any Gaming Authority requires that a Holder or Beneficial Owner
of Notes must be licensed, qualified or found suitable under any applicable
Gaming Laws and such Holder or Beneficial Owner:  (i) fails to apply for a license,
qualification or a finding of suitability within 30 days (or such shorter
period as may be required by the applicable Gaming Authority) after being
requested to do so by the Gaming Authority, or (ii) is denied such license
or qualification or not found suitable, or if any Gaming Authority otherwise
requires that Notes from any Holder or Beneficial Owner be redeemed, subject to
applicable Gaming Laws the Company shall have the right, at its option:  (iii) to require any such Holder or
Beneficial Owner to dispose of its Notes within 30 days (or such earlier
date as may be required by the applicable Gaming Authority) of receipt of such
notice or finding by such Gaming Authority, or (iv) to call for the
redemption of the Notes of such Holder or Beneficial Owner at a redemption
price equal to the least of:  (A) the
principal amount thereof, together with accrued interest and Liquidated
Damages, if any, to the earlier of the date of redemption or the date of the
denial of license or qualification or of the finding of unsuitability by such
Gaming Authority, (B) the price at which such Holder or Beneficial Owner acquired
the Notes, together with accrued interest and Liquidated Damages, if any, to
the earlier of the date of redemption or the date of the denial of license or
qualification or of the finding of unsuitability by such Gaming Authority, or (C) such
other lesser amount as may be required by any Gaming Authority.

 

The Company shall notify the
Trustee in writing of any such redemption as soon as practicable.  The Holder or Beneficial Owner applying for
license, qualification or a finding of suitability must pay all costs of the
licensure or investigation for such qualification or finding of suitability.

 

(e)           Any redemption pursuant to
this Section 3.07 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

 

Section 3.08.                             Mandatory Redemption.

 

The Company shall not be required to make mandatory
redemption or sinking fund payments with respect to the Notes.

 

53

 

Section 3.09.                             Offer To Purchase by
Application of Excess Proceeds.

 

In the event that, pursuant to Section 4.10
hereof, the Company shall be required to commence an offer to all Holders to
purchase Notes (an “Asset Sale Offer”), it shall follow the procedures
specified below.

 

The Asset Sale Offer shall be made to all Holders
and all holders of other Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in this
Indenture with respect to offers to purchase or redeem with proceeds of sales
of assets.  The Asset Sale Offer shall
remain open for a period of 20 Business Days following its commencement and no
longer, except to the extent that a longer period is required by applicable law
(the “Offer Period”).  No later
than five Business Days after the termination of the Offer Period (the “Purchase
Date”), the Company shall purchase the principal amount of Notes required
to be purchased pursuant to Section 4.10 hereof (the “Offer Amount”)
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer.  Payment
for any Notes so purchased shall be made in the same manner as interest
payments are made.

 

If the Purchase Date is on or after an interest
record date and on or before the related interest payment date, any accrued and
unpaid interest shall be paid to the Person in whose name a Note is registered
at the close of business on such record date, and no additional interest shall
be payable to Holders who tender Notes pursuant to the Asset Sale Offer.

 

Upon the commencement of an Asset Sale Offer, the
Company shall send, by first class mail, a notice to the Trustee and each of
the Holders.  The notice shall contain
all instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Asset Sale Offer.  The
Asset Sale Offer shall be made to all Holders. 
The notice, which shall govern the terms of the Asset Sale Offer, shall
state:

 

(a)           that the Asset Sale Offer is
being made pursuant to this Section 3.09 and Section 4.10 hereof and
the length of time the Asset Sale Offer shall remain open;

 

(b)           the Offer Amount, the
purchase price and the Purchase Date;

 

(c)           that any Note not tendered
or accepted for payment shall continue to accrete or accrue interest;

 

(d)           that, unless the Company
defaults in making such payment, any Note accepted for payment pursuant to the
Asset Sale Offer shall cease to accrete or accrue interest after the Purchase
Date;

 

(e)           that Holders electing to
have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes
purchased in denominations of $2,000 and integral multiples of $1,000 only;

 

(f)            that Holders electing to
have a Note purchased pursuant to any Asset Sale Offer shall be required to
surrender the Note, with the form entitled “Option of Holder to Elect Purchase”
on the reverse of the Note completed, or transfer by book-entry transfer, to
the Company, a depositary, if appointed by the Company, or a Paying Agent at
the address specified in the notice at least three days before the Purchase
Date;

 

(g)           that Holders shall be
entitled to withdraw their election if the Company, the depositary or the
Paying Agent, as the case may be, receives, not later than the expiration of
the Offer Period, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the 

 

54

 

Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased;

 

(h)           that, if the aggregate
principal amount of Notes and other pari passu
Indebtedness surrendered by Holders exceeds the Offer Amount, the Company shall
select the Notes and other pari passu
Indebtedness to be purchased on a pro rata basis
based on the principal amount of Notes and other pari passu
Indebtedness surrendered (with such adjustments as may be deemed appropriate by
the Company so that only Notes in denominations of $2,000, or integral
multiples of $1,000, shall be purchased); and

 

(i)            that Holders whose Notes
were purchased only in part shall be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer).

 

On or before the Purchase Date, the Company shall,
to the extent lawful, accept for payment, on a pro rata
basis to the extent necessary, the Offer Amount of Notes or portions thereof
tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has
been tendered, all Notes tendered, and shall deliver to the Trustee an Officers’
Certificate stating that such Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section 3.09.  The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a
new Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal
to any unpurchased portion of the Note surrendered.  Any Note not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof.  The Company shall publicly announce the
results of the Asset Sale Offer on the Purchase Date.

 

Other than as specifically provided in this Section 3.09,
any purchase pursuant to this Section 3.09 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.

 

ARTICLE 4

 

COVENANTS

 

Section 4.01.                             Payment of Notes.

 

The Company shall pay or cause to be paid the
principal of, premium, if any, and interest on the Notes on the dates and in
the manner provided in the Notes. 
Principal, premium or Liquidated Damages, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m.  Eastern Time on the due date money deposited
by the Company in immediately available funds and designated for and sufficient
to pay all principal, premium or Liquidated Damages, if any, and interest then
due.  The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.

 

The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal at the rate equal to 1% per annum in excess of the then applicable
interest rate on the Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest and Liquidated Damages (without regard to
any applicable grace period) at the same rate to the extent lawful.

 

55

 

Section 4.02.                          Maintenance of Office or
Agency.

 

The Company shall maintain in the Borough of
Manhattan, the City of New York, an office or agency (which may be an office of
the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where
Notes may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served.  The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. 
If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee.

 

The Company may also from time to time designate one
or more other offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. 
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.

 

The Company hereby designates the Corporate Trust
Office of the Trustee as one such office or agency of the Company in accordance
with Section 2.03.

 

Section 4.03.                          Reports.

 

(a)                                  Whether or not
required by the SEC, so long as any Notes are outstanding, the Company shall
furnish to the Trustee for mailing to the Holders of Notes, within 30 days
after the time periods specified in the SEC’s rules and regulations, (i) all
quarterly and annual financial information that is filed or that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if or
as if the Company were required to file such Forms, including a “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and,
with respect to the annual information only, a report on the annual financial
statements by the Company’s certified independent accountants; and (ii) all
current reports that would be required to be filed with the SEC on Form 8-K if
the Company were required to file such reports. 
The availability of the foregoing materials on the SEC’s EDGAR or IDEA
service (or any successor thereto) shall be deemed to satisfy the Company’s
obligations to furnish such materials to the Trustee for mailing to the Holders
of Notes, provided, however, that the Trustee
shall have no obligation whatsoever to determine if any such filing has been
made.  The Company shall send to the
Trustee copies of any EDGAR filings with the SEC on Forms 10-K, 10-Q and
8-K.  Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

 

(b)                                 In addition,
the Company has agreed that, for so long as any Notes remain outstanding, if
the Company is not required to file with the SEC the reports required by Section
4.03(a), it will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

Section 4.04.                          Compliance Certificate.

 

(a)                                  The Company
shall deliver to the Trustee, within 105 days after the end of each fiscal
year, an Officers’ Certificate (which Officers’ Certificate must be signed by
at least one of the principal executive officer, the principal financial
officer or the principal accounting officer of the Company) 

 

56

 

stating that a review of the activities of
the Company and its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event
of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is prohibited
or if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.

 

(b)                                 So long as not
contrary to the then current recommendations of the American Institute of
Certified Public Accountants, the year-end financial statements delivered
pursuant to Section 4.03(a) above shall be accompanied by a written statement
of the Company’s independent public accountants (who shall be a firm of
established national reputation) that in making the examination necessary for
certification of such financial statements, nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 4 or Article 5 hereof or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.

 

(c)                                  The Company
shall, so long as any of the Notes are outstanding, deliver to the Trustee,
forthwith upon any Officer becoming aware of any Default or Event of Default,
an Officers’ Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.

 

Section 4.05.                          Taxes.

 

The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.

 

Section 4.06.                          Stay, Extension and Usury
Laws.

 

The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law has been enacted.

 

Section 4.07.                          Restricted Payments.

 

(a)                                  The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly:

 

57

 

(i)                  declare or pay
any dividend or make any other distribution on account of the Company’s or any
of its Restricted Subsidiaries’ Equity Interests (other than (A) dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or (B) to the Company or a Restricted Subsidiary of the Company);

 

(ii)               purchase,
redeem or otherwise acquire or retire for value (A) any Equity Interests of the
Company (other than Disqualified Stock issued after the date of this Indenture
within 365 days of the Stated Maturity of such Disqualified Stock) or (B) any
preferred stock of a Restricted Subsidiary of the Company (other than within
365 days of the Stated Maturity thereof), in the case of each of clauses (A) and
(B), other than any such Equity Interests or preferred stock held by the
Company or a Restricted Subsidiary of the Company);

 

(iii)            make any
payment of principal on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value, any Indebtedness of the Company that is
subordinated to the Notes (except a payment within 365 days of the Stated
Maturity thereof and other than Indebtedness permitted under clause (6) of the
second paragraph of Section 4.09 hereof); or

 

(iv)           make any
Restricted Investment (all such payments and other actions set forth in these
clauses (i) through (iv) being collectively referred to as “Restricted Payments”),

 

unless, at the time of and after giving effect to such Restricted
Payment:

 

(1)                                  no Default or Event of
Default has occurred and is continuing or would occur as a consequence of such
Restricted Payment;

 

(2)                                  the Company would, at the
time of such Restricted Payment and after giving pro forma effect thereto as if
such Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 hereof; and

 

(3)                                  such Restricted Payment,
together with the aggregate amount of all other Restricted Payments made by the
Company and its Restricted Subsidiaries after the 111/8% Issue Date (excluding Restricted Payments permitted by clauses (2),
(3), (4), (8), (10), (13), (14) and (15) and, solely to the extent not reducing
Consolidated Net Income (or Net Income), (7) of Section 4.07(b)), is less than
the sum, without duplication, of:

 

(A)                              50% of the
Consolidated Net Income of the Company for the period (taken as one accounting
period) from the beginning of the first fiscal quarter immediately following
the 111/8% Issue Date to the end of
the Company’s most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus

 

(B)                                100% of (x) the
aggregate net cash proceeds received by the Company since the 111/8% Issue Date (i) as a contribution to its common
equity capital, or (ii) from the issue or sale of the Redeemable Preferred
Stock, or (iii) from the issue or sale of other Equity Interests of the Company
(other than Disqualified Stock) or (iv) from the issue or sale of convertible
or exchangeable Disqualified Stock (other than the Redeemable Preferred Stock),
or convertible or exchangeable debt securities of the Company, in each case in
this clause (iv), that 

 

58

 

have been converted into or
exchanged for such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary of the Company),
and (y) the purchase price of any Permitted Business Assets or other assets
acquired in exchange for the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable debt securities
of the Company that have been converted into or exchanged for such Equity Interests
(other than Equity Interests (or Disqualified Stock or debt securities) sold to
a Subsidiary of the Company) following the date of this Indenture, plus

 

(C)                                to the extent
that any Restricted Investment (including to designate a Subsidiary as an
Unrestricted Subsidiary) that was made after the 111/8% Issue Date and was included in the calculation of Restricted Payments
made under this Indenture:  (x) is sold
for cash or otherwise liquidated or repaid for cash, in whole or in part
(including through the sale of capital stock or other securities of an
Unrestricted Subsidiary other than to the Company or any of its Restricted
Subsidiaries), or (y) is repurchased or redeemed by any person (other than the
Company or any of its Restricted Subsidiaries) or results in, or is otherwise
returned or reduced by, the payment of principal, interest, dividends or
distributions, or repayments of loans or advances, or other transfers of assets,
or the satisfaction, release, expiration, cancellation or reduction (other than
by means of payments by the Company or any of its Restricted Subsidiaries) of
Indebtedness or other obligations (including any such Indebtedness or other
obligations guaranteed by the Company or any of its Restricted Subsidiaries,
including any Investment Guarantee), or any payments under management contracts
or services agreements,

 

100% of the aggregate
reduction of or return with respect to, and all other payments and the fair
market value of assets other than cash received with respect to, such
Restricted Investment,  plus

 

(D)                               to the extent
that any Restricted Investment was made after the 111/8% Issue Date in an entity that subsequently becomes a Restricted
Subsidiary (other than through the redesignation of an Unrestricted Subsidiary
to which clause (E) below shall apply) and such Restricted Investment remains
outstanding, the aggregate amount of such Restricted Investments, plus

 

(E)                            to the extent
that any Unrestricted Subsidiary of the Company is redesignated as a Restricted
Subsidiary in compliance with Section 4.17 hereof or has been merged,
consolidated or amalgamated with or into, or transfers or conveys its assets
to, or is liquidated into, the Company or a Restricted Subsidiary, in each case
after the 111/8 % Issue Date, the fair
market value of the Company’s and its Restricted Subsidiaries’ Investment in
such Subsidiary (directly or indirectly) as of the date of such redesignation,
merger, consolidation, amalgamation, transfer or conveyance or liquidation.

 

(b)                                 The preceding
provisions will not prohibit:

 

(1)                                  the payment of
any dividend or distribution or the consummation of any irrevocable redemption
within 60 days after the date of declaration of the dividend or distribution or
giving of the redemption notice, as applicable, if at the date of declaration
or giving of the redemption

 

59

 

notice, as the case may be, the dividend,
distribution or redemption payment would have complied with the provisions of
this Indenture;

 

(2)                                  the redemption,
repurchase, retirement, defeasance (whether by covenant or legal defeasance) or
other acquisition of any subordinated Indebtedness of the Company or of any Equity
Interests of the Company in exchange for, or by conversion into, or out of the
net cash proceeds of the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of, Equity Interests of the Company
(other than Disqualified Stock) or of any Person that is or becomes,
substantially concurrently with such transaction, a holding company of the
Company; provided that the amount
of any such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition will be excluded from clause (3)(B)
of Section 4.07(a);

 

(3)                                  (x) the
defeasance (whether by covenant or legal defeasance), redemption, repurchase or
other acquisition of subordinated Indebtedness of the Company with the net cash
proceeds from an incurrence of, or in exchange for, Permitted Refinancing
Indebtedness, or (y) the redemption, repurchase or other acquisition of
Disqualified Stock of the Company with the net cash proceeds from an issuance
of, or in exchange for, Permitted Refinancing Indebtedness constituting
Disqualified Stock;

 

(4)                                  the payment of
any dividend by a Restricted Subsidiary of the Company to the holders of its
Equity Interests (other than preferred stock) on a pro rata basis;

 

(5)                                  redemptions,
repurchases or repayments of Indebtedness or Equity Interests of the Company or
any of its Subsidiaries to the extent required by any Gaming Authority having jurisdiction
over the Company or any Restricted Subsidiary or deemed necessary by the Board
of Directors of the Company in order to avoid the suspension, revocation or
denial of a gaming license by any Gaming Authority, or as required under Section
3.07(d) hereof;

 

(6)                                  the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company or any Restricted Subsidiary of the Company held by any member
of the Company’s, or any of its Restricted Subsidiaries’, present or former
management, any director or any employee (or heirs of, estates of or trusts
formed by such persons) upon the death, disability, retirement or termination
of employment of such officer, director or employee or pursuant to any equity
subscription agreement, stock option agreement, employment agreement, severance
agreement or similar agreement; provided
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests may not exceed $10.0 million in any fiscal year, and provided, further,
that any amounts not used in any fiscal year may be carried forward for up to
two succeeding fiscal year periods until used;

 

(7)                                  the declaration
and payment of dividends to holders of the Company’s Disqualified Stock and to
holders of preferred stock of Restricted Subsidiaries issued in accordance with
Section 4.09 hereof;

 

(8)                                  repurchases of
Equity Interests deemed to occur upon exercise of stock options if such Equity
Interests represent a portion of the exercise price of such options;

 

(9)                                  if a Change of
Control Triggering Event or an Asset Sale has occurred and the Company shall
have consummated the Change of Control Offer or Asset Sale Offer, respectively,
and purchased on the Change of Control Payment Date or the Asset Sale Payment
Date, respectively, all Notes tendered (up to the maximum amount of Notes
required to be so purchased, in 

 

60

 

the case of an Asset Sale Offer) in response
to the Change of Control Offer or the Asset Sale Offer, respectively, pursuant
to Section 4.14 or 4.10 respectively, any purchase or redemption (within 60
days after the Change of Control Payment Date or the Asset Sale Payment Date, respectively)
of any Indebtedness that is subordinated to the Notes or of any Disqualified
Stock, in each case, required pursuant to the terms thereof as a result of such
Change of Control or Asset Sale at a purchase or redemption price not to exceed
the outstanding principal amount (or accreted value or liquidation preference,
as applicable) thereof, plus accrued and unpaid interest or accrued and unpaid
dividends, as applicable, thereon, if any, plus any premium thereon, if any; provided, however, that
at the time of such purchase or redemption, no Default or Event of Default
shall have occurred and be continuing (or would result therefrom);

 

(10)                            purchase by the
Company or any of its Restricted Subsidiaries of preferred stock of a
Restricted Subsidiary of the Company if after giving effect thereto the Company’s
and its Restricted Subsidiaries’ direct or indirect aggregate percentage
ownership of the Equity Interests of such Restricted Subsidiary increases;

 

(11)                            Investment
Guarantees, Investment Guarantee Payments, Permitted Joint Venture Investments
or other Investments (without duplication) that the Company has elected to
include in the calculation of Restricted Payments pursuant to either clause (17)(b)(z)
of the definition of “Permitted Investments” or clause (z) of the definition of
“Permitted Joint Venture Investment;”

 

(12)                            any payment
made relating to any Trust Agreement;

 

(13)                            Restricted
Payments to allow the payment of cash in lieu of the issuance of fractional
shares upon the exercise of options or warrants or upon the conversion or
exchange of Capital Stock, or payments or distributions to dissenting
stockholders pursuant to applicable law;

 

(14)                            payments
(whether in cash, Capital Stock or property) in connection with the redemption,
purchase or other acquisition or retirement of the Redeemable Preferred Stock,
in each case if the Consolidated Leverage Ratio of the Company is less than or
equal to 5.0:1.0; and

 

(15)                            other
Restricted Payments not to exceed $100.0 million.

 

(c)                                  The amount of
all Restricted Payments (other than cash) will be the fair market value on the
date of the Restricted Payment of the assets or securities proposed to be
transferred or issued by the Company or such Restricted Subsidiary, as the case
may be, pursuant to the Restricted Payment. 
The fair market value of any assets or securities that are required to
be valued by this Section 4.07 will be determined by the Company’s Board of
Directors.

 

(d)                                 The incurrence
of Indebtedness (including Guarantees) and the granting of Liens, to the extent
in compliance with Sections 4.09 and 4.12, respectively, and any payment of
consideration to holders of the Company’s or any of its Restricted Subsidiaries’
Equity Interests from the proceeds thereof, in each case, in connection with a
merger or consolidation constituting or resulting in a Change of Control and
otherwise permitted by this Indenture shall not constitute a Restricted Payment
or be subject to the provisions of this Section 4.07 if either (A) both (i) the
Consolidated Leverage Ratio of the Company on a pro forma basis after giving
effect to such Change of Control shall be less than 5.5:1.0 and (ii) there
shall not be effective as of the close of business on the date of the consummation
of such Change of Control or be effective as of such date as a result of an
earlier announcement (which date shall be extended for so long as the rating of
the Notes is under publicly announced consideration for possible downgrade by either
of the Rating Agencies), a decrease in the rating of the Notes by either Rating
Agency by one or more gradations (including gradations within Rating Categories
as well as between Rating Categories), 

 

61

 

as compared with the rating of the Notes in
effect by each such Rating Agency on the Rating Date or (B) there shall be
effective as of the close of business on the date of the consummation of such
Change of Control or be effective as of such date as a result of an earlier
announcement (which date shall be extended for so long as the rating of the
Notes is under publicly announced consideration for possible change by either
of the Rating Agencies) an increase in the rating of the Notes by both Rating
Agencies by one or more gradations (including gradations within Rating
Categories as well as between Rating Categories), as compared with the rating
of the Notes in effect by each such Rating Agency on the Rating Date.

 

Section
4.08.                          Dividend and
Other Payment Restrictions Affecting Subsidiaries.

 

The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to: 
(a) pay dividends or make any other distributions on its Capital Stock
to the Company or any of its Restricted Subsidiaries, or pay any indebtedness
owed to the Company or any of its Restricted Subsidiaries; (b) make loans or
advances to the Company or any of its Restricted Subsidiaries; or (c) transfer
any of its properties or assets to the Company or any of its Restricted
Subsidiaries.

 

However, the preceding restrictions will not apply
to encumbrances or restrictions existing under or by reason of:

 

(1)                                  the provisions of any
agreements governing Existing Indebtedness or Credit Facilities and any other
agreements as in effect on the date of this Indenture;

 

(2)                                  (x) this Indenture and the
Notes, in each case as the same may be amended from time to time in accordance
with the terms thereof, and (y) other Indebtedness pari passu with the Notes, provided
that in the case of this clause (y), the restrictions contained in the
agreements governing such pari passu Indebtedness
are no more restrictive, taken as a whole, in the good faith judgment of the
Company, than those contained in this Indenture and the Notes;

 

(3)                                  applicable law, rule,
regulation, decree or order (including any Gaming Law and any rules,
regulations, orders or requirements of any Gaming Authority);

 

(4)                                  any agreement or instrument
(including those governing Indebtedness (including Acquired Debt) or Capital
Stock) of a Person acquired by the Company or any of its Restricted Subsidiaries
as in effect at the time of such acquisition (except to the extent such
Indebtedness or Capital Stock was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, or the Equity Interests of
the Person, so acquired, provided
that, in the case of Indebtedness, Disqualified Stock or preferred stock, such
Indebtedness, Disqualified Stock or preferred stock was permitted by the terms
of this Indenture to be incurred;

 

(5)                                  customary restrictions on
subletting or assignment of any lease or sublease governing a leasehold
interest of the Company or any Restricted Subsidiary;

 

(6)                                  non-assignment provisions or
other customary restrictions arising under any purchase money financing or
licenses or other contracts entered into in the ordinary course of business;

 

62

 

(7)                                  purchase money obligations
or Capital Lease Obligations permitted to be incurred under this Indenture that
impose restrictions on that property of the nature described in clause (c) of
the preceding paragraph;

 

(8)                                  any agreement for the sale
or other disposition of a Restricted Subsidiary that imposes restriction on
action by that Restricted Subsidiary pending its sale or other disposition;

 

(9)                                  restrictions on the transfer
of any property subject to a contract with respect to an Asset Sale or other
transfer, conveyance or disposition permitted under this Indenture;

 

(10)                            Permitted Refinancing
Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, in the good faith
judgment of the Company, than those contained in the agreements governing the
Indebtedness being refinanced;

 

(11)                            Liens securing Indebtedness
otherwise permitted to be incurred under the provisions of Section 4.12 hereof
that limit the right of the debtor to dispose of the assets subject to such
Liens;

 

(12)                            restrictions in respect of
Equity Interests in joint ventures or non-wholly owned Restricted Subsidiaries
or the property of joint ventures or non-wholly owned Restricted Subsidiaries;

 

(13)                            restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into
in the ordinary course of business;

 

(14)                            Senior Debt, including the
Senior Credit Facilities, provided
that the restrictions contained in the agreements governing such Senior Debt
are no more restrictive, taken as a whole, in the good faith judgment of the
Company, than those contained in the Senior Credit Facilities as of the date of
this Indenture;

 

(15)                            any Indebtedness incurred or
preferred stock issued by Foreign Subsidiaries or joint ventures that is
permitted to be incurred after the issue date pursuant to the provisions of Section
4.09 hereof;

 

(16)                            restrictions imposed
pursuant to any of the Trust Agreements upon the occurrence of a Trigger Event;

 

(17)                            agreements in existence with
respect to a Restricted Subsidiary at the time it is so designated or at the
time such Person becomes a Restricted Subsidiary, provided, however,
that such agreements are not entered into in anticipation or contemplation of
such designation or of such Person becoming a Restricted Subsidiary;

 

(18)                            restrictions imposed by
Gaming Authorities on entities holding, or operating pursuant to, Gaming
Approvals;

 

(19)                            restrictions on deposits
made in connection with license applications or to secure letters of credit or
surety or other bonds issued in connection therewith or deposits made in the
ordinary course of business with respect to insurance premiums, worker’s
compensation, statutory obligations, utility deposits, rental obligations,
unemployment insurance, performance of 

 

63

 

tenders, surety and appeal
bonds and other similar obligations (or to secure letters of credit or surety
or other bonds relating thereto);

 

(20)                            the subordination provisions
of any Indebtedness owed to the Company or any of its Restricted Subsidiaries;

 

(21)                            restrictions on the ability
of any Restricted Subsidiary to make Investments in or transfer assets to any
Person that is a Subsidiary of such Restricted Subsidiary or that is not a direct
or indirect parent of such Restricted Subsidiary; and

 

(22)                            any encumbrances or
restrictions of the type referred to in clauses (a), (b) and (c) of the
preceding paragraph imposed by any amendments, modifications, restatements,
renewals, increases, supplements, refundings, restructurings, replacements or
other refinancings of those agreements, instruments or obligations referred to
in clauses (1) through (21) above, provided
that the amendments, modifications, restatements, renewals, increases,
supplements, refundings, restructurings, replacements or other refinancings are
no more restrictive, taken as a whole, in the good faith judgment of the
Company, with respect to such dividend and other payment restrictions than
those contained in the most restrictive of those agreements prior to such
amendment, modification, restatement, renewal, increase, supplement, refunding,
restructuring, replacement or other refinancing.

 

Nothing contained in this Section 4.08 shall prevent
the Company or any of its Restricted Subsidiaries from (1) creating, incurring,
assuming or suffering to exist any Liens otherwise permitted by Section 4.12
hereof or (2) restricting the sale or other disposition of property or assets
of the Company or any of its Restricted Subsidiaries that secure Indebtedness
of the Company or any of its Restricted Subsidiaries.

 

Section 4.09.                          Incurrence of Indebtedness
and Issuance of Preferred Stock.

 

The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable, contingently
or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the
Company will not issue any Disqualified Stock and will not permit any of its
Restricted Subsidiaries to issue any shares of preferred stock; provided, however,
that the Company and its Restricted Subsidiaries may incur Indebtedness
(including Acquired Debt), the Company may issue Disqualified Stock and the
Company’s Restricted Subsidiaries may issue preferred stock if, in any such
case, the Fixed Charge Coverage Ratio for the Company’s most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock or preferred stock is issued would have
been at least 2.0 to 1.0 determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom and including as set forth in the
definition of “Fixed Charge Coverage Ratio”), as if the additional Indebtedness
had been incurred or the preferred stock or Disqualified Stock had been issued,
as the case may be, at the beginning of such four-quarter period.

 

The first paragraph of this Section 4.09 will not
prohibit the incurrence of any of the following items of Indebtedness
(collectively, “Permitted Debt”):

 

(1)                                  the incurrence
by the Company and/or any of its Restricted Subsidiaries of Indebtedness and
letters of credit pursuant to the Credit Facilities or otherwise; provided that the aggregate principal
amount of all Indebtedness then classified as having been incurred in reliance 

 

64

 

upon this clause (1) that remains outstanding
under such Credit Facilities or otherwise after giving effect to such
incurrence does not exceed the greater of (A) $3.025 billion, less the aggregate amount of all Net
Proceeds of Asset Sales consummated after the date of this Indenture that have
been applied by the Company or any of its Restricted Subsidiaries to repay any
Indebtedness under a Credit Facility or otherwise incurred under this clause (1)
(and to reduce commitments with respect thereto in the case of any such
Indebtedness that is revolving credit Indebtedness) pursuant to Section 4.10
hereof and (B) 2.0 times the Consolidated Cash Flow of the Company and its
Restricted Subsidiaries for the period consisting of the four full fiscal
quarters for which financial statements are available that immediately precede
the date on which the Indebtedness is incurred (after giving pro forma effect
to the application of the net proceeds of such Indebtedness and to those
matters referred to in clauses (1), (2) and (3) of the second paragraph of the
definition of “Fixed Charge Coverage Ratio” that have occurred since the
beginning of such four quarter period as if they had occurred at the start of
such period); provided, however, that the maximum amount permitted
to be outstanding under this clause (1) shall not be deemed to limit additional
Indebtedness under the Credit Facilities to the extent the incurrence of such
additional Indebtedness is permitted pursuant to any of the other provisions
under this Section 4.09;

 

(2)                                  the incurrence
by the Company and its Restricted Subsidiaries of the Existing Indebtedness;

 

(3)                                  the incurrence
by the Company of Indebtedness represented by the Notes to be issued on the
date of this Indenture in the principal amount of $325.0 million (and the
Exchange Notes issued in exchange therefor);

 

(4)                                  the incurrence
by the Company and/or any of its Restricted Subsidiaries of (a) Indebtedness
represented by Purchase Money Indebtedness and Capital Lease Obligations, or (b)
Indebtedness in connection with the construction of any new facility or
facilities related to, or the acquisition of assets used in (whether by the
purchase of assets or of Capital Stock of any Person owning such assets), any
Permitted Business or in connection with the expansion or refurbishment by the
Company or any Restricted Subsidiary of any of its existing facilities, in the
case of each of clauses (a) and (b), including all Permitted Refinancing
Indebtedness incurred to refinance any Indebtedness incurred pursuant to this
clause (4), in an aggregate principal amount or accreted value, as applicable,
not to exceed $150.0 million in the aggregate at any time outstanding;

 

(5)                                  the incurrence
by the Company or any of its Restricted Subsidiaries of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of which are used to
refinance, Indebtedness (including an Investment Guarantee) that (a) was
permitted by this Indenture to be incurred under the first paragraph of this Section
4.09 or clause (2), (3), (4), (9), (16) or, without duplication, (17) of this Section
4.09 or this clause (5) or (b) was incurred during any Suspension Period;

 

(6)                                  the incurrence
by the Company or any of its Restricted Subsidiaries of intercompany
Indebtedness or the issuance of preferred stock by a Restricted Subsidiary, in
each case between or among the Company and any of its Restricted Subsidiaries
(including Indebtedness or preferred stock of any Restricted Subsidiary to the
Company or another Restricted Subsidiary or of the Company to a Restricted
Subsidiary constituting the purchase price in respect of intercompany transfers
of goods and services made in the ordinary course of business); provided, however,
that (a) any subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness, or preferred stock being held by a Person other than
the Company or a Restricted Subsidiary of the Company and (b) any sale or other
transfer (excluding Liens permitted by this Indenture) of 

 

65

 

any such Indebtedness or preferred stock to a
Person that is neither the Company nor a Restricted Subsidiary of the Company
will be deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Restricted Subsidiary or an issuance of preferred stock
by such Subsidiary, as the case may be, that was not permitted by this clause (6);

 

(7)                                  the incurrence
by the Company and/or any of its Restricted Subsidiaries of Hedging Obligations
that are incurred for the purpose of hedging interest rate risk with respect to
any Indebtedness that is permitted by the terms of this Indenture to be
outstanding or currency exchange risk or commodity pricing risk;

 

(8)                                  the guarantee
by the Company or any of its Restricted Subsidiaries of Indebtedness of the
Company or a Restricted Subsidiary of the Company that was permitted to be incurred
by another provision of this Section 4.09;

 

(9)                                  the incurrence
by the Company or any of its Restricted Subsidiaries of any Investment
Guarantee or Investment Guarantee Indebtedness;

 

(10)                            Indebtedness in
respect of workers’ compensation claims, self-insurance obligations,
performance bonds, surety appeal or similar bonds, completion guarantees and
letters of credit provided by the Company or any of its Restricted Subsidiaries
in the ordinary course of its business (including to support the Company’s and
its Restricted Subsidiaries’ applications for gaming licenses or such workers’
compensation claims, self-insurance, obligations, bonds or guarantees);

 

(11)                            Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument drawn against insufficient funds in the ordinary
course of business; provided, however,
that such Indebtedness is extinguished within five Business Days of its
incurrence;

 

(12)                            Indebtedness
arising in connection with endorsement of instruments for deposit in the
ordinary course of business;

 

(13)                            Indebtedness
arising from agreements of the Company or any of its Restricted Subsidiaries
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
acquisition or disposition of any business, assets or a subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any portion of
such business, assets or subsidiary for the purpose of financing that
acquisition; provided that:  (a) such Indebtedness is not reflected at the
time of such incurrence or assumption on the balance sheet of the Company or
any of its Restricted Subsidiaries (contingent obligations referred to in a footnote
or footnotes to financial statements and not otherwise reflected on the balance
sheet will not be deemed to be reflected on that balance sheet for purposes of
this clause (a)); and (b) in the case of a disposition, the maximum assumable
liability in respect of that Indebtedness shall at no time exceed the gross
proceeds including non-cash proceeds (the fair market value of those non-cash
proceeds being measured at the time received and without giving effect to any
subsequent changes in value), actually received by the Company and/or that
Restricted Subsidiary in connection with that disposition;

 

(14)                            incurrence of
Indebtedness by the Company or any of its Restricted Subsidiaries (in addition
to Existing Indebtedness) consisting of Guarantees of Indebtedness of Pennwood
in an aggregate principal amount at any time outstanding not to exceed $20.0 million;

 

66

 

(15)         Indebtedness incurred to repurchase Indebtedness or Equity
Interests of the Company or any of its Subsidiaries pursuant to clause (5) of Section
4.07(b) hereof;

 

(16)         Acquired Debt and any other Indebtedness incurred to finance
a merger, consolidation or other acquisition; provided
that immediately after giving effect to the incurrence of such Acquired Debt
and such other Indebtedness, as the case may be, on a pro forma basis as if such incurrence (and
the related merger, consolidation or other acquisition) had occurred at the
beginning of the applicable four-quarter period, either (A) the Company and its
Restricted Subsidiaries would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
in the first paragraph of this Section 4.09, or (B) (x) the Fixed Charge
Coverage Ratio for the Company and its Restricted Subsidiaries would be greater
than the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries immediately prior to such merger, consolidation or other
acquisition and (y) (i) in the case of Acquired Debt, has a Weighted Average
Life to Maturity equal to or greater than three years and (ii) in the case of
any such other Indebtedness, has a final maturity date at least 91 days after
the Stated Maturity of the notes and has a Weighted Average Life to Maturity
greater than the Weighted Average Life to Maturity of the Notes; and

 

(17)         the incurrence or issuance by the Company and/or any of its
Restricted Subsidiaries of additional Indebtedness, Disqualified Stock or
preferred stock in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refinance any other Indebtedness incurred pursuant to
this clause (17), not to exceed $150.0 million (it being understood that
Indebtedness incurred, or Disqualified Stock or preferred stock issued,
pursuant to this clause (17) shall cease to be deemed incurred or outstanding
for purposes of this clause (17) but shall be deemed to be incurred or issued
for purposes of the first paragraph of this Section 4.09 from and after the
first date on which the Company or the Restricted Subsidiary, as the case may
be, could have incurred such Indebtedness or issued such Disqualified Stock or
preferred stock under the first paragraph of this Section 4.09 without reliance
on this clause (17)).

 

For purposes of determining compliance with this Section
4.09 in the event that an item of proposed Indebtedness meets the criteria of
more than one of the categories of Permitted Debt described in clauses (1) through
(17) above or is entitled to be incurred pursuant to the first paragraph of
this Section 4.09, the Company will be permitted to classify such item of Indebtedness
on the date of its incurrence in any manner that complies with this Section 4.09.  In addition, the Company may, at any time,
change the classification of an item of Indebtedness (or any portion thereof)
to any other clause or to the first paragraph of this Section 4.09, provided that the Company or the
applicable Restricted Subsidiary would be permitted to incur such item of
Indebtedness (or portion thereof) pursuant to such other clause or the first
paragraph of this Section 4.09, as the case may be, at such time of
reclassification.  Indebtedness under the
Senior Credit Facilities outstanding on the date on which the Notes are first
issued and authenticated under this Indenture will be deemed to have been
incurred on such date in reliance on the exception provided by clause (1) of
the definition of “Permitted Debt” to the extent permitted by such exception.

 

Accrual of interest, the accretion of accreted value
and the payment of interest or dividends in the form of additional
Indebtedness, Disqualified Stock or preferred stock will not be deemed to be an
incurrence of Indebtedness, Disqualified Stock or preferred stock for purposes
of this Section 4.09.  The maximum amount
of Indebtedness that the Company or a Restricted Subsidiary may incur shall not
be deemed to be exceeded, with respect to any outstanding Indebtedness, due
solely to fluctuations in the exchange rates of currencies.

 

67

 

For purposes of determining compliance with any U.S.
dollar-denominated restriction on the incurrence of Indebtedness, the U.S.
dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was incurred, in the case of term debt, or
first committed, in the case of revolving credit debt; provided that if such
Indebtedness is incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable U.S.
dollar-denominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of such refinancing, such U.S.
dollar-denominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed
the principal amount of such Indebtedness being refinanced.

 

The principal amount of any Indebtedness incurred to
refinance other Indebtedness, if incurred in a different currency from the Indebtedness
being refinanced, shall be calculated based on the currency exchange rate
applicable to the currencies in which such respective Indebtedness is
denominated that is in effect on the date of such refinancing.

 

Section 4.10.                           Asset Sales.

 

(a)           The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:  (x) the Company (or the Restricted
Subsidiary, as the case may be) receives consideration at the time of the Asset
Sale at least equal to the fair market value of the assets or Equity Interests
issued or sold or otherwise disposed of; and (y) at least 75% of the
consideration received in the Asset Sale by the Company or such Restricted
Subsidiary is in the form of (A) cash or Cash Equivalents or (B) Permitted
Business Assets; provided, however,
that for purposes of this clause (2), each of the following will be deemed to
be cash:

 

(i)      any liabilities, as shown
on the Company’s or such Restricted Subsidiary’s most recent balance sheet, of
the Company or such Restricted Subsidiary (other than liabilities of the
Company that are by their terms subordinated to the Notes) that are assumed by
the transferee of any such assets;

 

(ii)     any securities, notes or
other obligations or asset received by the Company or such Restricted
Subsidiary from such transferee that within 180 days after the consummation of
such Asset Sale, subject to ordinary settlement periods, are converted by the
Company or such Restricted Subsidiary into cash or Cash Equivalents, to the extent
of the cash or Cash Equivalents received in that conversion; and

 

(iii)    any Designated Non-Cash
Consideration received by the Company or such Restricted Subsidiary in such
Asset Sale having an aggregate fair market value, taken together with all other
Designated Non-Cash Consideration received pursuant to this clause (c) that is
at the time outstanding, not to exceed 5.0% of Total Assets at the time of the
receipt of such Designated Non-Cash Consideration, with the fair market value
of each item of Designated Non-Cash Consideration being measured at the time
received and without giving effect to subsequent changes in value.

 

(b)           Within 360 days after the receipt of any Net Proceeds from
an Asset Sale, the Company may apply an amount equal to those Net Proceeds at
its option:

 

(i)      to repay Senior Debt or
Indebtedness of any Restricted Subsidiary (other than Existing Notes) and, if
such Indebtedness repaid is revolving credit Indebtedness, to correspondingly
reduce commitments with respect thereto;

 

68

 

(ii)     to improve real property
or make capital expenditures;

 

(iii)    to invest in or acquire
Permitted Business Assets;

 

(iv)    to enter into binding
commitment to take any of the actions described in the foregoing clauses (i), (ii)
and (iii) of this Section 4.10(b), and take such action within 12 months after
the date of such commitment; or

 

(v)     any combination of the
foregoing clauses (i) through (iv).

 

Pending the final application of any Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest or utilize
the Net Proceeds in any manner that is not prohibited by this Indenture.

 

(c)           Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the preceding paragraph will constitute “Excess Proceeds”.  When the aggregate amount of Excess Proceeds
exceeds $25.0 million, the Company will make either the offers set forth in
clause (a) or the offer set forth in clause (b), the choice of offer to be
determined by the Company in its sole discretion:

 

(i)      the Company will make an
offer (an “Asset Sale Offer”)
to all Holders of Notes (the “Note
Asset Sale Offer”), and an offer to all holders of any other
Indebtedness that is pari passu
with the Notes (the “Pari Passu
Asset Sale Offer”) containing provisions similar to those set forth
in this Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets to purchase, on a pro
rata basis (with Excess Proceeds pro rated between the Holders of
Notes and such holders of pari passu
Indebtedness based upon the respective outstanding aggregate principal amounts
(or accreted value, as applicable) on the date the Note Asset Sale Offer and
the Pari Passu Asset Sale Offer, respectively, are made), the maximum principal
amount of the Notes and the maximum principal amount (or accreted value, as
applicable) of such other pari passu
Indebtedness that may be purchased out of the respective pro rata amounts of Excess Proceeds.  To the extent that the aggregate principal
amount of Notes or the aggregate principal amount (or accreted value, if
applicable) of such pari passu
Indebtedness tendered into the Note Asset Sale Offer and the Pari Passu Asset
Sale Offer, respectively, is less than the principal amount of Notes or the
principal amount (or accreted value, if applicable) of such pari passu Indebtedness offered to be
purchased in the Note Asset Sale Offer or the Pari Passu Asset Sale Offer,
respectively, the Company and its Restricted Subsidiaries may use those
remaining Excess Proceeds for any purpose not otherwise prohibited by this
Indenture.  If the aggregate principal
amount of Notes or the aggregate principal amount (or accreted value, if
applicable) of such pari passu
Indebtedness tendered into the Note Asset Sale Offer or the Pari Passu Asset
Sale Offer, respectively, exceeds the respective pro rata amounts of Excess Proceeds, the applicable trustee
will select such Notes or such other pari
passu Indebtedness, as the case may be, to be purchased on a pro rata basis;

 

(ii)     the Company will make an
Asset Sale Offer to all Holders of Notes and all holders of other Indebtedness
that is pari passu with the Notes
containing provisions similar to those set forth in this Indenture with respect
to offers to purchase or redeem with the proceeds of sales of assets to
purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds.  If
any Excess Proceeds remain after consummation of such Asset Sale Offer, the
Company may use those Excess Proceeds for any purpose not otherwise prohibited
by this Indenture.  If the aggregate
principal amount of Notes and other pari
passu Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the applicable trustee will select the Notes and
such other pari passu Indebtedness

 

69

 

to
be purchased on a pro rata
basis.  The offer price in any Asset Sale
Offer will be equal to 100% of principal amount plus accrued and unpaid
interest to the date of purchase (the “Asset Sale Payment Date”), and will be payable in cash.  Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds will be reset at zero.

 

(d)           If any non-cash consideration received by the Company or
any of its Restricted Subsidiaries, as the case may be, in connection with any
Asset Sale is converted into or sold or otherwise disposed of for cash (other
than interest received with respect to any such non-cash consideration), then
such conversion or disposition, at the time of such conversion or disposition,
shall be subject to the provisions of this Section 4.10 (subject to the proviso
of the definition of “Asset Sale”).  The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with each repurchase of Notes
pursuant to an Asset Sale Offer.  To the
extent that the provisions of any securities laws or regulations conflict with
the Asset Sale provisions of this Indenture, the Company shall comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Asset Sale provisions of this Indenture by
virtue of such conflict.

 

Section 4.11.                           Transactions with Affiliates.

 

(a)           The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with or for the
benefit of, any Affiliate (each, an “Affiliate
Transaction”), unless:

 

(i)      the Affiliate Transaction
is on terms that are not materially less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person; and

 

(ii)     the Company delivers to
the Trustee: (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $10.0 million,
a resolution of the Board of Directors set forth in an officers’ certificate
certifying that such Affiliate Transaction complies with clause (1) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors; and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $50.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing.

 

(b)           The following items will not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the provisions of Section 4.11(a):

 

(i)      any indemnification or
employment agreements or arrangements and benefit plans or arrangements, and
any transactions contemplated by any of the foregoing relating to compensation
and employee benefits matters, including any issuances of securities, loans or
other payments, grants or awards, in each case in respect of or to employees,
officers or directors entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business or otherwise approved by the
Board of Directors of the Company;

 

(ii)     transactions between or
among the Company and/or its Restricted Subsidiaries;

 

70

 

(iii)    transactions with a
Person that is an Affiliate of the Company solely because the Company or one of
its Restricted Subsidiaries owns an Equity Interest in such Person;

 

(iv)    payment of reasonable
directors’ fees and indemnity provided on behalf of officers, directors or
employees of the Company or any of its Restricted Subsidiaries;

 

(v)     sales or issuances of
Equity Interests (other than Disqualified Stock) of the Company to Affiliates
of the Company;

 

(vi)    Permitted Investments
(other than Permitted Investments in a joint venture or an Unrestricted
Subsidiary, which shall be subject to clause (11) below) and Restricted
Payments that are permitted by the provisions of this Indenture described under
Section 4.07 hereof;

 

(vii)   transactions disclosed in
the Company’s SEC filings prior to the date of this Indenture and any
agreements, instruments or obligations as in effect on the date of issuance of
the Notes and transactions contemplated thereby and any renewals, replacements,
amendments, supplements or other modifications thereof (so long as the terms of
such renewals, replacements, amendments, supplements or modifications are not
less favorable to the Holders of the Notes in any material respect, taken as a
whole, as compared to the applicable agreement as in effect on the date of
issuance of the Notes);

 

(viii)  the occurrence of a
Trigger Event and the transactions contemplated by the Trust Agreements;

 

(ix)    transactions with persons
who have entered into an agreement, contract or arrangement with the Company or
any of its Restricted Subsidiaries to manage, own or operate a Gaming Facility
because the Company and its Restricted Subsidiaries have not received the requisite
Gaming Approvals or are otherwise not permitted to manage, own or operate such
Gaming Facility under applicable Gaming Laws; provided
that such transactions shall have been approved by a majority of the disinterested
members of the Company’s Board of Directors and determined by them to be in the
best interests of the Company;

 

(x)     transactions with
customers, clients, suppliers, or purchasers or sellers of goods or services,
in each case in the ordinary course of business and otherwise in compliance
with the terms of this Indenture which are fair to the Company and its
Restricted Subsidiaries taken as a whole, in the determination of the Company’s
Board of Directors or management, or are on terms at least as favorable as
might reasonably have been obtained at such time from an unaffiliated party;
and

 

(xi)    transactions with joint
ventures and Unrestricted Subsidiaries approved by a majority of the
disinterested members of the Company’s Board of Directors (a director shall be
disinterested if he or she has no interest in such joint venture or
Unrestricted Subsidiary other than through the Company and its Restricted
Subsidiaries); provided that no
Affiliate of the Company (other than the Company and its Restricted
Subsidiaries) has an interest (other than indirectly through the Company and
other than Unrestricted Subsidiaries or such joint ventures) in any such joint
venture or Unrestricted Subsidiary.

 

Section 4.12.                           Liens.

 

The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind securing Indebtedness

 

71

 

(other than Permitted Liens)
upon any of its property or assets, now owned or hereafter acquired, unless all
payments due under this Indenture and the Notes are secured (1) on an equal and
ratable basis with the obligations so secured (if such obligations are pari passu with the Notes) until such time
as such obligations are no longer secured by a Lien or (2) on a senior basis to
the obligations so secured to the extent such obligations are subordinated in
right of payment to the Notes.

 

Section 4.13.                           Corporate Existence.

 

Subject to Article 5 hereof, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Subsidiary and (ii) the rights (charter and statutory),
licenses and franchises of the Company and its Subsidiaries; provided, however, that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Notes.

 

Section 4.14.                           Offer To Repurchase upon
Change of Control and Ratings Decline.

 

(a)           If a Change of Control Triggering Event occurs, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $2,000 or an integral multiple of $1,000) of that Holder’s
Notes pursuant to an offer by the Company (a “Change of Control Offer”) on the terms set forth in this
Indenture.  In the Change of Control
Offer, the Company shall offer a payment in cash equal to 101% of the aggregate
principal amount of Notes repurchased plus accrued and unpaid interest on the Notes
repurchased, to the date of purchase (the “Change of Control Payment”).

 

(b)           Subject to the last sentence in clause (e) of this Section
4.14(b), within 30 days following the occurrence of a Change of Control
Triggering Event, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control Triggering
Event pursuant to this Section 4.14 and stating:

 

(i)      that the Change of
Control Offer is being made pursuant to this Section 4.14 and that all Notes
tendered will be accepted for payment;

 

(ii)     the purchase price and
the purchase date, which shall be no earlier than 30 Business Days and no later
than 60 Business Days after the date such notice is mailed (the “Change of
Control Payment Date”);

 

(iii)    that any Note not
tendered will continue to accrue interest;

 

(iv)    that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date;

 

(v)     that Holders electing to
have any Notes purchased pursuant to a Change of Control Offer will be required
to surrender the Notes, with the form entitled “Option of Holder to Elect
Purchase” on the reverse of the Notes completed, to the Paying Agent at the
address 

 

72

 

specified
in the notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date;

 

(vi)    that Holders will be
entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the second Business Day preceding the Change of
Control Payment Date, a facsimile transmission or letter setting forth the name
of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes
purchased; and

 

(vii)   that Holders whose Notes
are being purchased only in part will be issued new Notes equal in principal
amount to the unpurchased portion of the Notes surrendered, which unpurchased
portion must be equal to $2,000 in principal amount or an integral multiple of
$1,000.  The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Notes as a result of a Change
of Control Triggering Event.  To the
extent that the provisions of any securities laws or regulations conflict with
the Change of Control provisions of this Indenture, the Company shall comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Change of Control provisions of this
Indenture by virtue of such conflict.

 

(c)           On the Change of Control Payment Date, the Company shall,
to the extent lawful:

 

(i)      accept for payment all
Notes or portions of Notes properly tendered pursuant to the Change of Control
Offer;

 

(ii)     deposit with the paying
agent an amount equal to the Change of Control Payment in respect of all Notes
or portions of Notes properly tendered; and

 

(iii)    deliver or cause to be
delivered to the Trustee the Notes properly accepted together with an Officers’
Certificate stating the aggregate principal amount of Notes or portions of
Notes being purchased by the Company.

 

(d)           The paying agent shall promptly mail to each Holder of
Notes properly tendered the Change of Control Payment for such Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new note equal in principal amount to any unpurchased
portion of the Notes surrendered, if any; provided
that each new note shall be in a principal amount of $2,000 or an integral
multiple of $1,000.

 

(e)           Prior to complying with any of the provisions of this Section
4.14, but in any event within 90 days following the occurrence of a Change of
Control Triggering Event, the Company shall either repay all outstanding Senior
Debt in cash or Cash Equivalents or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this Section 4.14. 
The Company shall publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment
Date.  The provisions described above
that require the Company to make a Change of Control Offer following the
occurrence of a Change of Control Triggering Event will be applicable whether
or not any other provisions of this Indenture are applicable.  Except as described above with respect to a
Change of Control Triggering Event, this Indenture does not contain provisions
that permit the Holders of the Notes to require that the Company repurchase or
redeem the Notes in the event of a takeover, recapitalization or similar
transaction.

 

73

 

(f)            The Company shall not be required to make a Change of
Control Offer upon the occurrence of a Change of Control Triggering Event if a
third party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this Indenture applicable
to a Change of Control Offer made by the Company and purchases all Notes
properly tendered and not withdrawn under the Change of Control Offer.

 

Section 4.15.                           No Senior
Subordinated Debt; No Guarantees of Senior Subordinated Debt Securities.

 

The Company shall not incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate
or junior in right of payment to any Senior Debt of the Company and senior in
any respect in right of payment to the Notes. 
In addition, following the date of this Indenture, no Restricted
Subsidiary of the Company will directly or indirectly guarantee, or become
jointly and severally liable with respect to any Debt Securities of the Company
(excluding, in any event, (x) Acquired Debt and (y) guarantees of such Acquired
Debt or any other Indebtedness of the Company and its Restricted Subsidiaries
to the extent a guarantee is required as a result of the assumption by the
Company or any of its Restricted Subsidiaries of such Acquired Debt described
in clause (x) pursuant to the terms thereof as they existed at the time of and
after giving effect to (and are not modified in contemplation of, other than to
give effect to) the assumption of or acquisition of such Acquired Debt) issued
after the date of this Indenture that are subordinate or junior in right of
payment to any Senior Debt of the Company (“Other Senior Subordinated Debt
Securities”), unless a senior subordinated Subsidiary Guarantee as provided
in Article 11 is provided in respect of the Notes by such Restricted Subsidiary.  The foregoing does not apply to distinctions
between categories of Indebtedness that exist by reason of any Liens securing
some but not all of such Indebtedness or securing such Indebtedness with
greater or lesser priority or with different collateral.

 

Section 4.16.                           Payments for Consent.

 

The Company shall not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid
any consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid and is paid to all Holders of the Notes that consent, waive or agree
to amend in the time frame and on the terms set forth in and in accordance with
the solicitation documents relating to such consent, waiver or agreement.

 

Section 4.17.                           Designation of Restricted
and Unrestricted Subsidiaries.

 

Each of the Existing Unrestricted Subsidiaries shall
be an Unrestricted Subsidiary as of the date of this Indenture.  Further, the Board of Directors may designate
any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation
would not cause a Default.  If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the
aggregate fair market value of all outstanding Investments owned by the Company
and its Restricted Subsidiaries in the Subsidiary properly designated will be
deemed to be an Investment made as of the time of the designation and will
constitute Restricted Investments under Section 4.07(a) hereof or, if eligible,
Permitted Investments, as determined by the Company.  That designation will only be permitted if
the Investment would be permitted at that time and if the Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.  The Board of Directors may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation
would not cause a Default.

 

74

 

Section 4.18.                           Business Activities.

 

The Company shall not, and shall not permit any
Restricted Subsidiary to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Company and
its Restricted Subsidiaries taken as a whole.

 

Section 4.19.                           Payment of Liquidated
Damages.

 

If Liquidated Damages are payable due to the
occurrence of a Registration Default as described in the Registration Rights
Agreement or pursuant to the final paragraph of Section 6.01 hereof, the
Company shall deliver to the Trustee a certificate to that effect stating (1) the
amount of such Liquidated Damages that are payable and (2) the date on which
such Liquidated Damages are payable. 
Unless and until a Responsible Officer of the Trustee receives at the
Corporate Trust Office of the Trustee such a certificate, the Trustee may
assume without inquiry that no such Liquidated Damages are payable.  If the Company has paid Liquidated Damages
directly to the person entitled to it, the Company shall deliver to the Trustee
a certificate setting forth the particulars of such payment.

 

Section
4.20.                           Covenant
Suspension.

 

(a)           During any period of time (a “Suspension Period”)
that: (i) the Notes have Investment Grade Ratings from both Rating Agencies and
(ii) no Default or Event of Default has occurred and is continuing under this
Indenture (the occurrence of the events described in the foregoing clauses (i) and
(ii) being collectively referred to as a “Covenant Suspension Event,”
the Company and its Subsidiaries will not be subject to the following
provisions of this Indenture, and during a Suspension Period, the Board of
Directors of the Company may not designate any of its Subsidiaries as
Unrestricted Subsidiaries unless the Board of Directors of the Company could
have designated such Subsidiaries as Unrestricted Subsidiaries in compliance
with this Indenture assuming the following sections of this Indenture had not
been suspended:

 

(1)           Section 4.07,

 

(2)           Section 4.08,

 

(3)           Section 4.09,

 

(4)           Section 4.10,

 

(5)           Section 4.11,

 

(6)           Section 4.18, and

 

(7)           clause (a)(iv) of Section 5.01 hereof

 

(collectively, the “Suspended Covenants”).  Upon the occurrence of a Covenant Suspension
Event, the amount of Excess Proceeds shall be set at zero.

 

(b)           In the event that the Company and its Restricted
Subsidiaries are not subject to the Suspended Covenants with respect to the
Notes for any period of time as a result of the preceding paragraph and,
subsequently, at least one of the two designated Rating Agencies withdraws its
rating or downgrades the rating assigned to the notes below the required
Investment Grade Rating (such date of withdrawal or downgrade, the “Reinstatement
Date”), then the Company and its Restricted Subsidiaries 

 

75

 

will after the Reinstatement Date again be
subject to the Suspended Covenants with respect to future events for the
benefit of the Notes.

 

(c)           On the Reinstatement Date, all Indebtedness incurred, or
Disqualified Stock or preferred stock issued, during the Suspension Period will
be subject to Section 4.09 hereof.  To
the extent such Indebtedness, Disqualified Stock or preferred stock would not
be so permitted to be incurred or issued pursuant to Section 4.09, such
Indebtedness, Disqualified Stock or preferred stock will be deemed to have been
outstanding on the issue date of the notes, so that it is classified as
permitted under clause (2) of the second paragraph of Section 4.09.

 

(d)           Calculations made after the Reinstatement Date of the
amount available to be made as Restricted Payments under Section 4.07 will be
made as though such covenant had been in effect from the issue date of the
notes and throughout the Suspension Period. 
Accordingly, Restricted Payments made during the Suspension Period will
reduce the amount available to be made as Restricted Payments under Section 4.07(a)
to the extent provided therein.

 

(e)           Notwithstanding that the Suspended Covenants may be
reinstated, no Default or Event of Default will be deemed to have occurred as a
result of a failure to comply with the Suspended Covenants during the
Suspension Period (or on the Reinstatement Date or after the Suspension Period
based solely on events that occurred during the Suspension Period).

 

(f)            Notwithstanding the foregoing, neither (i) the continued
existence, after the Reinstatement Date, of facts and circumstances or
obligations that were incurred or otherwise came into existence during a
Suspension Period nor (ii) the performance of any such obligations, shall
constitute a breach of any covenant set forth in this Indenture or cause a
Default or Event of Default hereunder; provided that (1)
the Company and its Restricted Subsidiaries did not incur or otherwise cause
such facts and circumstances or obligations to exist in anticipation of a
withdrawal or downgrade by the applicable Rating Agency below an Investment
Grade Rating and (2) the Company reasonably believed that such incurrence or
actions would not result in such withdrawal or downgrade.

 

ARTICLE 5

 

SUCCESSORS

 

Section 5.01.                           Merger, Consolidation or
Sale of Assets.

 

(a)           The Company shall not, directly or indirectly, consolidate
or merge with or into another Person (whether or not the Company is the
surviving corporation) or sell, assign, transfer, convey or otherwise dispose
of all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person unless:

 

(i)      either (A) the Company is
the surviving corporation; or (B) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other disposition has been made is a
corporation organized or existing under the laws of the United States, any
state of the United States or the District of Columbia;

 

(ii)     the Person formed by or
surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, conveyance or other
disposition has been made assumes all the obligations of the Company under the
Notes, this 

 

76

 

Indenture
and the Registration Rights Agreement pursuant to agreements reasonably satisfactory
to the Trustee;

 

(iii)    immediately after such
transaction no Default or Event of Default exists; and

 

(iv)    on the date of such
transaction after giving pro forma effect thereto and to any related financing
transactions as if the same had occurred at the beginning of the applicable
four-quarter period, (A) the Company or the Person formed by or surviving any
such consolidation or merger (if other than the Company), or to which such
sale, assignment, transfer, conveyance or other disposition has been made, will
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09
hereof or (B) the Company (or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to which such
sale, assignment, transfer, conveyance or other disposition has been made) and
its Restricted Subsidiaries will have a Fixed Charge Coverage Ratio equal to or
greater than the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries immediately prior to such transaction.  In addition, the Company may not, directly or
indirectly, lease all or substantially all of its properties or assets, in one
or more related transactions, to any other Person.

 

(b)           Upon any sale, assignment, transfer, conveyance or other
disposition of all or substantially all of the Company’s and its Restricted
Subsidiaries’ assets, taken as a whole, in compliance with the provisions of
this Section 5.01, the Company will be released from the obligations under the
Notes and this Indenture except with respect to any obligations that arise
from, or are related to, such transaction.

 

This Section 5.01 will not apply to:  (i) a merger, consolidation, sale,
assignment, transfer, conveyance or other disposition of assets between or
among the Company and any of its Restricted Subsidiaries; or (ii) a merger
between the Company and an Affiliate of the Company incorporated solely for the
purpose of reincorporating or reorganizing the Company in another State of the
United States.

 

Section 5.02.                           Successor Corporation
Substituted.

 

Upon any consolidation or merger, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the Company’s or its Restricted Subsidiaries’ assets,
taken as a whole, in compliance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the “Company” shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale,
assignment, transfer, conveyance or other disposition of all of the Company’s
or its Restricted Subsidiaries’ assets, taken as a whole, that meets the
requirements of Section 5.01 hereof.

 

77

 

ARTICLE
6

 

DEFAULTS
AND REMEDIES

 

Section 6.01.                           Events
of Default.

 

An “Event of Default” occurs if:

 

(a)           the
Company defaults in the payment when due of interest on, or Liquidated Damages
with respect to, the Notes and such default continues for a period of 30 days
whether or not prohibited by the subordination provisions of Article 10;

 

(b)           the
Company defaults in the payment when due of the principal of or premium, if
any, on the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
whether or not prohibited by the subordination provisions of Article 10;

 

(c)           the
Company or any of its Restricted Subsidiaries fails to comply with any of the
provisions of Section 4.14 or 5.01 hereof;

 

(d)           subject
to the last paragraph of this Section 6.01, the Company or any of its Restricted
Subsidiaries fails to observe or perform any other covenant, representation,
warranty or other agreement in this Indenture or the Notes for 60 days after
the Company’s receipt of notice from the Trustee or the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding voting as a single
class;

 

(e)           a
default occurs under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) whether such Indebtedness or
guarantee now exists, or is created after the date of this Indenture, if that
default:  (i) is caused by a failure
to pay principal of such Indebtedness at final maturity (a “Payment Default”);
or (ii) results in the acceleration of such Indebtedness prior to its
express maturity, and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates in excess of $100.0 million; provided,
that this clause (e) shall not apply to any Investment Guarantee or
Investment Guarantee Indebtedness unless the Company or one of its Restricted
Subsidiaries defaults in the performance of its payment obligations in respect
of its Investment Guarantee of such Investment Guarantee Indebtedness;

 

(f)            a
final judgment or final judgments for the payment of money are entered by a
court or courts of competent jurisdiction against the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary and such judgment or judgments remain undischarged for a period (during
which execution shall not be effectively stayed) of 60 days; provided that the aggregate of all such undischarged
judgments exceeds $100 million;

 

(g)           the
Company or any of its Restricted Subsidiaries that is a Significant Subsidiary
or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary

 

78

 

pursuant to or within the meaning of Bankruptcy Law (i) commences
a voluntary case, (ii) consents to the entry of an order for relief
against it in an involuntary case, (iii) consents to the appointment of a
custodian of it or for all or substantially all of its property, (iv) makes
a general assignment for the benefit of its creditors, or (v) generally is
not paying its debts as they become due; or

 

(h)           a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (i) is for relief against the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
in an involuntary case; (ii) appoints a custodian of the Company or any of
its Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary or for all or substantially all of the property of the Company or
any of its Restricted Subsidiaries that is a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary; or (iii) orders the liquidation of the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary; and the order or decree remains unstayed and in effect for 60
consecutive days.

 

(i)            Notwithstanding
clause (d) of this Section 6.01 or any other provision of this Indenture,
except as provided in the final sentence of this paragraph, the sole remedy for
any failure to comply by the Company with Section 4.03 hereof shall be the
payment of Liquidated Damages as described in the following sentence, such
failure to comply shall not constitute an Event of Default, and Holders of the
Notes shall not have any right under this Indenture to accelerate the maturity
of the Notes as a result of any such failure to comply. If a failure to comply
by the Company with Section 4.03 hereof continues for 60 days after
the Company receives notice of such failure to comply in accordance with
clause (d) of this Section 6.01 (such notice, the “Reports Default Notice”), and is
continuing on the 60th day following the Company’s receipt of the Reports
Default Notice, the Company will pay Liquidated Damages to all Holders of Notes
at a rate per annum equal to 0.25% of the principal amount of the Notes from
the 60th day following the Company’s receipt of the Reports Default Notice
to but not including the earlier of (x) the 121st day following the
Company’s receipt of the Reports Default Notice and (y) the date on which
the failure to comply by the Company with Section 4.03 hereof shall have
been cured or waived. On the earlier of the date specified in the immediately
preceding clauses (x) and (y), such Liquidated Damages will cease to
accrue. If the failure to comply by the Company with Section 4.03 hereof
shall not have been cured or waived on or before the 121st day following
the Company’s receipt of the Reports Default Notice, then the failure to comply
by the Company with Section 4.03 hereof shall on such 121st day constitute
an Event of Default. A failure to comply with Section 4.03 hereof
automatically shall cease to be continuing and shall be deemed cured at such
time as the Company furnishes to the Trustee the applicable information or
report (it being understood that the availability of such information or report
on the Commission’s EDGAR or IDEA service (or any successor thereto) shall be
deemed to satisfy the Company’s obligation to furnish such information or
report to the Trustee), provided, however,
that the Trustee shall have no obligation whatsoever to determine if any such
filing has been made.  The Company shall
send to the Trustee copies of any EDGAR filings with the SEC on Forms 10-K,
10-Q and 8-K.  Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

 

79

 

Section 6.02.                           Acceleration.

 

If any Event of Default (other than an Event
of Default specified in clause (g) or (h) of Section 6.01
hereof with respect to the Company, any Restricted Subsidiary that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable
immediately.  Upon any such declaration,
the Notes shall become due and payable immediately.  Notwithstanding the foregoing, if an Event of
Default specified in clause (g) or (h) of Section 6.01
hereof occurs with respect to the Company, all outstanding Notes shall be due
and payable immediately without further action or notice.  The Holders of a majority in aggregate
principal amount of the then outstanding Notes by written notice to the Trustee
may on behalf of all of the Holders rescind an acceleration and its consequences
if the rescission would not conflict with any judgment or decree and if the
Trustee shall have received an Officers’ Certificate that all existing Events
of Default (except nonpayment of principal, interest or premium that has become
due solely because of the acceleration) have been cured or waived.

 

Section 6.03.                           Other
Remedies.

 

If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal, premium and Liquidated Damages, if any, and interest on the Notes
or to enforce the performance of any provision of the Notes or this Indenture.

 

The Trustee may maintain a proceeding even if
it does not possess any of the Notes or does not produce any of them in the
proceeding.  A delay or omission by the
Trustee or any Holder of a Note in exercising any right or remedy accruing upon
an Event of Default shall not impair the right or remedy or constitute a waiver
of or acquiescence in the Event of Default. 
All remedies are cumulative to the extent permitted by law.

 

Section 6.04.                           Waiver
of Past Defaults.

 

Holders of not less than a majority in
aggregate principal amount of the then outstanding Notes by notice to the
Trustee may on behalf of the Holders of all of the Notes waive an existing
Default or Event of Default and its consequences hereunder, except a continuing
Default or Event of Default in the payment of the principal of, premium and
Liquidated Damages, if any, or interest on, the Notes (including in connection
with an offer to purchase) (provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Notes may rescind an acceleration and
its consequences, including any related payment default that resulted from such
acceleration).  Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

 

Section 6.05.                           Control
by Majority.

 

Holders of a majority in principal amount of
the then outstanding Notes may direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee or exercising
any trust or power conferred on it.  However,
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture that the Trustee determines may be unduly prejudicial to the rights
of other Holders of Notes or that may involve the Trustee in personal
liability.

 

80

 

Section 6.06.                           Limitation
on Suits.

 

A Holder of a Note may pursue a remedy with
respect to this Indenture or the Notes only if:

 

(a)           the
Holder of a Note gives to the Trustee written notice of a continuing Event of Default;

 

(b)           the
Holders of at least 25% in principal amount of the then outstanding Notes make
a written request to the Trustee to pursue the remedy;

 

(c)           such
Holder of a Note or Holders of Notes offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense;

 

(d)           the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer and, if requested, the provision of indemnity; and

 

(e)           during
such 60-day period the Holders of a majority in principal amount of the then
outstanding Notes do not give the Trustee a direction inconsistent with the
request.

 

A Holder of a Note may not use this Indenture
to prejudice the rights of another Holder of a Note or to obtain a preference
or priority over another Holder of a Note (it being understood that the Trustee
does not have an affirmative duty to ascertain whether or not such actions or
forbearances are unduly prejudicial to such Holders).

 

Section 6.07.                           Rights
of Holders of Notes To Receive Payment.

 

Notwithstanding any other provision of this
Indenture, the right of any Holder of a Note to receive payment of principal,
premium and Liquidated Damages, if any, and interest on the Note, on or after
the respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.

 

Section 6.08.                           Collection
Suit by Trustee.

 

If an Event of Default specified in Section 6.01(a) or
(b) occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as Trustee of an express trust against the Company
for the whole amount of principal of, premium and Liquidated Damages, if any,
and interest remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

 

Section 6.09.                           Trustee
May File Proofs of Claim.

 

The Trustee is authorized to file such proofs
of claim and other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders of the Notes allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Notes), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the 

 

81

 

Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof. 
To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate
in any such proceeding, shall be denied for any reason, payment of the same
shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

 

Section 6.10.                           Priorities.

 

If the Trustee collects any money pursuant to
this Article, it shall pay out the money in the following order:

 

First:  to the Trustee, its agents and attorneys for
amounts due under Section 7.07 hereof, including payment of all
compensation, expense and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;

 

Second:  to Holders of Notes for amounts due and
unpaid on the Notes for principal, premium and Liquidated Damages, if any, and
interest, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and Liquidated
Damages, if any and interest, respectively; and

 

Third:  to the Company or to such party as a court of
competent jurisdiction shall direct.

 

The Trustee may fix a record date and payment
date for any payment to Holders of Notes pursuant to this Section 6.10.

 

Section 6.11.                           Undertaking
for Costs.

 

In any suit for the enforcement of any right
or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys’ fees and expenses, against any party litigant
in the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. 
This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of
more than 10% in principal amount of the then outstanding Notes.

 

ARTICLE
7

 

TRUSTEE

 

Section 7.01.                           Duties
of Trustee.

 

(a)           If
an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in its 

 

82

 

exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.

 

(b)           Except
during the continuance of an Event of Default:

 

(i)            the
duties of the Trustee shall be determined solely by the express provisions of
this Indenture and the Trustee need perform only those duties that are specifically
set forth in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

 

(ii)           in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture. 
However, the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.

 

In the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).

 

(c)           The
Trustee may not be relieved from liabilities for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:

 

(i)            this
paragraph does not limit the effect of paragraph (b) of this Section;

 

(ii)           the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and

 

(iii)          the
Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 6.05
hereof.

 

(d)           Whether
or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of
this Section.

 

(e)           No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or incur any liability.  The
Trustee shall be under no obligation to exercise any of its rights and powers
under this Indenture at the request of any Holders, unless such Holder shall
have offered to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense.

 

(f)            The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company.  Money held in trust by the Trustee need not
be segregated from other funds except to the extent required by law.

 

Section 7.02.                           Rights
of Trustee.

 

(a)           The
Trustee may conclusively rely upon any document believed by it to be genuine
and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or
matter stated in the document.

 

83

 

(b)           Before
the Trustee acts or refrains from acting, it may require an Officers’ Certificate
or an Opinion of Counsel or both.  The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers’ Certificate or Opinion of Counsel.  The Trustee may consult with counsel of its
selection and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.

 

(c)           The
Trustee may act through its attorneys and agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.

 

(d)           The
Trustee shall not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within the rights or powers
conferred upon it by this Indenture.

 

(e)           Unless
otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Company shall be sufficient if signed by an Officer of the
Company.

 

(f)            The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.

 

(g)           In
no event shall the Trustee be responsible or liable for special, indirect,
punitive or consequential loss or damage of any kind whatsoever (including, but
not limited to, loss of profit) irrespective of whether the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action.

 

(h)           The
Trustee shall not be deemed to have notice of any Default or Event of Default
unless a Reasonable Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is received
by the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Notes and this Indenture.

 

(i)            The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder,
and each agent, custodian and other Person employed to act hereunder.

 

(j)            The
Trustee shall not be required to give any bond or surety in respect of the performance
of its powers and duties hereunder.

 

(k)           The
Trustee may request that the Company deliver a certificate setting forth the
names of individuals and/or titles of offices authorized at such time to take
specified actions pursuant to this Indenture.

 

Section 7.03.                           Individual
Rights of Trustee.

 

The Trustee in its individual or any other
capacity may become the owner or pledgee of Notes and may otherwise deal with
the Company or any Affiliate of the Company with the same rights it would have
if it were not Trustee.  However, in the
event that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as Trustee
or resign.  Any Agent may do the same
with like rights and duties.  The Trustee
is also subject to Sections 7.10 and 7.11 hereof.

 

84

 

Section 7.04.                           Trustee’s
Disclaimer.

 

The Trustee shall not be responsible for and
makes no representation as to the validity or adequacy of this Indenture or the
Notes, it shall not be accountable for the Company’s use of the proceeds from
the Notes or any money paid to the Company or upon the Company’s direction
under any provision of this Indenture, it shall not be responsible for the use
or application of any money received by any Paying Agent other than the
Trustee, and it shall not be responsible for any statement or recital herein or
any statement in the Notes or any other document in connection with the sale of
the Notes or pursuant to this Indenture other than its certificate of
authentication.

 

Section 7.05.                           Notice
of Defaults.

 

If a Default or Event of Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to Holders
of Notes a notice of the Default or Event of Default within 90 days after it
occurs.  Except in the case of a Default
or Event of Default in payment of principal of, premium, if any, or interest on
any Note, the Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the notice
is in the interests of the Holders of the Notes.

 

Section 7.06.                           Reports
by Trustee to Holders of the Notes.

 

Within 60 days after each May 15
beginning with the May 15 following the date of this Indenture, and for so
long as Notes remain outstanding, the Trustee shall mail to the Holders of the
Notes a brief report dated as of such reporting date that complies with TIA
§ 313(a) (but if no event described in TIA § 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted).  The Trustee also shall
comply with TIA § 313(b)(2).  The
Trustee shall also transmit by mail all reports as required by TIA
§ 313(c).

 

A copy of each report at the time of its
mailing to the Holders of Notes shall be mailed to the Company and filed with
the SEC and each stock exchange on which the Notes are listed in accordance
with TIA § 313(d).  The Company
shall promptly notify the Trustee in writing when the Notes are listed on any
stock exchange and of any delisting thereof.

 

Section 7.07.                           Compensation
and Indemnity.

 

The Company shall pay to the Trustee from time
to time compensation for its acceptance of this Indenture and services
hereunder as agreed between the Company and the Trustee.  The Trustee’s compensation shall not be
limited by any law on compensation of a Trustee of an express trust.  The Company shall reimburse the Trustee
promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services.  Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee’s agents and counsel.

 

The Company shall indemnify each of the
Trustee and any predecessor Trustee against any and all losses, liabilities or
expenses incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company (including this Section 7.07)
and defending itself against any claim (whether asserted by the Company or any
Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or
willful misconduct.  The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder.  The Company shall defend the 

 

85

 

claim and the Trustee shall cooperate in the
defense.  The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel.  The Company need not pay for
any settlement made without its consent, which consent shall not be
unreasonably withheld.

 

The obligations of the Company under this Section 7.07
shall survive the satisfaction and discharge of this Indenture.

 

To secure the Company’s payment obligations
in this Section, the Trustee shall have a Lien prior to the Notes on all money
or property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. 
Such Lien shall survive the satisfaction and discharge of this
Indenture.

 

When the Trustee incurs expenses or renders
services after an Event of Default specified in Section 6.01(g) or (h) hereof
occurs, the expenses and the compensation for the services (including the fees
and expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.

 

The Trustee shall comply with the provisions
of TIA § 313(b)(2) to the extent applicable.

 

Section 7.08.                           Replacement
of Trustee.

 

A resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only upon the
successor Trustee’s acceptance of appointment as provided in this Section.

 

The Trustee may resign in writing at any time
and be discharged from the trust hereby created by so notifying the
Company.  The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing.  The Company may remove the Trustee if:

 

(a)           the
Trustee fails to comply with Section 7.10 hereof;

 

(b)           the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;

 

(c)           a
custodian or public officer takes charge of the Trustee or its property; or

 

(d)           the
Trustee becomes incapable of acting.

 

If the Trustee resigns or is removed or if a
vacancy exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. 
Within one year after the successor Trustee takes office, the Holders of
a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.

 

If a successor Trustee does not take office
within 60 days after the retiring Trustee resigns or is removed, the retiring
Trustee, the Company, or the Holders of at least 10% in principal amount of the
then outstanding Notes may petition, at the expense of the Company, any court
of competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee, after written request by any
Holder who has been a Holder for at least six months, fails to comply with Section 7.10,
such Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.

 

86

 

A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon, the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of
its succession to Holders.  The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee; provided all
sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. 
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company’s obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

 

Section 7.09.                           Successor
Trustee by Merger, etc.

 

If the Trustee consolidates, merges or converts
into, or transfers all or substantially all of its corporate trust business
(including the administration of the trust created by this Indenture) to,
another corporation, the successor corporation without any further act shall be
the successor Trustee.

 

Section 7.10.                           Eligibility;
Disqualification.

 

There shall at all times be a Trustee hereunder that
is a corporation organized and doing business under the laws of the United
States of America or of any state thereof that is authorized under such laws to
exercise corporate trustee power, that is subject to supervision or examination
by federal or state authorities and that has (or in the case of a subsidiary of
a bank holding company, its bank holding company parent shall have) a combined
capital and surplus of at least $100 million as set forth in its most recent
published annual report of condition.

 

This Indenture shall always have a Trustee who
satisfies the requirements of TIA §§ 310(a)(1), (2) and (5).  The Trustee is subject to TIA § 310(b).

 

Section 7.11.                           Preferential
Collection of Claims Against Company.

 

The Trustee is subject to TIA § 311(a),
excluding any creditor relationship listed in TIA § 311(b).  A Trustee who has resigned or been removed
shall be subject to TIA § 311(a) to the extent indicated therein.

 

ARTICLE 8

 

LEGAL DEFEASANCE AND
COVENANT DEFEASANCE

 

Section 8.01.                           Option To
Effect Legal Defeasance or Covenant Defeasance.

 

The Company may, at the option of its Board of
Directors evidenced by a resolution set forth in an Officers’ Certificate, at
any time, elect to have either Section 8.02 or 8.03 hereof be applied to
all outstanding Notes upon compliance with the conditions set forth below in
this Article 8.

 

Section 8.02.                           Legal
Defeasance and Discharge.

 

Upon the Company’s exercise under Section 8.01
hereof of the option applicable to this Section 8.02, the Company shall,
subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be deemed to have been discharged from its obligations with respect to
all outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, “Legal Defeasance”). 
For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness

 

87

 

represented by the
outstanding Notes, which shall thereafter be deemed to be “outstanding” only
for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all
its other obligations under such Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder:  (a) the rights of Holders of outstanding
Notes to receive payments in respect of the principal of, or interest or
premium and Liquidated Damages, if any, on such Notes when such payments are
due from the trust referred to below, (b) the Company’s obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes,
the replacement of mutilated, destroyed, lost or stolen Notes and the maintenance
of an office or agency for payment and money for security payments held in
trust, (c) the rights, powers, trusts, duties and immunities of the
Trustee, and the Company’s obligations in connection therewith and (d) this
Article 8.  Subject to compliance
with this Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03
hereof.

 

Section 8.03.                           Covenant
Defeasance.

 

Upon the Company’s exercise under Section 8.01
hereof of the option applicable to this Section 8.03, the Company shall,
subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be released from its obligations under the covenants contained in
Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16,
4.17 and 4.18 hereof and clause (iv) of Section 5.01(a) hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 are satisfied (hereinafter, “Covenant Defeasance”),
and the Notes shall thereafter be deemed not “outstanding” for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed “outstanding” for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes).  For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.01 hereof, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby.  In addition, upon
the Company’s exercise under Section 8.01 hereof of the option applicable
to this Section 8.03, subject to the satisfaction of the conditions set
forth in Section 8.04 hereof , the “Events of Default” described in
Sections 6.01 hereof (other than clauses (a), (b), (g) and (h) thereof
pertaining to the Company) shall not constitute Events of Default.  The Company may exercise Legal Defeasance
regardless of whether it previously has exercised Covenant Defeasance and the
Company may, within 90 days following the exercise of Covenant Defeasance,
redeem the Notes in whole and not in part pursuant to an optional redemption as
provided under Section 3.07(a) hereof and apply the defeasance trust
to such redemption.

 

Section 8.04.                           Conditions to
Legal or Covenant Defeasance.

 

The following shall be the conditions to the
application of either Section 8.02 or 8.03 hereof to the outstanding
Notes:

 

In order to exercise either
Legal Defeasance or Covenant Defeasance,

 

(a)           the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. 
dollars, non-callable Government Securities, or a combination of cash in
U.S.  dollars and non-callable Government
Securities, in amounts as shall be sufficient, in the 

 

88

 

opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, or interest and premium and Liquidated
Damages, if any, on the outstanding Notes on the Stated Maturity or on a
redemption date, as the case may be, and the Company must specify whether the
Notes are being defeased to maturity or to a particular redemption date provided that the Company may (within 90 days of such
deposit) subsequently redeem the Notes in whole and in part as provided under Section 3.07(a);

 

(b)           in
the case of an election under Section 8.02 hereof, the Company has
delivered to the Trustee an Opinion of Counsel confirming that (i) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the date of this Indenture, there has been
a change in the applicable United States federal income tax law, in either case
to the effect that, the Holders of the outstanding Notes shall not recognize
income, gain or loss for United States federal income tax purposes as a result
of such Legal Defeasance and shall be subject to United States federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;

 

(c)           in
the case of an election under Section 8.03 hereof, the Company has
delivered to the Trustee an Opinion of Counsel confirming that the Holders of
the outstanding Notes shall not recognize income, gain or loss for United
States federal income tax purposes as a result of such Covenant Defeasance and
shall be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Covenant Defeasance
had not occurred;

 

(d)           no
Default or Event of Default shall have occurred and be continuing on the date
of such deposit (other than a Default or Event of Default resulting from the incurrence
of Indebtedness, and, in each case, the granting of Liens in connection
therewith, all or a portion of the proceeds of which will be used to defease
the Notes pursuant to this Article Eight concurrently with such
incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is
concerned, at any time in the period ending on the 91st day after the date of deposit;

 

(e)           such
Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under any material agreement or
instrument (other than this Indenture or any agreement or instrument governing
any other Indebtedness which is being defeased or discharged) to which the
Company or any of its Restricted Subsidiaries is a party or by which the
Company or any of its Restricted Subsidiaries is bound;

 

(f)            the
Company shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders of Notes over any other creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the
Company; and

 

(g)           the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.

 

The Legal Defeasance or Covenant Defeasance will be
effective on the day on which all the applicable conditions above have been
satisfied.

 

Section 8.05.                           Deposited Money
and Government Securities To Be Held in Trust; Other Miscellaneous Provisions.

 

Subject to Section 8.06 hereof, all money and
non-callable Government Securities (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes

 

89

 

of this Section 8.05,
the “Trustee”) pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in accordance
with the provisions of such Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such Notes of all sums
due and to become due thereon in respect of principal, premium and Liquidated
Damages, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.

 

The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04
hereof or the principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
the outstanding Notes.

 

Anything in this Article 8 to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the written request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which
may be the opinion delivered under Section 8.04(b) hereof), are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.

 

Section 8.06.                           Repayment to
Company.

 

Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal
of, premium or Liquidated Damages, if any, or interest on any Note and
remaining unclaimed for two years after such principal, and premium or
Liquidated Damages, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as Trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying
Agent, before being required to make any such repayment, shall at the expense
of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of
such money then remaining shall be repaid to the Company.

 

Notwithstanding the foregoing, in the case of a
covenant or legal defeasance or discharge to the applicable redemption date for
a redemption pursuant to Section 3.07(a), the excess (if any) of (x) the
amount deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, premium or Liquidated
Damages, if any, or interest on the Notes over (y) the redemption price
determined pursuant to Section 3.07(a) (including accrued and unpaid
interest, if any, to the applicable redemption date) shall be paid to the
Company on its request or (if then held by the Company) shall be discharged
from such trust on the applicable redemption date.

 

Section 8.07.                           Reinstatement.

 

If the Trustee or Paying Agent is unable to apply
any United States dollars or non-callable Government Securities in accordance
with Section 8.02 or 8.03 hereof, as the case may be, by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Company’s obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such
time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with

 

90

 

Section 8.02 or 8.03 hereof,
as the case may be; provided, however, that, if the Company makes any payment of principal
of, premium or Liquidated Damages, if any, or interest on any Note following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.

 

ARTICLE 9

 

AMENDMENT, SUPPLEMENT
AND WAIVER

 

Section 9.01.                           Without Consent
of Holders of Notes.

 

Notwithstanding Section 9.02
of this Indenture, the Company and the Trustee may amend or supplement this
Indenture or the Notes without the consent of any Holder of a Note:

 

(a)           to
cure any ambiguity, defect, mistake or inconsistency;

 

(b)           to
provide for uncertificated Notes in addition to or in place of certificated
Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;

 

(c)           to
provide for the assumption of the Company’s obligations to the Holders of the Notes
by a successor to the Company pursuant to Article 5 hereof;

 

(d)           to
comply with the rules of any applicable securities depositary;

 

(e)           to
comply with applicable Gaming Laws, to the extent that such amendment or
supplement is not materially adverse to the Holders of Notes;

 

(f)            to
provide for the issuance of Additional Notes in accordance with the limitations
set forth in this Indenture including Section 4.09;

 

(g)           to
make any change that would provide any additional rights or benefits to the
Holders of the Notes (including to provide for any guarantees of the Notes or
any collateral securing the Notes) or that does not materially adversely affect
the legal rights hereunder of any Holder of the Note;

 

(h)           to
comply with requirements of the SEC in order to effect or maintain the qualification
of this Indenture under the TIA; or

 

(i)            to
conform the text of this Indenture or the Notes to any provision of the Description
of Notes contained in the Offering Memorandum dated August 10, 2009 with
respect to the Notes.

 

Upon the request of the Company accompanied by a
resolution of its Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon receipt by the Trustee of the
documents described in Section 9.06 hereof, the Trustee shall join with
the Company in the execution of any amended or supplemental Indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such amended or supplemental Indenture
that affects its own rights, duties or immunities under this Indenture or
otherwise.

 

91

 

Section 9.02.                           With Consent of
Holders of Notes.

 

Except as provided below in this Section 9.02,
the Company and the Trustee may amend or supplement this Indenture (including
Sections 3.09, 4.10 and 4.14 hereof) and the Notes with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default
(other than a Default or Event of Default in the payment of the principal of,
premium, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture or the Notes may be waived with the consent of the Holders of
a majority in principal amount of the then outstanding Notes voting as a single
class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes).

 

Upon the request of the Company accompanied by a
resolution of its Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section 9.06
hereof, the Trustee shall join with the Company in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
directly affects the Trustee’s own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.

 

It shall not be necessary for the consent of the
Holders of Notes under this Section 9.02 to approve the particular form of
any proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.

 

After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver.  Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such amended or supplemental Indenture or waiver.

 

Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive compliance in a particular instance
by the Company with any provision of this Indenture or the Notes.  However, without the consent of each Holder
affected, an amendment or waiver under this Section 9.02 may not:

 

(a)           reduce
the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver;

 

(b)           reduce
the principal of or change the fixed maturity of any note or alter the provisions
with respect to the redemption of the Notes (other than provisions relating to
the covenants described under Sections 3.09, 4.10 and 4.14 hereof);

 

(c)           reduce
the rate of or change the time for payment of interest on any Note;

 

(d)           waive
a Default or Event of Default in the payment of principal of, or interest or
premium, or Liquidated Damages, if any, on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration);

 

92

 

(e)           make
any Note payable in money other than that stated in the Notes;

 

(f)            make
any change in the provisions of this Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of,
or interest or premium or Liquidated Damages, if any, on the Notes;

 

(g)           waive
a redemption payment with respect to any note (other than a payment required by
one of the covenants described under Sections 3.09, 4.10 and 4.14 hereof);
or

 

(h)           make
any change in Section 6.04 or 6.07 hereof or in the foregoing amendment
and waiver provisions.

 

In addition, any amendment to, or waiver of, Article 10
of this Indenture that adversely affects the rights of the Holders of the Notes
shall require the consent of the Holders of at least 75% in principal amount of
the Notes then outstanding voting as a single class (including consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, the Notes).

 

Section 9.03.                           Compliance with
Trust Indenture Act.

 

Every amendment or supplement to this Indenture or
the Notes shall be set forth in an amended or supplemental Indenture that
complies with the TIA as then in effect.

 

Section 9.04.                           Revocation and
Effect of Consents.

 

Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder of a Note is a continuing consent by the
Holder of a Note and every subsequent Holder of a Note or portion of a Note
that evidences the same debt as the consenting Holder’s Note, even if notation
of the consent is not made on any Note. 
However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective.  An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds
every Holder.

 

Section 9.05.                           Notation on or
Exchange of Notes.

 

The Trustee may place an appropriate notation about
an amendment, supplement or waiver on any Note thereafter authenticated.  The Company in exchange for all Notes may
issue and the Trustee shall, upon receipt of a Company Order, authenticate new
Notes that reflect the amendment, supplement or waiver.

 

Failure to make the appropriate notation or issue a
new Note shall not affect the validity and effect of such amendment, supplement
or waiver.

 

Section 9.06.                           Trustee To Sign
Amendments, etc.

 

The Trustee shall sign any amended or supplemental
Indenture authorized pursuant to this Article Nine if the amendment or
supplement does not adversely affect the rights, duties, liabilities or
immunities of the Trustee.  The Company
may not sign an amendment or supplemental Indenture until the Board of
Directors approves it.  In executing any
amended or supplemental indenture, the Trustee shall receive and (subject to Section 7.01
hereof) shall be fully protected in relying upon, in addition to the documents
required by Section 13.04 hereof, an Officers’ Certificate and an Opinion
of Counsel stating

 

93

 

that the execution of such
amended or supplemental indenture is authorized or permitted by this Indenture.

 

ARTICLE 10

 

SUBORDINATION

 

Section 10.01.                     Agreement To
Subordinate.

 

The Company agrees, and each Holder by accepting a
Note agrees, that the Indebtedness evidenced by the Notes is subordinated in
right of payment, to the extent and in the manner provided in this Article 10,
to the prior payment in full of all Senior Debt (whether outstanding on the
date hereof or hereafter created, incurred, assumed or guaranteed), and that
the subordination is for the benefit of the holders of Senior Debt.

 

Section 10.02.                     Liquidation;
Dissolution; Bankruptcy.

 

Upon any distribution to creditors of the Company in
a liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshaling of
the Company’s assets and liabilities:

 

(i)      holders of Senior Debt shall be entitled
to receive payment in full of all Obligations due in respect of such Senior
Debt (including interest after the commencement of any such proceeding at the
rate specified in the applicable Senior Debt) and all outstanding letters of
credit under Credit Facilities shall either have been terminated or cash
collateralized in accordance with the terms thereof, before Holders of the
Notes shall be entitled to receive any payment on, or distribution with respect
to the Notes (except that Holders of the Notes may receive and retain (A) Permitted
Junior Securities and (B) payments made from any defeasance trust created
pursuant to Section 8.04(a) hereof), and

 

(ii)     until all Obligations with respect to
Senior Debt (as provided in clause (i) above) are paid in full, any
distribution to which Holders would be entitled but for this Article 10
shall be made to holders of Senior Debt (except that Holders of Notes may
receive (A) Permitted Junior Securities and (B) payments and other
distributions made from any defeasance trust created pursuant to Section 8.04(a) hereof),
as their interests may appear.

 

Section 10.03.                     Default on
Designated Senior Debt.

 

(a)           The
Company may not make any payment on or distribution to the Trustee or any
Holder in respect of Obligations with respect to the Notes (except (A) Permitted
Junior Securities and (B) payments and other distributions made from any
defeasance trust created pursuant to Section 8.04(a) hereof) until
all principal and other Obligations with respect to the Senior Debt have been
paid in full if:

 

(i)         a payment default of any principal or
other Obligations with respect to Designated Senior Debt occurs and is
continuing beyond any applicable grace period in the agreement, indenture or
other document governing such Designated Senior Debt; or

 

(ii)        any other default on any series of
Designated Senior Debt occurs and is continuing that then permits holders of
that series of Designated Senior Debt to accelerate its maturity and the
Trustee receives a notice of the default (a “Payment Blockage Notice”)
from the applicable 

 

94

 

agent under the Senior
Credit Facilities, the Company or any agent or trustee acting on behalf of the
holders of any Designated Debt.  If the
Trustee receives any such Payment Blockage Notice, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless and
until (A) at least 360 days shall have elapsed since the delivery of the
immediately prior Payment Blockage Notice and (B) all scheduled payments
of principal, premium, if any, and interest on the Securities that have come
due have been paid in full in cash.  No
nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for
a subsequent Payment Blockage Notice unless such default shall have been cured
or waived for a period of not less than 90 consecutive days.

 

(b)           The Company may and shall resume payments on and
distributions in respect of the Notes:

 

(i)            in the case of a payment default,
upon the date on which such default is cured or waived; and

 

(ii)           in the case of a nonpayment default,
upon the earlier of the date on which such nonpayment default is cured or
waived or 179 days after the date on which the applicable Payment Blockage
Notice is received,

 

unless the maturity of any Designated Senior Debt has been accelerated.

 

Notwithstanding the foregoing, the Company shall be
permitted to repurchase, redeem, repay or prepay any or all of the Notes to the
extent required to do so by any Gaming Authority, as described under Section 3.07
hereof.

 

Section 10.04.                     Acceleration of
Securities.

 

If payment of the Securities is accelerated because
of an Event of Default, the Company shall promptly notify holders of Senior
Debt of the acceleration.

 

Section 10.05.                     When
Distribution Must Be Paid Over.

 

In the event that the Trustee or any Holder receives
any payment of any Obligations with respect to the Notes at a time when a
Responsible Officer of the Trustee or such Holder, as applicable, has actual
knowledge that such payment is prohibited by Section 10.03 hereof, such
payment shall be held by the Trustee or such Holder, in trust for the benefit
of, and shall be paid forthwith over and delivered to, the holders of Senior
Debt as their interests may appear or their Representative under this Indenture
or other agreement (if any) pursuant to which Senior Debt may have been issued,
as their respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Debt.

 

With respect to the holders of Senior Debt, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 10, and no implied covenants
or obligations with respect to the holders of Senior Debt shall be read into
this Indenture against the Trustee.  The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Debt, and shall not be liable to any such holders if the Trustee shall pay over
or distribute to or on behalf of Holders or the Company or any other Person
money or assets to which any holders of Senior Debt shall be entitled by virtue
of this Article 10, except if such payment is made as a result of the
willful misconduct or gross negligence of the Trustee.

 

95

 

Section 10.06.       Notice by Company.

 

The Company shall promptly notify the Trustee and
the Paying Agent in writing of any facts known to the Company that would cause
a payment of any Obligations with respect to the Notes to violate this Article 10,
but failure to give such written notice shall not affect the subordination of
the Notes to the Senior Debt as provided in this Article 10.

 

Section 10.07.       Subrogation.

 

After all Senior Debt is paid in full and until the
Notes are paid in full, Holders of Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with
the Notes) to the rights of holders of Senior Debt to receive distributions
applicable to Senior Debt to the extent that distributions otherwise payable to
the Holders of Notes have been applied to the payment of Senior Debt.  A distribution made under this Article 10
to holders of Senior Debt that otherwise would have been made to Holders of
Notes is not, as between the Company and Holders, a payment by the Company on
the Notes.

 

Section 10.08.       Relative Rights.

 

This Article 10 defines the relative rights of
Holders of Notes and holders of Senior Debt. 
Nothing in this Indenture shall:

 

(i)      impair, as between the
Company and Holders of Notes, the obligation of the Company, which is absolute
and unconditional, to pay principal of and interest on the Notes in accordance
with their terms;

 

(ii)     affect the relative rights
of Holders of Notes and creditors of the Company other than their rights in
relation to holders of Senior Debt; or

 

(iii)    prevent the Trustee or any
Holder of Notes from exercising its available remedies upon a Default or Event
of Default, subject to the rights of holders and owners of Senior Debt to
receive distributions and payments otherwise payable to Holders of Notes.

 

If the Company fails because of this Article 10
to pay principal of or interest on a Note on the due date, the failure is still
a Default or Event of Default.

 

Section 10.09.       Subordination May Not
Be Impaired by Company.

 

No right of any holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.

 

Section 10.10.       Distribution or Notice to
Representative.

 

Whenever a distribution is to be made or a notice
given to holders of Senior Debt, the distribution may be made and the notice
given to their Representative.

 

Upon any payment or distribution of assets of the
Company referred to in this Article 10, the Trustee and the Holders of
Notes shall be entitled to conclusively rely upon any order or decree made by
any court of competent jurisdiction or upon any certificate of such
Representative or of the liquidating trustee or agent or other Person making
any distribution to the Trustee or to the Holders of Notes for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior

 

96

 

Debt and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this Article 10.

 

Section 10.11.       Rights of Trustee and Paying
Agent.

 

Notwithstanding the provisions of this Article 10
or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment or distribution by the Trustee, and the Trustee and the Paying Agent
may continue to make payments on the Notes, unless the Trustee shall have
received at its Corporate Trust Office at least five Business Days prior to the
date of such payment written notice of facts that would cause the payment of
any Obligations with respect to the Notes to violate this Article 10.  Only the Company or a Representative may give
the notice.  Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.

 

The Trustee in its individual or any other capacity
may hold Senior Debt with the same rights it would have if it were not
Trustee.  Any Agent may do the same with
like rights.

 

Section 10.12.       Authorization To Effect
Subordination.

 

Each Holder of Notes, by the Holder’s acceptance
thereof, authorizes and directs the Trustee on such Holder’s behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in this Article 10, and appoints the Trustee to act as such
Holder’s attorney-in-fact for any and all such purposes.  If the Trustee does not file a proper proof
of claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the
time to file such claim, the Representatives are hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Notes.

 

Section 10.13.       Amendments.

 

The provisions of this Article 10 shall not be
amended or modified without the written consent of the holders of all Senior
Debt.

 

ARTICLE 11

 

SUBSIDIARY GUARANTEES

 

No Person shall be required to guarantee the Notes
pursuant to this Article 11, except as expressly provided in Section 4.15
with respect to a Restricted Subsidiary that is required to provide a senior
subordinated guarantee in respect of the Notes. 
This Article 11 shall be effective only with respect to such a
Guarantor and only at such time as, and only to the extent that, such a senior
subordinated guarantee is required to be provided in respect of the Notes by
such Guarantor pursuant to Section 4.15.

 

Section 11.01.       Guarantee.

 

On the Issue Date, there will exist no
Guarantors.  With respect to any Person
that becomes a Guarantor after the Issue Date as required by Section 4.15,
such Guarantor agrees as set forth in this Article 11.

 

Subject to this Article 11, each of the
Guarantors hereby, jointly and severally, unconditionally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Notes

 

97

 

or the obligations of the
Company hereunder or thereunder, that:  (a) the
principal of and interest on the Notes will be promptly paid in full when due,
whether at maturity, by acceleration, redemption or otherwise, and interest on
the overdue principal of and interest on the Notes, if any, if lawful, and all
other obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.  Failing payment when due
of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors shall be jointly and severally obligated to pay the same
immediately.  Each Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection.

 

The Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a
guarantor.  Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands
whatsoever and covenant that this Subsidiary Guarantee shall not be discharged
except by complete performance of the obligations contained in the Notes and
this Indenture.

 

If any Holder or the Trustee is required by any
court or otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company
or the Guarantors, any amount paid either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.

 

Each Guarantor agrees that it shall not be entitled
to any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.  Each Guarantor
further agrees that, as between the Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Subsidiary Guarantee.  The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.

 

Section 11.02.       Subordination of Subsidiary
Guarantee.

 

The Obligations of each Guarantor under its
Subsidiary Guarantee pursuant to this Article 11 shall be junior and
subordinated to the Senior Guarantee of such Guarantor on the same basis as the
Notes are junior and subordinated to Senior Debt of the Company.  For the purposes of the foregoing sentence,
the Trustee and the Holders shall have the right to receive and/or retain payments
by any of the Guarantors only at such times as they may receive and/or retain
payments in respect of the Notes pursuant to this Indenture, including Article 11
hereof.

 

98

 

Section 11.03.       Limitation on Guarantor
Liability.

 

Each Guarantor, and by its acceptance of Notes, each
Holder, hereby confirms that it is the intention of all such parties that the
Subsidiary Guarantee of such Guarantor not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable to any Subsidiary Guarantee.  To effectuate the foregoing intention, the
Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of such Guarantor will, after giving effect to such maximum amount
and all other contingent and fixed liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under
this Article 11, result in the obligations of such Guarantor under its
Subsidiary Guarantee not constituting a fraudulent transfer or conveyance.

 

Section 11.04.       Execution and Delivery of
Subsidiary Guarantee and Supplemental Indenture.

 

To evidence its Subsidiary Guarantee set forth in Section 11.01,
each Guarantor hereby agrees that a  notation
of such Subsidiary Guarantee substantially in the form included in Exhibit E
shall be endorsed by an Officer of such Guarantor on each Note authenticated
and delivered by the Trustee and that this Indenture shall be executed on
behalf of such Guarantor by its President or one of its Vice Presidents.

 

Each Guarantor shall promptly execute a supplemental
indenture substantially in the form included in Exhibit F.

 

Each Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 11.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.

 

If an Officer whose signature is on this Indenture
or on the Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.

 

If a Subsidiary Guarantee has been provided, the
delivery of any Note by the Trustee, after the authentication thereof hereunder,
shall constitute due delivery of such Subsidiary Guarantee set forth in this
Indenture on behalf of the Guarantors.

 

Section 11.05.       Guarantors May Consolidate,
etc., on Certain Terms.

 

Except as otherwise provided in Section 11.06,
no Guarantor may consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) another Person whether or not affiliated
with such Guarantor unless:

 

(a)           subject to Section 11.06
hereof, the Person formed by or surviving any such consolidation or merger (if
other than a Guarantor or the Company) unconditionally assumes all the obligations
of such Guarantor, pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Notes, the Indenture and the
Subsidiary Guarantee on the terms set forth herein or therein; and

 

99

 

(b)           immediately after giving
effect to such transaction, no Default or Event of Default exists.

 

In case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor Person, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to
the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due
and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Guarantor, such successor Person shall succeed
to and be substituted for the Guarantor with the same effect as if it had been
named herein as a Guarantor.  Such successor
Person thereupon may cause to be signed any or all of the Subsidiary Guarantees
to be endorsed upon all of the Notes issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee.  All the Subsidiary Guarantees so issued shall
in all respects have the same legal rank and benefit under this Indenture as
the Subsidiary Guarantees theretofore and thereafter issued in accordance with
the terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.

 

Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Guarantor with or into the Company or another Guarantor, or shall prevent any
sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.

 

Section 11.06.       Releases Following Sale.

 

In the event (i) of a sale or other disposition
of all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, (ii) of a sale or other disposition of all to the capital stock
of any Guarantor, in each case to a Person that is not (either before or after
giving effect to such transactions) a Restricted Subsidiary of the Company or (iii) that
the Company properly designates any Restricted Subsidiary that is a Guarantor
as an Unrestricted Subsidiary in accordance with this Indenture, then such Guarantor
(in the event of a sale or other disposition, by way of merger, consolidation
or otherwise, of all of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) will be released and
relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other disposition
are applied in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 hereof.  Upon delivery by the Company to the Trustee
of an Officers’ Certificate and an Opinion of Counsel to the effect that such
sale or other disposition was made by the Company in accordance with the provisions
of this Indenture, including without limitation Section 4.10 hereof, the
Trustee shall execute any documents reasonably required in order to evidence
the release of any Guarantor from its obligations under its Subsidiary
Guarantee.

 

Any Guarantor not released from its obligations
under its Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations of any
Guarantor under this Indenture as provided in this Article 11.

 

Section 11.07.       Discharge of Subsidiary
Guarantee.

 

A Guarantor shall be automatically and
unconditionally released and discharged of its Subsidiary Guarantee and its
obligations in respect of this Indenture and the Notes without any action required
on the part of the Trustee or any Holder of Notes at such time as such
Guarantor’s guarantee or joint and several liability with respect to all Other
Senior Subordinated Debt Securities of the Company is released or discharged,
or, at the Company’s option, if the Guarantor is not a guarantor of or jointly
and severally liable with respect to such Other Senior Subordinated Debt
Securities.

 

100

 

ARTICLE 12

 

SATISFACTION AND DISCHARGE

 

Section 12.01.       Satisfaction and Discharge.

 

This Indenture shall be discharged and shall cease
to be of further effect as to all Notes issued thereunder, when:

 

(a)           either:

 

(1)           all Notes that have been
authenticated, except lost, stolen or destroyed Notes that have been replaced
or paid and Notes for whose payment money has been deposited in trust and, if
provided for in this Indenture, thereafter repaid to the Company, have been
delivered to the Trustee for cancellation; or

 

(2)           all Notes that have not been
delivered to the Trustee for cancellation have become due and payable by reason
of the mailing of a notice of redemption or otherwise or shall become due and
payable within one year and the Company has irrevocably deposited or caused to
be deposited with the Trustee as trust funds in trust solely for the benefit of
the Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination of cash in U.S. dollars and non-callable Government Securities, in
amounts as shall be sufficient without consideration of any reinvestment of
interest, to pay and discharge the entire indebtedness on the Notes not
delivered to the Trustee for cancellation for principal, premium and Liquidated
Damages, if any, and accrued interest to the date of maturity or redemption;

 

(b)           no Default or Event of Default
has occurred and is continuing on the date of the deposit or shall occur as a
result of the deposit (after giving effect thereto) and the deposit shall not
result in a breach or violation of, or constitute a default under, any other
instrument to which the Company is a party or by which the Company is bound, in
each case, other than a Default or Event of Default, or a breach, violation or
default, resulting from the borrowing of funds to be applied to such deposit
and any similar and substantially concurrent deposit relating to other Indebtedness
and, in each case, the granting of Liens in connection therewith;

 

(c)           the Company has paid or
caused to be paid all other sums payable by it under this Indenture; and

 

(d)           the Company has delivered
irrevocable instructions to the Trustee under this Indenture to apply the
deposited money toward the payment of the Notes at maturity or the redemption
date, as the case may be.

 

In addition, the Company must deliver an Officers’
Certificate and an Opinion of Counsel to the Trustee stating that all
conditions precedent to satisfaction and discharge have been satisfied.  Notwithstanding the satisfaction and
discharge of this Indenture, if money shall have been deposited with the
Trustee pursuant to subclause (b) of clause (1) of this
Section, the provisions of Section 12.02 and Section 8.06 shall
survive.

 

101

 

Section 12.02.       Application of Trust Money.

 

Subject to the provisions of Section 8.06, all
money deposited with the Trustee pursuant to Section 11.01 shall be held
in trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium or
Liquidated Damages, if any) and interest for whose payment such money has been
deposited with the Trustee; but such money need not be segregated from other funds
except to the extent required by law.  If
the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 11.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company’s obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 11.01; provided that if the Company has made any payment of
principal of, premium or Liquidated Damages, if any, or interest on any Notes
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or Government Securities held by the Trustee or Paying Agent.

 

ARTICLE 13

 

MISCELLANEOUS

 

Section 13.01.       Trust Indenture Act Controls.

 

If any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by TIA § 318(c), the imposed duties
shall control.

 

Section 13.02.       Notices.

 

Any notice or communication by the Company or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others’ address:

 

If to the Company and/or any Guarantor:

 

Penn National Gaming, Inc.

Wyomissing Professional Center

825 Berkshire Boulevard, Suite 200 

Wyomissing, PA 19610

Telecopier No.:  (610) 376-2842

Attention:  Robert S. Ippolito

 

With a copy to:

 

Skadden, Arps, Slate,
Meagher & Flom LLP

300 South Grand Avenue

Suite 3400

Los Angeles, CA  90071

Telecopier No.:  (213) 687-5600

Attention:  Rodrigo Guerra, Jr., Esq.

 

102

 

If to the Trustee:

 

Wells Fargo Bank, National
Association

45 Broadway

14th Floor

New York, NY 10006

Telecopier No.:  (212) 515-1589

Attention:  Corporate Trust Services

 

With a copy to:

 

Wells Fargo Bank, National Association

625 Marquette Avenue

MAC N9311-110

Minneapolis, MN 55479

Facsimile: 612-667-9825

Attention:  Corporate
Trust Services

 

The Company or the Trustee, by notice to the others
may designate additional or different addresses for subsequent notices or
communications.

 

All notices and communications (other than those
sent to Holders) shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; five Business Days after being deposited in
the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied;
and the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.

 

Any notice or communication to a Holder shall be
mailed by first class mail, certified or registered, return receipt requested,
or by overnight air courier guaranteeing next day delivery to its address shown
on the register kept by the Registrar. 
Any notice or communication shall also be so mailed to any Person described
in TIA § 313(c), to the extent required by the TIA.  Failure to mail a notice or communication to
a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.

 

If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.

 

If the Company mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.

 

Section 13.03.       Communication by Holders of
Notes with Other Holders of Notes.

 

Holders may communicate pursuant to TIA § 312(b) with
other Holders with respect to their rights under this Indenture or the
Notes.  The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA § 312(c).

 

103

 

Section 13.04.       Certificate and Opinion as
to Conditions Precedent.

 

Upon any request or application by the Company to
the Trustee to take any action under this Indenture, the Company shall furnish
to the Trustee:

 

(a)           an Officers’ Certificate in
form and substance reasonably satisfactory to the Trustee (which shall include
the statements set forth in Section 13.05 hereof) stating that, in the opinion
of the signers, all conditions precedent and covenants, if any, provided for in
this Indenture relating to the proposed action have been satisfied; and

 

(b)           an Opinion of Counsel in
form and substance reasonably satisfactory to the Trustee (which shall include
the statements set forth in Section 13.05 hereof) stating that, in the opinion
of such counsel, all such conditions precedent and covenants have been
satisfied.

 

Section 13.05.       Statements Required in
Certificate or Opinion.

 

Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA § 314(a)(4)) shall comply with the
provisions of TIA § 314(e) and shall include:

 

(a)           a statement that the Person
making such certificate or opinion has read such covenant or condition;

 

(b)           a brief statement as to the
nature and scope of the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are based;

 

(c)           a statement that, in the
opinion of such Person, he or she has made such examination or investigation as
is necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been satisfied; and

 

(d)           a statement as to whether or
not, in the opinion of such Person, such condition or covenant has been
satisfied.

 

Section 13.06.       Rules by Trustee and
Agents.

 

The Trustee may make reasonable rules for
action by or at a meeting of Holders. 
The Registrar or Paying Agent may make reasonable rules and set reasonable
requirements for its functions.

 

Section 13.07.       No Personal Liability of
Directors, Officers, Employees and Stockholders.

 

No director, officer, employee, incorporator or
direct or indirect stockholder of the Company or any successor entity, as such,
shall have any liability for any obligations of the Company under the Notes,
this Indenture, or the Registration Rights Agreement, or for any claim based
on, in respect of, or by reason of, such obligations or their creation.  Each Holder of Notes by accepting a note
waives and releases all such liability. 
The waiver and release are part of the consideration for issuance of the
Notes.  The waiver may not be effective
to waive liabilities under the federal securities laws.

 

104

 

Section 13.08.       Governing Law.

 

THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(B).

 

EACH OF THE PARTIES HERETO (A) IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK OR, IF SUCH COURT WILL NOT ACCEPT
JURISDICTION, THE SUPREME COURT OF THE STATE OF NEW YORK OR ANY COURT OF
COMPETENT CIVIL JURISDICTION SITTING IN NEW YORK COUNTY, NEW YORK, (B) UNCONDITIONALLY
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE ANY
CLAIMS THAT IT IS NOT SUBJECT TO THE JURISDICTION OF THE ABOVE COURTS, THAT
SUCH ACTION OR SUIT IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF
SUCH ACTION, SUIT OR OTHER PROCEEDING IS IMPROPER AND AGREES THAT IT SHALL NOT
ATTEMPT TO DENY OR DEFEAT SUCH JURISDICTION BY MOTION OR OTHER REQUEST FOR
LEAVE FROM ANY SUCH COURT AND (C) AGREES THAT IT SHALL NOT BRING ANY
ACTION RELATING TO THE INDENTURE OR THE NOTES IN ANY COURT OTHER THAN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR, IF SUCH
COURT WILL NOT ACCEPT JURISDICTION, THE SUPREME COURT OF THE STATE OF NEW YORK
OR ANY COURT OF COMPETENT CIVIL JURISDICTION SITTING IN NEW YORK COUNTY, NEW
YORK.

 

Section 13.09.       No Adverse Interpretation of
Other Agreements.

 

This Indenture may not be used to interpret any
other indenture, loan or debt agreement of the Company or its Subsidiaries or
of any other Person.  Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.

 

Section 13.10.       Successors.

 

All agreements of the Company in this Indenture and
the Notes shall bind its successors.  All
agreements of the Trustee in this Indenture shall bind its successors.

 

Section 13.11.       Severability.

 

In case any provision in this Indenture or in the
Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

 

Section 13.12.       Counterpart Originals.

 

The parties may sign any number of copies of this
Indenture.  Each signed copy shall be an
original, but all of them together represent the same agreement.

 

The exchange of copies of this Indenture and of
signature pages by facsimile or PDF transmission shall constitute
effective execution and delivery of this Indenture as to the parties hereto and

 

105

 

may be used in lieu of the
original Indenture for all purposes. 
Signatures of the parties hereto transmitted by facsimile or PDF shall
be deemed to be their original signatures for all purposes.

 

Section 13.13.       Table of Contents, Headings,
etc.

 

The Table of Contents, Cross-Reference Table and
Headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part of this Indenture
and shall in no way modify or restrict any of the terms or provisions hereof.

 

Section 13.14.       Force Majeure.

 

In no event shall the Trustee be responsible or
liable for any failure or delay in the performance of its obligations hereunder
arising out of or caused by, directly or indirectly, forces beyond its control,
including, without limitation, strikes, work stoppages, accidents, acts of war
or terrorism, civil or military disturbances, nuclear or natural catastrophes
or acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; it being understood
that the Trustee shall use reasonable efforts which are consistent with
accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.

 

Section 13.15.       U.S.A. Patriot Act.

 

The parties hereto acknowledge that in accordance
with Section 326 of the U.S.A. Patriot Act, the Trustee, like all
financial institutions and in order to help fight the funding of terrorism and
money laundering, is required to obtain, verify, and record information that
identifies each person or legal entity that establishes a relationship or opens
an account with the Trustee.  The parties
to this Indenture agree that they will provide the Trustee with such
information as it may request in order for the Trustee to satisfy the
requirements of the U.S.A. Patriot Act.

 

[Signatures on following
page]

 

106

 

IN WITNESS WHEREOF, the parties have executed this
Indenture as of the date first written above.

 

 

	
   

  	
  PENN
  NATIONAL GAMING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert S. Ippolito

  
	
   

  	
   

  	
  Name: 

  	
  Robert S. Ippolito

  
	
   

  	
   

  	
  Title:

  	
  Vice President, Secretary and Treasurer

  

 

107

 

WELLS
FARGO BANK, NATIONAL ASSOCIATION, as Trustee

 

 

	
  By:

  	
  /s/ Raymond Delli Colli

  	
   

  
	
   

  	
  Name:

  	
  Raymond
  Delli Colli

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  

 

108

 

EXHIBIT A

 

FORM OF NOTE

 

[Face of Note]

 

CUSIP:

 

83/4% [Series A] [Series B]
Senior Subordinated Notes due 2019

 

	
  No.
          

  	
   

  	
  $                         

  

 

PENN NATIONAL GAMING, INC.  promises to pay
to
                                                  
or registered assigns, the principal sum of
                                                  
Dollars on
                          , 2019.

 

Interest
Payment Dates:  February 15 and August 15

 

Record
Dates:  February 1 and August 1

 

 

	
   

  	
  PENN
  NATIONAL GAMING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

This
is one of the Notes referred to 

in the within-mentioned Indenture:

 

	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:
                                ,       

  	
   

  

 

A-1

 

[Back of Note]

 

83/4%
Senior Subordinated Notes due 2019

 

[Insert the Global Note Legend, if applicable pursuant to
the provisions of the Indenture]

 

[Insert the Private Placement Legend, if applicable pursuant
to the provisions of the Indenture]

 

Capitalized terms used herein shall have the
meanings assigned to them in the Indenture referred to below unless otherwise
indicated.

 

1.                                       Interest.  Penn National Gaming, Inc., a
Pennsylvania corporation (the “Company”), promises to pay interest on
the principal amount of this Note at 83/4% per annum from August 14, 2009 until maturity and shall pay any
Liquidated Damages.  Any Liquidated
Damages following the occurrence of a Registration Default shall be assessed on
the principal amount of Transfer Restricted Securities held by such Holder as
described in the Registration Rights Agreement. 
The Company shall pay interest and any Liquidated Damages semi-annually
in arrears on February 15 and August 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an “Interest
Payment Date”).  Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be February 15,
2010.  The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at a rate
that is 1% per annum in excess of the rate then in effect; it shall pay
interest (including post-petition interest in any proceeding under any Bankruptcy
Law) on overdue installments of interest and any Liquidated Damages (without
regard to any applicable grace periods) from time to time on demand at the same
rate to the extent lawful.  Interest will
be computed on the basis of a 360-day year of twelve 30-day months.

 

2.                                       Method of
Payment.  The Company will pay interest
on the Notes (except defaulted interest) and Liquidated Damages, if any, to the
Persons who are registered Holders of Notes at the close of business on February 1
and August 1 preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to
defaulted interest.  The Notes will be
payable as to principal, premium and Liquidated Damages, if any, and interest at
the office or agency of the Company maintained for such purpose within the City
and State of New York, or, at the option of the Company, payment of
interest and any Liquidated Damages may be made by check mailed to the Holders
at their addresses set forth in the register of Holders, and provided that
payment by wire transfer of immediately available funds will be required with
respect to principal of and interest, premium and any Liquidated Damages on,
all Global Notes and all other Notes the Holders of which hold at least
$1,000,000 in principal amount of the Notes and shall have provided wire
transfer instructions to the Company or the Paying Agent.  Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

 

3.                                       Paying Agent
and Registrar.  Initially,
Wells Fargo Bank, National Association, the Trustee under the Indenture, will
act as Paying Agent and Registrar.  The
Company may change any Paying Agent or Registrar without notice to any
Holder.  The Company or any of its Subsidiaries
may act in any such capacity.

 

A-2

 

4.                                       Indenture.  The Company issued the Notes under an
Indenture dated as of August 14, 2009 (“Indenture”) between the
Company and the Trustee.  The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S.  Code §§ 77aaa-77bbbb).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of this Indenture shall govern and be controlling.

 

5.                                       Optional
Redemption.

 

(a)                                  At any time prior to August 15,
2012, the Company may on any one or more occasions redeem Notes originally
issued under the Indenture at a redemption price of 108.750% of the principal
amount, plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of the aggregate principal amount
of Notes originally issued under the Indenture remains outstanding immediately
after the occurrence of such redemption (excluding Notes held by the Company
and its Subsidiaries); and the redemption occurs within 180 days after the date
of the closing of such Equity Offering.

 

(b)                                 At any time prior to August 15,
2014, the Company may redeem the Notes for cash at its option, in whole or in
part, at any time or from time to time, upon not less than 30 days nor
more than 60 days notice to each Holder of Notes, at a redemption price
equal to the greater of (1) 100% of the principal amount of the Notes
being redeemed and (2) the sum of the present values of the principal
amount of the notes being redeemed and scheduled payments of interest on such
Notes to August 15, 2014, discounted to the date of redemption on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 50 basis points, together in either case with accrued and
unpaid interest, if any, to the date of redemption.

 

(c)                                  Except as described in
subparagraphs (a) and (b) above, the Notes shall not be redeemable at
the Company’s option prior to August 15, 2014.  On and after August 15, 2014, the Company
may redeem all or a part of the Notes upon not less than 30 nor more than 60
days’ notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated
Damages, if any, on the Notes redeemed, to the applicable redemption date, if redeemed
during the twelve-month period beginning on August 15 of the years
indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2014

  	
   

  	
  104.375

  	
  %

  
	
  2015

  	
   

  	
  102.917

  	
  %

  
	
  2016

  	
   

  	
  101.458

  	
  %

  
	
  2017 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

In addition to the foregoing, if any Gaming
Authority requires that a Holder or Beneficial Owner of Notes must be licensed,
qualified or found suitable under any applicable Gaming Laws and such Holder or
Beneficial Owner (i) fails to apply for a license, qualification or a
finding of suitability within 30 days (or such shorter period as may be
required by the applicable Gaming Authority) after being requested to do so by
the Gaming Authority, or (ii) is denied such license or qualification or
not found suitable, or if any Gaming Authority otherwise requires that notes
from any Holder or Beneficial Owner be redeemed, subject to applicable Gaming
Laws, the Company shall have the right, subject to applicable Gaming Laws, at
its option (i) to require any such Holder or Beneficial Owner to dispose
of its Notes within 30 days (or such earlier date as may be required by the
applicable Gaming Authority) of receipt of such notice or finding by such
Gaming Authority, or (ii) to call for the redemption of the Notes of such
Holder or Beneficial Owner at a redemption price equal to the least of (A) the
principal amount thereof, 

 

A-3

 

together with accrued
interest and Liquidated Damages, if any, to the earlier of the date of
redemption or the date of the denial of license or qualification or of the
finding of unsuitability by such Gaming Authority, (B) the price at which
such holder or beneficial owner acquired the Notes, together with accrued interest
and Liquidated Damages, if any, to the earlier of the date of redemption or the
date of the denial of license or qualification or of the finding of
unsuitability by such Gaming Authority, or (C) such other lesser amount as
may be required by any Gaming Authority.

 

6.                                       Mandatory
Redemption.

 

Except as set forth in paragraph 7 below, the
Company shall not be required to make mandatory redemption payments with
respect to the Notes.

 

7.                                       Repurchase at
Option of Holder.

 

(a)                                  If there is a Change of
Control Triggering Event, the Company will be required to make an offer (a “Change
of Control Offer”) to repurchase all or any part (equal to $2,000 or an integral
multiple of $1,000) of each Holder’s Notes at a purchase price equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the “Change of
Control Payment”).  Within
30 days following the occurrence of a Change of Control Triggering Event,
the Company will mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.

 

(b)                                 If the Company or a Subsidiary
consummates any Asset Sales, within five days of each date on which the
aggregate amount of Excess Proceeds exceeds $25.0 million, the Company will
commence an offer to all Holders of Notes (as “Asset Sale Offer”)
pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture. 
To the extent that the aggregate amount of Notes tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company (or such Subsidiary)
may use such deficiency for general corporate purposes.  If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee will select the Notes to be purchased on a pro rata basis.  Holders of Notes that are the subject of an
offer to purchase will receive an Asset Sale Offer from the Company prior to
any related purchase date and may elect to have such Notes purchased by
completing the form entitled “Option of Holder to Elect Purchase” on the reverse
of the Notes.

 

8.                                       Notice of
Redemption.  Notice of
redemption will be mailed at least 30 days but not more than 60 days before the
redemption date to each Holder whose Notes are to be redeemed at its registered
address.  Notes in denominations larger
than $2,000 may be redeemed in part but only in whole multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed.  On and after the redemption date interest
ceases to accrue on Notes or portions thereof called for redemption.

 

9.                                       Denominations,
Transfer, Exchange.  The Notes
are in registered form without coupons in denominations of $2,000 and integral
multiples of $1,000.  The transfer of
Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. 
The Company need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of
any Note being redeemed in part.  Also,
the Company need not exchange or register the transfer of any Notes for a
period of 15 days before the mailing of a 

 

A-4

 

notice of redemption or
during the period between a record date and the corresponding Interest Payment
Date.

 

10.                                 Persons Deemed Owners.  The registered Holder of a Note may be
treated as its owner for all purposes.

 

11.                                 Amendment, Supplement and
Waiver.  Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes voting as a single class, and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class.  Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company’s obligations to Holders of the Notes
in case of a merger or consolidation, to comply with the rules of any
applicable securities depositary, to comply with applicable Gaming Laws, to the
extent that such amendment or supplement is not materially adverse to the
Holders of Notes, to provide for the issuance of Additional Notes in accordance
with the limitations set forth in the Indenture including Section 4.09, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes (including to provide for any guarantees of the Notes or
any collateral securing the notes) or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act, or to allow any Guarantor to execute a
supplemental indenture to the Indenture and/or a Subsidiary Guarantee with respect
to the Notes.

 

12.                                 Defaults and Remedies.  Events of Default include:  (i) default for 30 days in the payment
when due of interest or Liquidated Damages on the Notes; (ii) default in
payment when due of principal of or premium, if any, on the Notes when the same
becomes due and payable at maturity, upon redemption (including in connection
with an offer to purchase) or otherwise, (iii) failure by the Company or
any of its Restricted Subsidiaries to comply with Section 4.14 or 5.01 of
the Indenture; (iv) subject to the last paragraph of Section 6.01 of
the Indenture, the failure by the Company or any of its Restricted Subsidiaries
for 60 days after notice to the Company by the Trustee or the Holders of at
least 25% in principal amount of the Notes then outstanding voting as a single
class to comply with certain other agreements in the Indenture or the Notes; (v) default
under certain other agreements relating to Indebtedness of the Company which
default results in the acceleration of such Indebtedness prior to its express
maturity; (vi) certain final judgments for the payment of money that
remain undischarged for a period of 60 days; and (vii) certain events
of bankruptcy or insolvency with respect to the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary.  If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable.  Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes shall become due and payable without further
action or notice.  Holders may not
enforce the Indenture or the Notes except as provided in the Indenture.  Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. 
The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal, interest or Liquidated Damages) if it
determines that withholding notice is in their interest.  The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event
of Default and its consequences under the Indenture except a continuing Default
or Event of Default in the payment of interest or Liquidated Damages on, or the
principal of, the Notes; provided, however,
that the Holders of a majority in aggregate principal amount of the then
outstanding 

 

A-5

 

Notes by written notice to
the Trustee may on behalf of all the Holders rescind an acceleration and its
consequences.  The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.

 

13.                                 Trustee Dealings with
Company.  The Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

 

14.                                 No Recourse Against Others.  A director, officer, employee, incorporator
or direct or indirect stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes, the Indenture or
the Registration Rights Agreement or for any claim based on, in respect of, or
by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and
releases all such liability.  The waiver
and release are part of the consideration for the issuance of the Notes.

 

15.                                 Authentication.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

 

16.                                 Abbreviations.  Customary abbreviations may be used in the
name of a Holder or an assignee, such as: 
TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

17.                                 Additional Rights of Holders
of Restricted Global Notes and Restricted Definitive Notes.  In addition to the rights provided to Holders
of Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement.

 

18.                                 CUSIP Numbers.  Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy
of such numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.

 

The Company will furnish to any Holder upon written
request and without charge a copy of this Indenture and/or the Registration
Rights Agreement.  Requests may be made
to:

 

Penn National Gaming, Inc.

Wyomissing Professional Center

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

Attention:  Robert S. Ippolito

 

A-6

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

	
  (I) or (we) assign and transfer this Note to:

  	
   

  
	
   

  	
  (Insert assignee’s
  legal name)

  
	
   

  
	
   

  
	
  (Insert assignee’s soc. sec. or tax I.D. no.)

  
	
   

  
	
   

  
	
  (Print or type assignee’s name, address and zip code)

  
	
   

  
	
  and
  irrevocably appoint 

  	
   

  	
  to
  transfer this Note on 

  
	
  the
  books of the Company.  The agent may
  substitute another to act for him.

  
				

 

 

	
  Date:

  	
   

  	
  Your
  Signature:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Sign
  exactly as your name appears on the face of this Note)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature
  Guarantee*:

  	
   

  
						

 

*                 Participant in
a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-7

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by
the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the
appropriate box below:

 

	
   

  	
  o   Section 4.10

  	
   

  	
  o   Section 4.14

  

 

If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture,
state the amount you elect to have purchased:

 

	
  $

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  
	
  Your
  Signature:

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the face of this Note)

  
	
   

  
	
  Tax
  Identification No.:

  	
   

  	
   

  	
   

  
	
   

  
	
  Signature
  Guarantee*:

  	
   

  	
   

  	
   

  
	
   

  
											

 

*                 Participant in
a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-8

 

SCHEDULE OF EXCHANGES
OF INTERESTS IN THE GLOBAL NOTE(1)

 

The following exchanges of a part of this Global
Note for an interest in another Global Note or for a Definitive Note, or
exchanges of a part of another Global Note or Definitive Note for an interest
in this Global Note, have been made:

 

	
  Date
  of Exchange

  	
   

  	
  Amount of Decrease in 

  Principal Amount 

  of This Global Note

  	
   

  	
  Amount of Increase in 

  Principal Amount of 

  This Global Note

  	
   

  	
  Principal Amount of 

  This Global Note 

  Following Such 

  Decrease (or Increase)

  	
   

  	
  Signature of 

  Authorized Signatory 

  of Trustee or Note 

  Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(1)                                  This schedule should be
included only if the Note is issued in global form.

 

A-9

 

EXHIBIT B

 

FORM OF CERTIFICATE OF TRANSFER

 

Penn
National Gaming, Inc.

Wyomissing Professional Center

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

 

Wells Fargo
Bank — DAPS Reorg.

MAC
N9303-121

608 2nd
Avenue South

Minneapolis,
MN 55479

Telephone
No.: (877) 872-4605

Fax No.:
(866) 969-1290

Email:
DAPSReorg@wellsfargo.com

 

Re:  83/4% Senior Subordinated Notes
due 2019

 

Reference is hereby made to the Indenture, dated as
of August 14, 2009 (the “Indenture”), between Penn National Gaming, Inc.,
as issuer (the “Company”), and Wells Fargo Bank, National Association,
as trustee.  Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.

 

                                 (the
“Transferor”) owns and proposes to transfer the Note[s] or interest in
such Note[s] specified in Annex A hereto, in the principal amount of
$                      
in such Note[s] or interests (the “Transfer”), to
                                                      
(the “Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, the
Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.                                       o                                    Check if
Transferee will take delivery of a beneficial interest in the 144A Global Note
or a Definitive Note Pursuant to Rule 144A.  The Transfer is being effected pursuant to
and in accordance with Rule 144A under the United States Securities Act of
1933, as amended (the “Securities Act”), and, accordingly, the
Transferor hereby further certifies that the beneficial interest or Definitive
Note is being transferred to a Person that the Transferor reasonably believed
and believes is purchasing the beneficial interest or Definitive Note for its
own account, or for one or more accounts with respect to which such Person exercises
sole investment discretion, and such Person and each such account is a “qualified
institutional buyer” within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Transfer is in compliance
with any applicable blue sky securities laws of any state of the United
States.  Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the 144A Global Note and/or the Definitive Note and in the Indenture and the
Securities Act.

 

2.                                       o                                    Check if
Transferee will take delivery of a beneficial interest in the Regulation S
Global Note or a Definitive Note pursuant to Regulation S.  The Transfer is being effected pursuant to
and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly, the Transferor hereby further certifies that (i) the
Transfer is not being made to a person in the United States and (x) at the
time the buy order was originated, the Transferee was outside the United States
or such Transferor and any Person acting on its behalf reasonably believed and
believes that the Transferee was 

 

B-1

 

outside the United States or
(y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any
Person acting on its behalf knows that the transaction was prearranged with a
buyer in the United States, (ii) no directed selling efforts have been
made in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, (iii) the transaction is not part
of a plan or scheme to evade the registration requirements of the Securities
Act, and (iv) if the proposed transfer is being made prior to the expiration
of the Restricted Period, the transfer is not being made to a U.S.  Person or for the account or benefit of a U.S.  Person (other than an Initial
Purchaser).  Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Note and/or the Definitive Note and in the Indenture
and the Securities Act.

 

3.                                       o                                    Check and
complete if Transferee will take delivery of a beneficial interest in the IAI
Global Note or a Definitive Note pursuant to any provision of the Securities
Act other than Rule 144A or Regulation S. 
The Transfer is being effected in compliance with the transfer
restrictions applicable to beneficial interests in Restricted Global Notes and
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):

 

(a)                                  o                                    such Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act;

 

or

 

(b)                                 o                                    such Transfer
is being effected to the Company or a subsidiary thereof;

 

or

 

(c)                                  o                                    such Transfer
is being effected pursuant to an effective registration statement under the
Securities Act and in compliance with the prospectus delivery requirements of
the Securities Act;

 

or

 

(d)                                 o                                    such Transfer
is being effected to an Institutional Accredited Investor and pursuant to an
exemption from the registration requirements of the Securities Act other than Rule 144A,
Rule 144 or Rule 904, and the Transferor hereby further certifies
that it has not engaged in any general solicitation within the meaning of
Regulation D under the Securities Act and the Transfer complies with the
transfer restrictions applicable to beneficial interests in a Restricted Global
Note or Restricted Definitive Notes and the requirements of the exemption
claimed, which certification is supported by (1) a certificate executed by
the Transferee in the form of Exhibit D to the Indenture and (2) if
the Company so requests, an Opinion of Counsel provided by the Transferor or
the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the Securities
Act.  Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI Global
Note and/or the Definitive Notes and in the Indenture and the Securities Act.

 

4.                                       o                                    Check if
Transferee will take delivery of a beneficial interest in an Unrestricted
Global Note or of an Unrestricted Definitive Note.

 

B-2

 

(a)                                  o                                    Check if
Transfer is pursuant to Rule 144.  (i) The
Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state of
the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. 
Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will
no longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

 

(b)                                 o                                    Check if
Transfer is Pursuant to Regulation S.  (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904
under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. 
Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will
no longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

 

(c)                                  o                                    Check if
Transfer is Pursuant to Other Exemption. 
(i) The Transfer is being effected pursuant to and in compliance
with an exemption from the registration requirements of the Securities Act
other than Rule 144, Rule 903 or Rule 904 and in compliance with
the transfer restrictions contained in the Indenture and any applicable blue
sky securities laws of any State of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities
Act.  Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will not be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

 

This certificate and the statements contained herein
are made for your benefit and the benefit of the Company.

 

	
   

  	
  [Insert
  Name of Transferor]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
				

 

B-3

 

ANNEX A TO CERTIFICATE OF TRANSFER

 

	
   

  	
  1.

  	
  The
  Transferor owns and proposes to transfer the following:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [CHECK
  ONE OF (a) OR (b)]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  o

  	
  a
  beneficial interest in the:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  o

  	
  144A
  Global Note (CUSIP
                    ),
  or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  o

  	
  Regulation
  S Global Note (CUSIP
                    ),
  or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  o

  	
  IAI
  Global Note (CUSIP
                    );
  or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  o

  	
  a
  Restricted Definitive Note.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  After
  the Transfer the Transferee will hold:

  
	
   

  	
   

  	
   

  	
   

  
	
  [CHECK ONE]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  o

  	
  a
  beneficial interest in the:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  o

  	
  144A
  Global Note (CUSIP
                    ),
  or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  o

  	
  Regulation
  S Global Note (CUSIP
                    ),
  or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  o

  	
  IAI
  Global Note (CUSIP
                    );
  or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  o

  	
  Unrestricted
  Global Note (CUSIP
                    );
  or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  o

  	
  a
  Restricted Definitive Note; or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  o

  	
  an Unrestricted Definitive
  Note, in accordance with the terms of this Indenture.

  

 

B-4

 

EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

Penn
National Gaming, Inc.

Wyomissing Professional Center

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

 

Wells Fargo
Bank — DAPS Reorg.

MAC
N9303-121

608 2nd
Avenue South

Minneapolis,
MN 55479

Telephone
No.: (877) 872-4605

Fax No.:
(866) 969-1290

Email:
DAPSReorg@wellsfargo.com

 

Re:  83/4% Senior Subordinated Notes
due 2019

 

(CUSIP
                        )

 

Reference is hereby made to the Indenture, dated as
of August 14, 2009 (the “Indenture”), between Penn National Gaming, Inc.,
as issuer (the “Company”), and Wells Fargo Bank, National Association,
as trustee.  Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.

 

                                                     ,
(the “Owner”) owns and proposes to exchange the Note[s] or interest in
such Note[s] specified herein, in the principal amount of
$                        
in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner
hereby certifies that:

 

1.                                       Exchange of
Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note
for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted
Global Note

 

(a)                                  o                                    Check if
Exchange is from beneficial interest in a Restricted Global Note to beneficial
interest in an Unrestricted Global Note. 
In connection with the Exchange of the Owner’s beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global Note
in an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to and in accordance
with the United States Securities Act of 1933, as amended (the “Securities
Act”), (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest in an
Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

 

(b)                                 o                                    Check if
Exchange is from beneficial interest in a Restricted Global Note to Unrestricted
Definitive Note.  In connection with the
Exchange of the Owner’s beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner’s own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities 

 

C-1

 

Act and (iv) the Definitive
Note is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.

 

(c)                                  o                                    Check if
Exchange is from Restricted Definitive Note to beneficial interest in an
Unrestricted Global Note.  In connection
with the Owner’s Exchange of a Restricted Definitive Note for a beneficial
interest in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.

 

(d)                                 o                                    Check if
Exchange is from Restricted Definitive Note to Unrestricted Definitive
Note.  In connection with the Owner’s
Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note,
the Owner hereby certifies (i) the Unrestricted Definitive Note is being
acquired for the Owner’s own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted
Definitive Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

 

2.                                       Exchange of
Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes
for Restricted Definitive Notes or Beneficial Interests in Restricted Global
Notes

 

(a)                                  o                                    Check if
Exchange is from beneficial interest in a Restricted Global Note to Restricted
Definitive Note.  In connection with the
Exchange of the Owner’s beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner’s
own account without transfer.  Upon
consummation of the proposed Exchange in accordance with the terms of the
Indenture, the Restricted Definitive Note issued will continue to be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Definitive Note and in the Indenture and the Securities Act.

 

(b)                                 o                                    Check if
Exchange is from Restricted Definitive Note to beneficial interest in a
Restricted Global Note.  In connection
with the Exchange of the Owner’s Restricted Definitive Note for a beneficial
interest in the:

 

[CHECK ONE]

 

o                                   144A Global
Note, or

 

o                                   Regulation S
Global Note, or

 

o                                   IAI Global Note
with an equal principal amount,

 

the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner’s own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions applicable
to the Restricted Global Notes and pursuant to and in accordance with the
Securities Act, and in compliance with any applicable blue sky securities laws
of any state of the United States.  Upon 

 

D-2

 

consummation of the proposed Exchange in accordance with the terms of
the Indenture, the beneficial interest issued will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the relevant Restricted Global Note and in the Indenture and the Securities
Act.

 

D-3

 

This certificate and the statements contained herein
are made for your benefit and the benefit of the Company.

 

	
   

  	
  [Insert
  Name of Transferor]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

D-4

EXHIBIT D

 

FORM OF
CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

 

Penn
National Gaming, Inc.

Wyomissing Professional Center

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

 

Wells Fargo
Bank — DAPS Reorg.

MAC
N9303-121

608 2nd
Avenue South

Minneapolis,
MN 55479

Telephone
No.: (877) 872-4605

Fax No.:
(866) 969-1290

Email:
DAPSReorg@wellsfargo.com

 

Re:  83/4% Senior Subordinated Notes
due 2019

 

Reference is hereby made to the Indenture, dated as
of August 14, 2009 (the “Indenture”), between Penn National Gaming, Inc.,
as issuer (the “Company”), and Wells Fargo Bank, National Association,
as trustee.  Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.

 

In connection with our proposed purchase of
$                        
aggregate principal amount of:

 

(a)           o            a beneficial interest in a
Global Note, or

 

(b)           o            a Definitive Note,

 

we confirm that:

 

1.             We understand
that any subsequent transfer of the Notes or any interest therein is subject to
certain restrictions and conditions set forth in the Indenture and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes or any interest therein except in compliance with, such
restrictions and conditions and the United States Securities Act of 1933, as
amended (the “Securities Act”).

 

2.             We understand
that the offer and sale of the Notes have not been registered under the
Securities Act, and that the Notes and any interest therein may not be offered
or sold except as permitted in the following sentence.  We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that if we should
sell the Notes or any interest therein, we will do so only (A) to the
Company or any subsidiary thereof, (B) in accordance with Rule 144A
under the Securities Act to a “qualified institutional buyer” (as defined
therein), (C) to an institutional “accredited investor” (as defined below)
that, prior to such transfer, furnishes (or has furnished on its behalf by a
U.S.  broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and if the
Company so requests, an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such transfer is in compliance with the Securities
Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under
the Securities Act or (F) pursuant to an effective registration statement
under the Securities Act, and 

 

D-1

 

we further agree to provide
to any person purchasing the Definitive Note or beneficial interest in a Global
Note from us in a transaction meeting the requirements of clauses (A) through
(E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.

 

3.             We understand
that, on any proposed resale of the Notes or beneficial interest therein, we
will be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions.  We further understand that the Notes
purchased by us will bear a legend to the foregoing effect.

 

4.             We are an
institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act) and have such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Notes, and we and any accounts
for which we are acting are each able to bear the economic risk of our or its investment.

 

5.             We are
acquiring the Notes or beneficial interest therein purchased by us for our own
account or for one or more accounts (each of which is an institutional “accredited
investor”) as to each of which we exercise sole investment discretion.

 

You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.

 

	
   

  	
  [Insert
  Name of Accredited Investor]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

D-2

EXHIBIT E

 

FORM OF SUBSIDIARY GUARANTEE

 

For value received, each Guarantor (which term
includes any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture dated as of August 14, 2009
(the “Indenture”) between Penn National
Gaming, Inc. (the “Company”) and Wells
Fargo Bank, National Association, as trustee (the “Trustee”), (a) the due and punctual payment of the principal
of, premium, if any, and interest on the Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and punctual
payment of interest on overdue principal and premium or Liquidated Damages, if
any, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case
of any extension of time of payment or renewal of any Notes or any of such
other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. 
The obligations of the Guarantors to the Holders of Notes and to the
Trustee pursuant to the Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to
the Indenture for the precise terms of the Subsidiary Guarantee.  Each Holder of a Note, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee, on behalf of such Holder, to take such action as may
be necessary or appropriate to effectuate the subordination as provided in the
Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for
such purpose; provided, however,
that the Indebtedness evidenced by this Subsidiary Guarantee shall cease to be
so subordinated and subject in right of payment upon any defeasance of this
Note in accordance with the provisions of the Indenture.

 

	
   

  	
  [NAME
  OF GUARANTOR(S)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

E-1

EXHIBIT F

 

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

 

SUPPLEMENTAL INDENTURE (this “Supplemental
Indenture”), dated as of
                            ,
among                                     
(the “Guaranteeing Subsidiary”), a subsidiary of Penn National Gaming, Inc.  (or its permitted successor), a Pennsylvania
corporation (the “Company”), the Company and Wells Fargo Bank, National
Association, as trustee under this Indenture referred to below (the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS, the Company has heretofore executed and
delivered to the Trustee an indenture (the “Indenture”), dated as of August 14,
2009 providing for the issuance of an unlimited amount of 83/4% Senior Subordinated Notes due 2019 (the “Notes”);

 

WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Company’s Obligations under the
Notes and the Indenture on the terms and conditions set forth herein (the “Subsidiary
Guarantee”); and

 

WHEREAS, pursuant to Section 9.01 of the
Indenture, the Trustee is authorized to execute and deliver this Supplemental
Indenture.

 

NOW THEREFORE, in consideration of the foregoing and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and
agree for the equal and ratable benefit of the Holders of the Notes as follows:

 

1.             Capitalized
Terms.  Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.

 

2.             Agreement to
Guarantee.  The
Guaranteeing Subsidiary hereby agrees as follows:

 

(a)           To jointly and severally
Guarantee, on a senior subordinated basis, to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, the Notes or the obligations of the Company hereunder or
thereunder, that:

 

(i)            the principal of and interest on the Notes will be
promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest
on the Notes, if any, if lawful, and all other obligations of the Company to
the Holders or the Trustee hereunder or thereunder will be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and

 

(ii)           in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, that same will be promptly paid
in full when due or

 

F-1

 

performed in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.  Failing payment
when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Guarantors shall be jointly and severally obligated to pay
the same immediately.

 

(b)           The obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or the Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.

 

(c)           The following is hereby
waived: diligence presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever.

 

(d)           Except as otherwise provided
by the Indenture, this Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and the
Indenture, and the Guaranteeing Subsidiary accepts all obligations of a Guarantor
under the Indenture.

 

(e)           If any Holder or the Trustee
is required by any court or otherwise to return to the Company, the Guarantors,
or any Custodian, Trustee, liquidator or other similar official acting in
relation to either the Company or the Guarantors, any amount paid by either to
the Trustee or such Holder, this Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.

 

(f)            The Guaranteeing Subsidiary
shall not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.

 

(g)           As between the Guarantors,
on the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Subsidiary Guarantee.

 

(h)           The Guarantors shall have
the right to seek contribution from any non-paying Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the Guarantee.

 

(i)            Pursuant to Section 11.03
of the Indenture, after giving effect to any maximum amount and any other
contingent and fixed liabilities that are relevant under any applicable Bankruptcy
or fraudulent conveyance laws, and after giving effect to any collections from,
any rights to receive contribution from or payments made by or on behalf of any
other 

 

F-2

 

Guarantor in respect of the
obligations of such other Guarantor under Article 11 of this Indenture,
this new Subsidiary Guarantee shall be limited to the maximum amount
permissible such that the obligations of such Guarantor under this Subsidiary
Guarantee will not constitute a fraudulent transfer or conveyance.

 

3.             Execution and
Delivery.  Each
Guaranteeing Subsidiary agrees that the Subsidiary Guarantees shall remain in
full force and effect notwithstanding any failure to endorse on each Note a
notation of such Subsidiary Guarantee.

 

4.             Guaranteeing
Subsidiary May Consolidate, etc.  on
Certain Terms.

 

(a)           The Guaranteeing Subsidiary may not consolidate with
or merge with or into (whether or not such Guarantor is the surviving Person)
another corporation, Person or entity whether or not affiliated with such
Guarantor unless:

 

(i)            subject to Sections 11.05 and 11.06 of the
Indenture, the Person formed by or surviving any such consolidation or merger
(if other than a Guarantor or the Company) unconditionally assumes all the
obligations of such Guarantor, pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Notes, this Indenture
and the Subsidiary Guarantee on the terms set forth herein or therein; and

 

(ii)           immediately after giving effect to such transaction,
no Default or Event of Default exists.

 

(b)           In case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and
the due and punctual performance of all of the covenants and conditions of the
Indenture to be performed by the Guarantor, such successor corporation shall
succeed to and be substituted for the Guarantor with the same effect as if it
had been named herein as a Guarantor. 
Such successor corporation thereupon may cause to be signed any or all
of the Subsidiary Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and delivered
to the Trustee.  All the Subsidiary
Guarantees so issued shall in all respects have the same legal rank and benefit
under the Indenture as the Subsidiary Guarantees theretofore and thereafter
issued in accordance with the terms of the Indenture as though all of such
Subsidiary Guarantees had been issued at the date of the execution hereof.

 

(c)           Except as set forth in Articles 4 and 5 and Section 11.06
of Article 11 of the Indenture, and notwithstanding clauses (a) and
(b) above, nothing contained in the Indenture or in any of the Notes shall
prevent any consolidation or merger of a Guarantor with or into the Company or
another Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.

 

5.             Releases.

 

(a)           In the event of a sale or other disposition of all
of the assets of any Guarantor, by way of merger, consolidation or otherwise,
or a sale or other disposition of all the capital stock of any Guarantor, in
each case to a Person that is not (either before or after giving effect to such
transaction) a Restricted Subsidiary of the Company, then such Guarantor (in
the event of a sale or other 

 

F-3

 

disposition, by way of
merger, consolidation or otherwise, of all of the capital stock of such Guarantor)
or the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) will
be released and relieved of any obligations under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of the
Indenture, including without limitation Section 4.10 of the
Indenture.  Upon delivery by the Company
to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in
accordance with the provisions of the Indenture, including without limitation Section 4.10
of the Indenture, the Trustee shall execute any documents reasonably required
in order to evidence the release of any Guarantor from its obligations under
its Subsidiary Guarantee.

 

(b)           A Guarantor shall be automatically and
unconditionally released and discharged of its Subsidiary Guarantee and its
obligations in respect of this Indenture and the Notes without any action
required on the part of the Trustee or any Holder of Notes at such time as such
Guarantor’s guarantee or joint and several liability with respect to all Other
Senior Subordinated Debt Securities of the Company is released or discharged,
or, at the Company’s option, if the Guarantor is not a guarantor of or jointly
and severally liable with respect to any Other Senior Subordinated Debt Securities.

 

(c)           Any Guarantor not released from its obligations
under its Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations of any
Guarantor under the Indenture as provided in Article 11 of the Indenture.

 

6.             No Recourse
Against Others.  No past,
present or future director, officer, employee, incorporator, stockholder or
agent of the Guaranteeing Subsidiary, as such, shall have any liability for any
obligations of the Company or any Guaranteeing Subsidiary under the Notes, any
Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation.  Each Holder of the Notes by
accepting a Note waives and releases all such liability.  The waiver and release are part of the
consideration for issuance of the Notes. 
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.

 

7.             New York
Law to Govern.  THE INDENTURE
AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE
STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF
THE NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES
327(B).

 

EACH OF THE PARTIES HERETO (A) IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK OR, IF SUCH COURT WILL NOT ACCEPT
JURISDICTION, THE SUPREME COURT OF THE STATE OF NEW YORK OR ANY COURT OF
COMPETENT CIVIL JURISDICTION SITTING IN NEW YORK COUNTY, NEW YORK, (B) UNCONDITIONALLY
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE ANY
CLAIMS THAT IT IS NOT SUBJECT TO THE JURISDICTION OF THE ABOVE COURTS, THAT
SUCH ACTION OR SUIT IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF
SUCH ACTION, SUIT OR OTHER PROCEEDING IS IMPROPER AND AGREES THAT IT SHALL NOT
ATTEMPT TO DENY OR 

 

F-4

 

DEFEAT SUCH JURISDICTION BY
MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT AND (C) AGREES THAT
IT SHALL NOT BRING ANY ACTION RELATING TO THE INDENTURE OR THE NOTES IN ANY
COURT OTHER THAN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK OR, IF SUCH COURT WILL NOT ACCEPT JURISDICTION, THE SUPREME COURT OF
THE STATE OF NEW YORK OR ANY COURT OF COMPETENT CIVIL JURISDICTION SITTING IN
NEW YORK COUNTY, NEW YORK.

 

8.             Counterparts.  The parties may sign any number of copies of
this Supplemental Indenture.  Each signed
copy shall be an original, but all of them together represent the same
agreement.

 

9.             Effect of
Headings.  The Section headings
herein are for convenience only and shall not affect the construction hereof.

 

10.           The Trustee.  The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the Company.

 

F-5

 

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

 

	
  Dated:
                                ,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [GUARANTEEING
  SUBSIDIARY]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  PENN
  NATIONAL GAMING, INC.

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  [EXISTING
  GUARANTORS]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
  By:

  
	
   

  	
  Authorized Signatory

  

 

F-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}]]