Document:

Exhibit 10.5

 

Congaree Bancshares, Inc. 2007 Stock
Incentive Plan

 

 

CONGAREE
BANCSHARES, INC.

2007
STOCK INCENTIVE PLAN

 

TABLE OF
CONTENTS

 

	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  THE PLAN

  	
  4

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  NAME

  	
  4

  
	
  2.2

  	
  PURPOSE

  	
  5

  
	
  2.3

  	
  EFFECTIVE
  DATE

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  PARTICIPANTS

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  ADMINISTRATION

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  DUTIES
  AND POWERS OF THE COMMITTEE

  	
  5

  
	
  4.2

  	
  INTERPRETATION;
  RULES

  	
  5

  
	
  4.3

  	
  NO
  LIABILITY

  	
  6

  
	
  4.4

  	
  MAJORITY
  RULE

  	
  6

  
	
  4.5

  	
  COMPANY
  ASSISTANCE

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  SHARES OF STOCK SUBJECT TO PLAN

  	
  6

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  LIMITATIONS

  	
  6

  
	
  5.2

  	
  ANTIDILUTION

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  OPTIONS

  	
  7

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  TYPES
  OF OPTIONS GRANTED

  	
  7

  
	
  6.2

  	
  OPTION
  GRANT AND AGREEMENT

  	
  7

  
	
  6.3

  	
  OPTIONEE
  LIMITATIONS

  	
  8

  
	
  6.4

  	
  $100,000
  LIMITATION

  	
  8

  
	
  6.5

  	
  EXERCISE
  PRICE

  	
  8

  
	
  6.6

  	
  EXERCISE
  PERIOD

  	
  9

  
	
  6.7

  	
  OPTION
  EXERCISE

  	
  9

  
	
  6.8

  	
  NONTRANSFERABILITY
  OF OPTION

  	
  9

  
	
  6.9

  	
  TERMINATION
  OF EMPLOYMENT OR SERVICE

  	
  9

  
	
  6.10

  	
  EMPLOYMENT
  RIGHTS

  	
  10

  
	
  6.11

  	
  CERTAIN
  SUCCESSOR OPTIONS

  	
  10

  
	
  6.12

  	
  FORFEITURE
  BY ORDER OF REGULATORY AGENCY

  	
  10

  
	
  6.13

  	
  EFFECT
  OF A CORPORATE TRANSACTION

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  STOCK CERTIFICATES

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  TERMINATION AND AMENDMENT

  	
  11

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  TERMINATION
  AND AMENDMENT

  	
  11

  
	
  8.2

  	
  EFFECT
  ON GRANTEE’S RIGHTS

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  RELATIONSHIP TO OTHER COMPENSATION PLANS

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  MISCELLANEOUS

  	
  11

  
					

 

i

 

	
  10.1

  	
  REPLACEMENT
  OR AMENDED GRANTS

  	
  11

  
	
  10.2

  	
  FORFEITURE
  FOR COMPETITION

  	
  11

  
	
  10.3

  	
  LEAVE
  OF ABSENCE

  	
  12

  
	
  10.4

  	
  PLAN
  BINDING ON SUCCESSORS

  	
  12

  
	
  10.5

  	
  HEADINGS,
  ETC., NO PART OF PLAN

  	
  12

  
	
  10.6

  	
  SECTION 16
  COMPLIANCE

  	
  12

  

 

ii

 

CONGAREE
BANCSHARES, INC.

2007
STOCK INCENTIVE PLAN

 

ARTICLE I

DEFINITIONS

 

As used herein, the
following terms have the following meanings unless the context clearly
indicates to the contrary:

 

“Board” shall mean
the Board of Directors of the Company.

 

“Cause” (i) with
respect to the Company or any subsidiary which employs the recipient of an
Option (the “recipient”) or for which such recipient primarily performs
services, the commission by the recipient of an act of fraud, embezzlement,
theft or proven dishonesty, or any other illegal act or practice (whether or
not resulting in criminal prosecution or conviction), or any act or practice
which the Committee shall, in good faith, deem to have resulted in the
recipient’s becoming unbondable under the Company’s or the subsidiary’s
fidelity bond; (ii) the willful engaging by the recipient in misconduct
which is deemed by the Committee, in good faith, to be materially injurious to
the Company or any subsidiary, monetarily or otherwise, including, but not
limited, improperly disclosing trade secrets or other confidential or sensitive
business information and data about the Company or any subsidiaries and
competing with the Company or its subsidiaries, or soliciting employees,
consultants or customers of the Company in violation of law or any employment
or other agreement to which the recipient is a party; or (iii) the willful
and continued failure or habitual neglect by the recipient to perform his or
her duties with the Company or the subsidiary substantially in accordance with
the operating and personnel policies and procedures of the Company or the
subsidiary generally applicable to all their employees.  For purposes of this Plan, no act or failure
to act by the recipient shall be deemed be “willful” unless done or omitted to
be done by recipient not in good faith and without reasonable belief that the
recipient’s action or omission was in the best interest of the Company and/or
the subsidiary.  Notwithstanding the
foregoing, if the recipient has entered into an employment agreement that is
binding as of the date of employment termination, and if such employment
agreement defines “Cause,” then the definition of “Cause” in such agreement
shall apply to the recipient in this Plan. 
“Cause” under either (i), (ii) or (iii) shall be determined by
the Committee.

 

“Code” shall mean
the United States Internal Revenue Code of 1986, including effective date and
transition rules (whether or not codified).  Any reference herein to a specific section of
the Code shall be deemed to include a reference to any corresponding provision
of future law.

 

“Committee” shall
mean a committee of at least two Directors appointed from time to time by the
Board, having the duties and authority set forth herein in addition to any
other authority granted by the Board.  In
selecting the Committee, the Board shall consider (i) the benefits under Section 162(m) of
the Code of having a Committee composed of “outside directors” (as that term is
defined in the Code) for certain grants of Options to highly compensated
executives, and (ii) the benefits under Rule 16b-3 of having a
Committee composed of either the entire Board or a Committee of at least two
Directors who are Non-Employee Directors for Options granted to or held by any Section 16
Insider.   At any time that the Board
shall not have appointed a committee as described above, any reference herein
to the Committee shall mean the Board.

 

“Company” shall
mean Congaree Bancshares, Inc., a South Carolina corporation.

 

 

“Corporate
Transaction” shall mean the occurrence of any of the following events,
unless such event is a result of a Non-Control Transaction:

 

(i)            the individuals who are
members of the Board of Directors of the Company (the “Incumbent Board”) cease
for any reason to constitute at least 50% of the Board of Directors of the
Company; provided, however, that if the election, or nomination
for election by the Company’s shareholders, of any new director was approved in
advance by a vote of at least 50% of the Incumbent Board, such new director
shall, for purposes of the Plan, be considered as a member of the Incumbent
Board; provided, further, that no individual shall be considered
a member of the Incumbent Board if such individual initially assumed office as
a result of either an actual or threatened election contest, or other actual or
threatened solicitation of proxies or consents by or on behalf of any person
other than the Board of Directors of the Company, including by reason of any
agreement intended to avoid or settle any election contest or proxy contest.

 

(ii)           an acquisition (other than
directly from the Company) of any voting securities of the Company (the “Voting
Securities”) by any “Person” (as the term “person” is used for purposes of Section 13(d) or
14(d) of the Exchange Act) immediately after which such Person has “Beneficial
Ownership” (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of the Company’s then
outstanding Voting Securities; provided, however, that in
determining whether a Corporate Transaction has occurred, Voting Securities
which are acquired in a Non-Control Transaction shall not constitute a
Corporate Transaction under the Plan.

 

(iii)          consummation of:  (i) a merger, consolidation, or
reorganization involving the Company; (ii) a complete liquidation or
dissolution of the Company; or (iii) the sale or other disposition of all
or substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).

 

(iv)          a notice of an application is
filed with the South Carolina Board of Financial Institutions or the Federal
Reserve Board or any other bank or thrift regulatory approval (or notice of no
disapproval) is granted by the Federal Reserve, South Carolina Board of
Financial Institutions, the OCC, the Federal Deposit Insurance Corporation, or
any other regulatory authority for permission to acquire control of the Company
or any of its banking subsidiaries; provided that if the application is filed
in connection with a transaction which has been approved by the Board, then the
Corporate Transaction shall not be deemed to occur until consummation of the
transaction.

 

“Non-Control Transaction”
shall mean a transaction described below:

 

(i)            the shareholders of the Company,
immediately before such merger, consolidation or reorganization, own, directly
or indirectly, immediately following such merger, consolidation or
reorganization, at least 50% of the combined voting power of the outstanding
voting securities of the corporation resulting from such merger, consolidation
or reorganization (the “Surviving Corporation”) in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization; and

 

2

 

(ii)           immediately following such merger,
consolidation or reorganization, the number of directors on the board of
directors of the Surviving Corporation who were members of the Incumbent Board
shall at least equal the number of directors who were affiliated with or
appointed by the other party to the merger, consolidation or reorganization.

 

“Director” shall
mean a member of the Board and any person who is an advisory or honorary
director of the Company if such person is considered a director for the
purposes of Section 16 of the Exchange Act, as determined by reference to
such Section 16 and to the rules, regulations, judicial decisions, and
interpretative or “no-action” positions with respect thereto of the Securities
and Exchange Commission, as the same may be in effect or set forth from time to
time.

 

“Employee” shall
mean a person who constitutes an employee of the Company as such term is
defined in the instructions to the Form S-8 Registration Statement under
the Securities Act of 1933, and also includes non-employees to whom an offer of
employment has been extended.

 

“Exchange Act”
shall mean the Securities Exchange Act of 1934. 
Any reference herein to a specific section of the Exchange Act shall be
deemed to include a reference to any corresponding provision of future law.

 

“Exercise Price”
shall mean the price at which an Optionee may purchase a share of Stock under a
Stock Option Agreement.

 

“Fair Market Value”
on any date shall mean (i) the closing sales price of the Stock, regular
way, on such date on the national securities exchange having the greatest
volume of trading in the Stock during the thirty-day period preceding the day
the value is to be determined or, if such exchange was not open for trading on
such date, the next preceding date on which it was open; (ii) if the Stock
is not traded on any national securities exchange, the average of the closing
high bid and low asked prices of the Stock on the over-the-counter market on
the day such value is to be determined, or in the absence of closing bids on
such day, the closing bids on the next preceding day on which there were bids;
or (iii) if the Stock also is not traded on the over-the-counter market,
the fair market value as determined in good faith by the Board or the Committee
based on such relevant facts as may be available to the Board, which may
include opinions of independent experts, the price at which recent sales have
been made, the book value of the Stock, and the Company’s current and future
earnings.

 

“Incentive Stock
Option” shall mean an option to purchase any stock of the Company, which
complies with and is subject to the terms, limitations and conditions of Section 422
of the Code and any regulations promulgated with respect thereto.

 

“Non-Employee Director”
shall have the meaning set forth in Rule 16b-3 under the Exchange Act, as
the same may be in effect from time to time, or in any successor rule thereto,
and shall be determined for all purposes under the Plan according to
interpretative or “no-action” positions with respect thereto issued by the
Securities and Exchange Commission.

 

“Officer” shall
mean a person who constitutes an officer of the Company for the purposes of Section 16
of the Exchange Act, as determined by reference to such Section 16 and to
the rules, regulations, judicial decisions, and interpretative or “no-action”
positions with respect thereto of the Securities and Exchange Commission, as
the same may be in effect or set forth from time to time.

 

3

 

“Option” shall
mean an option, whether or not an Incentive Stock Option, to purchase Stock
granted pursuant to the provisions of Article VI hereof.

 

“Optionee” shall
mean a person to whom an Option has been granted hereunder.

 

“Parent”  shall mean any corporation (other than the
Company or a Subsidiary) in an unbroken chain of corporations ending with the
Company if, at the time of the grant (or modification) of the Option, each of
the corporations other than the Company or a Subsidiary owns stock possessing
50% or more of the total combined voting power of the classes of stock in one
of the other corporations in such chain.

 

“Permanent and Total
Disability” shall have the same meaning as given to that term by Code Section 22(e)(3) and
any regulations or rulings promulgated thereunder.

 

“Plan” shall mean
the Congaree Bancshares, Inc. 2007 Stock Incentive Plan, the terms of
which are set forth herein.

 

“Purchasable”
shall refer to Stock which may be purchased by an Optionee under the terms of
this Plan on or after a certain date specified in the applicable Stock Option
Agreement.

 

“Qualified Domestic
Relations Order” shall have the meaning set forth in the Code or in the
Employee Retirement Income Security Act of 1974, or the rules and
regulations promulgated under the Code or such Act.

 

“Section 16
Insider” shall mean any person who is subject to the provisions of Section 16
of the Exchange Act, as provided in Rule 16a-2 promulgated pursuant to the
Exchange Act.

 

“Stock” shall mean
the Common Stock, no par value, of the Company or, in the event that the
outstanding shares of Stock are hereafter changed into or exchanged for shares
of a different stock or securities of the Company or some other entity, such
other stock or securities.

 

“Stock Option
Agreement” shall mean an agreement between the Company and an Optionee
under which the Optionee may purchase Stock hereunder, a sample form of which
is attached hereto as Exhibit A (which form may be varied by the
Committee in granting an Option).

 

“Subsidiary” shall
mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the grant (or
modification) of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

 

ARTICLE
II

THE PLAN

 

2.1           Name.  This Plan shall be known as “Congaree Bancshares, Inc.
2007 Stock Incentive Plan.”

 

4

 

2.2           Purpose. The
purpose of the Plan is to advance the interests of the Company, its
Subsidiaries, and its shareholders by affording Employees and Directors of the
Company and its subsidiaries an opportunity to acquire or increase their
proprietary interests in the Company. 
The objective of the issuance of the Options is to promote the growth
and profitability of the Company and its Subsidiaries because the Optionees will
be provided with an additional incentive to achieve the Company’s objectives
through participation in its success and growth and by encouraging their
continued association with or service to the Company.

 

2.3           Effective Date.  The Plan shall become effective on January 1,
2007; provided, however, that if the shareholders of the Company have not
approved the Plan on or prior to the first anniversary of such effective date,
then all options granted under the Plan shall be non-incentive Stock
Options.  If, at the time of any
amendment to the Plan, shareholder approval is required by the Code for
Incentive Stock Options and such shareholder approval has not been obtained (or
is not obtained within 12 months thereof), any Incentive Stock Options issued
under the Plan shall automatically become options which do not qualify as
Incentive Stock Options.

 

ARTICLE
III

PARTICIPANTS

 

The class of persons
eligible to participate in the Plan shall consist of all Directors and
Employees of the Company or any Subsidiary.

 

ARTICLE
IV

ADMINISTRATION

 

4.1           Duties
and Powers of the Committee.  The
Plan shall be administered by the Committee. 
The Committee shall select one of its members as its Chairman and shall
hold its meetings at such times and places as it may determine.  The Committee shall keep minutes of its
meetings and shall make such rules and regulations for the conduct of its
business as it may deem necessary.  The
Committee shall have the power to act by unanimous written consent in lieu of a
meeting, and to meet telephonically.  In
administering the Plan, the Committee’s actions and determinations shall be
binding on all interested parties.  The
Committee shall have the power to grant Options in accordance with the
provisions of the Plan and may grant Options singly, in combination, or in
tandem.  Subject to the provisions of the
Plan, the Committee shall have the discretion and authority to determine those
individuals to whom Options will be granted, the number of shares of Stock
subject to each Option, such other matters as are specified herein, and any
other terms and conditions of a Stock Option Agreement.  The Committee shall also have the discretion
and authority to waive any provision of the Plan or to delegate to any Officer
its power to grant Options under the Plan to Employees, but not to Employees
who are Officers or Directors.

 

4.2           Interpretation;
Rules.  Subject to the express
provisions of the Plan, the Committee also shall have complete authority to
interpret the Plan, to prescribe, amend, and rescind rules and regulations
relating to it, to determine the details and provisions of each Stock Option
Agreement, and to make all other determinations necessary or advisable for the
administration of the Plan, including, without limitation, the amending or altering
of the Plan and any Options granted hereunder as may be required to comply with
or to conform to any federal, state, or local laws or regulations.  If an option granted under the Plan is
intended to be an Incentive Stock Option but does not qualify as an Incentive
Stock Option for any reason, then the option granted shall remain valid but
shall be a non-Incentive Stock Option.

 

5

 

4.3           No Liability.  Neither any member of the Board nor any
member of the Committee shall be liable to any person for any act or
determination made in good faith with respect to the Plan or any Option granted
hereunder.

 

4.4           Majority Rule.  A majority of the members of the Committee
shall constitute a quorum, and any action taken by a majority at a meeting at
which a quorum is present, or any action taken without a meeting evidenced by a
writing executed by all the members of the Committee, shall constitute the
action of the Committee.

 

4.5           Company Assistance.  The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability, or other termination of employment,
and such other pertinent facts as the Committee may require.  The Company shall furnish the Committee with
such clerical and other assistance as is necessary in the performance of its
duties.

 

ARTICLE V

SHARES OF
STOCK SUBJECT TO PLAN

 

5.1           Limitations.  The maximum number of shares that may be
issued hereunder shall initially be 317,599  and thereafter shall automatically be increased each time
the Company issues additional shares of Stock so that the total number of
shares issuable hereunder shall at all times equal 18% of the then outstanding
shares of Stock, unless in any case the Board of Directors adopts a resolution
providing that the number of shares issuable under this Plan shall not be so
increased.  Notwithstanding the above,
the total number of shares of Stock issuable pursuant to Incentive Stock
Options may not be increased to more than 317,599 (other than pursuant to
antidilution adjustments) without shareholder approval.  In addition, the number of shares that may be
issued hereunder shall be subject to any antidilution adjustment pursuant to
the provisions of Section 5.2 hereof. 
Any or all shares of Stock subject to the Plan may be issued in any
combination of Incentive Stock Options or non-Incentive Stock Options.  Shares subject to an Option may be either
authorized and unissued shares or shares issued and later acquired by the
Company.  The shares covered by any
unexercised portion of an Option that has terminated for any reason (except as
set forth in the following paragraph) may again be optioned under the Plan, and
such shares shall not be considered as having been optioned or issued in
computing the number of shares of Stock remaining available for option
hereunder.

 

If Options are issued in
respect of options to acquire stock of any entity acquired, by merger or
otherwise, by the Company (or any Subsidiary of the Company), to the extent
that such issuance shall not be inconsistent with the terms, limitations and
conditions of Code Section 422 or Rule 16b-3 under the Exchange Act,
the aggregate number of shares of Stock for which Options may be granted
hereunder shall automatically be increased by the number of shares subject to
the Options so issued; provided, however, that the aggregate number of shares
of Stock for which Options may be granted hereunder shall automatically be
decreased by the number of shares covered by any unexercised portion of an
Option so issued that has terminated for any reason, and the shares subject to
any such unexercised portion may not be optioned to any other person.

 

5.2           Antidilution.

 

(a)           If (x) the outstanding shares of Stock are changed
into or exchanged for a different number or kind of shares or other securities
of the Company by reason of merger,

 

6

 

consolidation, reorganization, recapitalization,
reclassification, combination or exchange of shares, or stock split or stock
dividend, (y) any spin-off, spin-out or other distribution of assets
materially affects the price of the Company’s stock, or (z) there is any
assumption and conversion to the Plan by the Company of an acquired company’s
outstanding option grants, then:

 

(i)  the
aggregate number and kind of shares of Stock for which Options may be granted
hereunder shall be adjusted proportionately by the Committee; and

 

(ii)  the
rights of Optionees (concerning the number of shares subject to Options and the
Exercise Price) under outstanding Options shall be adjusted proportionately by
the Committee.

 

(b)           If the Company shall be
a party to any reorganization in which it does not survive, involving merger,
consolidation, or acquisition of the stock or substantially all the assets of
the Company, the Committee, in its sole discretion, may (but is not required
to), notify all Optionees that all Options granted under the Plan shall be
assumed by the successor corporation or substituted on an equitable basis with
options issued by such successor corporation.

 

(c)           If the Company is to be
liquidated or dissolved in connection with a reorganization described in Section 5.2(b),
the provisions of such Section shall apply.  In all other instances, the adoption of a
plan of dissolution or liquidation of the Company shall, notwithstanding other
provisions hereof, cause every Option outstanding under the Plan to terminate
to the extent not exercised prior to the adoption of the plan of dissolution or
liquidation by the shareholders.

 

(d)           The adjustments
described in paragraphs (a) through (c) of this Section 5.2, and
the manner of their application, shall be determined solely by the Committee,
and any such adjustment may provide for the elimination of fractional share
interests; provided, however, that any adjustment made by the Board or the
Committee shall be made in a manner that will not cause an Incentive Stock
Option to be other than an Incentive Stock Option under applicable statutory
and regulatory provisions.  The
adjustments required under this Article V shall apply to any successors of
the Company and shall be made regardless of the number or type of successive
events requiring such adjustments.

 

ARTICLE
VI

OPTIONS

 

6.1           Types of Options
Granted.  The Committee may, under
this Plan, grant either Incentive Stock Options or Options which do not qualify
as Incentive Stock Options.  Within the
limitations provided in this Plan, both types of Options may be granted to the
same person at the same time, or at different times, under different terms and
conditions, as long as the terms and conditions of each Option are consistent
with the provisions of the Plan.  Without
limitation of the foregoing, Options may be granted subject to conditions based
on the financial performance of the Company or any other factor the Committee
deems relevant.

 

6.2           Option Grant and
Agreement.  Each Option granted
hereunder shall be evidenced by minutes of a meeting or the written consent of
the Committee and by a written Stock Option Agreement executed by the Company
and the Optionee.  The terms of the
Option, including the Option’s duration, time or times of exercise, exercise
price, whether the Option is intended to be an Incentive Stock 

 

7

 

Option shall be stated in the Stock Option
Agreement.  In structuring the terms of
each Option, the Committee shall follow the guidelines set forth in the FDIC
statement of policy relating to applications for deposit insurance, including that
the terms should encourage each Optionee to remain involved in the Company
and/or its Subsidiaries, such as by having a vesting period of equal
percentages each year over the initial three years following the grant of the
Option and a requirement that the Option be exercised or expire no later than
90 days after termination as an active officer or employee.  No Incentive Stock Option may be granted more
than ten years after the earlier to occur of the effective date of the Plan or
the date the Plan is approved by the Company’s shareholders.  Separate stock option agreements may be used
for Options intended to be Incentive Stock Options and those not so intended,
but any failure to use such separate agreements shall not invalidate, or otherwise
adversely affect the Optionee’s interest in, the Options evidenced thereby.

 

6.3           Optionee Limitations.  The Committee shall not grant an Incentive
Stock Option to any person who, at the time the Incentive Stock Option is
granted:

 

(a)           is not an employee of
the Company or any of its Subsidiaries (as the term “employee” is defined by
the Code); or

 

(b)           owns or is considered to own stock possessing at least
10% of the total combined voting power of all classes of stock of the Company
or any of its Parent or Subsidiary corporations; provided, however, that this
limitation shall not apply if at the time an Incentive Stock Option is granted
the Exercise Price is at least 110% of the Fair Market Value of the Stock
subject to such Option and such Option by its terms would not be exercisable
after five years from the date on which the Option is granted.  For the purpose of this subsection (b), only
common stock of the Company owned by the Optionee at the time of grant will be
considered in the 10% owner calculation. 
A person shall be considered to own: (i) the stock owned, directly
or indirectly, by or for his or her brothers and sisters (whether by whole or
half blood), spouse, ancestors and lineal descendants and (ii) the stock
owned, directly or indirectly, by or for a corporation, partnership, estate, or
trust in proportion to such person’s stock interest, partnership interest or
beneficial interest therein.

 

6.4           $100,000 Limitation.  Except as provided below, the Committee shall
not grant an Incentive Stock Option to, or modify the exercise provisions of
outstanding Incentive Stock Options held by, any person who, at the time the
Incentive Stock Option is granted (or modified), would thereby receive or hold
any Incentive Stock Options of the Company and any Parent or Subsidiary, such
that the aggregate Fair Market Value (determined as of the respective dates of
grant or modification of each option) of the stock with respect to which such
Incentive Stock Options are exercisable for the first time during any calendar
year is in excess of $100,000 (or such other limit as may be prescribed by the
Code from time to time); provided, however, that to the extent
that the aggregate Fair Market Value of the stock subject to the Incentive
Stock Options does in fact exceed the $100,000 limitation described in this Section 6.4,
the excess shall be treated as an Option not qualifying as an Incentive Stock
Option, with the determination to be made in the order the Options are granted.

 

6.5           Exercise Price.  The Exercise Price of the Stock subject to
each Option shall be determined by the Committee.  Subject to the provisions of Section 6.3(b) hereof,
the Exercise Price of an Option shall not be less than the Fair Market Value of
the Stock as of the date the Option is granted (or in the case of an Incentive
Stock Option that is subsequently modified, on the date of such modification).

 

8

 

6.6           Exercise Period. The period
for the exercise of each Option granted hereunder shall be determined by the
Committee, but the Stock Option Agreement with respect to each Option shall
provide that such Option shall not be exercisable after ten years from the date
of grant of the Option.

 

6.7           Option Exercise.

 

(a)           Unless otherwise provided in the
Stock Option Agreement or Section 6.6 hereof, an Option may be exercised
at any time or from time to time during the term of the Option as to any or all
full shares which have become Purchasable under the provisions of the Option,
but not at any time as to less than 100 shares unless the remaining shares that
have become so Purchasable are less than 100 shares. The Committee shall have
the authority to prescribe in any Stock Option Agreement that the Option may be
exercised only in accordance with a vesting schedule during the term of the
Option.

 

(b)           An Option shall be exercised by (i) delivery
to the Company at its principal office a written notice of exercise with
respect to a specified number of shares of Stock and (ii) payment to the
Company at that office of the full amount of the Exercise Price for such number
of shares in accordance with Section 6.7(c). If requested by an Optionee,
an Option may be exercised with the involvement of a stockbroker in accordance
with the federal margin rules set forth in Regulation T (in which case the
certificates representing the underlying shares will be delivered by the
Company directly to the stockbroker).

 

(c)           The Exercise Price is to be paid in
full in cash upon the exercise of the Option and the Company shall not be
required to deliver certificates for the shares purchased until such payment
has been made.

 

(d)           In addition to and at the time of
payment of the Exercise Price, the Optionee shall pay to the Company in cash
the full amount of any federal, state, and local income, employment, or other
withholding taxes applicable to the taxable income of such Optionee resulting
from such exercise.

 

(e)           The holder of an Option shall not
have any of the rights of a shareholder with respect to the shares of Stock
subject to the Option until such shares have been issued and transferred to the
Optionee upon the exercise of the Option.

 

6.8           Nontransferability of Option. No
Option shall be transferable by an Optionee other than by will or the laws of
descent and distribution or, in the case of non-Incentive Stock Options, and,
during the lifetime of an Optionee, Options shall transferable, upon approval
by the Committee, in the event of the Optionee’s death or disability, and all
such Options shall be exercisable only by the Optionee (or by such Optionee’s
guardian or legal representative, should one be appointed, or by the transferee
in the event of a transfer following the Optionee’s disability).

 

6.9           Termination of Employment or
Service. The Committee shall have the power to specify the effect upon an
Optionee’s right to exercise an Option upon termination of such Optionee’s
employment or service under various circumstances, which effect may include
immediate or deferred termination of such Optionee’s rights under an Option,
not to exceed 90 days. Subject to Section 6.2, unless a Stock Option
Agreement specifically provides otherwise, in the event the recipient of an
Option  is terminated from his or her
employment or other service to the Company or its subsidiaries

 

9

 

for Cause, Options,
whether vested or unvested, granted to such person shall terminate immediately
and shall not thereafter be exercisable.

 

6.10         Employment Rights. Nothing in
the Plan or in any Stock Option Agreement shall confer on any person any right
to continue in the employ of the Company or any of its Subsidiaries, or shall
interfere in any way with the right of the Company or any of its Subsidiaries
to terminate such person’s employment at any time.

 

6.11         Certain Successor Options. To
the extent not inconsistent with the terms, limitations and conditions of Code Section 422
and any regulations promulgated with respect thereto, an Option issued in
respect of an option held by an employee to acquire stock of any entity
acquired, by merger or otherwise, by the Company (or any Subsidiary of the
Company) may contain terms that differ from those stated in this Article VI,
but solely to the extent necessary to preserve for any such employee the rights
and benefits contained in such predecessor option, or to satisfy the
requirements of Code Section 424(a).

 

6.12         Forfeiture by Order of Regulatory
Agency. If the Company’s or any of its financial institution Subsidiaries’
capital falls below the minimum requirements contained in 12 CFR 3 or below a
higher requirement as determined by the Company’s or such Subsidiary’s primary
bank regulatory agency, such agency may direct the Company to require Optionees
to exercise or forfeit some or all of their Options. All options granted under
this Plan are subject to the terms of any such directive.

 

6.13         Effect of a Corporate Transaction.
All Options, to the extent outstanding at the time of a Corporate Transaction
but not otherwise fully exercisable, shall automatically accelerate so that the
Options shall, immediately prior to the effective date of the Corporate
Transaction, become exercisable for all shares at the time subject to such Options
and may be exercised for any or all of those shares as fully vested shares of
Stock.

 

ARTICLE
VII

STOCK
CERTIFICATES

 

The Company shall not be
required to issue or deliver any certificate for shares of Stock purchased upon
the exercise of any Option granted hereunder or any portion thereof prior to
fulfillment of all of the following conditions:

 

(a)           The admission of such shares to
listing on all stock exchanges on which the Stock is then listed;

 

(b)           The completion of any registration or
other qualification of such shares which the Committee shall deem necessary or
advisable under any federal or state law or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory
body;

 

(c)           The obtaining of any approval or
other clearance from any federal or state governmental agency or body which the
Committee shall determine to be necessary or advisable; and

 

(d)           The lapse of such reasonable period
of time following the exercise of the Option as the Board from time to time may
establish for reasons of administrative convenience.

 

10

 

Stock certificates issued
and delivered to Optionees shall bear such restrictive legends as the Company
shall deem necessary or advisable pursuant to applicable federal and state
securities laws. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Stock pursuant to Options shall relieve the
Company of any liability with respect to the non-issuance or sale of the Stock
as to which such approval shall not have been obtained. However, the Company
shall use its best efforts to obtain all such approvals.

 

ARTICLE
VIII

TERMINATION
AND AMENDMENT

 

8.1           Termination and Amendment. The
Board may at any time terminate the Plan; provided, however, that the Board
(unless its actions are approved or ratified by the shareholders of the Company
within twelve months of the date that the Board amends the Plan) may not amend
the Plan to:

 

(a)   Increase the total number of shares of Stock
issuable pursuant to Incentive Stock Options under the Plan, except as
contemplated in Section 5.2 hereof; or

 

(b)   Change the class of employees eligible to
receive Incentive Stock Options that may participate in the Plan.

 

8.2           Effect on Optionee’s Rights. No
termination, amendment, or modification of the Plan shall affect adversely a
Optionee’s rights under a Stock Option Agreement without the consent of the
Optionee or his legal representative.

 

ARTICLE
IX

RELATIONSHIP
TO OTHER COMPENSATION PLANS

 

The adoption of the Plan
shall not affect any other stock option, incentive, or other compensation plans
in effect for the Company or any of its Subsidiaries; nor shall the adoption of
the Plan preclude the Company or any of its Subsidiaries from establishing any
other form of incentive or other compensation plan for employees or Directors
of the Company or any of its Subsidiaries.

 

ARTICLE X

MISCELLANEOUS

 

10.1         Replacement or Amended Grants. At
the sole discretion of the Committee, and subject to the terms of the Plan, the
Committee may modify outstanding Options or accept the surrender of outstanding
Options and grant new Options in substitution for them. However no modification
of an Option shall adversely affect a Optionee’s rights under a Stock Option
Agreement without the consent of the Optionee or his legal representative.

 

10.2         Forfeiture for Competition. If a
Optionee provides services to a competitor of the Company or any of its
Subsidiaries, whether as an employee, officer, director, independent
contractor, consultant, agent, or otherwise, such services being of a nature
that can reasonably be expected to involve the skills and experience used or
developed by the Optionee while an Employee, then that

 

11

 

Optionee’s rights under
any Options outstanding hereunder shall be forfeited and terminated subject in
each case to a determination to the contrary by the Committee.

 

10.3         Leave of Absence. Unless
provided otherwise in a particular Stock Option Agreement, the following
provisions shall apply upon an Optionee’s commencement of an authorized leave
of absence:

 

(a)           The exercise schedule in effect for
such Option shall be frozen as of the first day of the authorized leave, and
the Option shall not become exercisable for any additional installments of
shares of Stock during the period Optionee remains on such leave.

 

(b)           Should the Optionee resume active
Employee status within 60 days after the start date of the authorized leave,
Optionee shall, for purposes of the applicable exercise schedule, receive
service credit for the entire period of such leave. If the Optionee does not
resume active Employee status within such 60-day period, then no service credit
shall be given for the entire period of such leave.

 

(c)           If the Option is an Incentive Stock
Option, then the following additional provision shall apply:

 

If the
leave of absence continues for more than three months, then the Option shall
automatically convert to a Non-Incentive Stock Option under the Federal tax
laws upon the expiration of such three-month period, unless the Optionee’s
reemployment rights are guaranteed by statute or written agreement. Following
any such conversion of the Option, all subsequent exercises of the Option,
whether effected before or after Optionee’s return to active Employee status,
shall result in an immediate taxable event, and the Company shall be required
to collect from Optionee the Federal, state and local income and employment
withholding taxes applicable to such exercise.

 

(d)           In no event shall the Option become
exercisable for any additional shares or otherwise remain outstanding if
Optionee does not resume Employee status prior to the Expiration Date of the
option term.

 

10.4         Plan Binding on Successors. The
Plan shall be binding upon the successors and assigns of the Company.

 

10.5         Headings, etc., No Part of Plan.
Headings of Articles and Sections hereof are inserted for convenience and reference;
they do not constitute part of the Plan.

 

10.6         Section 16 Compliance. With
respect to Section 16 Insiders, transactions under this Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors
under the Exchange Act. To the extent any provision of the Plan or action by
the Committee fails to so comply, it shall be deemed void to the extent
permitted by law and deemed advisable by the Committee. In addition, if
necessary to comply with Rule 16b-3 with respect to any grant of an Option
hereunder, and in addition to any other vesting or holding period specified
hereunder or in an applicable Stock Option Agreement, any Section 16
Insider acquiring an Option shall be required to hold either the Option or the
underlying shares of Stock obtained upon exercise of the Option for a minimum
of six months.

 

IN WITNESS WHEREOF, the
Company has caused this Plan to be executed as of

 

12

 

                    ,
2007, in accordance with the authority provided by the Board of Directors.

 

 

	
   

  	
  Congaree
  Bancshares, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  Franklin
  H. Ray, Jr.

  
	
   

  	
  Title:
    Chief Executive Officer

  

 

13

 

Exhibit A

 

TO THE

CONGAREE BANCSHARES, INC.

2007 Stock Incentive PLAN

 

NOTICE OF EXERCISE

 

The
undersigned hereby notifies Congaree Bancshares, Inc. (the “Company”)
of this election to exercise the undersigned’s stock option to purchase                  
shares of the Company’s common stock, no par value (the “Common Stock”),
pursuant to the Stock Option Agreement (the “Agreement”) between the
undersigned and the Company dated                             ,
20                       .
Accompanying this Notice is (1) a certified or a cashier’s check in the
amount of $        payable to the
Company, and/or (2)                               
shares of the Company’s Common Stock presently owned by the undersigned and
duly endorsed or accompanied by stock transfer powers, having an aggregate Fair
Market Value (as defined in the Congaree Bancshares, Inc. 2007 Stock
Incentive Plan) as of the date hereof of
$                                    ,
such amounts being equal, in the aggregate, to the purchase price per share set
forth in Section 3 of the Agreement multiplied by the number of shares
being purchased hereby (in each instance subject to appropriate adjustment
pursuant to Section 5.2 of the Agreement).

 

IN
WITNESS WHEREOF, the undersigned has set his hand and seal, this     day
of         , 20                  .

 

 

	
   

  	
  OPTIONEE
  [OR OPTIONEE’S ADMINISTRATOR,

  
	
   

  	
  EXECUTOR
  OR PERSONAL REPRESENTATIVE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Position
  (if other than Optionee):

  	
   

  
				

 

 

EXHIBIT B

to

CONGAREE
BANCSHARES, INC.

2007 STOCK
INCENTIVE PLAN

Form of
Employee Stock Option Agreement Certificate

 

 

Congaree
Bancshares, Inc.

 

STOCK OPTION CERTIFICATE

 

[Insert Name]

 

Congaree
Bancshares, Inc., a South Carolina corporation (the “Company”),
hereby grants to the optionee named above (the “Optionee”) an option (this “Option”)
to purchase the total number of shares shown below of Common Stock of the
Company (the “Shares”) at the exercise price per share set forth below (the “Exercise
Price”), subject to all of the terms and conditions on the reverse side of this
Stock Option Certificate and in the Company’s 2007 Stock Incentive Plan (the “Plan”),
which are incorporated herein by reference. Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Plan.

 

By
signing below, the Optionee acknowledges:

 

1. Receipt of the
Prospectus; and

 

2. Receipt of a copy of the Plan, represents
that he or she has read and understands the terms and provisions of the Plan, and
accepts this Option subject to all the terms and conditions of the Plan and
this Stock Option Certificate.

 

3. Receipt of or access
to the Form 10-K on the company’s web site, at www.companyname  under (name location of where can be found,
access to the Company’s web site; and consent to receiving a copy of the
Form 10-K electronically.

 

4.
That there may be adverse tax consequences upon exercise of this Option or
disposition of the Shares and that he or she should consult a tax adviser prior
to such exercise or disposition.

 

	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
  Optionee Name: 

  	
  (NAME OF EMPLOYEE)

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
				

 

This Option (Check One) x
is o is not an Incentive Stock Option

 

No. of Shares
Subject to Option:   (NO OF SHARES)

 

Exercise Price Per Share:   $   (DOLLAR AMT)

 

Expiration
Date:   FILL IN DATE

 

Date of
Grant:   FILL IN DATE

 

Shares subject to issuance under this Option shall be
eligible for exercise according to the following vesting schedule, subject to
the conditions set forth on the reverse side of this Stock Option Certificate:

 

Vesting Schedule

 

	
  Date

  	
   

  	
  No. of Shares

  
	
   

  	
   

  	
   

  
	
  Month, Day, Year

  	
   

  	
  —

  
	
  Month, Day, Year

  	
   

  	
  —

  
	
  Month, Day, Year

  	
   

  	
  —

  
	
  Month, Day, Year

  	
   

  	
  —

  

 

In Witness Whereof, this
Stock Option Certificate has been executed by the Company by a duly authorized
officer as of the date of grant.

 

(Name of
Company)

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   Franklin
  H. Ray, Jr.

  	
   

  
				

 

Title: Chief Executive
Officer and President

 

PLEASE RETURN ONE SIGNED
COPY OF THIS AGREEMENT TO:

 

(Name
of Company), Corporate Secretary’s Office, (Street), City, State, ZipCode

 

 

This is not a stock certificate or a negotiable instrument.

 

 

1. Exercise Terms.
The Optionee must exercise the Option for at least the lesser of 100 shares or
the number of shares of Purchasable Stock as to which the Option remains
unexercised. If this Option is not exercised with respect to all or any part of
the shares subject to this Option prior to its expiration, the shares with
respect to which this Option was not exercised shall no longer be subject to
this Option.

 

2. Restrictions on
Transferability. No Option shall be transferable by an Optionee other than
by will or the laws of descent and distribution or pursuant to a Qualified
Domestic Relations Order. During the lifetime of an Optionee, Options shall be
exercisable only by such Optionee (or by such Optionee’s guardian or legal
representative, should one be appointed). The shares purchased pursuant to the
exercise of an Incentive Stock Option shall not be transferred by the Optionee
except pursuant to the Optionee’s will, or the laws of descent and
distribution, until such date which is the later of two years after the grant
of such Incentive Stock Option or one year after the transfer of the shares to
the Optionee pursuant to the exercise of such Incentive Stock Option.

 

3. Termination of
Employment. (a)  In the event of the termination of the Optionee’s
employment with the Company or any of its Subsidiaries, other than a
termination that is either (i) for cause, (ii) voluntary on the part
of the Optionee and without written consent of the Company, or (iii) for
reasons of death or disability or retirement, the Optionee may exercise this
Option at any time within three months after such termination to the extent of
the number of shares which were Purchasable hereunder at the date of such
termination. At the end of this three month period, this Option, to the extent
not previously exercised, shall terminate immediately and shall not thereafter
be or become exercisable.

 

(b)  In the event of
a termination of the Optionee’s employment that is either (i) for cause or
(ii) voluntary on the part of the Optionee and without the written consent
of the Company, this Option, to the extent not previously exercised, shall
terminate immediately and shall not thereafter be or become exercisable.

 

(c)  In the event of
termination of employment because of the Optionee’s Permanent and Total
Disability, the Optionee (or his or her personal representative) may exercise
this Option within a period ending on the earlier of (i) the last day of
the one year period following the Optionee’s Permanent and Total Disability or (ii) the
expiration date of this Option, to the extent of the number of shares which
were Purchasable hereunder at the date of such termination.

 

(d)  Subject to Section 5
below, in the event of the retirement of the Optionee after a minimum of five
years of employment or the age of 55 (whichever occurs first), the Optionee
shall continue to have the right to exercise any options for shares which were
Purchasable at the date of the Optionee’s retirement if within 10 days
following the date of retirement the Optionee enters into a non-compete
agreement in the form specified by the Company (or, if the Optionee has an
existing agreement with the Company containing a non-compete provision, if the
Optionee acknowledges and confirms the continuing effectiveness of such
agreement) and the Optionee continues to comply with such non-compete agreement.
The Optionee acknowledges that any incentive stock options may become
nonqualified stock options upon the extension of the term as described in this
Section.

 

(e)  In the event of
the Optionee’s death while employed by the Company or any of its Subsidiaries
or within three months after a termination of such employment (if such
termination was neither (i) for cause nor (ii) voluntary on the part
of the Optionee and without the written consent of the Company), the
appropriate persons described in Section 4 hereof or persons to whom all
or a portion of this Option is transferred in accordance with Section 2
hereof may exercise this Option at any time within a period ending on the
earlier of (a) the last day of the one year period following the Optionee’s
death or (b) the expiration date of this Option. If the Optionee was an
employee of the Company at the time of death, this Option may be so exercised
to the extent of the number of shares that were Purchasable hereunder at the
date of death. If the Optionee’s employment terminated prior to his or her
death, this Option may be exercised only to the extent of the number of shares
covered by this Option which were Purchasable hereunder at the date of such
termination.

 

4. Notice of Exercise. This Option may be
exercised by the Optionee, by a written notice signed by the Optionee and
delivered or mailed to the Company as specified in this Agreement to the
attention of the President or such other officer as the Company may designate. Any
such notice shall (a) specify the number of shares of Stock which the
Optionee then elects to purchase hereunder, (b) contain such information
as may be reasonably required by the Company pursuant to this Agreement, and (c) be
accompanied by (i) a certified or cashier’s check payable to the Company
in payment of the total Exercise Price applicable to such shares as provided herein,
(ii) shares of stock owned by the Optionee and duly endorsed or
accompanied by stock transfer powers having a Fair Market Value equal to the
total Exercise Price applicable to such shares purchased hereunder, or (iii) a
certified or cashier’s check accompanied by the number of shares of stock where
Fair Market Value when added to the amount of the check equal the total
Exercise Price applicable to such shares purchased hereunder. Upon receipt of
any such notice and accompanying payment, and subject to the terms hereof, the
Company agrees to issue to the Optionee stock certificates for the number of
shares specified in such notice registered in the name of the person exercising
this Option. In the event of the Optionee’s death or Permanent and Total Disability,
the Option may be exercised as described above by, and the Option shall be
granted in the name of, the Optionee’s administrators, executors or personal
representatives.

 

5. Forfeiture. (a) The forfeiture
provisions described Section 5(b) below will be triggered (i) if
the Optionee breaches any noncompetition, nonsoliciation, or similar provision
of an agreement then in effect between the Optionee and the Company or any of
its subsidiaries or (ii) if the Optionee is not then subject to any such
agreement, then if at any time within the later of (x) one year after
termination of the Optionee’s employment or (y) one year after the
Optionee’s exercise of any portion of this Option, the Optionee engages in any
of the Forfeiture Activities. “Forfeiture Activity” for purposes of clause (ii) above
shall include (A) the provision of services to a competitor of the Company
or any of its subsidiaries within any county that the Company has an office or
operates a branch, whether as an employee, officer, director, independent
contractor, consultant, agent, or otherwise, such services being of a nature
that can reasonably be expected to involve the skills and experience used or
developed by the Optionee while an Employee; (B) any activity which
constitutes a violation of any confidentiality or similar provision of any
agreement between the Company and the Optionee or violation by the Optionee of
any Company policies pertaining to such matters; or (c) any activity which
is inimical, contrary, or harmful to the interests of the Company (including
conduct related to the Optionee’s employment for which either criminal or civil
penalties against the Optionee may be sought or violation of the Company’s
policies, including the Company’s insider trading policy).

 

(b)  If the forfeiture provisions are triggered
pursuant to Section 5(a) above, then (i) this Option shall
terminate effective the date on which the Optionee breaches the agreement or
engages in the Forfeiture Activity, unless terminating sooner by operation of
another term or condition of this Option or the Plan, and (ii) any Option
Gain realized by the Optionee from exercising all or a portion of this Option
within the preceding year shall be paid by the Optionee to the Company. “Option
Gain” shall mean the gain represented by the mean market price on the date of
exercise over the Exercise Price, multiplied by the number of shares purchased
through exercise of the Option, without regard to any subsequent market price
decrease or increase, but net of any taxes actually paid on the gain.

 

(c)  By accepting
this Agreement, the Optionee consents to a deduction from any amounts the
Company owes the Optionee from time to time (including amounts owed as wages or
other compensation, fringe benefits, or vacation pay),
to the extent of the amounts the Optionee owes the Company under this Section. Whether
or not the Company elects to make any set-off in whole or in part, if the
Company does not recover by means of set-off the full amount owed by the
Optionee to the Company, calculated as set forth above, the Optionee shall pay
immediately the unpaid balance to the Company. The Optionee hereby appoints the
Company as its attorney-in-fact to execute any documents or do any acts
necessary to exercise its rights under this Section.

 

(d)  The Optionee
may be released from its obligations under this Section only if the Board of  Directors (or its
duly appointed agent) determines in its sole discretion that such action is in
the best interests of the Company.

 

6. Vesting and
Exercise of Shares. This Option shall vest and become exercisable in
accordance with the vesting schedule set forth on the front of this Stock
Option Certificate if the Option has not been terminated prior to such date
pursuant to Section 3. However, the Option shall not continue to vest
during the limited period of exercisability following the Optionee’s
termination of employment provided for in Section 3 above. During such
period, the Option may only be exercised with respect to the number of shares
for which it was exercisable at the time of such termination of employment. After
vesting, the Option may be exercised with respect to the vested shares at any
time until the Expiration Date if the Option has not been terminated prior to
such date pursuant to Section 3.

 

7. Compliance with
Regulatory Matters. The Optionee acknowledges that the issuance of capital
stock of the Company is subject to limitations imposed by federal and state law
and the Optionee hereby agrees that the Company shall not be obligated to issue
any shares of Stock upon exercise of this Option that would cause the Company
to violate any law or any rule, regulation, order or consent decree of any
regulatory authority (including without limitation the Securities and Exchange
Commission) having jurisdiction over the affairs of the Company. Regulators of
the Company or any of its Subsidiaries may direct the Company to require the
Optionee to exercise or forfeit some of all of this Option if the Company’s or
any of its Subsidiaries’ capital falls below minimum regulatory requirements. The
Optionee agrees that he or she will provide the Company with such information
as is reasonably requested by the Company or its counsel to determine whether
the issuance of stock complies with the provisions described by this Section.

 

8. Miscellaneous.
(a) The number of Shares subject to this Option, the Exercise Price, and
other matters are subject to adjustment during the term of this Option in
accordance with Section 5.2 of the Stock Incentive Plan.

 

(b)  This agreement
shall be binding upon the parties hereto and their representatives, successors
and assigns.

 

(c)  This Agreement
is executed and delivered in, and shall be governed by the laws of, the State
of South Carolina.

 

(d)  Any requests or
notices to be given hereunder shall be deemed given, and any elections or
exercises to be made or accomplished shall be deemed made or accomplished, upon
actual delivery thereof to the designated recipient, or three days after
deposit thereof in the United States mail, registered, return receipt requested
and postage prepaid, addressed, if to the Optionee, at the address set forth on
the reverse side of this Stock Option Certificate and, if to the Company, to
the address of its then current executive offices.

 

(e)  This Agreement may not be modified except in
writing executed by each of the parties hereto.

 

(f)  This Option
does not confer upon the Optionee any right with respect to continuance of
employment by the Company or by any of its Subsidiaries. This Option shall not
be affected by any change of employment so long as the Optionee continues to be
an employee of the Company or one of its SubsidiariesExhibit
10.30

 

 

PURCHASE AGREEMENT

 

by and among

 

CROWN LIMITED,

 

CROWN CCR GROUP
INVESTMENTS ONE, LLC,

 

CROWN CCR GROUP
INVESTMENTS TWO, LLC,

 

MILLENNIUM GAMING,
INC.,

 

OCM HOLDCO, LLC

 

and

 

CANNERY CASINO
RESORTS, LLC

 

Dated as of December 11,
2007

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  SALE AND
  PURCHASE OF SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
  Sale and Purchase of Shares

  	
  28

  
	
   

  	
  2.2.

  	
  Consideration

  	
  28

  
	
   

  	
  2.3.

  	
  Sellers’ Closing Deliveries

  	
  37

  
	
   

  	
  2.4.

  	
  Buyers’ Closing Deliveries

  	
  39

  
	
   

  	
  2.5.

  	
  Final Statements

  	
  39

  
	
   

  	
  2.6.

  	
  Allocation of Purchase Price

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  CLOSING

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Closing

  	
  42

  
	
   

  	
  3.2.

  	
  Closing Extension

  	
  42

  
	
   

  	
  3.3.

  	
  Closing Date

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING SELLERS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Representations of Millennium

  	
  43

  
	
   

  	
  4.2.

  	
  Representations of HoldCo

  	
  43

  
	
   

  	
  4.3.

  	
  Representations of Each Seller

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING THE COMPANIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Company Organization; Good Standing; CCR Authority and Enforceability

  	
  52

  
	
   

  	
  5.2.

  	
  Capitalization

  	
  52

  
	
   

  	
  5.3.

  	
  No Litigation

  	
  53

  
	
   

  	
  5.4.

  	
  Consents and Approvals

  	
  53

  
	
   

  	
  5.5.

  	
  No Violations

  	
  53

  
	
   

  	
  5.6.

  	
  Material Contracts

  	
  54

  
	
   

  	
  5.7.

  	
  Financial Information

  	
  56

  
	
   

  	
  5.8.

  	
  Liabilities

  	
  56

  
	
   

  	
  5.9.

  	
  Labor Matters

  	
  56

  
	
   

  	
  5.10.

  	
  Employee Benefit Matters

  	
  58

  
	
   

  	
  5.11.

  	
  Taxes

  	
  60

  
	
   

  	
  5.12.

  	
  Governmental Authorizations

  	
  61

  
	
   

  	
  5.13.

  	
  Insurance

  	
  62

  
	
   

  	
  5.14.

  	
  Compliance with Laws

  	
  62

  
	
   

  	
  5.15.

  	
  Real Property

  	
  63

  
	
   

  	
  5.16.

  	
  Environmental Matters

  	
  65

  
	
   

  	
  5.17.

  	
  Intellectual Property

  	
  66

  
	
   

  	
  5.18.

  	
  Absence of Certain Changes

  	
  67

  
	
   

  	
  5.19.

  	
  Brokers and Finders

  	
  67

  

 

 

	
   

  	
  5.20.

  	
  Solvency

  	
  67

  
	
   

  	
  5.21.

  	
  Related Party Transactions

  	
  67

  
	
   

  	
  5.22.

  	
  Personal Property

  	
  68

  
	
   

  	
  5.23.

  	
  No Other Representations or Warranties

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE BUYERS AND THE PARENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Buyer Organization and Good Standing

  	
  68

  
	
   

  	
  6.2.

  	
  Buyer Authority; Enforceability

  	
  69

  
	
   

  	
  6.3.

  	
  Consents and Approvals

  	
  69

  
	
   

  	
  6.4.

  	
  No Violations

  	
  69

  
	
   

  	
  6.5.

  	
  Funds Available

  	
  69

  
	
   

  	
  6.6.

  	
  Brokers and Finders

  	
  69

  
	
   

  	
  6.7.

  	
  Securities Act

  	
  70

  
	
   

  	
  6.8.

  	
  No Litigation

  	
  70

  
	
   

  	
  6.9.

  	
  Gaming Approvals and Licensing Matters

  	
  70

  
	
   

  	
  6.10.

  	
  Solvency

  	
  71

  
	
   

  	
  6.11.

  	
  No Other Representations or Warranties

  	
  71

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  COVENANTS
  OF THE PARTIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  Conduct of the Companies

  	
  71

  
	
   

  	
  7.2.

  	
  Conduct of Blocker and AcquisitionCo

  	
  75

  
	
   

  	
  7.3.

  	
  No Control of Other Party’s Business

  	
  75

  
	
   

  	
  7.4.

  	
  Reasonable Best Efforts

  	
  75

  
	
   

  	
  7.5.

  	
  Updates to Disclosure Schedules

  	
  80

  
	
   

  	
  7.6.

  	
  Notifications to Buyers

  	
  81

  
	
   

  	
  7.7.

  	
  No Alternative Transactions

  	
  81

  
	
   

  	
  7.8.

  	
  Publicity

  	
  81

  
	
   

  	
  7.9.

  	
  Racing Services Agreement

  	
  81

  
	
   

  	
  7.10.

  	
  Tax Matters

  	
  82

  
	
   

  	
  7.11.

  	
  LandCo Disposition

  	
  89

  
	
   

  	
  7.12.

  	
  Excluded Opportunities

  	
  89

  
	
   

  	
  7.13.

  	
  Assistance and Records

  	
  90

  
	
   

  	
  7.14.

  	
  Guarantee

  	
  90

  
	
   

  	
  7.15.

  	
  Gaming Opportunity

  	
  91

  
	
   

  	
  7.16.

  	
  Construction of the Projects

  	
  91

  
	
   

  	
  7.17.

  	
  Construction Information and Other Matters

  	
  94

  
	
   

  	
  7.18.

  	
  Pennsylvania Condition Certificate

  	
  95

  
	
   

  	
  7.19.

  	
  No Assignment if Breach

  	
  96

  
	
   

  	
  7.20.

  	
  FIRPTA Certificates

  	
  97

  
	
   

  	
  7.21.

  	
  Repayment of Loan Obligations

  	
  98

  
	
   

  	
  7.22.

  	
  Activities of AcquisitionCo and Blocker

  	
  99

  
	
   

  	
  7.23.

  	
  [Intentionally Left Blank]

  	
  99

  
	
   

  	
  7.24.

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

  	
  99

  
	
   

  	
  7.25.

  	
  Termination of Affiliate Agreements; Release of Claims

  	
  99

  

 

ii

 

	
   

  	
  7.26.

  	
  Labor Matters

  	
  100

  
	
   

  	
  7.27.

  	
  Impact of New Gaming Taxes

  	
  100

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  CONDITIONS
  TO CLOSING

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Conditions to the Obligations of All Parties

  	
  102

  
	
   

  	
  8.2.

  	
  Conditions to the Obligations of the Buyers

  	
  102

  
	
   

  	
  8.3.

  	
  Conditions to the Obligations of Sellers

  	
  104

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Termination

  	
  105

  
	
   

  	
  9.2.

  	
  Termination Fee

  	
  106

  
	
   

  	
  9.3.

  	
  Effect of Termination

  	
  107

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
  Survival

  	
  108

  
	
   

  	
  10.2.

  	
  Indemnification

  	
  108

  
	
   

  	
  10.3.

  	
  Limits on Indemnification

  	
  111

  
	
   

  	
  10.4.

  	
  Escrow

  	
  113

  
	
   

  	
  10.5.

  	
  Tax Benefit

  	
  113

  
	
   

  	
  10.6.

  	
  Mitigation for Construction Claims

  	
  115

  
	
   

  	
  10.7.

  	
  Exclusive Remedy

  	
  115

  
	
   

  	
  10.8.

  	
  Adjustment of Purchase Price

  	
  116

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GENERAL

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1.

  	
  Entire Agreement

  	
  116

  
	
   

  	
  11.2.

  	
  No Third Party Rights

  	
  116

  
	
   

  	
  11.3.

  	
  Counterparts

  	
  116

  
	
   

  	
  11.4.

  	
  Headings

  	
  116

  
	
   

  	
  11.5.

  	
  Applicable Law

  	
  116

  
	
   

  	
  11.6.

  	
  Enforcement

  	
  117

  
	
   

  	
  11.7.

  	
  Waiver of Jury Trial

  	
  117

  
	
   

  	
  11.8.

  	
  Waiver of Conditions

  	
  117

  
	
   

  	
  11.9.

  	
  Transaction Expenses

  	
  117

  
	
   

  	
  11.10.

  	
  Construction

  	
  118

  
	
   

  	
  11.11.

  	
  Severability

  	
  118

  
	
   

  	
  11.12.

  	
  Amendments

  	
  118

  
	
   

  	
  11.13.

  	
  Assignments

  	
  118

  
	
   

  	
  11.14.

  	
  Notices

  	
  118

  
	
   

  	
  11.15.

  	
  Further Assurances

  	
  120

  
	
   

  	
  11.16.

  	
  Confidentiality

  	
  120

  

 

iii

 

	
   

  	
  11.17.

  	
  Additional Rules of Construction

  	
  120

  
	
   

  	
  11.18.

  	
  Enforcement of this Agreement

  	
  121

  
	
   

  	
  11.19.

  	
  Knowledge

  	
  121

  

 

iv

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  Unit Ownership

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Sample Statement of
  Free Cash Flow

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Amended Nevada Palace
  Lease

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Budgets

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Cannery East Project
  Brief

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  Escrow Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit G

  	
   

  	
  Payment Percentages

  
	
   

  	
   

  	
   

  
	
  Exhibit H

  	
   

  	
  Non-Competition
  Agreement (Mr. William Paulos)

  
	
   

  	
   

  	
   

  
	
  Exhibit I

  	
   

  	
  Non-Competition
  Agreement (Mr. William Wortman)

  
	
   

  	
   

  	
   

  
	
  Exhibit J

  	
   

  	
  Meadows Casino and
  Hotel Project Brief

  
	
   

  	
   

  	
   

  
	
  Exhibit K

  	
   

  	
  Title Commitment
  Exceptions

  
	
   

  	
   

  	
   

  
	
  Exhibit L

  	
   

  	
  Plans and
  Specifications

  
	
   

  	
   

  	
   

  
	
  Exhibit M

  	
   

  	
  Timetables

  
	
   

  	
   

  	
   

  
	
  Exhibit N

  	
   

  	
  Form of Sale of
  Option Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit O

  	
   

  	
  Form of Opinion of
  Sellers’ Counsel

  
	
   

  	
   

  	
   

  
	
  Exhibit P

  	
   

  	
  Form of Estoppel
  Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit Q

  	
   

  	
  Transition Services
  Consulting Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit R

  	
   

  	
  Assignment/Sale Documentation

  
	
   

  	
   

  	
   

  
	
  Exhibit S

  	
   

  	
  [Intentionally Left
  Blank]

  
	
   

  	
   

  	
   

  
	
  Exhibit T

  	
   

  	
  Form of Cash Log

  
	
   

  	
   

  	
   

  
	
  Exhibit U

  	
   

  	
  Form of Releases

  
	
   

  	
   

  	
   

  
	
  Exhibit V

  	
   

  	
  Form of
  Non-imputation Endorsement

  
	
   

  	
   

  	
   

  
	
  Exhibit W

  	
   

  	
  Dispute Resolution

  

 

v

 

	
  Exhibit X

  	
   

  	
  Gaming Approvals

  
	
   

  	
   

  	
   

  
	
  Exhibit Y

  	
   

  	
  Form of
  Subordination, Non-disturbance and Attornment Agreement

  

 

vi

 

PURCHASE
AGREEMENT

 

This PURCHASE AGREEMENT, dated as of  December 11,
2007 (this “Agreement”), is by and among (i) Crown Limited, an
Australian company (the “Parent”), (ii) Crown CCR Group Investments
One, LLC (“Crown One”) and Crown CCR Group Investments Two, LLC (“Crown
Two” and, collectively with Crown One, the “Buyers” and each, a “Buyer”),
each a Delaware limited liability company and an indirect wholly owned
subsidiary of Parent, (iii) Millennium Gaming, Inc., a Nevada
corporation (“Millennium”), (iv) OCM HoldCo, LLC, a Delaware
limited liability company (“HoldCo” and, collectively with Millennium,
the “Sellers” and each, a “Seller”), and (v) Cannery Casino
Resorts, LLC, a Nevada limited liability company (“CCR”).  Capitalized terms used but not defined herein
have the respective meanings specified in Article 1.

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

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

 

WHEREAS, Millennium desires to sell to Crown One, and
Crown One desires to purchase from Millennium, the Millennium Units, upon the
terms and subject to the conditions set forth herein;

 

WHEREAS, HoldCo desires to sell to Crown Two, and
Crown Two desires to purchase from HoldCo, the HoldCo Units, upon the terms and
subject to the conditions set forth herein;

 

 

WHEREAS, HoldCo desires to sell to Crown One, and
Crown One desires to purchase from HoldCo, all of HoldCo’s right, title, and
interest in the Option Agreement;

 

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

 

WHEREAS, upon the concurrent closings of the
transactions contemplated by this Agreement and by the GLCP Purchase Agreement,
the Buyers shall collectively own, directly or indirectly, 100% of the issued
and outstanding CCR Units.

 

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

 

ARTICLE 1

 

Definitions

 

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

 

1.1.       “Accepted
Gaming Opportunity” has the meaning set forth in Section 7.15.

 

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

 

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

 

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

 

1.5.       “Actual
Statement” has the meaning set forth in Section 2.5(a).

 

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

 

1.7.       “Adjusted
Operating Income” means, for the Companies on a consolidated basis, an
amount equal to income from operations plus depreciation and
amortization expense included within such computation of income from
operations, in each case, for the FCF Period, as determined on a consistent
basis with the Financial Statements and the sample statement of Free Cash Flow
attached as Exhibit B hereto; 

 

2

 

provided, that compensation expenses for a chief executive officer
and/or chief operating officer or similar executive level employees and
expenses for management fees or similar payments made to any Affiliate of the
Buyers shall be excluded in computing income from operations to the extent such
expenses and fees exceed the fees that would have been payable for the same
time period under the Millennium Management Agreement.

 

1.8.       “Adjustment
Date” means December 31, 2008.

 

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

 

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

 

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

 

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

 

1.13.     “Agreement
in Principle” means that certain Agreement in Principle, dated October 9,
2007, by and among CCR, PBL, HoldCo and Millennium.

 

1.14.     “Allocation
Accounting Firm” has the meaning set forth in Section 2.6.

 

1.15.     “Amended
Nevada Palace Lease” means the Amended and Restated Ground Lease for the
land upon which the Nevada Palace casino hotel is currently located and upon
which the Cannery East Project is being constructed, in the form attached
hereto as Exhibit C.

 

1.16.     “Applicable
Meadows Construction Documents” has the meaning set forth in Section 7.16(c).

 

1.17.     “Approved
Construction Documents” has the meaning set forth in Section 7.16(b).

 

3

 

1.18.     “Approved
Design Development Documents” has the meaning set forth in Section 7.16(b).

 

1.19.     “Approved
Schematic Drawings” has the meaning set forth in Section 7.16(b).

 

1.20.     “Assignment
Documents” has the meaning set forth in Section 2.3(g).

 

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

 

1.22.     “Bank
of America Facilities” means credit facilities of CCR pursuant to (a) that
certain First Lien Credit Agreement, dated as of May 18, 2007, by and
among CCR, WTA, each lender from time to time party thereto, Bank of America,
N.A., as Administrative Agent, Collateral Agent, Swing Line Lender and L/C
Issuer and CIT Lending Services Corporation, Commerzbank AG, Los Angeles Branch
and Nevada State Bank as Co-Documentation Agents in the maximum aggregate
outstanding amount of $745,000,000; and (b) that certain Second Lien
Credit Agreement, dated as of May 18, 2007, by and among CCR, WTA, the
lenders from time to time party thereto, and Bank of America as Administrative
Agent and Collateral Agent in the outstanding amount of $115,000,000.

 

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

 

1.24.     “Bank
Construction Consultant” means Professional Associate Construction Services
(or any authorized successor or assign) in its capacity as independent
construction consultant under the Bank of America Facilities.

 

1.25.     “Base
Purchase Price” has the meaning set forth in Section 2.1(b).

 

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

 

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

 

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

 

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

 

1.30.     “Budget”
means the budget for the development of each Project as a whole, as the same
may be amended in accordance with the terms of this Agreement; all such Budgets
are collectively the “Budgets.”  The
Budgets for the Projects as of the date hereof are attached hereto as Exhibit D.

 

4

 

1.31.     “Business”
means the gaming, racing, entertainment, hospitality and related businesses and
operations conducted by the Companies in Nevada and Pennsylvania, excluding
development of the Projects.

 

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

 

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

 

1.34.     “Buyer
Construction Consultant” means Mr. Todd Nisbet, together with his
successors and replacements, as designated by the Buyers and as reasonably
acceptable to the Sellers.

 

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

 

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

 

1.37.     “Buyer
Pennsylvania Ticking Fee” has the meaning set forth in Section 2.2(b).

 

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

 

1.39.     “Buyer
Ticking Fee” has the meaning set forth in Section 2.2(b).

 

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

 

1.41.     “Cannery
East” means the casino resort under construction adjacent to the existing
Nevada Palace as more fully described in the Plans and Specifications described
on Exhibit L attached hereto, and as Owner Cost Items related
thereto are described in the Cannery East Project Brief attached hereto as Exhibit E.

 

1.42.     “Cannery
East Excess Costs” has the meaning set forth in Section 2.2(h).

 

1.43.     “Cannery
True-Up” has the meaning set forth in Section 2.2(h).

 

1.44.     “Cannery
True-Up Notice” has the meaning set forth in Section 2.2(h).

 

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

 

5

 

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

 

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

 

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

 

1.49.     “Cash
Payment” has the meaning set forth in Section 2.2(g).

 

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

 

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

 

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

 

1.53.     “Certificate
of Occupancy” means either a temporary or permanent certificate of
occupancy for any of Cannery East, the Permanent Meadows Casino or the
Permanent Meadows Hotel, issued by the applicable Governmental Entity pursuant
to applicable Laws, which permanent or temporary certificate of occupancy shall
permit the Cannery East, the Permanent Meadows Casino or the Permanent Meadows
Hotel, as applicable, to be used for their intended purposes and shall be in
full force and effect.

 

1.54.     “Closing”
has the meaning set forth in Section 3.1.

 

1.55.     “Closing
Date” has the meaning set forth in Section 3.3.

 

1.56.     “Closing
Extension” has the meaning set forth in Section 3.2.

 

1.57.     “Closing
Payment” has the meaning set forth in Section 2.2(a).

 

1.58.     “Closing
Statement” has the meaning set forth in Section 2.2(d).

 

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

 

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

 

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

 

6

 

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

 

1.63.     “Company
Cash” shall mean the cash amounts shown on the Cash Log in the line item “Cash
in Cage”.

 

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

 

1.65.     “Company
Loan Payment Amount” has the meaning set forth in Section 2.2(c).

 

1.66.     “Complete”
or “Completion” means, with respect to each Project, that (i) all
Work has been completed in substantial compliance with the Plans and
Specifications for Cannery East or with the Applicable Meadows Construction
Documents for the Meadows (such that only Punch List Items remain uncompleted),
(ii) a Certificate of Occupancy for such Project has been issued (which
Certificate of Occupancy shall be for the casino, in the case of Cannery East
and the Permanent Meadows Casino, or the hotel, in the case of the Permanent
Meadows Hotel, and which Certificate of Occupancy shall, in each case, cover
such additional facilities as are necessary for the operation of such casino or
hotel (but excluding any space not intended to be completed as part of the
Work), (iii) the Work is sufficiently complete so that the Project can be
occupied for all intended purposes and the performance to completion of any
unfinished Work would not materially interfere with, disrupt or hamper use,
occupancy or enjoyment of the Project for the intended business operations, and
(iv) all Project systems (including all life safety systems) are
operational and functioning as designed for the intended business operations.

 

1.67.     “Completion
Certificate” means, with respect to each Project, a written certificate
delivered to the Administrative Agent pursuant to the Bank of America
Facilities executed by the architect, the General Contractor and the Bank
Construction Consultant, and approved by the Buyer Construction Consultant, which approval may not be unreasonably withheld,
certifying that the Work for such Project has been completed in all material
respects in accordance with its Plans and Specifications (in the case of
Cannery East) and in accordance with the Applicable Meadows Construction
Documents (in the case of the Meadows) and that such Project has been or is
ready to be opened for business, with a certificate executed by a responsible
officer of CCR to that effect.

 

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

 

1.69.     “Construction
Contract” means any and all Contracts between any of the Companies and any
contractor or any subcontractor or between any of the foregoing and any other
person including any architect, engineer or consultant) relating in any way to
the construction of any of the Projects, including the performing of labor or
the furnishing of standard or specially fabricated materials in connection
therewith or the preparation or furnishing of any drawings, renderings, plans,
design 

 

7

 

documents or other related items for the design, architecture or
construction of any such Projects.

 

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

 

1.71.     “Contingency
Amount” has the meaning set forth in Section 2.2(c).

 

1.72.     “Contingency
Escrow” means the escrow account for the Contingency Amount.

 

1.73.     “Contingency
Escrow Release Date” has the meaning set forth in Section 2.2(e).

 

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

 

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

 

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

 

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

 

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

 

1.79.     “Development
Modification” has the meaning set forth in Section 7.16(c).

 

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

 

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

 

1.82.     “End
Date” has the meaning set forth in Section 9.1(b)(i).

 

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

 

8

 

circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.91.     “Estimated
Completion Date” has the meaning set forth in Section 7.18(a).

 

9

 

1.92.     “Excess
Costs”  has the meaning set forth in Section 2.2(e).

 

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

 

1.94.     “Excluded
Opportunities” has the meaning set forth in Section 7.15.

 

1.95.     “FCF
Period” means the period from and including the Closing Date through and
including the Adjustment Date.

 

1.96.     “Final
Completion” means, with respect to each Project, that (i) Completion
has occurred, and (ii) all of the Work, including any Punch List Items,
has been completed, (iii) all of the Owner Cost Items have been performed,
supplied and installed as appropriate in substantial compliance with the
applicable Project Brief and to the extent that the Applicable Meadows
Construction Documents have superseded the Project Brief as provided in Section 7.16,
substantial compliance with such Applicable Meadows Construction Documents
(provided that all Fixed Cost Items, as well as the number of slot machines, in
the case of the Meadows Projects, and the number of slot machines and tables,
in the case of Cannery East, shall be in compliance with the Project Brief), (iv) all
components of the Project are fully functional and operable, (v) all costs
of the Work and all of the Owner Cost Items have been paid in full and no
liens, claims or encumbrances by any contractor, subcontractor or other
mechanics’ liens claimants have been filed or are outstanding with respect to the
Project (or, in lieu thereof, the costs thereof shall have been included for
purposes of the Future Capital Payment, if applicable), and (vi) the
casino and the hotel, in the case of Cannery East, or the casino, in the case
of the Permanent Meadows Casino, or the hotel, in the case of the Permanent
Meadows Hotel, and also in each case, such additional facilities as are
necessary for the operation of such casino or hotel, are open and fully
operating, and all Certificates of Occupancy and other permits, inspections and
certifications that are required for the operation and opening of all such
components of the Project to the public have been achieved, made and (if
applicable) posted.

 

1.97.     “Final
Completion Certificate” means with respect to each Project, a written
certificate executed by the Buyer Construction Consultant at the request of
either the Buyers or the Sellers and delivered to each of them, certifying in
the reasonable judgment of Buyer Construction Consultant that Final Completion
has occurred.

 

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

 

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

 

1.100.   “Fixed
Cost Items” has the meaning set forth in Section 2.2(b).

 

10

 

1.101.   “Free
Cash Flow” means, with respect to the FCF Period, (a) Adjusted
Operating Income, minus (b) the amount of Maintenance Capital
Expenditures, minus (c) the Interest Per Diem multiplied by the
number of days in the FCF Period, minus (d) the Tax Adjustment, in
each case calculated on a consistent basis with the sample statement of Free
Cash Flow attached as Exhibit B hereto and on a pro forma basis, if
necessary, to reflect operations in the ordinary course of business consistent
with the Companies’ historical practices.

 

1.102.   “Fund”
has the meaning set forth in Section 2.2(g).

 

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

 

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

 

1.105.   “Future
Capital Payment” means for any Project, as of the Closing Date, the costs
required (subject to the limitations and exclusions set forth in Section 7.17(b))
(i) to achieve Final Completion of a Project, and (ii) to the extent
remedial work is required, to bring a Project, for which a Final Completion
Certificate has not previously been provided, into material compliance with the
applicable Plans and Specifications (in the case of Cannery East) or into
material compliance with the Applicable Meadows Construction Documents (in the
case of the Meadows).

 

1.106.   “Future
Capital Payment Amount” has the meaning set forth in Section 2.2(b)(iii).

 

1.107.   “Future
Capital True-Up” has the meaning set forth in Section 2.2(e).

 

1.108.   “Future
Capital True-Up Notice” has the meaning set forth in Section 2.2(e).

 

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

 

1.110.   “Gaming
Approvals” has the meaning set forth in Section 7.4(e).

 

11

 

1.111.   “Gaming
Authorities” means any Governmental Entity with regulatory control,
authority or jurisdiction over casino, pari-mutuel and lottery or other gaming
activities and operations, including the Nevada Gaming Commission, the Nevada
State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board,
the City of Las Vegas and the City of North Las Vegas, the Pennsylvania Gaming Control
Board and the Pennsylvania Harness Racing Commission.

 

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

 

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

 

1.114.   “General
Contractor” means any Person who contracts for the construction of an entire
Project, rather than for a portion of the Work relating thereto and otherwise
has the obligation to retain and pay subcontractors and coordinates the Work to
be performed.

 

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

 

1.116.   “GLCP
Purchase Agreement” means that certain Purchase Agreement, dated as of the
date hereof, by and among the Parent, Crown Two and GLCP, pursuant to which,
and on the terms and subject to the conditions of which, GLCP has agreed to
sell to Crown Two, and Crown Two has agreed to purchase from GLCP, the GLCP
Units.

 

1.117.   “GLCP
Purchase Price” means the purchase price payable by Crown Two to GLCP for
the GLCP Units pursuant to the GLCP Purchase Agreement.

 

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

 

1.119.   “Governing
Documents” means with respect to any particular entity, (a) if a
corporation, the articles or certificate of incorporation and the bylaws; (b) if
a general partnership, the partnership agreement and any statement of
partnership; (c) if a limited partnership, the limited partnership
agreement and the certificate of limited partnership; (d) if a limited
liability company, the articles or certificate of organization and the limited
liability company agreement or operating agreement; (e) if another type of
entity, any other charter or similar document adopted 

 

12

 

or filed in connection with the creation, formation or organization of
such entity; and (f) any amendment or supplement to any of the foregoing.

 

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

 

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

 

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

 

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

 

1.124.   “Holdback
Reduction” has the meaning set forth in Section 2.2(g).

 

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

 

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

 

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

 

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

 

1.129.   “Hot
Asset Allocation” has the meaning set forth in Section 2.6.

 

1.130.   “Hot
Asset Allocation Notice of Disagreement” has the meaning set forth in Section 2.6.

 

13

 

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

 

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

 

1.133.   “In-Balance Certificate” means, with respect to
each Project, a certification that such Project is “In-Balance” (as defined
under the Bank of America Facilities), together with applicable supporting
documentation, delivered by the Company to the Administrative Agent immediately
prior to the commencement of development and construction of such Project and
quarterly thereafter pursuant to the Bank of America Facilities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.141.   “Independent
Accounting Firm” has the meaning set forth in Section 2.5(d).

 

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

 

14

 

name registrations and all of (a) through (e) above contained
in such Internet web sites.

 

1.143.   “Interest
Per Diem” means the (a) for the thirty (30) days ending on the day
immediately prior to the Closing Date, (i) interest expense for the
Companies on a consolidated basis minus (ii) interest income for
the Companies on a consolidated basis, divided by (b) 30.

 

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

 

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

 

1.146.   “Joint
Instructions” has the meaning set forth in Section 2.2(e).

 

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

 

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

 

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

 

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

 

1.151.   “Licensed
Persons” has the meaning set forth in Section 7.4(f).

 

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

 

1.153.   “List”
has the meaning set forth in Section 6.9.

 

15

 

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

 

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

 

1.156.   “Maintenance
Capital Expenditures” means Capital Expenditures made during the FCF Period
in the ordinary course of business to maintain properties and assets provided (i) Maintenance
Capital Expenditures shall not include Capital Expenditures for the Projects
consisting of the Permanent Meadows Casino, the Permanent Meadows Hotel and, if
it has not reached Final Completion prior to the Closing Date, Cannery East, or
any items that are included in the Budgets for the Cannery East Project or the
Meadows Projects which generally include construction, development,
furnishings, slot machines (in addition to those at the temporary Meadows
facility) and pre-opening costs, and (ii) Capital Expenditures for the
Rampart Casino and the Cannery Casino and Hotel and, if it has reached Final
Completion prior to the Closing Date, Cannery East, shall be presumed to be
Maintenance Capital Expenditures if such Capital Expenditures are not related
to any development, expansion or construction project.

 

1.157.   “Material
Adverse Effect” means (i) any fact, change, development, circumstance,
event, effect or occurrence (an “Effect”) that, when considered either
individually or in the aggregate with all other Effects, is materially adverse
to the business (excluding any future development opportunities, but including
the Projects), properties, assets, liabilities, financial condition or results
of operations of the Companies, taken as a whole, (ii) any failure of any
Seller to have good and valid title to, and be able to deliver to the Buyers at
the Closing, free and clear of all Liens, the Millennium Units, the Holdco
Units, or the Option, as applicable, or any failure of AcquisitionCo to have
good and valid title to all of the AcquisitionCo Units, or (iii) the loss
by any Subsidiary of CCR of its non-restricted gaming license necessary to
operate its gaming Business in the State of Nevada, the loss by CCR of its
finding of suitability as a holding company of any Subsidiary holding such
non-restricted gaming license, or the loss of WTA’s Category I Slot Machine
License to operate its gaming Business; provided, however, that in no event
shall any of the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in determining whether
there has been, a Material Adverse Effect under clause (i) above:  (A) an Effect in general business,
economic, political, legislative, social, regulatory or other conditions,
whether locally, nationally or internationally, or in the financial, banking or
securities markets (including changes to interest rates, currency rates or the
value of the U.S. Dollar relative to other currencies, consumer confidence,
stock, bond and/or debt prices and trends), or any acts of war, hostilities,
military action, sabotage or terrorism (whether or not declared or undeclared)
or any escalation or worsening of any such acts of war, hostility, military
action, sabotage or terrorism; (B) any Effect resulting from the
announcement of this Agreement and the transactions contemplated hereby, or the
identity of the 

 

16

 

Parent, the Buyers or any of their Affiliates as the acquiror of the
Companies; (C) any failure to meet projections, forecasts or revenue or
earnings predictions for any period, provided that the underlying causes of any
such failure shall not be excluded; (D) any changes in Law, GAAP or any
accounting regulation (including any proposal or adoption of any new Law or
GAAP rule or any change in the interpretation or enforcement of any
existing Law or GAAP rule); (E) any Effect in the travel, hospitality or
gaming industries generally; or (F) any taking of any action by any of the
Companies or the Sellers specifically required by this Agreement to be so
taken; provided, however, that the Effects set forth in clauses (A), (D) and
(E) above may be taken into account to the extent such Effects have a
disproportionate impact on the Companies.

 

1.158.   “material
accordance,” “material compliance” and “material conformance”
are deemed to be synonymous with each other and with the terms “substantial
conformance”, “substantial conformity”, and “substantial
compliance,” (which themselves are deemed synonymous) as those terms are
used in this Agreement.

 

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

 

1.160.   “Meadows
Projects” means, collectively, the Permanent Meadows Casino and the
Permanent Meadows Hotel.

 

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

 

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

 

1.163.   “Meadows
Withdrawal Liability” has the meaning set forth in Section 2.2(g).

 

1.164.   “Merrill
Lynch Facility” means the credit facility of CCR established pursuant to
that certain Amended and Restated Loan Agreement, dated as of May 18,
2007, by and among CCR, WTA, Merrill Lynch Capital, a division of Merrill Lynch
Business Financial Services Inc., as administrative agent, and each of the
lenders from time to time party thereto in the maximum outstanding amount of
$30,000,000.

 

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

 

1.166.   “Millennium
Management Agreement” means the Casino Management Agreement, dated as of September 22,
2006, by and among CCR, 

 

17

 

Rampart Resort Management, LLC, The Cannery Hotel and Casino, LLC,
Nevada Palace, LLC, and Millennium Management Group II, LLC.

 

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

 

1.168.   “Monthly
Construction Draw Package” means the monthly construction draw package
produced by CCR and approved by the Bank Construction Consultant pursuant to
the Bank of America Facilities.

 

1.169.   “Monthly
Progress Report” means the monthly progress report with respect to the
Projects produced by the Bank Construction Consultant pursuant to the Bank of
America Facilities.

 

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

 

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

 

1.172.   “Nevada
Palace” means the Nevada Palace Casino which is located on Boulder Highway
in Las Vegas, Nevada.

 

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

 

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

 

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

 

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

 

1.177.   “NGT
Tax Amount” means the estimated increased amount of aggregate taxes and
levies imposed on the Companies on an annual basis as a direct 

 

18

 

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

 

1.178.   “Non-Competition
Agreements” means (i) the Non-Competition Agreement, in the form
attached as Exhibit H, by and among the Parent, the Buyers and Mr. William
Paulos, and (ii) the Non-Competition Agreement, in the form attached as Exhibit I,
by and among the Parent, the Buyers and Mr. William Wortman.

 

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

 

1.180.   “Notice
of Acceptance” has the meaning set forth in Section 7.18(b).

 

1.181.   “Notice
of Objection” has the meaning set forth in Section 7.18(b).

 

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

 

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

 

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

 

1.185.   “Option”
has the meaning set forth in the Recitals.

 

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

 

19

 

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

 

1.188.   “Other
Documents” means the Escrow Agreement and the Transition Services
Consulting Agreement.

 

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

 

1.190.   “Owner
Cost Items” means the line items in the applicable Budget under the
headings “Owner Cost Items - Development”, “Owner Cost Items – OS&E” and “Owner
Cost Items – Pre-Opening”.

 

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

 

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

 

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

 

1.194.   “PBL”
means Publishing and Broadcasting Limited (now known as Consolidated Media
Holdings Limited), a company organized under the laws of Western Australia.

 

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

 

1.196.   “Pennsylvania
Condition” has the meaning set forth in Section 3.2.

 

1.197.   “Pennsylvania
Date” means the date that the Pennsylvania Act or WTA’s Governmental
Authorization from the Pennsylvania Gaming Control Board, as applicable,
requires a permanent casino facility to be open at the Meadows Property or such
later date as is permitted pursuant to Section 1207(17) of the
Pennsylvania Act or as otherwise authorized by the Pennsylvania Gaming Control
Board.

 

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

 

1.199.   “Permanent
Meadows Casino” means the permanent casino to be constructed at the Meadows
Property, as more fully described in the Meadows Casino and Hotel Project Brief
attached hereto as Exhibit J, as such Project Brief may be
superseded by the Applicable Meadows Construction Documents in accordance with Section 7.16.

 

20

 

1.200.   “Permanent
Meadows Hotel” means the hotel to be constructed at the Meadows Property,
as more fully described in the Meadows Casino and Hotel Project Brief attached
hereto as Exhibit J, as such Project Brief may be superseded by the
Applicable Meadows Construction Documents in accordance with Section 7.16.

 

1.201.   “Permitted
Exceptions” means (i) any Liens for Taxes not yet due and payable or
that are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with GAAP; (ii) mechanics’,
warehousemens’, materialmens’, contractors’, workmens’, repairmens’, carriers’
and other similar Liens that are (a) inchoate, (b) being contested in
good faith by appropriate proceedings or with respect to which there remains a
bona fide opportunity to contest and, in either case, for which reserves have
been established, where appropriate and consistent with past practice or (c) the
costs of which are included in an applicable Future Capital Payment; (iii) Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations provided that such items do not appear on
title; (iv) imperfections of title that, individually or in the aggregate,
do not materially and adversely restrict or affect the value or the
contemplated or current use and enjoyment of any material property or assets of
any of the Companies; (v) the title policy and title commitment exceptions
identified on Exhibit K attached hereto; (vi) any state of
facts shown or which should have been shown on an existing ALTA survey covering
any of the real property of the Companies that has been delivered or made
available to the Buyers; (vii) all presently existing and future Liens of
water rates, water meter charges, water frontage charges and sewer Taxes, rents
and charges, if any, provided that such items are not due and payable; (viii) any
other matter or thing affecting title to the Real Property that the Buyers
shall have expressly agreed in writing to waive; (ix) Liens disclosed on Schedule
1.201 of the Sellers Disclosure Schedules; or (x) any other Liens
(excluding any Liens for Indebtedness) that have been incurred or suffered in
the ordinary course of business consistent with past practice and are not,
individually or in the aggregate, material to the Companies.

 

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

 

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

 

1.204.   “Plans
and Specifications” means, with respect to each Project, the most advanced
set of schematic drawings, design development documents, and/or construction
drawings and specifications and related items for the design, architecture and
construction of such Project that are prepared by CCR’s architect 

 

21

 

and/or other design professionals as those Plans and Specifications may
be amended in accordance with the terms of this Agreement.  The Plans and Specifications for the Projects
as of the date hereof are more particularly described on Exhibit L
attached hereto.

 

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

 

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

 

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

 

1.208.   “Pre-Completion
Closing Notice” has the meaning set forth in Section 7.18(a).

 

1.209.   “Projects”
means, collectively, the development of (a) Cannery East, (b) the
Permanent Meadows Casino and (c) the Permanent Meadows Hotel, in the case
of (a), in substantial conformance with the applicable Plans and
Specifications, and in the case of (b) and (c), in substantial conformance
with the Applicable Meadows Construction Documents, and, in the case of Owner
Cost Items only, with respect to any of the foregoing, in conformance with the
applicable Project Brief; each, individually, a “Project.”

 

1.210.   “Project
Brief” means the project brief for the Cannery East Project attached as Exhibit E,
or the project brief for the Meadows Projects attached as Exhibit J,
as applicable.

 

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

 

1.212.   “Punch
List Items” means those minor or “punch list” items of unfinished Work with
respect to a Project, as determined by the General Contractor and such Project’s
owner at Completion (in discussion with the Buyer Construction Consultant),
which the General Contractor shall complete prior to Final Completion and for
which funds will be withheld from the General Contractor or applicable vendor,
as the case may be, until Final Completion pursuant to the terms and conditions
of the Construction Contracts.

 

1.213.   “Purchase
Price” has the meaning set forth in Section 2.1(b).

 

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

 

22

 

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

 

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

 

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

 

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

 

1.218.   “Regulatory
Filing” has the meaning set forth in Section 7.4(h).

 

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

 

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

 

1.221.   “Releases”
has the meaning set forth in Section 2.3(h).

 

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

 

1.223.   “Remaining
Accrued Liabilities” has the meaning set forth in Section 2.2(c)(iv).

 

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

 

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

 

1.226.   “Review
Period” has the meaning set forth in Section 2.5(b).

 

1.227.   “Rockingham
Opportunity” has the meaning set forth in Section 7.15.

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.237.                “Sellers Ticking Fee” has
the meaning set forth in Section 2.2(b).

 

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

 

1.239.                “Statement of Objections”
has the meaning set forth in Section 2.5(c).

 

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

 

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

 

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

 

1.243.                “Subsidiary” means, with
respect to any Person, any corporation or other entity of which such Person
has, directly or indirectly, (i) ownership of securities or other
interests having the power to elect a majority of the 

 

24

 

Board of Directors or
similar governing body of such corporation or other entity, or (ii) the
power to direct the business and policies of that corporation or other entity.

 

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

 

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

 

1.246.                “Tax Adjustment” means (a) Adjusted
Operating Income, minus (i) depreciation and amortization expense
for the FCF Period for income tax purposes (taking into account any special
basis adjustments, including any adjustments arising under Section 743(b) or
734(b) of the Code or otherwise attributable to the transactions
contemplated by the Agreement and exercise of the Option Agreement), minus
(ii) the product of (x) the Interest Per Diem and (y) the number
of days in the FCF Period, multiplied by (b) the highest maximum
combined marginal federal, state and local income tax rates to which any Tax
Recipient may be subject (taking into account the deductibility of state income
tax for federal income tax purposes).

 

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

 

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

 

1.249.                “Tax Benefit” means the
sum of the amount by which the actual Tax Liability (after giving effect to any
alternative minimum or similar Tax) of an Indemnified Party to the appropriate
Tax Authority is reduced by the payment of the Liability upon which the claim
for indemnity (or other claim) is based (including by or as a result of a
deduction, entitlement to refund, or credit) plus any interest (on an after-Tax
basis) from such Tax Authority relating to such Tax Liability and taking into
account the Tax treatment of the receipt of indemnification payments. Where a

 

25

 

Tax Benefit may be
realized that may result in the reduction of a payment to the Indemnified
Party, the Indemnified Party will as promptly as practicable take or cause
Indemnified Party’s Affiliates to take such reasonable or appropriate steps
(including the filing of an amended Tax Return or Claim for refund) to obtain
at the earliest possible time any such reasonably available Tax Benefit.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.258.                “Tejon Opportunity” has
the meaning set forth in Section 7.15.

 

26

 

1.259.                “Termination Fee” means
$50,000,000 (Fifty Million Dollars).

 

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

 

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

 

1.262.                “Timetable” means the
schedule for construction and completion of each of the Projects, including
critical path activities and milestones for the General Contractor,
subcontractors and suppliers, which schedule has been prepared at the request
of CCR and as may be amended in accordance with the terms of this Agreement. The
Timetables for the Projects as of the date hereof are more particularly
described on Exhibit M attached hereto.

 

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

 

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

 

1.265.                “Transition Services
Consulting Agreement” means the Meadows Transition Services Consulting
Agreement, in the form attached hereto as Exhibit Q, by and among
WTA, Millennium Gaming, Inc., the Parent and the Buyers.

 

1.266.                “Unrecovered Amount” has
the meaning set forth in Section 2.2(f).

 

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

 

1.268.                “Work” when used in
reference to any Project, has the meaning set forth in the Contract with the
General Contractor for such Project.

 

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

 

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

 

27

 

ARTICLE
2

 

Sale
and Purchase of Shares

 

2.1.          Sale and Purchase of Shares. (a) Upon
the terms and subject to the conditions set forth in this Agreement, on the
Closing Date:  (1) Millennium shall
sell to Crown One, and Crown One shall purchase from Millennium, all of Millennium’s
right, title and interest in and to the Millennium Units, (2) HoldCo shall
sell to Crown Two, and Crown Two shall purchase from HoldCo, all of HoldCo’s
right, title and interest in the HoldCo Units, and (3) HoldCo shall sell
to Crown One, and Crown One shall purchase from HoldCo, all of HoldCo’s right,
title and interest in the Option Agreement, in each case, free and clear of all
Liens.

 

(b)           Purchase
Price. The purchase price (the “Purchase Price”) payable for the
Millennium Units, the Holdco Units and the Option shall be an amount in cash
equal to the following:

 

(i)            $1,752,200,000
(One Billion Seven Hundred Fifty Two Million Two Hundred Thousand Dollars),
less the dollar amount of the GLCP Purchase Price (the “Base Purchase Price”);

 

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

 

(iii)          decreased
by the Future Capital Payment Amount, if any;

 

(iv)          increased,
if the Closing occurs prior to the Adjustment Date, by the Free Cash Flow for
the FCF Period; and

 

(v)           further
increased or decreased, as applicable, by the adjustments set forth in clauses (iv),
(v),  (vi) and (vii) of Section 2.2(a).

 

2.2.          Consideration.

 

(a)           Closing Payment. The aggregate
consideration for the Millennium Units, the Holdco Units and the Option payable
at Closing shall be an amount in cash equal to the following (the “Closing
Payment”):

 

(i)            the Base
Purchase Price;

 

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

 

(iii)          decreased
by the Future Capital Payment Amount, if any, on the Closing Date as determined
in accordance with Section 2.2(b)(iii);

 

(iv)          if
the End Date is automatically extended pursuant to the terms of Section 9.1(b)(i),
increased by an amount equal to the Sellers Ticking Fee, as calculated in
accordance with Section 2.2(b)(i) below;

 

28

 

(v)           if the
Closing occurs prior to the Adjustment Date, decreased by an amount equal to
the Buyer Ticking Fee, as calculated in accordance with Section 2.2(b)(ii)(A) below;

 

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

 

(vii)         if
the Buyers elect to extend the Closing in accordance with Section 3.2,
decreased by an amount equal to the Buyer Pennsylvania Ticking Fee, as
calculated in accordance with Section 2.2(b)(ii)(B) below.

 

(b)           Calculation of Closing Payment.

 

(i)            If the
End Date is automatically extended pursuant to the terms of Section 9.1(b)(i),
then the consideration to be paid to the Sellers at the Closing shall increase
pursuant to Section 2.2(a)(iv) by an amount equal to the
following:  (A) for each day in the
period from and including January 1, 2009 to the earlier of the Closing
Date (including the Closing Date) and March 31, 2009 (including March 31,
2009), by an amount equal to $171,630 (One Hundred Seventy One Thousand Six
Hundred and Thirty Dollars) per day, and (B) if the End Date is extended
in accordance with Section 9.1(b)(i) beyond March 31,
2009, for each day in the period from and including April 1, 2009 to the
Closing Date (including the Closing Date), by an amount equal to $256,165 (Two
Hundred Fifty Six Thousand One Hundred and Sixty Five Dollars) per day ((A) and
(B), as applicable, the “Sellers Ticking Fee”); provided, however, the
Sellers Ticking Fee shall be suspended for each day after both of the Buyers
satisfy the condition set forth in Section 8.1(b) and on which
all other conditions to the Closing applicable to the Buyers set forth in Section 8.1
and Section 8.3 remain satisfied or capable of satisfaction at the
Closing (other than those conditions that by their nature are to be satisfied
at the Closing by the taking of actions by the Buyers at the Closing, but
subject to the fulfillment or waiver of those conditions).

 

(ii)           (A)          In the event that the Closing shall occur
prior to the Adjustment Date, then the consideration to be paid to the Sellers
at the Closing shall decrease pursuant to Section 2.2(a)(v) by an
amount, for each day in the period from and including the Closing Date to and
including the Adjustment Date, equal to $171,630 (One Hundred Seventy One
Thousand Six Hundred and Thirty Dollars) per day (the “Buyer Ticking Fee”).

 

(B)           If the Buyers elect to extend the
Closing in accordance with Section 3.2, then the consideration to
be paid to the Sellers at the 

 

29

 

Closing shall decrease
pursuant to Section 2.2(a)(vii) by an amount, for each day on
and after the Buyers’ election to extend, unless made prior to June 1,
2009, and then only for June 1, 2009 and each day thereafter (including June 1,
2009) to and including the date on which the Pennsylvania Condition is
satisfied or otherwise waived, equal to $256,165 (Two Hundred Fifty Six
Thousand One Hundred and Sixty Five Dollars) per day (the “Buyer
Pennsylvania Ticking Fee”).

 

(iii)          No
later than thirty (30) days prior to the anticipated Closing Date, the Buyers
and the Sellers shall meet and negotiate with each other in good faith to
determine the Future Capital Payment to be deducted from the Base Purchase Price.
In the event that the parties are unable to agree on the Future Capital Payment
by five (5) days prior to the anticipated Closing Date, then the Sellers
reasonably and in good faith shall calculate the Future Capital Payment, taking
into account all relevant information relating to the applicable Project(s) reasonably
available to the Sellers, including the Project Brief (as it may be superseded
pursuant to Section 7.16), Plans and Specifications, Applicable
Meadows Construction Documents, Construction Contracts and any other existing
or contemplated agreements, Budget and Timetable and the Buyers’ position with
regard to the disputed matters. No later than three (3) days prior to the
Closing Date, the Sellers shall deliver to the Buyers a notice stating the
amount the Sellers have so determined to be the Future Capital Payment,
together with a detailed accounting of the costs incurred or reasonably
expected to be incurred and the costs actually paid by the Companies relating
to the applicable Project(s), and with reasonable supporting documentation that
shows the Sellers’ calculation of the Future Capital Payment. The parties agree
that the amounts set forth in the Meadows Budget for Marketing, Opening
Inventory, Licensing/Fees, Working Capital and Pre-Opening Labor under the
heading “Owner Cost Items - Pre-Opening” shall be fixed as of the date of this
Agreement and shall not be subject to increase as part of the process of
determining the Future Capital Payment or for making claims against the
Contingency Escrow (the “Fixed Cost Items”). The amount as mutually
agreed by the parties or as determined by the Sellers shall be the “Future
Capital Payment Amount”.

 

(c)         Closing Payment and Cash Amounts.

 

(i)            At the
Closing, CCR (A) shall direct the release and application of the amounts
in the Cash Collateral Account and the Construction Reserve Account  to make a payment in respect of the Bank of America
Facilities (such amounts, the “Bank of America Repayment”) and (B) may,
but shall not be obligated to, make 

 

30

 

payment(s) in respect
of any of the Debt Facilities (the aggregate amounts paid by CCR pursuant to
this clause (B), if any, and the Bank of America Repayment are
collectively hereinafter referred to as the “Company Loan Payment Amount”).

 

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

 

(A)          $25,000,000
(Twenty Five Million Dollars) (the “Indemnity Escrow Amount”) payable by
wire transfer in immediately available US funds to the Escrow Agent to be held
to satisfy Sellers’ indemnification obligations pursuant to Section 2.2(g)(iii),
Section 7.10 and Article 10 and distributed pursuant to
the terms and conditions of the Escrow Agreement and this Agreement;

 

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

 

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

 

(D)          in the
event that the Closing occurs prior to Completion of the Meadows Projects,
$10,000,000 (Ten Million Dollars) (the “Contingency Amount”), payable by
wire transfer in immediately available funds to an escrow account to be held to
satisfy Excess Costs pursuant to Section 2.2(e) and
distributed pursuant to the Escrow Agreement and this Agreement; and

 

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

 

31

 

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

 

(iv)                           CCR
agrees that “Remaining Accrued Liabilities” shall be equal to the total
of the Rampart Amount and the Gaming Tax Amount as of the date immediately
preceding the Closing Date; provided that, in the event that the Cash Log as of
such date reflects amounts in the line items “Cash in Bank” and “Investments”
and such amounts have not otherwise been applied to the Company Loan Payment
Amount, then the Sellers may elect to have all or any portion of the “Cash in
Bank” and “Investments” amounts retained by CCR (or the applicable Subsidiary
thereof) on the Closing Date for the benefit of the Parent and the Buyers, in
which event, for purposes of determining the Closing Payment and the Purchase
Price, the Remaining Accrued Liabilities shall be reduced by the aggregate
amount so retained by CCR (or the applicable Subsidiary thereof).

 

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

 

(e)         Contingency Escrow.

 

(i)                                  The
Contingency Amount shall be available to the Buyers only for the purpose of
paying actual costs in excess of the Future Capital Payment Amount that are
necessary to achieve Final Completion of the Meadows Projects (“Excess Costs”).
Without limiting the foregoing, the parties acknowledge that the Excess Costs
may include items that were overlooked in the process of calculating the Future
Capital Payment or were considered paid at the time of such calculation
although not actually paid and therefore not taken into 

 

32

 

account in calculating the Future Capital Payment. The
parties acknowledge that there may be changes in the Applicable Meadows
Construction Documents for the Meadows Projects following the Closing, and the
cost of such changes will not be included in Excess Costs, except to the extent
required by Laws in existence as of the Closing Date. In no event may any
portion of the Contingency Amount be used to fund costs related to the
maintenance or repair of the Meadows Projects or to satisfy any indemnification
claims pursuant to Section 2.2(g)(iii), Section 7.10 or
Section 10.2.

 

(ii)                               The
Contingency Amount shall be held by the Escrow Agent, unless the parties
mutually agree to an earlier disbursement, from the Closing Date to the date
that is six (6) months after the date on which the Permanent Meadows
Casino first opens for operation, provided that the Reconciliation Amount (as
defined in the Escrow Agreement) shall be held and released in accordance with
the terms of the Escrow Agreement and this Agreement (the “Contingency
Escrow Release Date”).

 

(iii)                            At any time on or prior to 5:00 p.m.,
Pacific time, on the Business Day immediately preceding the Contingency Escrow
Release Date, the Buyers may deliver written notice to the Escrow Agent and the
Sellers (the “Future Capital True-Up Notice”), which notice shall state (1) that some
or all of the Future Capital Payment has been applied to the Meadows Projects
and the amount remaining, if any, is insufficient to achieve Final Completion
of the Meadows Projects and (2) the amount in excess of the remaining
Future Capital Payment necessary to achieve such Final Completion (the “Future
Capital True-Up”), and the Buyers shall provide accounting and reasonable
supporting documentation for the Buyers’ calculation of the Future Capital
True-Up. The Sellers may dispute the Future Capital True-Up as set forth in the
Future Capital True-Up Notice by following the procedures set forth in Exhibit W.
On the Contingency Escrow Release Date, the excess, if any, of (A) the
remaining amount in the Contingency Escrow over (B) the amount identified
by the Buyers in the Future Capital True-Up Notice as the Future Capital
True-Up, shall be distributed from the Contingency Escrow to the Sellers in
accordance with each Seller’s payment percentage as set forth in Exhibit G,
by wire transfer of immediately available funds.

 

(iv)                           Within
ten (10) Business Days after Buyers’ delivery of the Future Capital
True-Up Notice (if the Sellers do not dispute the Future Capital True-Up) or
within one (1) Business Day after the final resolution of such dispute
pursuant to the procedures set forth in Exhibit W (if the Sellers
dispute the Future Capital True-Up), the Buyers and the Sellers shall deliver
joint written instructions (“Joint 

 

33

 

Instructions”) to the Escrow Agent to
(x) pay to the Buyers from the Contingency Escrow an amount equal to the
Excess Costs, if any, and (y) pay to the Sellers the excess, if any, of (A) the
remaining amount in the Contingency Escrow over (B) the Excess Costs, in
accordance with each Seller’s payment percentage as set forth in Exhibit G,
by wire transfer of immediately available funds. The Sellers agree that if the
Contingency Amount is insufficient to pay the Excess Costs, the Sellers shall
be jointly and severally liable for the amount of Excess Costs in excess of the
Contingency Amount and shall pay the amount thereof to the Buyers by wire
transfer to an account specified by the Buyers within ten (10) Business
Days after the Buyers’ demand. In the event the Future Capital Payment exceeds
the actual costs to achieve Final Completion of the Meadows Projects, within
ten (10) Business Days after Final Completion of the Meadows Projects, the
Buyers shall provide reasonable supporting documentation to the Sellers and
shall pay such excess amount to the Sellers in accordance with each Seller’s
payment percentage as set forth in Exhibit G, by wire transfer of
immediately available funds.

 

(v)                               All
payments made pursuant to this Section 2.2(e) shall be treated
for all Tax purposes as an adjustment to the Purchase Price.

 

(f)           Holdback Tax Amount. The
Buyers agree to use commercially reasonable efforts to recover the entire
Holdback Tax Amount from Magna by making claims for such amount under the
Holdback Agreement. If the Buyers do not recover the entire Holdback Tax
Amount, Buyers may deliver to the Sellers a written notice setting forth the
amount of the Holdback Tax Amount that the Buyers failed to recover (the “Unrecovered
Amount”) from Magna. Within ten (10) Business Days of Buyers’ delivery
of such notice, the Sellers agree to pay to the Buyers the Unrecovered Amount
by wire transfer of immediately available funds to an account designated by the
Buyers. Payment of the Unrecovered Amount pursuant to this Section 2.2(f) shall
be treated for all Tax purposes as an adjustment to the Purchase Price.

 

(g)          Pension Liability.

 

(i)                                 Prior
to the Closing, the Sellers and CCR shall cause the Companies to use their
reasonable best efforts to recover from Magna the withdrawal liability due and
payable to the Sports Arena Employees Local No. 137 Retirement Plan (the “Fund”)
as determined by the Fund pursuant to Sections 4202 and 4219 of ERISA (the “Meadows
Withdrawal Liability”) by making claims against Magna under the Meadows
Purchase Agreement, RSA, or the Holdback Agreement, as applicable, for the
amount of the Meadows Withdrawal Liability and/or for breach of Magna’s
representations, warranties or covenants relating to the Fund pursuant to the
Meadows Purchase Agreement or RSA. In furtherance and not in limitation of the
foregoing covenant, the Sellers and CCR shall (x) cause the 

 

34

 

Companies to act diligently and promptly to pursue any such claims; (y) provide
to the Parent and the Buyers copies of any agreements, material correspondence
or other material documents relating to any such claims; and (z) keep the
Parent and the Buyer generally apprised on a regular basis (but no less
frequently than once a month) of the status of any such claims and the progress
in obtaining from Magna all or any portion of the Meadows Withdrawal Liability.

 

(ii)                               If,
by the tenth (10th) Business Day prior to the anticipated Closing Date, the
Companies have not recovered amounts equal to the full amount of the Meadows
Withdrawal Liability from Magna, through either a Cash Payment or a Holdback
Reduction (each as defined below), then, within the five (5) Business Days
following such tenth-Business Day, the Sellers, at their election, shall either
(1) reduce the Purchase Price by the amount of the Meadows Withdrawal
Liability not so recovered or (2) provide adequate security to the Buyers
(by way of escrow, bond or other comparable credit support) that is reasonably
satisfactory to the Buyers for the amount of the Meadows Withdrawal Liability
not so recovered. If the Meadows Withdrawal Liability is to be paid over time
after the Closing, then the amount of such Purchase Price reduction or security
shall equal the net present value of the Meadows Withdrawal Liability, as
mutually agreed by the Buyers and the Sellers. In the event that the Buyers and
the Sellers are unable to agree upon such net present value, the determination
thereof shall be submitted for resolution to an independent expert with respect
to such matters, jointly selected by the Buyers and the Sellers. The
determination of such independent expert of the net present value of the
Meadows Withdrawal Liability shall be final and binding on all parties hereto. For
the avoidance of doubt, any settlement of claims by the Companies against Magna
with respect to the Companies’ claims under the first sentence of paragraph (i) of
this Section 2.2(g), whether in the form of a Cash Payment or a
Holdback Reduction shall be deemed to reduce the amount of the Meadows
Withdrawal Liability for which the Sellers are responsible under paragraph (ii) of
this Section 2.2(g), provided that any such settlement does not
impose any material Liabilities or obligations on the Companies following the
Closing.

 

(iii)                            If, as
of the Closing Date, any claims or actions are pending against Magna with
respect to the unrecovered Meadows Withdrawal Liability or an alleged breach of
representations, warranties or covenants relating to the Fund by Magna under
the Meadows Purchase Agreement, RSA or the Holdback Agreement, the Buyers shall
cause the applicable Companies to prosecute such claims at the sole cost and
expense, and at the direction and control of the 

 

35

 

Sellers, and shall not settle or compromise such claims or actions
without the prior written consent of the Sellers; provided, that if such claims
or actions with respect to the unrecovered Meadows Withdrawal Liability are
resolved or settled by the Companies with Magna after the Closing (whether in
the form of a cash payment to the Companies or an offset or reduction in the
Holdback Amount (as defined in the Meadows Purchase Agreement)), the Buyers or
the Companies, as the case may be, shall promptly, but in no event later than
ten (10) Business Days, remit to the Sellers, in cash, the amount of such
cash payment or offset or reduction to the Holdback Amount. Notwithstanding the
foregoing, in connection with prosecuting any such claims or actions, neither
the Buyers nor the Companies shall be obligated to (1) incur any
out-of-pocket expense unless such expense is advanced or substantially
simultaneously reimbursed by the Sellers or (2) violate any provision of
any Law; and, in the event that (x) the Sellers fail, within ten (10) Business
Days of Sellers’ receipt of Buyers’ written request to advance or reimburse, to
advance or reimburse the costs and expenses arising out of, relating to or in
connection with the prosecution of such claims or actions, or (y) the
Buyers reasonably determine (after providing twenty (20) Business Days’ (or
such shorter period as may be required under the circumstances) written notice
to the Sellers) that actions to be taken by either Buyer or any Company in
connection with the prosecution of such claims would violate any provision of any
Law, the Buyers and the Companies may terminate the prosecution of such claims
or actions with or without prejudice to such claims or actions being reinstated.
In furtherance of the foregoing, from and after the Closing, the Sellers shall
indemnify and hold harmless the Buyers and the Companies from and against any
and all Damages suffered or incurred by either Buyer or any Company arising out
of, relating to or in connection with any action taken by the Buyers or any
Company at the request of the Sellers in connection with prosecuting any such
claims or actions.

 

(iv)                              As
used herein, (1) “Cash Payment” means payments by Magna to the
Companies in cash, the full amount of which is retained by the Companies from
and after the Closing, and (2) “Holdback Reduction” means an amount
by which the Holdback Amount is reduced or offset, as evidenced by an
acknowledgment in writing by Magna that such amount is an Agreed Upon Loss (as
defined in the Meadows Purchase Agreement) under the Holdback Agreement or
other comparable acknowledgment in writing and that represents a
dollar-for-dollar reduction of the Holdback Amount, in each case, pursuant to a
settlement that does not impose any material Liabilities or obligations on the
Companies after the Closing.

 

36

 

(v)                                 Any
Purchase Price reduction or provision of security referenced in the second
sentence of Section 2.2(g)(i) shall be treated for all Tax
purposes as an adjustment to the Purchase Price.

 

(h)           Cannery East Excess Costs.

 

(i)                                     In
the event the Future Capital Payment, if any, for the Cannery East Project is
insufficient to pay the actual costs that are necessary to achieve Final
Completion of the Cannery East Project (the “Cannery East Excess Costs”),
then within ten (10) Business Days following the Final Completion of the
Cannery East Project, the Buyers may deliver written notice to the Sellers (the
“Cannery True-Up Notice”),  which notice shall state (1) that some or
all of the Future Capital Payment has been applied to the Cannery East Project
and the amount remaining, if any, is insufficient to achieve Final Completion
of the Cannery East Project and (2) the amount in excess of the remaining
Future Capital Payment necessary to achieve such Final Completion (the “Cannery
True-Up”). The Buyers shall provide with the Cannery True-Up Notice
accounting and reasonable supporting documentation for the Buyers’ calculation
of the Cannery True-Up. The Sellers may dispute the Cannery True-Up as set
forth in the Cannery True-Up Notice by following the procedures set forth in Exhibit W.

 

(ii)                            The
Sellers agree that they shall be jointly and severally liable for the Cannery
East Excess Costs, if any. Within ten (10) Business Days after Buyers’
delivery of the Cannery True-Up Notice (if the Sellers do not dispute the
Cannery  True-Up) or within one (1) Business
Day after the final resolution of such dispute pursuant to the procedures set
forth in Exhibit W (if the Sellers dispute the Cannery True-Up),
the Sellers shall pay to the Buyers the Cannery East Excess Costs by wire
transfer of immediately available funds. In the event the Future Capital
Payment exceeds the actual costs to achieve Final Completion of the Cannery
East Project, within ten (10) Business Days after Final Completion of the
Cannery East Project, the Buyers shall provide reasonable supporting
documentation to the Sellers and shall pay such excess amount to the Sellers in
accordance with each Seller’s payment percentage as set forth in Exhibit G,
by wire transfer of immediately available funds.

 

(iii)                            All
payments made pursuant to this Section 2.2(h) shall be treated
for all Tax purposes as an adjustment to the Purchase Price.

 

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

 

37

 

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

 

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

 

(b)           the Closing Statement;

 

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

 

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

 

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

 

(f)            the Non-Competition Agreements duly
executed by each of Mr. William Paulos and Mr. William Wortman;

 

(g)           the assignment documents evidencing
the assignment and transfer of the Millennium Units and the HoldCo Units, each
substantially in the respective forms as attached hereto as Exhibit R,
and the sale documents evidencing the sale of the Option Agreement,
substantially in the form as attached hereto as Exhibit N
(collectively, the “Assignment Documents”);

 

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

 

(i)            the FIRPTA Certificates required by Section 7.20;

 

(j)            the Transition Services Consulting
Agreement duly executed by Millennium Gaming, Inc.;

 

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

 

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

 

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

 

(n)           certificates representing the
Millennium Units; and

 

38

 

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

 

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

 

(a)           an amount equal to the Closing
Payment (as calculated pursuant to Section 2.2(a));

 

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

 

(c)           the Releases;

 

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

 

(e)           the Non-Competition Agreements duly
executed by the Parent and the Buyers;

 

(f)            the Transition Services Consulting
Agreement duly executed by the Parent and the Buyers; and

 

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

 

2.5.          Final Statements.

 

(a)           Preparation of Statement of Free
Cash Flow. Within sixty (60) days after the Adjustment Date in the event
that the Closing has occurred prior to the Adjustment Date, the Buyers shall
prepare and deliver, or cause to be prepared and delivered, to the Sellers a
statement calculating the Free Cash Flow (the “Actual Statement”). The
Actual Statement shall be certified by the Buyers as fairly presenting, in all
material respects, the Free Cash Flow.

 

(b)           Examination by the Sellers. Upon
receipt of the Actual Statement, the Sellers shall have thirty  (30) days (the “Review Period”) to review such
Actual Statement. In connection with its review of the Actual Statement, the
Buyers shall give the Sellers (including its Representatives) full access at
all reasonable times to the books, records and other materials of the Companies
and the personnel of, and work papers prepared by or for, any Company or any
Company’s accountants or in any Company’s or any Company’s accountants’
possession to the extent that they relate to the Companies, including to such
historical financial information relating to the Companies as the Sellers
(including their Representatives) shall reasonably request in order to permit
the timely and accurate review of the Actual Statement.

 

39

 

(c)           Objection by the Sellers. On
or prior to the last day of the Review Period, the Sellers may object to the
Actual Statement and the computation of Free Cash Flow (including whether
appropriate adjustments were made in circumstances where the operations during
the FCF Period materially differed from the ordinary course of business
consistent with the Companies’ historical practices prior to the FCF Period)
set forth in the Actual Statement, by delivering to the Buyers a written
statement setting forth in reasonable detail the basis and amount of the
Sellers objections to the Actual Statement and the computation of Free Cash
Flow (the “Statement of Objections”). If the Sellers fail to deliver the
Statement of Objections to the Buyers within the Review Period, the Actual
Statement and computations of Free Cash Flow set forth therein, shall be deemed
to have been accepted by the Sellers and shall be final and binding on all
parties hereto for purposes of the Actual Statement and Free Cash Flow. If the
Sellers deliver the Statement of Objections to the Buyers within the Review
Period, the Sellers and the Buyers shall negotiate in good faith to resolve
such objections, and any objections that are resolved by a written agreement
among the Buyers and the Sellers shall be final and binding on all parties
hereto for purposes of the Actual Statement and Free Cash Flow.

 

(d)           Resolution of Disputes. If the
Sellers and the Buyers fail to reach an agreement with respect to all of the
matters set forth in the Statement of Objections, then the matters still in
dispute shall, not later than thirty (30) days after the delivery of the
Statement of Objections (or, if earlier, the date on which either the Sellers
or the Buyers affirmatively terminates discussions in writing with respect to
the Statement of Objections), be submitted for resolution to an independent
accounting firm jointly selected by the Buyers and the Sellers or, if the
Buyers and the Sellers are unable to agree on such accounting firm, within the
thirty (30) days after the delivery of the Statement of Objections, an
independent accounting firm jointly selected within ten (10) days by the
Buyers’ accounting firm and an accounting firm identified by the Sellers (such
firm, the “Independent Accounting Firm”). The Independent Accounting
Firm shall act as an expert and not as an arbitrator, and shall resolve the
matters still in dispute and adjust the Actual Statement and Free Cash Flow set
forth in the Actual Statement to reflect such resolution. The Independent
Accounting Firm’s resolution of the matters in dispute shall be final and
binding on all parties hereto for purposes of the Actual Statement and  Free Cash Flow. The Independent Accounting
Firm shall make a determination as soon as practicable after its engagement.

 

(e)           Scope of Review. The scope of
any dispute to be resolved by the Independent Accounting Firm shall be limited
to whether the amounts set forth on the Actual Statement in respect of Free
Cash Flow were obtained from and in accordance with the books and records of
the Companies and prepared in accordance with the terms of this Agreement and
the sample statements attached as Exhibit B after taking into
account the items set forth in the Actual Statement and the objections thereto
as set forth in the Statement of Objections. In resolving a disputed item, the
Independent Accounting Firm may not assign a value to any particular item
greater than the greatest value for such item claimed by the Buyers or the
Sellers or less than the smallest value for such item claimed by the Buyers or
the Sellers, in each case as presented to the Independent Accounting Firm in
the Actual Statement and the Statement of Objections.

 

(f)            Fees, Costs and Expenses of the
Independent Accounting Firm. The fees, costs and expenses of the
Independent Accounting Firm shall be borne 50% by the Buyers, on the one hand,
and 50% by the Sellers, on the other hand. Each party shall bear the fees and
expenses 

 

40

 

of its own independent accounting firm retained to
select the Independent Accounting Firm, if applicable.

 

(g)           Access to Supporting Documentation.
The Buyers and the Sellers shall each make readily available to the Independent
Accounting Firm all relevant work papers and books and records relating to the
Companies, the Actual Statement and the computation of Free Cash Flow, as
applicable, as are requested by the Independent Accounting Firm and shall use
commercially reasonable efforts to cooperate with the Independent Accounting Firm
in resolving any disputed matters.

 

(h)           Payment of Purchase Price. Within
five (5) Business Days after the Actual Statement and computations of the
Free Cash Flow become final and binding, the Buyers shall pay to the Sellers
the Free Cash Flow plus interest thereon calculated pursuant to the following
sentence. The Free Cash Flow shall bear interest through and including the date
of payment at the rate of 6% per annum for the period from but not including
the Adjustment Date and shall be calculated on the basis of a year of 360 days.
Any such payment shall be made by wire transfer of immediately available funds
to a bank account or accounts as shall be designated in writing by the Sellers
or the Buyers, as the case may be, no later than one Business Day prior to the
payment date. The final determination of the Free Cash Flow shall be final and
binding on all parties hereto for purposes of the determination of the Purchase
Price.

 

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

 

41

 

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

 

ARTICLE
3

 

Closing

 

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

 

3.2.          Closing Extension. Notwithstanding Section 3.1,
in the event that the condition stated in Section 8.2(c)(i) has
not been satisfied and either (a) the Pre-Completion Closing Notice
delivered pursuant to Section 7.18 states that the Estimated
Completion Date is after the Pennsylvania Date (or no Pre-Completion Closing
Notice is delivered pursuant to Section 7.18), or (b) the
Buyers deliver a Notice of Objection pursuant to Section 7.18, then
the condition in Section 8.2(c) (the “Pennsylvania
Condition”) shall not be deemed satisfied, and the Buyers may elect to
extend the date for the Closing to take place by delivering an officer’s
certificate to the Sellers (i) stating that the Buyers are prepared to
close (other than for the existence of the Pennsylvania Condition, and other
than those conditions that by their nature are to be satisfied at the Closing
but subject to the fulfillment or waiver of those conditions) and (ii) agreeing
to extend the date for the Closing to the earlier of (A) three (3) Business
Days after the Estimated Completion Date or (B) the Pennsylvania Date, as
it may be extended or as it may have been extended (the “Closing Extension”).
Upon delivery of such officer’s certificate, the Sellers shall have until the
expiration of the Closing Extension in which to cause the condition stated in Section 8.2(c)(i) to
be satisfied, and the Closing shall occur within two Business Days 

 

42

 

after satisfaction of such condition if all other
conditions to Closing remain satisfied or capable of satisfaction at the
Closing (other than those conditions that by their nature are to be satisfied at
the Closing, but subject to fulfillment or waiver of those conditions).

 

3.3.          Closing Date. The date on which the Closing
occurs is referred to as the “Closing Date”.

 

ARTICLE
4

 

Representations
and Warranties Regarding Sellers

 

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

 

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

 

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

 

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

 

43

 

capable of becoming an agreement or option for the
acquisition of the HoldCo Units. Except as provided in this Agreement or any
Other Document, each of AcquisitionCo, Blocker and HoldCo and, to the knowledge
of HoldCo, each other member, partner or other owner of CCR, AcquisitionCo or
Blocker owns no right, title or interest (record or beneficial) to any other
equity interests of CCR, AcquisitionCo or Blocker, as the case may be, or right
of any kind to have any such equity interests.

 

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

 

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

 

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

 

44

 

or AcquisitionCo is bound relating to the voting or
registration of any equity interests of Blocker or AcquisitionCo or preemptive
rights with respect thereto.

 

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

 

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

 

(i)                                  AcquisitionCo
and Blocker have timely paid all Taxes due with respect to each such entity,
except with respect to Taxes that are being contested in good faith by
appropriate proceedings and for which adequate reserves (in accordance with
GAAP) have been maintained. All Taxes that AcquisitionCo and Blocker have been
required to collect or withhold have been duly collected or withheld, and have
been, to the extent required when due, duly paid to the proper Tax Authority
and each Company has complied with all material information reporting and
record keeping requirements related to withholding.

 

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

 

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

 

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

 

45

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

46

 

disposition made on or prior to the Closing Date; or (v) prepaid
amount received on or prior to the Closing Date.

 

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

 

(xiv)                      Neither
AcquisitionCo nor Blocker has participated or engaged in any transaction that
gave rise to (x) a registration obligation under section 6111 of the Code
or the Treasury Regulations thereunder, (y) a list maintenance obligation
under section 6112 of the Code or the Treasury Regulations thereunder, or (z) a
disclosure obligation as a “reportable transaction” under section 6011 of the
Code and the Treasury Regulations thereunder (or in each of clauses (x), (y) or
(z) any corresponding or similar provision of state, local or foreign Tax
law).

 

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

 

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

 

47

 

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

 

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

 

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

 

(k)           No Violations. The execution
and delivery by HoldCo of this Agreement and the Other Documents to which it is
a party does not, and the consummation by HoldCo of the transactions
contemplated hereby and thereby will not:

 

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

 

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

 

48

 

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

 

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

 

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

 

(a)           Organization and Good Standing.
The Seller (i) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii) has all
requisite power and authority to own, operate and lease its properties and to
carry on its business as now conducted and (iii) is qualified to transact
business and in good standing in each state or jurisdiction in which the
ownership of its property or conduct of its business requires such qualification,
except for failures to so qualify or be in good standing that, individually or
in the aggregate, are not material to its ability to perform its obligations
hereunder or under any of the Other Documents to which it is a party and are
not reasonably likely to prohibit or materially restrict or delay its
performance of this Agreement or any of the Other Documents to which it is a
party.

 

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

 

(c)           Consents and Approvals. Except
for HSR Notifications, the Gaming Approvals and the Negative Pledge Approval,
no notices, reports, registrations or other filings are required to be made by
the Seller with, nor are any consents, approvals or Governmental 

 

49

 

Authorizations required to be obtained by the Seller
from, any Governmental Entity, in connection with the execution, delivery or
performance by such Seller of this Agreement or the Other Documents to which it
is a party, except where the failure to make such notices, reports,
registrations or other filings, or to obtain such consents, approvals or Governmental
Authorizations, individually or in the aggregate, are not material to the
Seller’s ability to perform its obligations under this Agreement or any of the
Other Documents to which it is a party and are not reasonably likely to
prohibit or materially restrict or delay the performance by the Seller of this
Agreement or any of the Other Documents to which it is a party.

 

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

 

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

 

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

 

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

 

(iii)                               result
in the creation or imposition of any Liens with respect to any of the
Millennium Units or Holdco Units, in each case, other than (A) as set
forth on Schedule 4.3(e) of the Sellers Disclosure Schedules and (B) for
any such matters that, individually or in the 

 

50

 

aggregate, are not material to the ability of the Seller to perform its
material obligations hereunder or under any of the Other Documents to which it
is a party and are not reasonably likely to prohibit or materially restrict or
delay its performance of this Agreement or any of the Other Documents to which
it is a party;

 

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

 

(v)                                 assuming
all notices, reports, registrations, filings, consents, approvals and other
Governmental Authorizations contemplated by Section 4.3(c) having
been made or obtained, as applicable, violate, breach, contravene or conflict
with or result in the cancellation, modification, revocation or suspension of,
any Governmental Authorization required for Seller to lawfully conduct and
operate its business in the manner it currently conducts and operates such
business or to permit it to own, lease, operate and use its assets and
properties in the manner it currently owns, leases, operates and uses them,
other than (A) any violations, contraventions or conflicts with, or
cancellations, modifications, revocations or suspensions of any such
authorization that are set forth on Schedule 4.3(e) of the Sellers
Disclosure Schedules or (B) any violations, contraventions or conflicts
with, or cancellations, modifications, revocations or suspensions of such
Governmental Authorization that, individually or in the aggregate, are not
material to the ability of the Seller to perform its material obligations
hereunder or under any of the Other Documents to which it is a party and are
not reasonably likely to prohibit or materially restrict or delay its
performance of this Agreement or any of the Other Documents to which it is a
party.

 

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

 

51

 

ARTICLE 5

 

Representations
and Warranties Regarding the Companies

 

Except as set forth in the corresponding sections of
the Sellers Disclosure Schedules (provided that a listing of an item in one
section of the Sellers Disclosure Schedules shall be deemed to be a listing in
each section of the Sellers Disclosure Schedules to which such item relates
only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to another section), each of the
Sellers and CCR, jointly and severally, hereby represent and warrant to the
Parent and the Buyers as follows:

 

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

 

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

 

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

 

5.2.          Capitalization.

 

(a)           Exhibit A to this
Agreement contains a complete and accurate description of the ownership
structure of the Companies (including the identity and percentage ownership of
each Company and each other member, partner or other owner).  The Companies do not have any other
Subsidiaries or own any stock of, or any equity participation in, any Person,
except as set forth on Exhibit A to this Agreement.  Each Company and each other member, partner or
other owner, as applicable, is the owner of all right, title and interest
(record and beneficial) in and to the issued and outstanding equity interests
of the Companies as set forth on Exhibit A to this Agreement, free
and clear of all Liens, other than Permitted Exceptions.  No Company and no 

 

52

 

other member, partner or other owner, as applicable,
owns any right, title or interest (record or beneficial) to any other equity
interests of the Companies.  The equity
interests of each Company as set forth on Exhibit A to this
Agreement constitute all of the issued and outstanding equity interests of such
Company.  All of the issued and
outstanding equity interests of each Company have been duly authorized and are
validly issued, fully paid (if applicable) and nonassessable (if applicable)
and none of them has been issued in violation of preemptive or similar
rights.  There are no declared or accrued
but unpaid dividends or distributions with regard to any issued and outstanding
equity interests of any Company, other than distributions by CCR to the Sellers
for payment of Taxes in accordance with the Governing Documents of CCR.

 

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

 

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

 

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

 

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

 

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

 

53

 

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

 

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

 

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

 

(e)           assuming all notices, reports,
registrations, filings, consents, approvals and other Governmental
Authorizations contemplated by Section 5.4 having been made or
obtained, as applicable, violate, breach, contravene or conflict with or result
in the cancellation, modification, revocation or suspension of, any
Governmental Authorization required for any Company to lawfully conduct and
operate its businesses in the manner it currently conducts and operates such
businesses or to permit it to own, lease, operate and use its properties and
assets materially in the manner it currently owns, leases, operates and uses
them, other than (x) any violations, contraventions or conflicts with, or
cancellations, modifications, revocations or suspensions of any such
Governmental Authorization as set forth on Schedule 5.5(e) of the
Sellers Disclosure Schedules and (y) any violations, contraventions or
conflicts with, or cancellations, modifications, revocations or suspensions of
any such Governmental Authorization that are not reasonably likely to prohibit
or materially restrict or delay the consummation of the transactions
contemplated hereby or CCR’s ability to perform its material obligations
hereunder.

 

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

 

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

 

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

 

(c)           any Contract that establishes a
partnership, joint venture or similar arrangement, and any Contract related to
the construction or development of any material 

 

54

 

properties or assets and which by its express terms
will involve expenditures or receipts by any of the Companies (whether actual
or contingent) in excess of $1,000,000;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Accurate and complete copies of all Material Contracts
have been delivered or made available to the Buyers or the Parent. Except as
listed on Schedule 5.6 of the Sellers Disclosure Schedules:  (i) each such Material Contract is
valid, existing and in full force and effect with respect to each Company party
thereto, subject to applicable bankruptcy, insolvency, 

 

55

 

reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and to general principles of equity; and (ii) neither any Company party
thereto, nor, to the knowledge of the Sellers, any other party to such
Contract, is in material breach of or in material default under such Material
Contract and, to the knowledge of any Seller, no event has occurred that with
the lapse of time or the giving of notice or both would constitute a material
breach thereof or a material default thereunder.

 

5.7.          Financial Information.  Attached to Schedule 5.7 of the
Sellers Disclosure Schedules are (a) audited consolidated balance sheets
for the Companies as of December 31, 2005 and 2006 and audited
consolidated statements of operations for the fiscal years ended December 31,
2005 and 2006 (such financial statements, including the footnotes contained
therein, the “Audited Financial Statements”), and the reports thereon of
Piercy Bowler Taylor & Kern, independent certified public accountants,
and (b) an unaudited consolidated balance sheet for the Companies as of September 30,
2007 and an unaudited consolidated statement of operations for the nine month
period ended September 30, 2007 (such financial statements, including the
footnotes contained therein, are referred to as the “Interim Financial
Statements”, and, together with the Audited Financial Statements, the “Financial
Statements”).  The Financial
Statements have been prepared in accordance with GAAP consistently applied throughout
the periods covered by each such statement, are consistent with the books and
records of the Companies, and fairly present, in all material respects, the
consolidated financial condition of the Companies as of the respective dates
and the results of operations and cash flows of the Companies for the
respective periods then ended, as applicable, subject to, in the case of the
Interim Financial Statements (i) the absence of notes and schedules, and (ii) normal
year-end adjustments.

 

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

 

5.9.          Labor Matters.

 

(a)           With respect to the Companies: (i) there
are no trade unions, council of trade unions, employee bargaining agencies or
affiliated bargaining agents representing, purporting to represent or, to the
knowledge of the Sellers, attempting to represent any employees of any of the
Companies by way of certification, interim certification, voluntary recognition,
or succession rights, or have applied or, to the knowledge of the Sellers,
threatened to apply, to be certified as the bargaining agent of any employees
of any of the Companies; (ii) to the knowledge of the Sellers, there has
been no such attempt since January 1, 2005, and there are no threatened or
pending union organizing activities involving any employees of any of the
Companies; (iii) no Company is a party to any labor contract or collective
bargaining agreement with any labor union or labor organization with respect to
employees of any of the Companies; (iv) no Company is currently
negotiating any labor or collective bargaining agreement in respect of
employees of any 

 

56

 

of the Companies; (v) no Company has breached or
otherwise failed to comply in any material respect with the provisions of any
collective bargaining or union contract; and (vi) since January 1,
2005, there has not occurred or, to the knowledge of the Sellers, been
threatened, any strike, slowdown, picketing, work stoppage, lockout, concerted
refusal to work overtime, claim of unfair labor practice or other similar labor
activity against any of the Companies that would materially disrupt the conduct
of the Business.

 

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

 

(c)           The Companies are and have been in
compliance in all material respects with all notice and other requirements
under the Workers’ Adjustment and Retraining Notification Act (the “WARN Act”)
and any similar foreign, state or local Laws relating to plant closings and
layoffs.  Schedule 5.9(c) of
the Sellers Disclosure Schedules sets forth a true and complete list of the
names and sites of employment or facilities of those employees who suffered an “employment
loss” (as defined in the WARN Act) at any site of employment or facility of any
Company during the ninety (90)-day period prior to the date of this Agreement.

 

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

 

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

 

57

 

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

 

5.10.        Employee Benefit Matters.

 

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

 

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

 

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

 

58

 

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

 

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

 

(f)            No judicial action, suit, or claim or legal, administrative or arbitration
proceeding, investigation or review has been brought, or, to the
knowledge of the Sellers, is threatened, against or with respect to any Company
Benefit Plan, including any audit or inquiry by the Internal Revenue Service or
the United States Department of Labor (other than routine benefits claims).

 

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

 

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

 

59

 

5.11.        Taxes.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

60

 

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

 

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

 

(l)                                     None
of the Companies (a) has ever been a member of an affiliated (within the
meaning of Section 1504 of the Code), combined or unitary group of
corporations  filing a consolidated,
combined or unitary Tax Return; (b) is a successor to any other entity for
Tax purposes by way of merger, liquidation or other transaction; (c)  is a
party to any Tax sharing or indemnification agreement or arrangement with any
person or entity (other than CCR or any of its subsidiaries) pursuant to which
it would have an obligation with respect to Taxes of another person or entity
following the Closing; or (d) has liability for the Taxes of any person
(other than CCR or any of its Subsidiaries) as a transferee or successor or
under Treasury Regulation § 1.1502-6 (or any comparable provision of
state, local or foreign law), by contract or otherwise.

 

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

 

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

 

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

 

5.12.                        Governmental Authorizations. 
The Companies have obtained and maintain in full force and effect all
material Governmental Authorizations required to substantially conduct the
Business of the Companies as it is presently being conducted, and for 

 

61

 

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

 

5.13.                        Insurance.

 

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

 

(b)                                 No
written notice of cancellation or termination or any other notice or indication
of intent to cancel or not to renew any insurance policy of any Company has
been received with respect to any such policy, and each such policy is legally
valid, binding, enforceable and in full force and effect.  Each Company has paid all premiums due, and
has otherwise performed all of its respective material obligations under each
such policy as and when due, except to the extent that the failure to duly pay
the premiums or perform such obligations is not reasonably expected to result
in the loss of coverage under such policies.

 

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

 

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

 

5.14.                        Compliance with Laws.

 

(a)                                  Except
for matters that are the subject of the representations and warranties
contained in Section 5.5, Section 5.9, Section 5.10,
Section 5.11,  Section 5.12, Section 5.15

 

62

 

and Section 5.16, which are controlled by
such Sections without duplication in this Section  5.14, each of
the Companies is in compliance in all material respects with all Laws and
Orders applicable to the Business.

 

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

 

5.15.                        Real Property.

 

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

 

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

 

(c)                                  CCR
has provided to the Buyers accurate and complete copies of all Material
Contracts to which any Company is a party with respect to the construction of
the Cannery East Project, including the Contract with M.J. Dean Construction, Inc.
dated April 5, 2007 (including the addendum dated April 5, 2007) and
amended August 15, 2007.  The
Sellers have provided to the Buyers a true and complete set of the Plans and
Specifications for the 

 

63

 

Cannery East Project, and to the knowledge of the
Sellers, such Plans and Specifications (i) comply in all material respects
with all Laws and (ii) have been approved by each Governmental Entity as
is required for construction of the Cannery East Project.  To the Sellers’ knowledge, there are no facts
or conditions affecting the Cannery East Project which would materially
interfere with the Completion of the Cannery East Project, or the use,
occupancy or operation thereof.

 

(d)                           CCR has
provided to the Buyers accurate and complete copies of all Material Contracts
to which any Company is a party with respect to the construction of the Meadows
Projects as of the date hereof, and CCR has provided to the Buyers the most
recent draft of the contract with LPCiminelli, Inc., which has not been
executed as of the date hereof.  The
Sellers have provided to the Buyers a true and complete set of any and all
existing Plans and Specifications for the Meadows Projects, and to the
knowledge of the Sellers, such Plans and Specifications, at their level of
completion on the Closing Date, comply in all material respects with all
Laws.  To the Sellers’ knowledge, there
are no facts or conditions affecting the Meadows Projects that would materially
interfere with the Completion of the Meadows Projects, or the use, occupancy or
operation thereof.

 

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

 

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

 

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

 

(iii)                             all Owned Real Property
and all real property subject to a Real Property Lease of the Companies is, in
all material respects, in good operating condition and repair and regularly
maintained in accordance with the Companies’ past practice and consistent with
the standards that would be applied by a reasonable prudent owner of similar
properties, and, to the Sellers’ knowledge, there is no structural, electrical,
mechanical, plumbing, air conditioning or heating defect or other defect in the
building systems (other than any defects that will be repaired or replaced in
the ordinary course of business with normal or routine capital expenditures for
maintenance) in the improvements located on the Owned Real Property or real
property subject to a Real Property Lease except for defects which,
individually or in the aggregate, would not have a material adverse effect (A) on
the Owned Real Property or real property subject to a Real Property Lease or (B) on
the value, use or occupancy of the real property or improvements;

 

64

 

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

 

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

 

(vi)                             to
the Sellers’ knowledge, with respect to each of the Projects, as of the date
hereof:  (A) all Work on such
Project has been performed in a good and workmanlike manner in all material
respects in accordance with (1) the Plans and Specifications and
Timetables and (2) the requirements of all applicable agreements, Laws and
Governmental Authorities having jurisdiction over such Project; and (B) the
Companies have obtained and maintained or caused to be obtained and maintained
in existence all material licenses, permits and approvals required for such
Project.

 

5.16.                        Environmental Matters.

 

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

 

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

 

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

 

65

 

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

 

(e)                                  None
of the Companies is currently subject to any Order relating to, compliance
with, Liability under, any Environmental Law, Environmental Permit, or the
investigation, sampling, monitoring, treatment, remediation, removal or cleanup
of any Hazardous Materials.

 

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

 

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

 

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

 

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

 

5.17.                        Intellectual Property.

 

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

 

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

 

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

 

66

 

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

 

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

 

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

 

5.18.                        Absence of Certain Changes. 
Since September 30, 2007 through the date of this Agreement, (i) there
has not occurred any Effect that would reasonably be expected to have a
Material Adverse Effect, and (ii) no Company has taken any of the actions
specified in clause (a), (c), (d), (f), (g), (h), (i), (k), (l), (n), (o), (p) or
(t) of Section 7.1, except with respect to the Projects
pursuant to and in substantial conformity with the applicable Plans and
Specifications in the case of clauses (g), (h) or (p) of Section 7.1,
or authorized or agreed to take any of the actions specified in the foregoing
clauses.

 

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

 

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

 

5.21.                        Related Party Transactions.

 

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

 

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

 

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

 

67

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 6

 

Representations and
Warranties of the Buyers and the Parent

 

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

 

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

 

68

 

material to its ability to perform its obligations
hereunder and are not reasonably likely to prohibit or materially restrict or
delay the performance of this Agreement by either of the Buyers or the Parent.

 

6.2.                              Buyer Authority; Enforceability. 
Each of the Buyers and the Parent has the requisite power and authority
to execute, deliver and perform their obligations under this Agreement and the
Other Documents to which the Buyers or the Parent is a party, and to consummate
the transactions contemplated hereby and thereby.  The execution, delivery and performance of
this Agreement and such Other Documents and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action on the part of the Buyers or the Parent, as
applicable.  This Agreement and the Other
Documents, when executed by the other parties hereto and thereto, will
constitute legally valid and binding obligations of the Buyers or the Parent,
as applicable, enforceable against it in accordance with their terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights and remedies generally and to general
principles of equity.

 

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

 

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

 

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

 

6.6.                              Brokers and Finders. 
Except for Macquarie Securities (USA) Inc. and Global Leisure Partners,
neither the Buyers nor the Parent has retained any agent, broker, 

 

69

 

investment banker, intermediary, finder, or firm
acting on behalf of the Buyers or the Parent in connection with this Agreement
or the transactions contemplated hereby. 
The Buyers and the Parent have not incurred, and shall not incur, directly
or indirectly, any liability for any broker’s or finder’s fees or any other
commission or similar fee in connection with this Agreement or any transaction
contemplated hereby.

 

6.7.                              Securities Act. 
The Buyers are acquiring the Millennium Units and the HoldCo Units, as
applicable, for their own account and not with a view to their distribution
within the meaning of Section 2(11) of the Securities Act of 1933, as
amended (the “Securities Act”), in any manner that would be in violation
of the Securities Act.  Neither of the
Buyers has, directly or indirectly, offered the Millennium Units, the HoldCo
Units or the CCR Units to anyone or solicited any offer to buy the Millennium
Units, the HoldCo Units or the CCR Units from anyone, so as to bring the offer
and sale of the Millennium Units, the HoldCo Units or the CCR Units within the
registration requirements of the Securities Act.  Neither of the Buyers will sell, convey,
transfer or offer for sale any of the Millennium Units, the HoldCo Units or the
CCR Units except upon compliance with the Securities Act and any applicable
state securities or “blue sky” laws or pursuant to any exemption therefrom.

 

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

 

6.9.                              Gaming Approvals and Licensing Matters. 
The Buyers have delivered to the Sellers a list of individuals and
entities whom the Buyers are advised as of the date hereof are reasonably
likely to be the Licensed Persons, and such list sets forth those Gaming
Approvals which such individuals and entities have obtained in the past (the “List”).  As of the date hereof, none of the Parent,
the Buyers or any other direct or indirect wholly owned Subsidiary of the
Parent, or any director or executive officer of any of them, or Consolidated
Press Holdings Ltd., or any direct or indirect wholly owned Subsidiary of
Consolidated Press Holdings Ltd., or any of the individuals and entities listed
on the List, has ever been denied a gaming license, approval, or related
finding of suitability by any Gaming Authority, or had any gaming license
revoked or suspended.  As of the date
hereof, neither the Buyers nor the Parent has any knowledge of any fact or
circumstance that would adversely affect its ability or the ability of its
Affiliates and the persons and entities listed on the List to obtain all Gaming
Approvals.  As of the date hereof,
neither the Parent nor the Buyers has received any indication from any Gaming
Authority of any state of facts or circumstances that would be reasonably likely
to delay or prevent the receipt by any of the Buyers of a gaming license,
approval or finding of suitability in Nevada or Pennsylvania.

 

70

 

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

 

6.11.        No Other
Representations or Warranties.  Except for the representations and warranties
expressly made by the Buyers and the Parent in this Article 6 or in
any of the Other Documents, neither the Parent nor the Buyers make any other
representation or warranty in connection with the transactions contemplated
hereby.  Each of the Buyers and the
Parent acknowledge that the Sellers, the Companies and their respective
Affiliates and Representatives have not made and do not make any
representations or warranties as to any matter whatsoever except as expressly
set forth in this Agreement and specifically (but without limiting the
generality of the foregoing) that the Sellers, the Companies and their
respective Affiliates and Representatives have not made and do not make any
representations with respect to (i) any projections, estimates or budgets
delivered to or made available to the Parent or the Buyers (or their respective
Affiliates or Representatives) of future revenues, results of operations (or
any components thereof), cash flows or financial condition (or any components
thereof) of the Companies or (ii) the future business and operations of
the Companies.  Except for the
representations and warranties expressly made by the Sellers in Article 4,
Article 5 or in any of the Other Documents to which they are a
party, none of the Sellers or any Affiliates or any of their Representatives
will have or be subject to any liability to the Buyers, the Parent or any other
person resulting from the distribution to the Buyers, the Parent or their
Representatives or the Buyers’ use of, any such information, including any
memoranda or materials distributed on behalf of the Sellers relating to the
Companies or other publications or data room information provided to the
Buyers, the Parent or their Representatives, or any other document or
information in any form provided to the Buyers, the Parent or their
representatives in connection with the sale of the Companies and the
transactions contemplated hereby.

 

ARTICLE 7

 

Covenants
of the Parties

 

7.1.          Conduct of the
Companies.  Except for matters (x) set
forth on Schedule 7.1 of the Sellers Disclosure Schedules or as
otherwise specifically provided in this Agreement, or (y) consented to in
writing by the Buyers (which consent shall not be unreasonably withheld,
conditioned or delayed), or (z) in furtherance of the Projects pursuant to
and in substantial conformity with the applicable Plans and Specifications,
from the date hereof until the Closing Date, each of the Sellers and CCR shall,
and shall cause each of the other Companies to, conduct business in the
ordinary course consistent with past practice, make capital expenditures (other
than with respect to the Projects which are addressed separately below)
consistent with past 

 

71

 

practice, and use all commercially reasonable efforts to maintain and
preserve intact their business organizations, including the services of their
key employees on terms and conditions substantially comparable to those
currently in effect and the goodwill of any Governmental Authorities,
customers, distributors, suppliers and other Persons with which the Companies
have material business relationships. 
For purposes of this Agreement, the ordinary course of business
consistent with past practice includes actions taken to pursue the Projects in
accordance with the Plans and Specifications and Budgets. Without limiting the
generality of the foregoing, and except for matters set forth on Schedule
7.1 of the Sellers Disclosure Schedules, or as otherwise specifically
provided in this Agreement, without the prior written consent of the Buyers
(which consent shall not be unreasonably withheld, conditioned or delayed),
each of the Sellers and CCR shall not, and shall not permit any of the other
Companies to:

 

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

 

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

 

(c)           sell,
lease or otherwise dispose of any material assets, including by merger,
consolidation, asset sale or other business combination, other than (i) assets
of the Excluded HoldCo Subsidiaries and assets of the Excluded Opportunities,
or (ii) sales of equipment and other non-current assets in an amount not
to exceed $250,000 in the ordinary course of business, or (iii) any
salvage sales in connection with the opening of the Projects, or (iv) any
equipment trade-ins in connection with the Projects;

 

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

 

(e)           incur,
create, assume or otherwise become liable for any Indebtedness (including the
issuance of any debt security) or assume, guarantee or endorse, enter into any 

 

72

 

“keep well” arrangement or otherwise become responsible for, whether
directly, contingently or otherwise, the obligations of any other Person,
provided that, notwithstanding the above, the Companies may incur, repay,
prepay, amend or modify any Indebtedness as set forth on Schedule 5.6 of
the Sellers Disclosure Schedules;

 

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

 

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

 

(h)           authorize
any capital expenditures in excess of $5,000,000 except for (i) expenditures
contemplated by the Plans and Specifications and the Budgets for the Cannery
East Project and the Meadows Projects, (ii) expenditures made in response
to any emergency, or (iii) as set forth on Schedule 7.1 of the
Sellers Disclosure Schedule;

 

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

 

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

 

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

 

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

 

(m)          enter
into, modify or amend any Material Contract, except in the ordinary course of
business consistent with past practice, Material Contracts that (i) do not
provide for 

 

73

 

annual expenditures by any of the Companies in excess of $1,000,000, (ii) are
terminable by the Company party thereto on thirty (30) days notice or less or (iii) are
related to the Excluded Opportunities; provided, that, for the purpose of
clarity, the parties acknowledge and agree that renewals of Material Contracts
on substantially the same terms shall be deemed to be in the ordinary course of
business;

 

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

 

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

 

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

 

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

 

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

 

(s)           (i) make,
amend or revoke any material Tax election, (ii) settle or compromise any
material Tax liability, claim or assessment, or agree to any adjustment of any
material Tax attribute, (iii) file any amended material Tax Return, (iv) enter
into any material “closing agreement” within the meaning of Section 7121
of the Code (or any material comparable agreement under state, local or foreign
law), (v) surrender any right to claim a material Tax refund, (vi) consent
to waive any statute of limitations with respect to material Taxes;

 

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

 

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

 

74

 

permitted upon completion of construction of any Project), other than
immaterial variations in policies in the ordinary course consistent with past
practice; or

 

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

 

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

 

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

 

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

 

7.4.          Reasonable Best
Efforts.

 

(a)           Subject
to the terms of this Agreement and applicable Law (including Gaming Laws and
antitrust Laws), each party will use its reasonable best efforts to take, or
cause to be taken, all appropriate actions, to file, or cause to be filed, all
documents and to do, or cause to be done, all things necessary, proper or
advisable to consummate the transactions contemplated by this Agreement,
including preparing and filing as promptly as reasonably practicable all
documentation to effect all Governmental Authorizations, including all
necessary filings, consents, waivers, approvals, Authorizations, permits or
orders from all Governmental Entities (including Gaming Authorities) or other
Persons, provided, however, that in no event shall the Companies be required to
pay, prior to the Closing, any fee, penalty or other consideration to obtain
any consent, approval or waiver required for the consummation of the
transactions contemplated by this Agreement other than de minimis amounts.  In furtherance and not in limitation of the
foregoing, each party hereto agrees to make an appropriate filing of any HSR
Notification with respect to the transactions contemplated by this Agreement on
a date as agreed to by the parties prior to June 1, 2008 and to supply as
promptly as reasonable practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and use its reasonable
best efforts to take or cause to be taken all other actions necessary, proper
or advisable consistent with this Section 7.4 to cause the
expiration or termination of the applicable waiting periods, or receipt of
required authorizations, as applicable, under the HSR Act.  The filing fees with respect to the HSR
filings shall be borne 50% by the Buyers, on the one hand, and 50% by the
Sellers, on the other hand.  Without
limiting the foregoing, the parties shall 

 

75

 

request and shall use their respective reasonable best efforts to
obtain early termination of the waiting period under the HSR Act as promptly as
reasonably practicable.

 

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

 

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

 

(d)           In
the event that any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) by a Governmental Entity or private
party challenging the transactions contemplated by this Agreement, or any Other
Agreement, each of the parties shall cooperate in all respects with each other
and use its respective reasonable best efforts to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits or materially restricts or
delays consummation of the transactions contemplated by this Agreement.

 

(e)           In
furtherance and not in limitation of the covenants of the parties contained in Section 7.4(a),
the Buyers hereby agree to use their reasonable best efforts (i) to as
promptly as practicable after the date hereof, obtain all licenses, permits,
approvals, authorizations, registrations, findings of suitability, franchises,
entitlements, waivers and exemptions issued by any Gaming Authority required to
permit the parties hereto to consummate the transactions contemplated by this
Agreement or necessary to permit the Buyers to own and operate the Companies
(collectively, “Gaming Approvals”), (ii) to avoid any action or
proceeding 

 

76

 

by any Gaming Authority challenging the consummation of the
transactions contemplated hereby, (iii) to make or cause to be made all
necessary filings, and thereafter make or cause to be made any other required
submissions with respect to this Agreement and the transactions contemplated
hereby, as required under the Gaming Laws, (iv) to schedule and attend (or
cause to be scheduled and attended) any hearings or meetings with Gaming
Authorities to obtain the Gaming Approvals as promptly as possible; and (v) to
act diligently and promptly to pursue any and all of the foregoing as necessary
to obtain the Gaming Approvals. As of the date hereof, each Gaming Approval to
be obtained by the Buyers pursuant to this Section 7.4(e) is
listed on Exhibit X attached hereto.

 

(f)            The
Parent and the Buyers shall use their reasonable best efforts to cause all
Persons who are associated or affiliated with the Parent, the Buyers or their
Affiliates and who are, in the view of the applicable Gaming Authorities,
required to be licensed under applicable Gaming Laws in order to consummate the
transactions contemplated by this Agreement (the “Licensed Persons”), to
submit to the licensing process or apply for waivers from the licensing requirements
and, as promptly as reasonably practicable, to prepare and file all
documentation to effect all Gaming Approvals. 
The Parent and the Buyers shall use their respective reasonable best
efforts to (i) file or cause to be filed (x) by no later than December 21,
2007, all required initial applications and documents in respect of the
Licensed Persons (other than those with respect to institutional holders of 5%
or more of the shares of the Parent, which shall be filed as soon as reasonably
practicable following the date of this Agreement) in connection with obtaining
the Gaming Approvals or waivers from the licensing process and (y) as
promptly as practicable after the date hereof all other required applications
and documents in connection with obtaining the Gaming Approvals, (ii) request
or cause to be requested an accelerated review, if available, from the Gaming
Authorities in connection with such filings, (iii) act diligently and
promptly to pursue the Gaming Approvals, and (iv) keep CCR and the Sellers
and its gaming counsel generally apprised on a regular basis (but no less
frequently than once a month) of the status of all filings referenced in this Section and
the progress in obtaining the Gaming Approvals generally, including the status
with respect to matters, on, before, or after October 1, 2008, related to
the issues set forth in subsection (h) hereof.

 

(g)           In
the event of any meeting, in-person discussion or appearance before any Gaming
Authority or the staff or regulators of any Gaming Authority with respect to
the Gaming Approvals,  each party shall
make itself available to attend the meeting at the request of the other party
or the Gaming Authority.  In addition,
the parties will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any such meeting and in
connection with any analyses, presentations, memoranda, briefs, filings,
arguments and proposals relating to such meeting, discussion or appearance at
which both parties will be in attendance.

 

(h)           Until
the Closing Date, to the extent permitted by applicable Law, the Parent and the
Buyers shall provide reasonably descriptive written notifications to the
Sellers within three (3) days after the Parent or the Buyers becomes aware
of any of the following events (with the names of the Licensed Persons stated
in such notifications to the extent the notifications pertain to them):

 

77

 

(i)                                    the
Parent, the Buyers or any of the Licensed Persons makes the filings required by
clause (x) of Section 7.4(f) (a “Regulatory Filing”)
by providing a copy of the transmittal letter related thereto;

 

(ii)                                 the
Parent, the Buyers or any of the Licensed Persons receives a waiver directly
related to the transactions contemplated hereby from a Gaming Authority, as
evidenced by a writing from such Gaming Authority;

 

(iii)                              the
Parent, the Buyers or any Licensed Person withdraws any Regulatory Filing;

 

(iv)                             any
Governmental Authorization directly related to the transactions contemplated
hereby is obtained, taken, made or given;

 

(v)                                any
Governmental Entity notifies the Parent, the Buyers or any Licensed Person that
its Regulatory Filing has been placed on an agenda or scheduled for hearing or
consideration (which notification from the Parent or the Buyers to the Sellers
shall also specify the date of such hearing or consideration), delayed or
removed from such agenda or schedule;

 

(vi)                             any
Governmental Entity issues a decision not to take, make or give any
Governmental Authorization or withdraws, revokes, cancels, nullifies or
materially modifies any Governmental Authorization that was previously taken,
made or given, in all cases solely with respect to Governmental Authorizations
directly related to the transactions contemplated hereby;

 

(vii)                          the
Parent, the Buyers or any other direct or indirect wholly owned Subsidiary of
the Parent, or any director or executive officer of any of them, or
Consolidated Press Holdings Ltd., or any direct or indirect wholly owned
Subsidiary of Consolidated Press Holdings Ltd., or any of the individuals and
entities listed on the List, is denied a gaming license, approval, or related
finding of suitability by any Gaming Authority, or has any gaming license
revoked or suspended; or

 

(viii)                       beginning
on October 1, 2008, the Parent, the Buyers or any of the Licensed Persons
has been advised by the staff or regulators handling such Person’s Regulatory
Filing that the applicable Gaming Authority has a concern or issue with respect
to any of such Person’s Regulatory Filings or licensing proceeding, which
concern or issue if it remained unresolved or uncured would become an area of
concern at the gaming licensing hearings or in the gaming licensing
deliberations.

 

78

 

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

 

(j)            The
Sellers agree to use their reasonable best efforts to (i) continue to
cause CCR and the other Companies to maintain any licenses required under
applicable Gaming Laws with respect to the operation of the Business, including
obtaining or renewing all other licenses, permits, approvals, authorizations,
registrations, findings of suitability, entitlements, waivers and exemptions
issued in connection with such licenses and necessary to continue to operate
the Business and (ii) pursuing any renewal application process applicable
to such licenses, including any follow-up submissions and requests.  The Sellers also agree to use their
reasonable best efforts to cause WTA (and its Affiliates that are required to
be licensed in connection with the Meadows Casino Project), to pursue renewal
of the license required by the Pennsylvania Gaming Control Board with respect
to the Meadows Casino Project, including pursuing any follow-up submissions and
requests and obtaining all other material licenses, permits, approvals, authorizations,
registrations, findings of suitability, franchises, entitlements, waivers and
exemptions issued in connection with such license and necessary to continue to
operate the Meadows Casino Project. The Sellers shall keep the Parent and the
Buyers generally apprised on a regular basis (but no less frequently than once
a month) of the status of all filings with respect to the matters referenced in
this Section 7.4(j).

 

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

 

(l)            From
the date hereof until the Closing Date, if any counterparty to any Material
Contract specified in Schedule 7.4(l) (the “Specified Material
Contracts”) notifies any 

 

79

 

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

 

7.5.          Updates to
Disclosure Schedules.

 

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

 

(b)           Notwithstanding
anything to the contrary herein, if the Closing occurs, (i) the inclusion
of any Omitted Items on the Supplemental Disclosure Schedules shall not cure
any breach of any representation or warranty as of the date of this Agreement
and the Buyers shall be entitled to indemnification by the Sellers in accordance
with Section 7.10 and Article 10 in respect thereof,
and (ii) the inclusion of any Pre-Closing Event on the Supplemental
Disclosure Schedules shall not cure any breach of any representation or
warranty as of the Closing Date and the Buyers shall be entitled to
indemnification by the Sellers in accordance with Section 7.10 and Article 10
in respect thereof only in the event that such Pre-Closing Events otherwise
constitute a material breach of such relevant representation or warranty.

 

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

 

7.7.          No
Alternative Transactions.  The parties agree that from
the date hereof through earlier of the Closing Date, the termination of this
Agreement or December 31, 2009, none of the Sellers, Blocker,
AcquisitionCo or the Companies shall and each of the Sellers and the Companies
shall require its respective Representatives not to, directly or indirectly, (i) initiate,
solicit, encourage or otherwise facilitate any inquiry, proposal, offer or
discussion with any party (other than the Parent or the Buyers) concerning any
merger, reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale or license of
material assets or similar business transaction involving any of the Companies,
(ii) furnish any non-public information concerning the business,
properties or assets of any of the Companies to any party (other than the
Parent or the Buyers), or (iii) engage in discussions or negotiations with
any party (other than with the Parent or the Buyers) with respect to, or
consummate, any such transaction, or (iv) enter into, approve, agree to,
recommend or consummate any such transaction. 
If any of the Sellers, the Companies or any of their respective Representatives
receives any bona fide inquiry, proposal or offer of the nature described in
this Section 7.7, the Sellers shall, within one (1) Business
Day after such receipt, notify the Parent of such inquiry, proposal or offer,
including the identity of the other party and the terms of such inquiry,
proposal or offer.

 

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

 

7.9.          Racing
Services Agreement.  In the event that the RSA is terminated
before the Closing Date, CCR agrees to use its commercially reasonable efforts
to either (i) enable the Companies to conduct the harness racing
operations at the Meadows Property or (ii) 

 

81

 

enter into arrangements with a third party to conduct
the racing operations at the Meadows Property and obtain all required Gaming
Approvals in connection therewith, in either case, for at least the minimum
number of racing days required to maintain the Conditional Category I Slot
Machine License or a Category I Slot Machine License, as applicable, and with
such other terms as are reasonably acceptable to the Parent and the
Buyers.  During the three (3) months
prior to the anticipated Closing Date, CCR agrees to use commercially
reasonable efforts to assist the Buyers in making contingency plans with
respect to the conduct of the harness racing operations at the Meadows Property
should the RSA be terminated on or after the Closing Date.

 

7.10.        Tax Matters.

 

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

 

(b)           Tax Indemnification.

 

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

 

(ii)           After the Closing Date, the Sellers
shall jointly and severally indemnify, defend and hold harmless the Buyer
Indemnified Parties from and against and in respect of all Damages (without
duplication)  incurred or paid by any of
the Buyer Indemnified Parties arising out of, relating to or resulting from (a) Taxes
imposed on any of the Companies for Pre-Closing Periods (including the
XpressBet Assessments) and, with respect to any Straddle Period, the portion of
such Straddle Period deemed to end on and include the Closing Date; (b) any
breach of or inaccuracy in any representation or warranty contained in Section 5.11
(without regard to any “materiality” modifier); (c) Taxes imposed on any
of the Companies under Treasury Regulations Section 1.1502-6 (and all
corresponding provisions of state, local or foreign Law) as a result of being a
member of any consolidated, unitary, combined or similar 

 

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group for any Pre-Closing Period or portion of any
Straddle Period deemed to end on and include the Closing Date; and (d) the
breach or nonperformance of any covenant or agreement on the part of Seller
with respect to Taxes set forth in this Section 7.10 or Section 7.1(s).  Notwithstanding the foregoing, the Sellers
shall not be obligated to indemnify the Buyer Indemnified Parties for Damages
attributable to Non-Income Taxes (but not including Damages attributable to the
XpressBet Assessments) until such time as Buyer Indemnified Parties’ Damages
attributable to Non-Income Taxes (but not including Damages attributable to the
XpressBet Assessments) exceed $500,000.

 

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

 

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

 

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

 

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

 

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

 

83

 

(e)           Extraordinary Transactions.

 

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

 

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

 

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

 

84

 

this Section 7.10(f)(i) with respect
to such taxable period over (ii) the amount finally determined to be due.

 

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

 

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

 

85

 

such Tax Return shall be
filed as originally proposed by the Buyers, reflecting any items previously
objected to by HoldCo or the Sellers, as the case may be and agreed to by the
Buyers, and HoldCo or the Sellers, as applicable, shall pay to the Buyers the
Buyer Requested Amount.  When the amount
due to the Buyers from HoldCo or the Sellers, as applicable, in respect of such
Tax Return is finally determined by the Independent Accounting Firm, a
settlement payment shall be made from HoldCo or the Sellers, as applicable, to
the Buyers in an amount equal to the excess, if any, of (i) the amount
finally determined to be due over (ii) the Buyer Requested Amount, or from
the Buyers to HoldCo or the Sellers, as applicable, in an amount equal to the
excess, if any, of (i) the Buyer Requested Amount over (ii) the
amount finally determined to be due.

 

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

 

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

 

(h)           Tax Proceedings.

 

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

 

86

 

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

 

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

 

(i)            Tax Sharing Agreements. 
All Tax sharing agreements or similar agreements with respect to or
involving Blocker, AcquisitionCo or the Companies shall be 

 

87

 

terminated as of the Closing Date and, after the
Closing Date, none of Blocker, AcquisitionCo 
or the Companies shall be bound thereby or have any liability
thereunder.

 

(j)            Transfer Taxes.  Except with respect to the Pennsylvania
Gaming Fee, all transfer, documentary, sales, use, stamp, registration and
other such Taxes and fees (including any penalties and interest) incurred in
connection with the transactions contemplated by this Agreement shall be paid
50% by the Buyers, on the one hand, and 50% by the Sellers, on the other
hand.  If the Pennsylvania Gaming Fee
shall become due as a result of the sale from the Sellers to the Buyers of WTA,
such fee shall be split equally between the Sellers, on the one hand, and the
Buyers, on the other hand.  The Buyers
will, at their own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees, and, if required by applicable
law, the Sellers will join in the execution of any such Tax Returns and other
documentation.  The Sellers shall pay to
the Buyers, no later than five (5) days before the due date of any Taxes
described in this Section 7.10(j), Sellers’ share of such Taxes,
and the Buyer shall pay the full amount of such Taxes owed to the appropriate
Tax Authority.

 

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

 

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

 

88

 

(m)          Except for matters set forth on Schedule
7.10 of the Sellers Disclosure Schedules or as otherwise specifically
provided in this Agreement, without the prior written consent of the Buyers
(which consent shall not be unreasonably withheld, conditioned or delayed),
each of Blocker and AcquisitionCo from the date hereof until the Closing Date
shall not: (i) make, amend or revoke any material Tax election, (ii) settle
or compromise any material Tax liability, claim or assessment, or agree to any
adjustment of any material Tax attribute, (iii) file any amended material
Tax Return, (iv) enter into any material “closing agreement” within the
meaning of Section 7121 of the Code (or any material comparable agreement
under state, local or foreign law), (v) surrender any right to claim a
material Tax refund, (vi) consent to waive any statute of limitations with
respect to material Taxes.

 

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

 

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

 

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

 

7.12.        Excluded
Opportunities.  The Buyers acknowledge that neither any Buyer
nor its Affiliates nor the Companies has any right, title or interest to the
Rockingham Opportunity, the Tejon Opportunity, any other Excluded Opportunity
or the agreement set forth on Schedule 7.12 of the Sellers Disclosure
Schedules.  The agreements and
arrangements relating to the transfer of the assets, liabilities, contracts and
agreements related to each Excluded Opportunity shall include a full and
unconditional release and indemnification of each of the 

 

89

 

Companies, which shall survive the Closing, for any
and all Liabilities of, or arising in connection with or related to, the
Excluded Opportunities.  Any moneys
received by the Companies on or prior to the Closing Date with respect to
receivables related to the Rockingham Opportunity may be included in the
Company Loan Payment Amount or may reduce the amount of the Remaining Accrued
Liabilities.

 

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

 

7.14.        Guarantee.

 

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

 

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

 

90

 

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

 

7.15.        Gaming
Opportunity.  On and after the date hereof and prior to the
Closing Date, each of Millennium and CCR shall, and shall cause each of Mr. Paulos
and Mr. Wortman to, offer to CCR first all of their right, title and
interest in or to any gaming opportunity offered to any of the Companies or
their respective directors or officers, including Messrs. Wortman and
Paulos, whether acquired by them before, on or after the date of this
Agreement, by written notice to CCR and to the Buyers that describes the gaming
opportunity in reasonable detail, including the terms, conditions and status
thereof; provided, however, that each of (a) the gaming opportunity at
Rockingham Park in New Hampshire (the “Rockingham Opportunity”) and (b) the
gaming opportunity at Tejon Ranch in California (the “Tejon Opportunity”)
shall be excluded from this provision and shall be an opportunity solely of the
Sellers to pursue and shall not be required to be offered to CCR and the Buyers
pursuant to this Section 7.15. 
If the Buyers want CCR to pursue any gaming opportunity presented to it,
then it may accept such offer in writing 
(the “Accepted Gaming Opportunity”) within thirty (30) days after
the receipt of such offer (or such shorter period as may be required by the
terms of the gaming opportunity).  If the
Buyers do not accept the gaming opportunity, then Millennium, Mr. Paulos
and Mr. Wortman and any of their respective Affiliates, partners,
co-venturers or other interested parties, shall be free to pursue such gaming
opportunity (such gaming opportunities, collectively with the Rockingham
Opportunity and the Tejon Opportunity, the “Excluded Opportunities”).  The Parent and the Buyers acknowledge and
agree that nothing contained herein shall (i) prevent CCR or the Companies
from developing the Excluded Opportunities or incurring costs and expenses with
respect to such development prior to the Closing, so long as CCR and the
Companies do not retain any obligations or Liabilities with respect to such
Excluded Opportunities following the Closing or (ii) obligate HoldCo or
any Affiliate of Oaktree Capital Management (other than Millennium and the
Companies) to present any gaming opportunities to the Buyers.  The costs and expenses of development of the
Accepted Gaming Opportunity shall be budgeted by CCR and approved by the
Buyers, and the Buyers shall reimburse CCR prior to the Closing for all costs
and expenses incurred in pursuit of any Accepted Gaming Opportunity.

 

7.16.        Construction
of the Projects.

 

(a)           Obligation of the Sellers and the
Companies.  With respect to the
construction of each Project, the Sellers and the Companies shall, prior to
Closing, (i) diligently pursue such Project to Final Completion in a good
and workmanlike manner and in substantial compliance with its applicable
Timetable, Construction Contracts and Laws and requirements of Governmental
Entities having jurisdiction over such Project, (ii) obtain and maintain
in existence all licenses, permits and approvals required under applicable Laws
to be obtained by the Companies in connection with the construction of such
Project and (iii) pay all costs and expenses properly incurred in
connection with the construction of such Project when due and payable and
obtain appropriate lien waivers in connection with such payments.  The parties acknowledge that the Buyers may
request changes in scope or other material changes at any time to a Project,
which shall be (A) subject to the parties’ reaching prior written
agreement with respect to any such material change and the amount of additional
cost or additional time (if any) arising from such material change and (B) at
the Buyers’ sole cost and expense.

 

91

 

(b)                         Iterative Review of Plans and
Specifications.

 

(i)                                    Plans and Specifications, as identified
on Exhibit L, have been completed for the Cannery East and are
hereby approved by the Buyers.

 

(ii)                                 The Sellers shall cause schematic
drawings to be prepared for the Meadows Projects that shall (A) be
substantially consistent with and a logical evolution from the Project Brief
for the Meadows Projects and (B) be submitted to the Buyers for their
review and approval, which approval cannot be unreasonably conditioned,
withheld or delayed (the schematic drawings so approved by the Buyers are
referred to herein as the “Approved Schematic Drawings”).

 

(iii)                              Subsequent to the preparation, submission and approval
of the Approved Schematic Drawings, the Sellers shall cause design development
documents to be prepared for the Meadows Projects that shall be (A) substantially
consistent with the Project Brief for the Meadows Project, as it may have been
modified by the Approved Schematic Drawings, (B) a logical evolution from the
Approved Schematic Drawings, and (C) submitted to the Buyers for their
review and approval, which approval cannot be unreasonably conditioned,
withheld or delayed; provided that in no event may the Buyers disapprove design
development documents that are consistent with and a logical evolution from the
Approved Schematic Drawings (the design development documents so approved by
the Buyers are referred to herein as the “Approved Design Development
Documents”).

 

(iv)                             Subsequent to the preparation, submission
and approval of the Approved Design Development Documents, the Sellers shall
cause construction drawings to be prepared for the Meadows Projects that shall
be (A) substantially consistent with the Project Brief for the Meadows
Project, as it may have been modified by the Approved Schematic Drawings and
the Approved Design Development Documents, (B) a logical evolution from
the Approved Design Development Documents, and (C) submitted to the Buyers
for their review and approval, which approval cannot be unreasonably
conditioned, withheld or delayed; provided that in no event may the Buyers
disapprove construction drawings and specifications that are consistent with
and a logical evolution from the Approved Design Development Documents (the
construction drawings so approved by the Buyers are referred to herein as the “Approved
Construction Documents”).

 

(v)                                To the extent that the Approved Construction Documents address the same
matters as any inconsistent Plans and Specifications 

 

92

 

contained in, or incorporated by reference into, the Meadows
Project Brief, the Approved Construction Documents shall supersede such
inconsistent Plans and Specifications.

 

(vi)                              Notwithstanding any contrary provision
contained herein, the parties acknowledge and agree that in no event shall the
Owner Cost Items described in the Meadows Project Brief be modified or
superseded, except with the written consent of the parties.

 

(c)                                  Management of Construction. With respect to the construction of
each Project, the Sellers and the Companies may enter into, terminate, extend
or otherwise amend, modify, or waive rights under, or authorize the execution,
termination, extension or other amendment or modification of, or waiver of
rights under, any document relating to construction of a Project, other than
the Project Brief for such Project, but including the Construction Contracts,
the Applicable Meadows Construction Documents, the Plans and Specifications,
Budget, Timetable, and Owner Cost Items (excluding Fixed Cost Items, the number
of slot machines, in the case of the Meadows Projects, and the number of slot
machines and tables, in the case of the Cannery East Project) (each, a “Development
Modification”); provided that with respect to Development Modifications
(including change orders) the Sellers shall (i) provide the Buyers with
the ordinary review privileges as otherwise set forth in this Agreement, (ii) provide
the Buyers reasonable notice prior to making any material Development Modifications,
(iii) consult with the Buyers in good faith and consider any material
concerns or suggestions that the Buyers may express in regard to any material
Development Modification, and (iv) not make any Development Modification
which, considered individually or in the aggregate with other Development
Modifications, would reasonably be expected to materially delay the completion
of such Project or materially change the overall quality, appearance or utility
of the Project as described in the Project Brief (as it may be superseded by
the Approved Construction Documents) including the Project’s (A) architectural
program, (B) quality, (C) general floor plan and layout of gaming
facilities including mix and number of gaming machines, (D) number or size
of hotel rooms or type or quantity of hotel amenities, (E) restaurant type
or seating or service capabilities, or (F) any other Project program
component which would be reasonably expected to cause a material decrease in
post-completion revenues derived from the Business at such Project.  Prior to making a Development Modification of
the type described in clause (iv) of this Section 7.16(c), the
Sellers shall (X) provide the Buyers with (1) written notice of the
Sellers’ desire to make such Development Modification and (2) such
information as the Buyers may reasonably request to determine if such proposed
Development Modification is in the best interest of the Companies and the
Business, and (Y) obtain the Buyers’ written consent to such Development
Modification, which consent shall not be unreasonably withheld, conditioned or
delayed.  As used herein, “Applicable
Meadows Construction Documents” shall mean the Approved Construction
Documents as they have been modified through Development Modifications pursuant
to the terms of this Section 7.16(c).

 

(d)                                 Sellers and Buyers agree to further
discuss and in good faith endeavor to amend the Project Briefs on or before January 31,
2008, and the Project Briefs as so amended shall be deemed to be the Project
Briefs for all purposes of this Agreement; provided, however, that if Sellers
and Buyers fail to so amend the Project Briefs then the Project Briefs in the
forms attached hereto shall be the Project Briefs for all purposes hereunder.

 

93

 

7.17.                         Construction Information and Other
Matters.

 

(a)                                  Information. 
Each of the Sellers and CCR shall provide the Buyers, their agents and
their Representatives access to the Projects at all reasonable times and with
such financial information, progress reports and other relevant information
relating to the Projects as set forth in this Section 7.17 or that
the Buyers may reasonably request. 
Without limiting the generality of the foregoing, the Sellers shall and
shall cause the Company to: (a) within three (3) Business Days of
delivery to the Administrative Agent or Bank Construction Consultant, provide
to the Buyers (if not previously provided) copies of all Budgets, Timetables
and Plans and Specifications and all other information provided to the
Administrative Agent and/or the Bank Construction Consultant pursuant to the
Bank of America Facilities and/or to the Gaming Authorities; (b) within
three (3) Business Days of delivery to or receipt from the Administrative
Agent or Bank Construction Consultant, provide to the Buyers copies of all
material communications pertaining to the Projects and the progress and
financial condition of the Projects provided to or by the Gaming Authorities
and/or the Administrative Agent and/or the Bank Construction Consultant
pursuant to the Bank of America Facilities or otherwise, including Monthly
Progress Reports, Monthly Construction Draw Packages, In-Balance Certificates,
Applications and Certifications for Payment and Completion Certificates (as
such terms are defined in the credit agreements for the Bank of America
Facilities); (c) give the Buyers prompt notice of any cost overruns or
deviations from or amendments to any of the Budgets, Timetables or Plans and
Specifications; (d) allow the Buyers to review construction progress
compared to any of the Budgets, Timetables and Plans and Specifications; and (e) allow
the Buyers or the Buyer Construction Consultant to attend construction
meetings.

 

(b)                                 Objections.  The Buyers
and each of the Sellers and CCR agree to notify the other of any defective or
non-conforming workmanship identified in the construction of a Project and any
material deviations from the Plans and Specifications, Budgets and Timetables
of which it becomes aware, in each case as soon as reasonably practicable upon
becoming aware thereof and, in any event, at the next construction
meeting.  The Sellers agree to cooperate
with the Buyers to resolve any issues raised by the Buyers in the course of
construction and to pursue any rights it may have under the applicable
Construction Contract to correct such work. 
The Future Capital Payment and Excess Costs shall not include amounts
required for a Project to be in substantial conformity with the Project’s Plans
and Specifications, to the extent that (i) any of the Buyers requested in
writing the change (other than any such change required by Law) that results in
the substantial nonconformance in the Project’s Plans and Specification, or (ii) any
of the Buyers had knowledge or ought reasonably to have been aware of the issue
causing the nonconformance and the Buyers failed to notify the Sellers in
writing regarding the nonconformity; provided, that the Buyers shall not be
required to provide written notice of any nonconformity, if such nonconformity
is recorded in the minutes of a construction meeting; provided, further,
however, that the Buyers shall be required to provide written notice of any
objection by the Buyers to the course of action to be taken by the Sellers with
respect to such nonconformity as recorded in the minutes of a construction
meeting.

 

(c)                                  Other Matters. 
Each of the Sellers and CCR shall, and shall cause each of the other
Companies to:

 

94

 

(i)                                    for each Project, in the event that any
of the Companies obtains increased title coverage for the benefit of a lender,
then, at the same time as such increased title insurance coverage is provided
to a lender, such Company shall provide copies to Buyers of, appropriate
endorsements to each of the Companies’ owner’s or leasehold title insurance
policies, as applicable, to provide increased title insurance coverage in
amounts equal to or greater than the amounts provided for the benefit of a
lender under the Debt Facilities;

 

(ii)                                for each Project for which Completion
occurs prior to the Closing and for which an “as built” ALTA survey is provided
to a lender, deliver to the Buyers, a copy of such “as built” ALTA survey, at
the same time that such a survey is provided to a lender; and

 

(iii)                            for Projects where construction will
continue after Closing, Sellers and CCR will (A) use their reasonable best
efforts to cause all agreements entered into by any of the Companies relating
to such construction to permit pledges of the Companies’ interests in such agreements
to lenders, (B) use commercially reasonable efforts to obtain and deliver
to the Buyers at Closing estoppel certificates in the form attached hereto as Exhibit P
dated within thirty (30) days of Closing from counterparties to Construction
Contracts to which any Seller is a party, and (C) cooperate with the
Buyers to facilitate the transition of construction to the Buyers.

 

(d)                                 Final Completion. Prior to the Closing, the Sellers may
deliver written notice to the Buyers stating that a Project has reached Final
Completion (the “Final Completion Notice”).  The Buyers may dispute the conclusion that
the Project has reached Final Completion as set forth in the Final Completion
Notice by following the procedures set forth in Exhibit W.  Upon agreement by the Buyers and the Sellers
that such Project has reached Final Completion or after the final resolution of
such dispute pursuant to the procedures set forth in Exhibit W
determining that such Project has reached Final Completion (if the Buyers
dispute the Final Completion Notice), such Project shall have reached Final
Completion for purposes of this Agreement. 
If it is determined through dispute resolution procedures pursuant to
this Section 7.17(d) that Final Completion has been reached, then the
Buyer Construction Consultant shall be deemed to have issued the Final
Completion Certificate.

 

7.18.                          Pennsylvania Condition Certificate.

 

(a)                                  If the Sellers have not theretofore
delivered a Completion Certificate for the Meadows Casino Project and have not
opened and commenced operating the Permanent Meadows Casino in compliance with
the requirements of Section 1207(17) of the Pennsylvania Act, then no more
than thirty days prior to the date that the Sellers reasonably expect that the
Buyers will receive the Gaming Approvals, the Sellers may provide the Buyers
with a written notice (the “Pre-Completion Closing Notice”).  The Pre-Completion Closing Notice shall
include the following: (i) the estimated date on which the Sellers expect
the Closing to occur, (ii) the date 

 

95

 

on which the Sellers reasonably expect Completion of
the Meadows Casino Project to occur (the “Estimated Completion Date”)
and whether the Estimated Completion Date is reasonably expected to be on or before
the Pennsylvania Date; and (iii) all information and materials reasonably
necessary or thereafter reasonably requested by the Buyers for verification of
the Sellers’ Estimated Completion Date. If the Buyers elect the Closing
Extension pursuant to Section 3.2, then the Sellers shall use their
commercially reasonable efforts to obtain approval from the Pennsylvania Gaming
Control Board to extend the Pennsylvania Date to a date on or after the
Estimated Completion Date.

 

(b)                                 Within ten (10) Business Days after
the Pre-Completion Closing Notice has been received by the Buyers, the Buyers
shall provide the Sellers either (i) written notice of acceptance (“Notice
of Acceptance”) of the Sellers’ Pre-Completion Closing Notice, or (ii) written
notice of the Buyers’ objection (“Notice of Objection”) to the Sellers’
Pre-Completion Notice.  Any Notice of
Objection must include all information and materials within the Buyers’
possession or control and reasonably necessary for verification of the Buyers’
basis for objection.  If (i) the
Pre-Completion Closing Notice conspicuously states that the Buyers will be
deemed to have given a Notice of Acceptance if the Buyers fail to provide a
Notice of Objection within the specified response period, and (ii) the
Buyers for any reason fail to provide Notice of Objection within the specified
response period, then the Buyers shall be deemed to have given a Notice of
Acceptance.

 

(c)                                  If the Buyers deliver a timely and valid
Notice of Objection to the Sellers, the Buyers and the Sellers shall negotiate
in good faith for not more than ten (10) days to resolve the Buyers’
objections, and any objections that are resolved by a written agreement between
the Buyers and the Sellers shall be final and binding.  If the Buyers and the Sellers fail to reach
an agreement with respect to all matters set forth in such Notice of Objection,
they shall immediately proceed to resolve the Buyers’ objections pursuant to
the dispute resolution procedures set forth in Exhibit W.  For the avoidance of doubt, the Pennsylvania
Condition to Closing shall not be deemed to have been satisfied so long as any
such objections remain unresolved.

 

7.19.                        No Assignment if Breach.

 

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

 

(b)                                 In the event that the consent for the
Contract identified on Schedule 7.19(b) of the Sellers Disclosure
Schedules is not obtained from the relevant third party prior to 

 

96

 

Closing then the Closing Payment and the Purchase
Price shall be reduced by $25,000,000 (Twenty-five Million Dollars) (the “Property
Adjustment Amount”); provided, that upon any such reduction, any rights and
interests in such Contract and the operations located at the premises that are
the subject of such Contract (if any) shall be retained by the Sellers or an
Affiliate thereof; provided, further, that any termination payment paid or
payable with respect to such Contract shall be for the account of the Sellers.

 

Commencing as soon as practicable and continuing until
the earlier to occur of Closing or the receipt of the “Consent and Estoppel
Certificates” and “NDAs” (as defined below), the Sellers shall use commercially
reasonable efforts (a) to cause the sublandlord and prime landlord to
execute and deliver any consents of the sublandlord and the prime landlord
required in connection with the transactions contemplated by this Agreement, as
well as estoppel certificates from the sublandlord and prime landlord
(collectively, the “Consent and Estoppel Certificates”), and (b) if
there are any feehold or leasehold mortgage(s) or deed(s) of trust
encumbering the interest(s) of the sublandlord or the prime landlord in
the premises described by the Contract identified on Schedule 7.19(b),
to obtain fully executed nondisturbance agreements from the mortgagees or
beneficiaries thereof (the “NDAs”), in each case in form and substance
acceptable to the Buyers, such acceptance not to be unreasonably conditioned,
withheld or delayed.  The Buyers shall
reasonably cooperate in the Sellers’ efforts to obtain such Consent and
Estoppel Certificates and NDAs, and such cooperation shall include (x) providing
such information regarding the Buyers or Parent and their respective personnel,
plans for the premises described by the Contract identified on Schedule 7.19(b) or
casino operations as reasonably requested by prime landlord or sublandlord and (y) executing
any amendments to the Contract identified on Schedule 7.19(b) or
other documents or agreements that are not materially adverse to the subtenant
or to the Buyers or their Affiliates. 
Neither the Sellers nor the subtenant shall agree to any amendment to
the Contract identified on Schedule 7.19(b) or any other
arrangements relating to such Contract without the Buyers’ prior written
consent, which shall not be unreasonably conditioned, withheld or delayed.  In the event the Consent and Estoppel
Certificates (and the NDAs, if applicable) are delivered to the Buyers prior to
Closing, the Closing Payment and Purchase Price shall not be reduced by the
Property Adjustment Amount.

 

7.20.                        FIRPTA Certificates.

 

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

 

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

 

97

 

7.21.                        Repayment of Loan Obligations.

 

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

 

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

 

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

 

98

 

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

 

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

 

7.23.                        [Intentionally Left Blank]

 

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

 

7.25.                        Termination of Affiliate Agreements;
Release of Claims.

 

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

 

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

 

(c)                                  From and after the Closing, each of the
Buyers, on its own behalf and on behalf of its Affiliates and all Persons
entitled to assert on each such Buyer’s behalf, irrevocably and unconditionally
releases and forever discharges each of the Sellers from any and all claims, 

 

99

 

charges, complaints, demands, proceedings, causes of
action, orders, obligations, contracts, agreements, debts and liabilities
whatsoever, whether known or unknown, suspected or unsuspected, contingent or
actual, both at law and in equity, which any Company now has, has ever had or
may hereafter claim to have against any of the Sellers arising
contemporaneously with or prior to the date hereof, on account of, or arising
out of, or relating in any way to, any matter, cause, transaction or event
occurring contemporaneously with or prior to the Closing Date pursuant to any
Affiliate Agreement (other than any claim for fraud or breach of contract);
provided that, nothing contained in this Section 7.24(c) shall
operate to release any agreements, indemnities, liabilities, covenants or other
obligations of any Seller or any other Person arising under this Agreement or
any of the Other Documents.

 

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

 

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

 

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

 

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

 

7.26.                        Labor Matters. 
Each of the Sellers and CCR shall, and shall cause each of the other
Companies to, provide the Buyers with information and regularly consult with
the Buyers regarding ongoing negotiations of any successor collective
bargaining agreement.  Prior to the
Closing Date, the Companies will engage in any bargaining with any labor union
or labor organization as may be required by applicable law in connection with
the transactions contemplated by this Agreement.

 

7.27.                        Impact of New Gaming Taxes.

 

(a)                                  If, following the date hereof, the State
of Nevada imposes a new, additional or increased statewide tax or levy on or
prior to the New Tax Deadline that increases the aggregate taxes and levies
payable by the Companies (a “New Tax”), the Sellers and the Buyers agree
that, subject to the terms and conditions of this Section 7.27, the
Sellers shall pay to 

 

100

 

the Buyers a one-time amount in cash equal to the
lesser of (i) 50% of the New Tax Impact with respect to such New Tax and (ii) $25
million (the “New Tax Payment”).

 

(b)                                 If a New Tax Payment is due in accordance
with Section 7.27(a), the Buyers shall promptly notify the Sellers
by written notice.  During the 45 days
immediately following delivery of such notice by the Buyers, the Buyers and the
Sellers shall seek in good faith to agree upon the NGT Tax Amount.  If the Buyers and the Sellers fail to agree
upon the NGT Tax Amount within such 45-day period, or such longer period as the
Buyers and the Sellers may mutually agree, the Buyers and the Sellers shall
each submit a written determination of the NGT Tax Amount, including a
reasonably detailed description of the assumptions and calculations used in
arriving at such determination, to an independent accounting firm jointly
selected by the Sellers and the Buyers to act as an independent expert;
provided, that, if the Buyers and the Sellers are unable to agree on an
independent accounting firm, then each of the Buyers and the Sellers shall pick
an independent accounting firm and the two accounting firms shall choose a
third independent accounting firm to serve as the independent expert.  The independent expert shall be directed to
make a final determination of the NGT Tax Amount within 45 days following its
selection as the independent expert.  For
purposes of its determination of the NGT Tax Amount, the independent expert may
only select a value equal to one of, or between, the two values submitted by
the Sellers, on the one hand, and the Buyers, on the other hand. The Buyers and
the Sellers agree to cooperate with the independent expert during the course of
its determination and promptly provide any information reasonably requested by
the independent expert for its determination, including information regarding
the assumptions and calculations underlying the written determinations
submitted by the Buyers and the Sellers and information regarding the Companies
(including forecasts adopted and used by the Managers of CCR in the ordinary
course of business for business planning purposes).  The independent expert’s determination of the
NGT Tax Amount shall be final, conclusive and binding on the Sellers and the
Buyers.  Within 30 days of the final
determination of the NGT Tax Amount pursuant to this Section 7.27(b),
the Sellers agree to pay to the Buyers the New Tax Payment.  The fees and costs of the independent expert
shall be shared equally by the Buyers, on the one hand, and the Sellers, on the
other hand.

 

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

 

101

 

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

 

ARTICLE 8

 

Conditions to Closing

 

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

 

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

 

(b)                                 Regulatory Approval. 
Any and all Gaming Approvals required to be obtained prior to the
Closing to consummate the transactions contemplated by this Agreement shall
have been obtained.

 

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

 

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

 

(a)                                  Representations and Warranties. 
The representations and warranties of the Sellers contained in this Agreement,
shall be true and correct in all material respects (except for such
representations and warranties as are qualified by materiality or Material
Adverse Effect, which representations and warranties shall be true and correct
in all respects), as of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date (other than such representations
and warranties that are expressly made as of an earlier date which need only be
true and correct in all material respects or true and correct, as the case may
be, as of such earlier date), except where the failure of such representations
and warranties to be in compliance with the standard set forth above would not
have a Material Adverse Effect; provided, that this condition shall be
inapplicable and of no further force and effect for purposes of a Closing after
September 30, 2009 unless the breach of a representation or warranty
resulting in such Material Adverse Effect arose from actions taken by any of
the Sellers.  The Buyers shall have
received a certificate from CCR, signed by a manager of CCR with respect to the
representations and 

 

102

 

warranties in Article 5 and from the
Sellers with respect to their respective representations and warranties in Article 4
of the Sellers, certifying as to the matters set forth in this Section 8.2(a).

 

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

 

(c)                                  Completion Certificate; Pre-Completion
Closing Notice.  The Sellers shall have delivered to the
Buyers a Completion Certificate for the Cannery East Project and either

 

(i)                                    (A) the Sellers shall have delivered
a Completion Certificate for the Meadows Casino Project and (B) the casino
thereon shall be operating in compliance with the requirements of Section 1207(17)
of the Pennsylvania Act; or

 

(ii)                                if the conditions of the preceding clause
(i) shall not have been met then either (A) the Pre-Completion
Closing Notice shall have been delivered pursuant to Section 7.18
stating that, as of the date of the Pre-Completion Notice, the Estimated
Completion Date is reasonably expected to be on or before the Pennsylvania Date
and the Buyers shall have delivered (or shall be deemed to have delivered) to
the Sellers, the Buyers’ Notice of Acceptance pursuant to Section 7.18,
or (B) the Buyers shall have agreed in writing to waive the condition
provided in Section 8.2(c)(i), or (C) the Independent Construction
Consultant (as defined in Exhibit W) shall have delivered a
determination to the Buyers and the Sellers pursuant to Exhibit W
stating that the Pennsylvania Condition has been satisfied.

 

(d)                                 No Litigation. 
There shall be no bona fide Actions pending against or affecting any of
the Sellers, Blocker, AcquisitionCo or the Companies or any of their respective
properties, assets or rights that (i) would, if determined adversely, have
a Material Adverse Effect, provided, that this clause (i) shall be
inapplicable and of no further force and effect for purposes of a Closing after
September 30, 2009, (ii) challenges the ownership by the Sellers and
their ability to sell to the Buyers, and for the Buyers to have and hold the
right, title and interest in the Millennium Units, the HoldCo Units or the
Option, as applicable, or (iii) are reasonably likely to succeed and
would, if determined adversely, prevent the consummation of the transactions
contemplated hereby.

 

(e)                                  Material Adverse Effect. 
Since the date of this Agreement, there shall not have been any Effect
that would, individually or in the aggregate, have a Material Adverse Effect,
provided, that this condition shall be inapplicable and of no further force and
effect for purposes of a Closing after September 30, 2009.

 

103

 

(f)                                    Closing Deliveries. 
The Buyers shall have received the Amended Nevada Palace Lease, the
Transition Services Consulting Agreement, the Non-Competition Agreements, the
Assignment Documents, the Payoff and Release of Liens and the Releases, in each
case executed by the appropriate counterparties.

 

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

 

(h)                                 Third Party Consents. 
The parties shall have obtained the third party consents specified on Schedule
7.18 of the Seller Disclosure Schedules.

 

(i)                                     GLCP Closing. 
All conditions to the Closing set forth in the GLCP Purchase Agreement
shall have been satisfied or, if permissible, waived by the party entitled to
make such a waiver, and the closing thereunder shall have simultaneously
occurred.

 

(j)                                     RSA Arrangements. Either (i) the RSA shall remain in
full force and effect in accordance with its terms or (ii) alternative
arrangements to the RSA shall be in place for the conduct by the Companies or a
third party of the racing operations at the Meadows Property for at least the
minimum number of racing days required to maintain the Conditional Category I
Slot Machine License or the Category I Slot Machine License, as applicable.

 

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

 

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

 

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

 

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

 

104

 

(d)                                 Receipt of Purchase Price. 
The Sellers shall have received from the Buyers the payment of the
Purchase Price required by Section 2.1 hereof.

 

ARTICLE 9

 

Termination

 

9.1.                              Termination. 
This Agreement may be terminated at any time prior to the Closing:

 

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

 

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

 

(i)                                     the Closing shall not have occurred on or
before December 31, 2008 (the “End Date,” unless extended pursuant
to the proviso below), provided that the right to terminate this Agreement
pursuant to this Section 9.1(b)(i) shall not be available to a
party if the failure of the Closing to occur by such date is caused by the
failure of such party to perform or comply in all material respects with the
covenants and agreements of such party set forth in this Agreement; provided
further, that if, as of December 31, 2008, all of the conditions to the
Closing applicable to the Buyers set forth in Section 8.1 (other
than Section 8.1(b)) and Section 8.3 are or were
capable of being satisfied by the taking of actions by the Buyers at the
Closing, then the End Date shall be automatically extended to March 31,
2009; provided further that if, as of March 31, 2009, all of the
conditions to the Closing applicable to Buyers set forth in Section 8.1
(other than Section 8.1(b)) and Section 8.3 are or were
capable of being satisfied by the taking of actions by the Buyers at the
Closing, then the Buyers may provide a notice to the Sellers within five (5) days
of March 31, 2009 to extend the End Date from March 31, 2009 to December 31,
2009, provided that each Buyer represents to the Sellers in the notice that it
has a good faith belief, after consultation with counsel to the Buyers, that
there is a reasonable prospect that the Buyers will receive all Gaming
Approvals prior to December 31, 2009; provided further, that upon the
Buyers’ election to permit a Closing Extension pursuant to Section 3.2,
the End Date shall be extended to the earlier of (A) three (3) Business
Days after the Estimated Completion Date or (B) the Pennsylvania Date, as
it may be extended or as it may have been extended, if such day in clause (A) or
(B), as applicable, is later than the End Date;

 

(ii)                                  any Restraint having the effect set forth
in Section 8.1(c) shall be in effect and shall have become
final and nonappealable; provided, 

 

105

 

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

 

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

 

(c)                                  by the Sellers, if a breach of any
representation, warranty, covenant or agreement on the part of any Buyer set
forth in this Agreement shall have occurred which would cause the conditions to
Closing set forth in Section 8.3(a) or 8.3(b) not
to be satisfied by the Closing, and such breach is incapable of being cured or,
if capable of being cured, such breach is not cured within 60 calendar days
following notice of such breach to the Buyers or (ii) would result in a
failure of any Buyer to satisfy its obligations to effect the Closing under Section 2.1
and Section 2.2 hereof; provided, however, that none of the Sellers
or CCR is then in material breach of its covenants and agreements under this
Agreement such that the conditions set forth in Section 8.2(a) or
Section 8.2(b) are incapable of being satisfied;

 

(d)                                 by the Buyers, if a breach of any
representation, warranty, covenant or agreement on the part of the Sellers or
CCR set forth in this Agreement shall have occurred which (i) would cause
the conditions to Closing set forth in Section 8.2(a) or 8.2(b) not
to be satisfied by the Closing, and such breach is incapable of being cured or,
if capable of being cured, such breach is not cured within 60 calendar days
following notice of such breach to the Sellers or (ii) would result in a
failure of the Seller to satisfy its obligations to effect the Closing under Section 2.1
and Section 2.2 hereof; provided, however, that no Buyer is then in
material breach of its covenants and agreements under this Agreement such that
the conditions set forth in Section 8.3(a) or Section 8.3(b) are
incapable of being satisfied; or

 

(e)                                  by the Sellers, if any Buyer definitively
withdraws its application for a Gaming Approval in accordance with Section 7.4(e),
the receipt of which is necessary to satisfy the condition set forth in Section 8.1(b).

 

9.2.                              Termination Fee.

 

(a)                                  The Buyers shall pay the Termination Fee
to the Sellers or as directed by the Sellers as promptly as possible (but in
any event within two (2) Business Days) following termination of this
Agreement in circumstances where (i) none of the Sellers or CCR is in 

 

106

 

material breach of this Agreement and have not
meaningfully contributed to the failure to satisfy the relevant conditions and (ii) the
following shall have occurred:

 

(A)                              this Agreement is terminated by (x) the
Sellers or the Buyers pursuant to Section 9.1(b)(i) due to the
failure by the Buyers to have received the Gaming Approvals by the End Date, (y) the
Sellers or the Buyers pursuant to Section 9.1(b)(iii) or (z) the
Sellers pursuant to Section 9.1(e); or

 

(B)                                this Agreement is terminated by the
Sellers pursuant to Section 9.1(b)(i) or Section 9.1(c)
under circumstances where any Buyer has failed to satisfy any of the closing
conditions set forth in Section 8.1 (other than Section 8.1(b))
or Section 8.3, as applicable, for reasons that were wholly within
the control of the Buyers.

 

For the avoidance of doubt, the disclosure of objective
facts (and not opinions or any other subjective statements by CCR or the
Sellers as required by applicable Law or the rules or regulations of any
applicable Governmental Entity to which CCR is subject that is not made for the
purpose of triggering a Termination Fee shall not, in and of themselves,
constitute a meaningful contribution by CCR or the Sellers as referenced above.

 

(b)                                 Any amount that becomes payable pursuant
to Section 9.2(a) shall be paid by wire transfer of
immediately available funds to an account designated by the Sellers, as
applicable.

 

(c)                                  Each of the Company, the Parent and the
Buyers acknowledges that the agreements contained in this Section 9.2
are an integral part of the transactions contemplated by this Agreement, that
without these agreements the Sellers and the Buyers would not have entered into
this Agreement, and that any amounts payable pursuant to this Section 9.2
do not constitute a penalty.  If the
Buyers fail to pay the Sellers the Termination Fee within two (2) Business
Days following termination of this Agreement under circumstances in which such
fee is due (i) the Buyers shall pay any costs and expenses (including
reasonable legal fees and expenses) incurred by the Sellers in connection with
actions taken after such date for the collection under and enforcement of this Section 9.2
and (ii) shall pay interest on the amount of the Termination Fee, as
applicable, at the rate of ten percent (10%) per annum, compounded daily, from
the day immediately following such second Business Day through and including
the date of payment.

 

9.3.                              Effect of Termination. 
The Seller’s right to terminate this Agreement and receive, as
applicable, the payment of the Termination Fee pursuant to Section 9.2(a) shall
be the sole and exclusive remedy of CCR and the Sellers against the Parent and
the Buyers and any of their respective Affiliates, shareholders, partners,
members, directors, officers or agents under the circumstances described in Section 9.2(a).  Except as set forth in the preceding
sentence, the rights of termination under Section 9.1 are in
addition to any other rights the Buyers or the Sellers may have under this
Agreement and the exercise of a right of termination will not be an election of
remedies.  If this Agreement is terminated
pursuant to Section 9.1 and the applicable Termination Fee is paid
(if any), all further obligations of the Buyers and the Sellers under this 

 

107

 

Agreement will terminate, except that the obligations in
Section 7.4(l) (solely with respect to the indemnification
obligations), Section 7.7 (Publicity), Section 7.21(c) (solely
with respect to the indemnification obligations), Section 11.5
(Applicable Law), Section 11.6 (Enforcement), Section 11.7
(Waiver of Jury Trial), and Section 11.9 (Transaction Expenses)
will survive; provided, however, (a) if this Agreement is
terminated by the Buyers because of a breach of this Agreement by any of the
Sellers or because one or more of the conditions to the Buyers’ obligations
under this Agreement is not satisfied as a result of any of the Sellers’
failure to comply with its obligations under this Agreement, the Buyers’ right
to pursue remedies (consistent with this Agreement) will survive such
termination unimpaired; and (b) if this Agreement is terminated by the
Sellers because of a breach of this Agreement by any Buyer or because one or
more of the conditions to the Sellers’ obligations under this Agreement is not
satisfied as a result of any Buyer’s failure to comply with its obligations
under this Agreement and the Termination Fee is not payable pursuant to Section 9.2.(a),
each of the Buyers’ and the Sellers’ rights to pursue remedies (consistent with
this Agreement) will survive such termination unimpaired.

 

ARTICLE 10

 

Indemnification

 

10.1.                        Survival.  The
representations and warranties contained in this Agreement shall survive for a
period of two (2) years after the Closing Date (the “Survival Period”);
provided, that (a) the representations and warranties contained in Section 5.10
(Employee Benefit Matters), and Section 5.16 (Environmental
Matters) shall survive until the expiration of 90 days after the applicable
statutes of limitations, and (b) the representations and warranties
contained in Section 4.1 (Millennium Representations), Sections
4.2(a), (b), (c), (d) and (e) (Certain
HoldCo Representations), Section 4.3(a) (Sellers’ Good
Standing), Section 4.3(b) (Sellers’ Authority; Enforceability), Section 5.1
(Company Organization and Good Standing), Section 5.2 (Company Capitalization),
Section 6.1 (Buyer Organization and Good Standing) and Section 6.2
(Buyer Authority; Enforceability) shall survive in perpetuity with respect to
the matters addressed in such Sections. 
The covenants and agreements contained in this Agreement shall survive
the Closing Date.  If written notice of a
claim has been given in accordance with Section 10.2(e) prior
to the expiration of the applicable representations, warranties, covenants or
agreements, then the applicable representations, warranties, covenants or
agreements shall survive as to such claim, until such claim has been finally
resolved.  Notwithstanding anything to
the contrary contained in this Agreement, it is the explicit intent of each
party hereto that no party hereto is making any representations or warranties
whatsoever, express or implied, to any other party hereto except those
representations and warranties contained in Article 4, Article 5
and Article 6 or Section 11.15 and as contained in any
Other Documents.

 

10.2.                        Indemnification.

 

(a)                                  By Sellers.  From and
after the Closing, the Sellers shall indemnify, defend, save and hold harmless
the Buyers and the Parent and their Affiliates (including the Companies),
successors and assigns and each of the foregoing’s respective officers,
directors, managers, members, employees and agents (collectively, the “Buyer
Indemnified Parties”), from 

 

108

 

and against any and all Damages (without duplication)
arising out of, relating to, resulting from or in connection with:

 

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

 

(ii)                                 the breach of or failure to perform any
covenant or agreement made or to be performed by any of the Sellers or CCR
contained in Section 7.16, Section 7.17 and the
application of any other covenant to the Projects;

 

(iii)                              other than Section 7.16, Section 7.17
and the application of any other covenant to the Projects, the breach of or
failure to perform any covenant or agreement made or to be performed by any of
the Sellers or CCR contained in this Agreement, any Other Document or any other
agreement contemplated hereby or thereby;

 

(iv)                             the Excluded HoldCo Subsidiaries; and

 

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

 

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

 

(c)                                  By HoldCo. From and after the Closing, HoldCo shall indemnify,
defend,  save and hold harmless, the
Buyer Indemnified Parties, from and against any and all Damages (without
duplication) arising out of, relating to, resulting from or in connection with
the breach of any representation or warranty made by HoldCo under Section 4.2
or Section 4.3 of this Agreement (subject to Section 7.5(b) with
respect to any breach of any representation or warranty for Pre-Closing Events,
it being agreed that for purposes of such right to indemnification, such 

 

109

 

representations and
warranties shall be deemed not to be qualified by any references therein to
knowledge or materiality generally or to whether or not any breach would result
or could be expected to result in a Material Adverse Effect, and any such
qualification shall in all respects be disregarded); and

 

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

 

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

 

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

 

(e)                                  Procedure.  Any party
seeking indemnification under this Section 10.2 (but not, for the
avoidance of doubt, under Section 7.10, Section 2.2(g)(iii),
Section 7.4(l) or Section 7.21(c)) (an “Indemnified
Party”) shall give the party from whom indemnification is being sought (an “Indemnifying
Party”) notice of any matter which such Indemnified Party has determined
has given or could give rise to a right of indemnification under this Agreement
as soon as practicable after such Indemnified Party becomes aware of any fact,
condition or event which may give rise to Damages for which indemnification may
be sought under this Section 10.2, and such notice shall state the
nature and basis of the claim, the amount thereof to the extent known and a
reference to the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises; provided, that the failure to give
notice as soon as practicable shall not release the Indemnifying Party from any
of its obligations except to the extent the Indemnifying Party is materially
prejudiced thereby.  The liability of an
Indemnifying Party under this Section 10.2 with respect to Damages
arising from claims of any third party (including any Governmental Entity)
which are subject to the indemnification provided for in this Section 10.2
(“Third Party Claims”) shall be governed by and contingent upon the
following additional terms and conditions: if an Indemnified Party shall
receive notice of any Third Party Claim, the Indemnified Party shall give the
Indemnifying Party notice of such Third Party Claim as soon as reasonably
practicable; provided, that the
failure to provide such notice shall not release the Indemnifying Party from
any of its obligations under this Section 10.2 except to the extent
the Indemnifying Party is materially prejudiced by such failure.  The Indemnifying Party shall be entitled to
assume and control the defense of such Third Party Claim at its expense and
through counsel of its choice if it gives notice of its intention to do so to
the Indemnified Party within thirty (30) days of the receipt of such notice
from the Indemnified Party; provided, that if the 

 

110

 

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

 

(f)                                    Definition of Damages. 
For purposes of Section 7.10, this Article 10, Section 2.2(g)(iii),
Section 7.4(l) and Section 7.21(c), the term “Damages”
means any and all costs, losses, Liabilities, obligations, damages, lawsuits,
deficiencies, fines, judgments, settlements, penalties, and expenses (whether
or not arising out of Third Party Claims), including reasonable attorneys’ fees
and all amounts paid in investigation, defense or settlement of any of the
foregoing.  Notwithstanding anything in
this agreement to the contrary, no Indemnifying Party shall be required to
indemnify or hold harmless any Indemnified Party or otherwise compensate any
Indemnified Party for damages with respect to lost profits, restitution, damage
to reputation, diminutions in value, mental or emotional distress, exemplary,
consequential, incidental, special or punitive damages.

 

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

 

111

 

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

 

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

 

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

 

(d)                                 If an Indemnified Party recovers Damages
from an Indemnifying Party under Section 10.2 or Section 7.10,
the Indemnifying Party shall be subrogated, to the extent of such recovery, to
the Indemnified Party’s rights against any third party with respect to such recovered
losses, subject to the subrogation rights of any insurer providing insurance
coverage under one of the Indemnified Party’s policies and except to the extent
that the grant of subrogation rights to the Indemnifying Party is prohibited by
the terms of the applicable insurance policy.

 

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

 

112

 

10.4.        Escrow.

 

(a)           Any and all claims for Damages under Section 10.2(a)(i),
Section 10.2(a)(ii), Section 10.2(b) and Section 10.2(c) by
the Buyer Indemnified Parties against the Sellers up to an amount equal to the
Indemnity Escrow Amount shall be payable solely from the Indemnity Escrow
Account with no recourse by the Buyer Indemnified Parties against Millennium or
HoldCo directly or personally or against any assets of Millennium or Holdco or
their respective Affiliates; provided, that to the extent the aggregate amount
of Damages with respect to claims for which the Buyer Indemnified Parties may
seek indemnity from Millennium pursuant to Section 10.2(a)(i), Section 10.2(a)(ii) or
Section 10.2(b) or HoldCo pursuant to Section 10.2(a)(i),
Section 10.2(a)(ii) or Section 10.2(c) is in
excess of the Indemnity Escrow Amount, the Buyer Indemnified Parties may pursue
such claims against Millennium or HoldCo directly and personally, subject to
the terms of this Article 10, including Section 10.2(e).  All other claims for indemnification pursuant
to Section 2.2(g)(iii), Section 10.2 and Section 7.10
may, but shall not be required to be, brought by the Buyer Indemnified Parties
against the Indemnity Escrow Account; provided, that claims for indemnification
pursuant to Section 7.10 from and including the second anniversary
of the Closing Date to the end of the Escrow Period shall first be payable from
the Indemnity Escrow Account and to the extent such claims are in excess of any
amount of the Indemnity Escrow Amount remaining in the Indemnity Escrow
Account, the Buyer Indemnified Parties may pursue such claims against
Millennium or HoldCo directly or personally.

 

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

 

(c)           Insurance.  Payments by the Sellers pursuant to Section 10.2(a)(i) or
Section 7.10 shall be limited to (i) the amount of any liability
or damage that remains after deducting therefrom any insurance proceeds and any
indemnity, contribution or other similar payment actually recovered by the
Buyer from any third party with respect thereto, net of any Taxes imposed on
receipt of such amounts, plus (ii) out-of-pocket costs of collection
thereof, co-pays, increases in premiums or deductibles and related expenses.

 

10.5.        Tax
Benefit.  The amount of any payment to an Indemnified
Party pursuant to Article 10 or Section 7.10 shall be
reduced by the amount of any Tax Benefit Actually Realized by the Indemnified
Party, which Tax Benefit is solely attributable to the 

 

113

 

payment of the Damages upon which the claim for
indemnity is based and shall be determined as follows:

 

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

 

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

 

(c)           The Tax Benefit Accountant shall, as
promptly as practicable and in no event later than 45 days following the date
of the Tax Benefit Accountant’s retention, deliver to the Indemnifying Party
and the Indemnified Party a report (the “Tax Benefit Report”) in which 

 

114

 

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

 

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

 

10.6.        Mitigation
for Construction Claims.  No Buyer Indemnified Party may
seek indemnification for any Damages arising from or relating to construction
at any Project against the Sellers pursuant to Section 10.2(a)(i) or
Section 10.2(a)(ii) and no amount shall be payable by the
Sellers with respect to any such claimed Damages, until the Buyer Indemnified
Party has first made and resolved a claim for such Damages against the relevant
third parties listed on Schedule 10.7 of the Sellers Disclosure
Schedules; provided, that in settling or resolving any such claim, the Buyer
Indemnified Party shall consult with the Sellers; provided, further, that upon
such resolution, the Sellers shall indemnify the Buyer Indemnified Parties
against such Damages pursuant to Section 10.2(a)(i) or Section 10.2(a)(ii) to
the extent such Damages are in excess of the amount recovered from such third
parties and for which Damages are payable pursuant to this Article 10.  In the event of a claim is first being
pursued against any such third parties in accordance with this Section, the
Survival Period shall be tolled as to such claim until the claim is finally
resolved, and the Buyer Indemnified Party may seek indemnification with respect
to such claim pursuant to Section 10.2(a)(i) or Section 10.2(a)(ii).

 

10.7.        Exclusive
Remedy.  Other than claims for or in the nature of
fraud or willful misrepresentation, each party hereby acknowledges and agrees
that, from and after the Closing, without limitation of any available equitable
remedies, its sole remedy relating to the CCR Units, the Blocker Units, the
Business or the subject matter of this Agreement shall be pursuant to the
indemnification provisions of this Article 10, Section 7.10,
Section 2.2(g)(iii), Section 7.4(l) and Section 7.21(c).  In furtherance of the foregoing, each party
hereby waives, 

 

115

 

from and after the Closing, to the fullest extent permitted
by law, any and all other rights, claims, and causes of action it may have
against the other parties or their respective Representatives and Affiliates
relating to the Millennium Units, the HoldCo Units, the Blocker Units, the
Business or the subject matter of this Agreement, other than claims for or in
the nature of fraud.

 

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

 

ARTICLE 11

 

General

 

11.1.        Entire
Agreement.  This Agreement, including the Exhibits
hereto, the Buyers and Sellers Disclosure Schedules and the other agreements,
documents and written understandings referred to herein or otherwise entered
into by the parties hereto on the date hereof (including  the Other Documents) and the Confidentiality
Agreement, dated September 18,  2007,
between PBL and CCR (the “Confidentiality Agreement”), constitute the
entire agreement and understanding and supersede all other prior covenants,
agreements, undertakings, obligations, promises, arrangements, communications,
representations and warranties, whether oral or written, by any party hereto or
by any director, officer, employee, agent, Affiliate or Representative of any party
hereto including the Agreement in Principle. 
Except for the documents referred to in the immediately preceding
sentence, there are no covenants, agreements, undertakings or obligations with
respect to the subject matter of this Agreement other than those expressly set
forth or referred to herein and no representations or warranties of any kind or
nature whatsoever, express or implied, including any implied warranties of
merchantability or fitness for a particular purpose, are made or shall be
deemed to be made herein by the parties hereto except those expressly made
herein.

 

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

 

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

 

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

 

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

 

116

 

11.6.        Enforcement. 
The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions of this
Agreement in any federal or state court located in the State of Delaware, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of the federal and state courts located in
the State of Delaware in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and (c) agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal or state court
in the State of Delaware.

 

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

 

11.8.        Waiver
of Conditions.

 

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

 

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

 

11.9.        Transaction
Expenses.  Whether or not the transactions contemplated
by this Agreement or the Other Documents are consummated, each party shall pay
its own fees and expenses incident to the negotiation, preparation, execution,
delivery and performance hereof and thereof, including the fees and expenses of
its counsel, accountants and other experts, except as expressly provided
herein.  All fees associated with the
investment banking services provided by Deutsche Bank and Mercanti Securities,
LLC and legal services of Munger, Tolles & Olson, 

 

117

 

LLP, Santoro, Driggs, Walch, Kearney, Holley and
Thompson, Brownsten Hyatt Farber Schreck, 
DLA Piper US LLP, and Fox Rothschild LLP and all other service providers
to the Sellers in connection with this Agreement and the transactions contemplated
hereby shall not be expenses of the Companies, and shall be paid by the Sellers
at the Closing.

 

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

 

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

 

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

 

11.13.      Assignments.

 

(a)           None of the Buyers nor the Parent may
assign any of their rights or obligations under this Agreement without the
prior written consent of the Sellers and any purported assignment without such
consent shall be void, except that each Buyer may assign this Agreement to its
direct or indirect wholly-owned Affiliate provided, that, such assignment shall
not unduly delay or hinder the obtaining or completion of the Gaming Approvals
required by Section 8.1(b) hereof.

 

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

 

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

 

If to the Buyers:

 

The Corporation
Trust Company

1209 Orange Street

 

118

 

Wilmington,
Delaware  19801

Attention:   Scott Lascala

                   Service of Process
Department

Facsimile:  (302) 655-7813

 

With a copy to:

 

Crown Limited

8 Whiteman Street

Southbank,
Victoria 3006

Australia

Attn:  Company Secretary

Facsimile:  + 61 3 9292 8815

 

and

 

Skadden,
Arps, Slate, Meagher & Flom LLP

Four
Times Square

New
York, New York 10036

Attn:  Patricia Moran

Facsimile: (212)
735-2000

 

If to the Parent:

 

Crown Limited

8 Whiteman Street

Southbank,
Victoria 3006

Australia

Attn:  Company Secretary

Facsimile:  + 61 3 9292 8815

 

With a copy to:

 

Skadden,
Arps, Slate, Meagher & Flom LLP

Four
Times Square

New
York, New York 10036

Attn:  Patricia Moran

Facsimile: (212)
735-2000

 

If to the Sellers:

 

Millennium
Gaming, Inc.

9107
West Russell Road

Las
Vegas, Nevada  89148

Attn:  Chief Executive Officer

Facsimile:  (702) 856-5101

 

119

 

and

 

OCM
Holdco, LLC

333
South Grand Avenue, 28th Floor

Los Angeles, California  
90071

Attn:  Stephen A.
Kaplan

Facsimile:  (213) 830-6377

 

With a copy to:

 

Munger, Tolles &
Olson LLP

355 South Grand Avenue,
35th Floor

Los Angeles, California  90071

Attn:  Sandra A. Seville-Jones

Facsimile:  (213) 683-5126

 

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

 

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

 

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

 

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

 

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

 

120

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

[Signature
Pages Follow]

 

121

 

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

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  CROWN CCR GROUP INVESTMENTS
  ONE, 

  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CROWN CCR HOLDINGS, LLC

  
	
   

  	
  Its:

  	
  Sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CROWN CCR GROUP HOLDING
  ONE 

  
	
   

  	
  PTY LTD

  
	
   

  	
  Its:

  	
  Sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rowen Craigie

  
	
   

  	
   

  	
  Name:

  	
  Rowen Craigie

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CROWN CCR GROUP INVESTMENTS
  TWO, 

  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By: CROWN CCR HOLDINGS,
  LLC

  
	
   

  	
  Its:

  	
  Sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By: CROWN CCR GROUP
  HOLDINGS ONE 

  PTY LTD

  
	
   

  	
  Its:

  	
  Sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rowen Craigie

  
	
   

  	
   

  	
  Name:

  	
  Rowen Craigie

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARENT:

  
	
   

  	
   

  	
   

  
	
   

  	
  CROWN LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rowen Craigie

  
	
   

  	
   

  	
  Name:

  	
  Rowen Craigie

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
							

 

SIGNATURE 
PAGE TO PURCHASE AGREEMENT

 

 

	
   

  	
  SELLERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  MILLENNIUM
  GAMING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William J. Paulos

  
	
   

  	
   

  	
  Name:

  	
  William J. Paulos

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OCM
  HOLDCO, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen A. Kaplan

  
	
   

  	
   

  	
  Name:

  	
  Stephen A. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald N. Beck

  
	
   

  	
   

  	
  Name:

  	
  Ronald N. Beck

  
	
   

  	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  SIGNATURE  PAGE TO PURCHASE AGREEMENT

  
									

 

 

The
persons signing below hereby acknowledge

and agree to the provisions of Sections 2.3(f) and 7.15:

 

 

	
   

  	
   

  
	
  William J. Paulos

  
	
   

  
	
   

  
	
   

  	
   

  
	
  William C. Wortman

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
  SIGNATURE  PAGE TO PURCHASE AGREEMENT

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