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Exhibit 10.58    
    

 
 
  $160,000,000    
    
    HERBST GAMING, INC.    
    
    81/8% Senior Subordinated Notes due 2012    
    
    PURCHASE AGREEMENT    

New
York, New York

May 27, 2004 

LEHMAN
BROTHERS INC.

BANC OF AMERICA SECURITIES LLC

PIPER JAFFRAY & CO.

WELLS FARGO SECURITIES, LLC

COMERICA SECURITIES, INC.
 c/o Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019 

Ladies
and Gentlemen: 

        Herbst
Gaming, Inc., a Nevada corporation (the "Company"), proposes, upon the terms and considerations set forth herein, to issue
and sell to you (the "Initial Purchasers"), $160,000,000 in aggregate principal amount of its 81/8% Senior Subordinated Notes due 2012
(the "Series A Notes"). The Series A Notes (i) will have terms and provisions that are summarized in the Offering Memorandum (as
defined herein) and (ii) are to be issued pursuant to an Indenture (the "Indenture"), to be dated as of the Closing Date (as defined herein), to
be entered into among the Company, the Subsidiary Guarantors (as defined herein) and U.S. Bank National Association, as trustee (the "Trustee"). The
Company's obligations under the Series A Notes, including the due and punctual payment of interest on the Series A Notes, will be unconditionally jointly and severally guaranteed (the
"Series A Guarantees" and, together with the Series B Guarantees (as defined herein), the "Subsidiary
Guarantees") by E-T-T, Inc., a Nevada corporation, Flamingo Paradise Gaming, LLC, a Nevada limited-liability company, Market Gaming, Inc.,
a Nevada corporation, E-T-T Enterprises, L.L.C., a Nevada limited-liability company, Cardivan Company, a Nevada corporation, Corral Coin, Inc., a Nevada corporation, and
Corral Country Coin, Inc., a Nevada corporation (each a "Subsidiary Guarantor" and, collectively, the "Subsidiary
Guarantors"). As used herein, the term "Series A Notes" shall include the Series A Guarantees, unless the context otherwise requires. Capitalized terms used but
not defined herein shall have the meanings given to such terms in the Indenture. This is to confirm the agreement concerning the purchase of the Series A Notes from the Company by the Initial
Purchasers. 

        1.    Preliminary Offering Memorandum and Offering Memorandum.    The Series A Notes will be offered and sold
to the Initial Purchasers without registration under the Securities Act of 1933, as amended (the "Act"), in reliance on an exemption pursuant to
Section 4(2) under the Act. The Company and the Subsidiary Guarantors have prepared a preliminary offering memorandum, dated May 20, 2004 (the "Preliminary
Offering Memorandum"), and an offering memorandum, dated May 27, 2004 (the "Offering Memorandum"), setting forth
information regarding the Company, the Subsidiary Guarantors and the Series A Notes. Any references herein to the Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to
include all amendments and supplements thereto. The Company and the Subsidiary Guarantors hereby confirm that they have authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Series A Notes by the Initial Purchasers. 

        It
is understood and acknowledged that upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Act, the
Series A Notes (and all 

 

securities
issued in exchange therefor, in substitution thereof) shall bear the following legend (along with such other legends as the Initial Purchasers and its counsel deems necessary): 

"THE
NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER
THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT, IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (5) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE BLUE SKY LAWS OF THE STATES OF THE UNITED STATES." 

        You
have advised the Company that you will make offers (the "Exempt Resales") of the Series A Notes purchased by you hereunder on
the terms set forth in the Offering Memorandum, as amended or supplemented, solely to (i) persons (each, a "144A Purchaser") whom you reasonably
believe to be "qualified institutional buyers" as defined in Rule 144A under the Act ("QIBs") and (ii) outside the United States to
certain persons in offshore transactions in reliance on Regulation S under the Act, such persons specified in clauses (i) and (ii) being referred to herein as the
"Eligible Purchasers." You will offer the Series A Notes to Eligible Purchasers initially at a price equal to 99.284% of the principal amount
thereof. Such price may be changed at any time without notice. 

        Holders
(including subsequent transferees) of the Series A Notes will have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement") among the Company, the Subsidiary Guarantors and the Initial Purchasers, to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as such Series A Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Company and the Subsidiary Guarantors will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration statement under the Act (the "Exchange Offer
Registration Statement") relating to the Company's 81/8% Series B Senior Subordinated Notes due 2012 (the "Series B
Notes" and, together with the Series A Notes, the "Notes") and the Series B Guarantees to be offered in exchange
for the Series A Notes and the Series A Guarantees (the "Exchange Offer") and (ii) under certain circumstances a shelf registration
statement pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement,
the "Registration Statements") relating to the resale by certain holders of the Series A Notes, and to use all commercially reasonable efforts to
cause such Registration Statements to be declared and remain effective and usable for the periods specified in the Registration Rights Agreement, and to consummate the Exchange Offer. 

        The
Notes and the Subsidiary Guarantees will be unsecured senior subordinated obligations and will be subordinate in right of payment to all of the existing and future senior debt of the
Company and the Subsidiary Guarantors. 

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        The
following documents are hereinafter collectively referred to as the "Transaction Documents": (i) the Indenture; (ii) the
Notes; (iii) the Subsidiary Guarantees; and (iv) the Registration Rights Agreement. 

        2.    Representations, Warranties and Agreements of the Company and the Subsidiary Guarantors.    The Company and each
of the Subsidiary Guarantors represents, warrants and agrees that: 

        (a)   The
Preliminary Offering Memorandum and the Offering Memorandum as of their respective dates and the Offering Memorandum as of the Closing Date, did not or will not at
any time contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Any amendments or
supplements to either the Preliminary Offering Memorandum or the Offering Memorandum, as of the date of such amendment or supplement, when read together with the Preliminary Offering Memorandum or the
Offering Memorandum, as applicable, will not at any time contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. This representation and warranty does not apply to statements in or omissions from the Preliminary Offering Memorandum and Offering Memorandum made in reliance upon
and in conformity with information relating to the Initial Purchasers furnished to the Company in writing by or on behalf of the Initial Purchasers expressly for use therein. 

        (b)   The
Preliminary Offering Memorandum and Offering Memorandum with respect to the Series A Notes have been prepared by the Company and the Subsidiary Guarantors for
use by the Initial Purchasers in connection with the Exempt Resales. No order or decree preventing the use of the Preliminary Offering Memorandum or the Offering Memorandum, or any order asserting
that the transactions contemplated by this Agreement are subject to the registration requirements of the Act has been received by the Company or any of the Subsidiary Guarantors and to the best
knowledge after reasonable investigation of the Company and the Subsidiary Guarantors, no proceeding for that purpose has commenced or is pending or contemplated. 

        (c)   The
Company and each of the Subsidiary Guarantors have been duly incorporated or duly formed, as applicable, and are validly existing as corporations or
limited-liability companies, as the case may be, in good standing under the laws of the State of Nevada, are duly qualified to do business and are in good standing as foreign corporations or limited
liability companies, as the case may be, in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, and
have all power and authority necessary to own or hold their respective properties and to conduct the businesses in which they are engaged. 

        (d)   On
the Closing Date, the Company will have an authorized capitalization as set forth in the Offering Memorandum. On the Closing Date, all of the issued shares of capital
stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and conform to the description thereof contained in the Offering Memorandum; and
all of the issued shares of capital stock or all of the outstanding limited-liability company interests, as the case may be, of each of the Subsidiary Guarantors have been duly and validly authorized
and issued and are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims (collectively,
"Liens"). Each of the Subsidiary Guarantors is a direct or indirect wholly-owned subsidiary of the Company and there are no subsidiaries of the Company
other than the Subsidiary Guarantors. 

        (e)   Each
of the Company and the Subsidiary Guarantors has full corporate or limited liability company right, power and authority to enter into this Purchase Agreement (this
"Agreement"), to perform their respective obligations hereunder and to consummate the transactions contemplated by this Agreement and the Preliminary
Offering Memorandum. The Agreement and the 

3

 

transactions
contemplated by this Agreement and the Preliminary Offering Memorandum have been duly and validly authorized by the Company and each of the Subsidiary Guarantors. This Agreement has been
duly and validly executed and delivered by the Company and the Subsidiary Guarantors and (assuming the due execution and delivery thereof by the Initial Purchasers) constitutes the legal, valid and
binding obligation of the Company and the Subsidiary Guarantors, enforceable against the Company and the Subsidiary Guarantors in accordance with its terms, subject to the qualification that the
enforceability of the Company's and the Subsidiary Guarantors' obligations hereunder may be limited by applicable bankruptcy, fraudulent transfer, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors' rights generally, by general equitable principles (whether considered in a proceeding in equity or at law) and, as to rights of indemnification and
contribution, by principles of public policy or state or federal laws relating to the non-enforceability of the indemnification or contribution provisions. 

        (f)    Each
of the Company and the Subsidiary Guarantors has full corporate or limited liability company right, power and authority to enter into the Registration Rights
Agreement and to perform their respective obligations thereunder. The Registration Rights Agreement will be, on or prior to the Closing Date, duly and validly authorized by the Company and each of the
Subsidiary Guarantors, and when executed by the Company and the Subsidiary Guarantors in accordance with the terms thereof, will be validly executed and delivered and (assuming the due execution and
delivery thereof by the Initial Purchasers) will constitute the legal, valid and binding obligation of the Company and the Subsidiary Guarantors, enforceable against the Company and the Subsidiary
Guarantors in accordance with its terms, subject to the qualification that the enforceability of the Company's and the Subsidiary Guarantors' obligations thereunder may be limited by bankruptcy,
fraudulent transfer, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors' rights generally, by general equitable principles (whether considered in a proceeding in
equity or at law) and, as to rights of indemnification and contribution, by principles of public policy or state or federal laws relating to the non-enforceability of the indemnification
or contribution provisions. On the Closing
Date, the Registration Rights Agreement will conform in all material respects to the description thereof in the Preliminary Offering Memorandum and the Offering Memorandum. 

        (g)   Each
of the Company and the Subsidiary Guarantors has full corporate or limited liability company right, power and authority to execute and deliver the Indenture and to
perform their respective obligations thereunder. The Indenture will be, on or prior to the Closing Date, duly and validly authorized by the Company and each of the Subsidiary Guarantors, and, when
executed by the Company and the Subsidiary Guarantors in accordance with the terms thereof, will be validly executed and delivered and (assuming the due authorization, execution and delivery thereof
by the Trustee) will constitute the legal, valid and binding obligation of the Company and the Subsidiary Guarantors, enforceable against the Company and the Subsidiary Guarantors in accordance with
its terms, subject to the qualification that the enforceability of the Company's and the Subsidiary Guarantors' obligations thereunder may be limited by bankruptcy, fraudulent transfer, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors' rights generally, by general equitable principles (whether considered in a proceeding in equity or at law) and, as to
rights of indemnification and contribution, by principles of public policy or state or federal laws relating to the non-enforceability of the indemnification or contribution provisions. On
the Closing Date, the Indenture will conform in all material respects to the description thereof in the Preliminary Offering Memorandum and the Offering Memorandum. No qualification of the Indenture
under the Trust Indenture Act of 1939, as amended, and the rules and regulations thereunder (the "TIA" or "Trust Indenture
Act") is required in connection with the offer and sale of the Series A Notes contemplated hereby or in connection with the Exempt Resales. On the Closing Date, the
Indenture will conform in all material respects to the requirements of the TIA 

4

 

and
the rules and regulations of the Commission thereunder applicable to an indenture which is required to be qualified thereunder. 

        (h)   The
Company has all the requisite power and authority to offer and sell the Series A Notes. The Series A Notes have been duly and validly authorized by the
Company and when duly executed by the Company in accordance with the terms of the Indenture and, assuming due authentication of the Series A Notes by the Trustee, upon delivery to the Initial
Purchasers against payment therefor in accordance with the terms hereof, will have been validly issued and delivered, and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with their terms, except as such enforceability may be limited by bankruptcy, fraudulent transfer, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally and by general equitable principles (whether considered in a proceeding in equity or at law). On the Closing Date, the
Series A Notes will conform as to legal matters to the description thereof contained in the Preliminary Offering Memorandum and the Offering Memorandum, which summary description is accurate in
all material respects. 

        (i)    The
Series B Notes have been duly and validly authorized by the Company and if and when duly issued and authenticated in accordance with the terms of the
Indenture and delivered in accordance with the Exchange Offer provided for in the Registration Rights Agreement, upon receipt of approval of the Exchange Offer from the Nevada Gaming Commission, will
constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture, enforceable against the Company in accordance with their terms, except as such enforceability may be limited by bankruptcy,
fraudulent transfer, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights generally and by general equitable principles (whether considered in a proceeding
in equity or at law). When the Series B Notes are issued, the Series B Notes will conform as to legal matters to the description thereof contained in the Preliminary Offering Memorandum
and the Offering Memorandum, which summary description is accurate in all material respects. 

        (j)    The
Subsidiary Guarantors have all the requisite power to offer and sell the Series A Guarantees. The Series A Guarantees have been duly and validly
authorized by the Subsidiary Guarantors and when duly executed and delivered by the Subsidiary Guarantors in accordance with the terms of the Indenture and upon the due execution, authentication and
delivery of the Series A Notes in accordance with the Indenture and the issuance of the Series A Notes and the sale to the Initial Purchasers contemplated by this Agreement, will
constitute valid and binding obligations of the Subsidiary Guarantors, enforceable against the Subsidiary Guarantors in accordance with their terms, subject to the qualification that the
enforceability of the Subsidiary Guarantors' obligations thereunder may be limited by bankruptcy, fraudulent transfer, insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles (whether considered in a proceeding in equity or at law). On the Closing Date, the Series A Guarantees to be endorsed on the
Series A Notes will conform as to legal matters to the description thereof contained in the Preliminary Offering Memorandum and the Offering Memorandum, which summary description is accurate in
all material respects. 

        (k)   The
Subsidiary Guarantors have all the requisite power to offer and sell the unconditional guarantee of the Company's obligations under the Series B Notes,
including the due and punctual payment of interest on the Series B Notes (the "Series B Guarantees"). The Series B Guarantees have
been duly and validly authorized by the Subsidiary Guarantors and if and when duly executed and delivered by the Subsidiary Guarantors in accordance with the terms of the Indenture and upon receipt of
approval of the Exchange Offer from the Nevada Gaming Commission and upon the due execution and authentication of the Series B Notes in accordance with the Indenture and the issuance and
delivery of the Series B Notes in the Exchange Offer contemplated by the 

5

 

Registration
Rights Agreement, will constitute valid and binding obligations of the Subsidiary Guarantors, enforceable against the Subsidiary Guarantors in accordance with their terms, subject to the
qualification that the enforceability of the Subsidiary Guarantors' obligations thereunder may be limited by bankruptcy, fraudulent transfer, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally and by general equitable principles (whether considered in a proceeding in equity or at law). When the Series B Guarantees are issued, the
Series B Guarantees to be endorsed on the Series B Notes will conform as to legal matters to the description thereof contained in the Preliminary Offering Memorandum and the Offering
Memorandum, which summary description is accurate in all material respects. 

        (l)    When
issued, the Subsidiary Guarantees will be a general unsecured obligation of the Subsidiary Guarantors and will be subordinated in right of payment to all of the
Subsidiary Guarantors' other
existing and future Senior Debt. The Subsidiary Guarantees will be pari passu in right of payment with any future subordinated Indebtedness of the
Subsidiary Guarantors. 

        (m)  Neither
the Company nor any of the Subsidiary Guarantors (i) is in violation of its charter, by-laws or operating agreement (or similar organizational
document), (ii) is in default and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant
or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject, except for any such default, violation or event that would not, individually or in the aggregate, have a material adverse effect on the business, condition (financial
or otherwise), prospects or results of operations of the Company and its subsidiaries taken as a whole (any such event, a "Material Adverse Effect"),
(iii) (assuming compliance with all applicable state securities or "Blue Sky" laws and assuming the accuracy of the representations and warranties of the Initial Purchasers in Section 3
hereof) is in violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject, except for any such violation or event that would
not, individually or in the aggregate, have a Material Adverse Effect, or (iv) has failed to obtain any license, permit, certificate, franchise or other governmental authorization or permit
necessary to the ownership of its property or to the conduct of its business, except for any such failure that would not, individually or in the aggregate, have a Material Adverse Effect. 

        (n)   The
execution, delivery and performance of this Agreement and the Transaction Documents by the Company and Subsidiary Guarantors and the consummation of the transactions
contemplated hereby and thereby have not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the Company or any of the Subsidiary Guarantors is a party or by which the Company or any of the Subsidiary Guarantors is bound
or to which any of the property or assets of the Company or any of the Subsidiary Guarantors is subject, nor have or will such actions result in any violation of the provisions of the charter,
by-laws or operating agreement or other organizational document of the Company or any of the Subsidiary Guarantors or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of the Subsidiary Guarantors or any of their properties or assets, except for (i) such as have been or will be obtained
and made on or prior to the Closing Date (or, in the case of the Registration Rights Agreement, will be obtained and made under the Act, the TIA, and state securities or Blue Sky laws and
regulations), (ii) routine corporate filings and renewals of licenses, (iii) routine filings under the Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (iv) routine filings with applicable gaming authorities and (v) those which the failure to obtain the same would not,
individually or in the aggregate, have a Material Adverse Effect. 

6

 

        (o)   No
consent, approval, authorization or order of, or filing, qualification or registration with, any court or governmental agency or body is required for the execution,
delivery and performance of the Transaction Documents by the Company and the Subsidiary Guarantors or the consummation of the transactions contemplated hereby and thereby, except for the filing of a
registration statement by the
Company with the Commission pursuant to the Act as required by the Registration Rights Agreement and such consents, approvals, authorizations, orders, filings, registrations or qualifications
(x) as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Notes by the Initial Purchasers and (y) as have been obtained or
will be obtained prior to the Closing Date. 

        (p)   When
the Series A Notes and Series A Guarantees are issued and delivered pursuant to this Agreement, the Company will not have any securities listed on a
national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United States automated inter-dealer quotation system. 

        (q)   None
of the Company or any of the Subsidiary Guarantors is an "investment company" or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. 

        (r)   Assuming
(i) that your representations and warranties in Section 3 are true (ii) compliance by you with your covenants set forth in Section 3
and (iii) that each of the Eligible Purchasers is a QIB or a person who acquires the Series A Note in an "offshore transaction" and is not a "U.S. Person" (within the meaning of
Regulation S under the Act), the purchase and resale of the Series A Notes pursuant hereto (including pursuant to the Exempt Resales) is exempt from the registration requirements of the
Act. No form of general solicitation, general advertising or any direct selling efforts within the meaning of Regulation S was used by the Company, the Subsidiary Guarantors or any of their
representatives (other than you, as to whom the Company and the Subsidiary Guarantors make no representation) in connection with the offer and sale of the Series A Notes, including, but not
limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising. No securities of the same class as the Series A Notes have been issued and sold by the Company or the Subsidiary Guarantors within
the six-month period immediately prior to the date hereof. 

        (s)   The
Company is not required to deliver the information specified in Rule 144A(d)(4) under the Act in connection with the Exempt Resales. 

        (t)    The
market-related and customer-related data and estimates included under the captions "Summary—Herbst Gaming, Inc.," "Summary—Business
Strategy," "Summary—Recent Developments," "Risk Factors—Risks Related to Our Company," "Risk Factors—Risks Related to the Offering," "Management's Discussion and
Analysis of Financial Conditions and Results of Operations," "Business—General," "Business—Recent Developments," "Business—Route Operations,"
"Business—Casino Operations," "Business—Business Strategy," "Business—Las Vegas Market" and "Business—Competition" in the Preliminary Offering
Memorandum and the Offering Memorandum are based on or derived from sources which the Company believes to be reliable and accurate. 

        (u)   There
are no contracts or other documents which are required to be described in the Offering Memorandum by the Act or by the rules and regulations thereunder which have
not been described in the Offering Memorandum. 

        (v)   No
relationship, direct or indirect, exists between or among the Company on the one hand, and the directors, officers, stockholders, Terrible Herbst, Inc., a
Nevada corporation, Jerry 

7

 

Herbst,
customers or suppliers of the Company on the other hand, which is required to be described in the Offering Memorandum which is not so described. 

        (w)  There
are no contracts, agreements or understandings between the Company or any Subsidiary Guarantor and any person granting such person the right to require the Company
or any Subsidiary Guarantor to file a registration statement under the Act with respect to any securities of the Company or such Subsidiary Guarantor owned or to be owned by such person or to
require the Company to include such securities in the securities registered pursuant to the Exchange Offer Registration Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act. 

        (x)   Neither
the Company nor any of the Subsidiary Guarantors has sustained, since the date of the latest audited financial statements included in the Offering Memorandum,
any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or
decree, that would reasonably be expected to have a Material Adverse Effect, otherwise than as set forth or contemplated in the Offering Memorandum; and, since such date, there has not been any change
in the capital stock or long-term debt of the Company or any of the Subsidiary Guarantors or any adverse change, or development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of operations of the Company and the Subsidiary Guarantors that would reasonably be expected to have a Material Adverse Effect,
otherwise than as set forth or contemplated in the Offering Memorandum. 

        (y)   Each
of the financial statements and the pro forma information (including the related notes and supporting schedules) included in the Offering Memorandum present fairly
the financial condition and results of operations of the Company and each of the Subsidiary Guarantors at the dates and for the periods indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the periods involved. 

        (z)   Deloitte &
Touche LLP who have certified certain financial statements of the Company, whose report appears in the Offering Memorandum and who have delivered the
initial letter referred to in
Section 9(e) hereof, are independent public accountants as required by the Act and the rules and regulations thereunder. 

        (aa) The
Company and each of the Subsidiary Guarantors have good and marketable title in fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all Liens except for Permitted Liens; and all real property and buildings held under lease by the Company and the Subsidiary Guarantors are held
by them under valid, subsisting and enforceable leases, with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the
Company and the Subsidiary Guarantors, and no material default on the part of either the Company or the Subsidiary Guarantors or, to the knowledge of the Company and the Subsidiary Guarantors, any
other party thereto has occurred and is continuing thereunder, and the Company and the Subsidiary Guarantors enjoy peaceful and undisturbed possession under all such leases to which any of them is a
party lessee. The operation and use of the all real property owned and leased by the Company and the Subsidiary Guarantors are currently in compliance with all applicable municipal, county, state and
federal laws, regulations, ordinances, standards, orders, and other regulations, where the failure to comply therewith could have a Material Adverse Effect. Under currently applicable zoning and use
laws, ordinances, rules and regulations, the real property owned and leased by the Company and the Subsidiary Guarantors may be used for the purposes described in the Offering Memorandum and the
Indenture. 

        (bb) Except
as described in the Offering Memorandum, the Company and each of the Subsidiary Guarantors own or possess adequate rights to use all material patents, patent 

8

 

applications,
trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights and licenses presently employed by them for the conduct of their respective
businesses and have no reason to believe that the conduct of their respective businesses will conflict with, and have not received any notice of any claim of conflict with, any such rights of others. 

        (cc) There
are no legal or governmental proceedings pending to which the Company or any of the Subsidiary Guarantors is a party or of which any property or assets of the
Company or any of the Subsidiary Guarantors is the subject which, if determined adversely to the Company or any of the Subsidiary Guarantors, might have a Material Adverse Effect on the consolidated
financial position, stockholders' equity, results of operations, business or prospects of the Company and the Subsidiary Guarantors; and to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others. 

        (dd) No
labor disturbance by the employees of the Company exists or, to the knowledge of the Company, is imminent which might be expected to have a Material Adverse Effect
on the consolidated financial position, stockholders' equity, results of operations, business or prospects of the Company and the Subsidiary Guarantors. 

        (ee) The
Company is in compliance with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"), except where the failure to be in compliance would not have a Material Adverse Effect; no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Code (as defined below); and each
"pension plan" for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would be likely to cause the loss of such qualification. 

        (ff)  Neither
the Company nor any corporation considered an affiliate of the Company within the meaning of Section 407(d)(7) of ERISA (an
"Affiliate") is a party in interest or disqualified person to any employee pension or benefit plan. The representation made by the Company in the
preceding sentence is made in reliance upon and subject to the accuracy of, and compliance with, the representations and covenants made or deemed made by the Eligible Purchasers as set forth in the
Offering Memorandum under the Section entitled "Notice to Investors." 

        (gg) The
Company is, and has been at all times since its incorporation, an "S Corporation" (within the meaning of Section 1361(a) of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations issued thereunder (the "Code")) for which a valid election under
Section 1362 of the Code has been in effect (and which has also been in effect (or a similar state, local or foreign tax election has been in effect) for state, local or foreign income tax
purposes in all jurisdictions in which the Company can make such election and each of the Company and Subsidiary Guarantors has filed tax returns). The election by the Company under
Section 1362 (and applicable provisions of state, foreign or local law) has not been revoked or otherwise terminated and is still in full force and effect. 

        (hh) The
Company and the Subsidiary Guarantors have filed all federal, state and local income and franchise tax returns required to be filed through the date hereof and have
paid all taxes due thereon, and no tax deficiency has been determined adversely to the Company or any of the Subsidiary Guarantors which has had (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its subsidiaries, might have) a 

9

 

Material
Adverse Effect on the consolidated financial position, stockholders' equity, results of operations, business or prospects of the Company and the Subsidiary Guarantors. 

        (ii)   Neither
the Company nor any of the Subsidiary Guarantors nor any agent thereof acting on behalf of them has taken, and none of them will take, any action that might
cause this Agreement or the
issuance or sale of the Notes to violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the
Board of Governors of the Federal Reserve System. 

        (jj)   No
"nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Act has (i) has imposed (or
has informed the Company or any Subsidiary Guarantor that it is considering imposing) any condition (financial or otherwise) on the Company's or any Subsidiary Guarantor's retaining any rating
assigned to it, or to any securities of the Company or such Subsidiary Guarantor or (ii) has indicated to the Company or any Subsidiary Guarantor that it is considering (a) the
downgrading, suspension, or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating so assigned or (b) any change in the
outlook for any rating of the Company or any Subsidiary Guarantor or any securities of any of them. 

        (kk) Since
the date as of which information is given in the Preliminary Offering Memorandum through the date hereof, and except as may otherwise be disclosed in the Offering
Memorandum, neither the Company nor any of the Subsidiary Guarantors (i) has issued or granted any securities, (ii) has incurred any liability or obligation, direct or contingent, other
than liabilities and obligations which were incurred in the ordinary course of business, (iii) has entered into any transaction not in the ordinary course of business or (iv) has
declared or paid any extraordinary distribution on its capital stock. 

        (ll)   Each
of the Company and the Subsidiary Guarantors (i) makes and keeps accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (C) access to its assets is permitted only in accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at reasonable intervals. 

        (mm) Neither
the Company nor any of the Subsidiary Guarantors, nor any director, officer, agent, employee or other person associated with or acting on behalf of the Company
or any of the Subsidiary Guarantors, has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. 

        (nn) There
has been no storage, disposal, generation, manufacture, refinement, transportation, handling or treatment of toxic wastes, medical wastes, hazardous wastes or
hazardous substances by the Company or any of the Subsidiary Guarantors (or, to the knowledge of the Company, any of their predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or the Subsidiary Guarantors in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit, except for any violation or remedial action which would not have, or could not be reasonably
likely to have, singularly or in the aggregate with all such violations and remedial actions, a Material Adverse Effect on the general affairs, management, financial position, stockholders' equity or
results of operations of the Company and the Subsidiary Guarantors; there has been no material spill, 

10

 

discharge,
leak, emission, injection, escape, dumping or release of any kind onto such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes,
hazardous wastes or hazardous substances due to or caused by the Company or any of the Subsidiary Guarantors or with respect to which the Company or any of the Subsidiary Guarantors have knowledge,
except for any such spill, discharge, leak, emission, injection, escape, dumping or release which would not have or would not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and releases, a Material Adverse Effect on the general affairs, management, financial position, stockholders' equity or results of
operations of the Company and the Subsidiary Guarantors; and the terms "hazardous wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have the meanings specified in any
applicable local, state, federal and foreign laws or regulations with respect to environmental protection. 

        (oo) Except
as would not have a Material Adverse Effect, each of the Company and the Subsidiary Guarantors (i) possesses the permits, licenses, consents and other
authorizations (collectively, the "Government Licenses") issued by, and has made all filings with, the appropriate regulatory entities necessary to own,
lease and operate its properties and to conduct businesses now operated by it and (ii) all such Government Licenses are valid and in full force and effect. Except as would not have a Material
Adverse Effect, each of the Company and the Subsidiary Guarantors is in compliance with the terms and conditions of all such Government Licenses. No event has occurred (including, without limitation,
the receipt of any notice from any regulatory entity) that allows, or after notice or lapse of time or both, would allow revocation, modification, suspension or termination of any Government License
or would result in any other material impairment of the rights of the holder of any such Government License that would have a Material Adverse Effect. To the knowledge of the Company and the
Subsidiary Guarantors, no regulatory entity is considering limiting, suspending or revoking any Government License or is investigating any of them, other than ordinary course administrative reviews or
any ordinary course review of the transactions contemplated hereby. 

        Each
certificate signed by any officer, member or manager of the Company or any Subsidiary Guarantor and delivered to the Initial Purchasers or counsel to the Initial Purchasers shall be
deemed to be a representation and warranty by the Company and the Subsidiary Guarantors, as the case may be, to the Initial Purchasers as to the matters covered thereby. 

        3.    Initial Purchasers' Representations.    Each of the Initial Purchasers, severally and not jointly, represents
and warrants to, and agrees with, the Company and the Subsidiary Guarantors as set forth below in this Section 3. 

        (a)   Such
Initial Purchaser is a QIB with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an
investment in the Series A Notes. 

        (b)   Such
Initial Purchaser (i) is purchasing the Series A Notes pursuant to a private sale exempt from registration under the Act; (ii) is not acquiring
the Series A Notes with a view to any distribution thereof or with any present intention of offering or selling any of the Series A Notes in a transaction that would violate the Act or
the securities laws of any State of the United States or any other applicable jurisdiction; and (iii) will be reoffering and reselling the Series A Notes only to QIBs in reliance on the
exemption from the registration requirements of the Act provided by Rule 144A and in offshore transactions meeting the requirements of Regulation S. 

11

  

        (c)   Such
Initial Purchaser also understands that the Company and, for purposes of the opinions to be delivered to it pursuant to Section 9(c) hereof, counsel to the
Company and counsel to the Initial Purchasers, will rely upon the accuracy and truth of the foregoing representations and such Initial Purchaser hereby consents to such reliance. 

        (d)   Such
Initial Purchaser will offer the Series A Notes for sale upon the terms and conditions set forth in this Agreement and in the Offering Memorandum as soon as
is practicable after this Agreement is entered into and as in the judgment of such Initial Purchaser is advisable and will not offer or sell the Series A Notes by means of, nor has it offered
or sold the Series A Notes by means of, or otherwise engaged in a public offering within the meaning of Section 4(2) of the Act or any form of general solicitation or general advertising
(within the meaning of Regulation D; including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising) in connection with the offering of the
Series A Notes. 

        (e)   Such
Initial Purchaser and its affiliates or any person acting on its or their behalf have not engaged or will not engage in any directed selling efforts within the
meaning of Regulation S with respect to the Series A Notes. 

        (f)    The
sale of the Series A Notes offered and sold by such Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or scheme to
evade the registration provisions of the Act. 

        (g)   Such
Initial Purchaser agrees that the Series A Notes have not been registered under the Act and that neither it or its affiliates has offered or sold and will
not offer or sell the Series A Notes in the United States or to, or for the benefit or account of, a U.S. Person (other than a distributor) (a) as part of its distribution at any time
and (b) otherwise until 40 days after the later of the commencement of the offering of the Series A Notes pursuant hereto and the Closing Date (the
"distribution compliance period"), other than in accordance with Regulation S or another exemption from the registration requirements of the Act.
Such Initial Purchaser agrees that, during such 40-day distribution compliance period, it will not cause any advertisement with respect to the Series A Notes (including any
"tombstone" advertisement) to be published in any newspaper or periodical or posted in any public place and will not issue any circular relating to the Series A Notes, except such
advertisements as permitted by and include the statements required by Regulation S. Such Initial Purchaser also agrees that, at or prior to confirmation of a sale of Series A Notes
offered and sold pursuant to Regulation S, it will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration in respect of the Series A Notes from it during the restricted period a confirmation or notice substantially to the following effect: 

"The
Series A Notes covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered and sold within the United States or
to, or for the account or benefit of, U.S. persons (i) as part of your distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the Offering
and the Closing Date, except in either case in accordance with Regulation S under the Securities Act (or Rule 144A or to Accredited Institutions in transactions that are exempt from the
registration requirements of the Securities Act), and in connection with any subsequent sale by you of the Series A Notes covered hereby in reliance on Regulation S during the period
referred to above to any distributor, dealer or person receiving a selling concession, fee or other remuneration, you must deliver a notice to substantially the foregoing effect. Terms used above have
the meanings assigned to them in Regulation S." 

12

 

        (h)   Such
Initial Purchaser has taken no action, and will take no action, in any jurisdiction (either on its own or as an agent of the Company) in connection with the
offering of the Series A Notes that would independently require any action, filing or registration to be made for that purpose in any jurisdiction, or that would independently result in the
breach of the applicable laws, statutes, rules or regulations (whether by such Initial Purchaser or the Company) in any such jurisdiction. Such Initial Purchaser will comply with all applicable laws,
statutes, rules and regulations in each jurisdiction in which it purchases, offers, sells or delivers Series A Notes or distributes or causes to be distributed the Offering Memorandum or any
other offering materials prepared in connection with the Exempt Resales. 

        4.    Purchase and Sale.    On the basis of the representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to the Initial Purchasers and the Initial Purchasers, severally and not jointly, agree to purchase from the Company, at a
purchase price of 97.284% of the principal amount thereof, $160,000,000 aggregate principal amount of Series A Notes set forth opposite their respective names on Schedule I hereto. 

        5.    Delivery and Payment.    Delivery to the Initial Purchasers of and payment for the Series A Notes shall
be made (the "Closing") at 10:00 a.m., New York City time, on June 11, 2004 or such later date as the Initial Purchasers shall designate,
which date and time may be postponed by agreement between the Initial Purchasers and the Company (the "Closing Date") at the offices of Latham &
Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, California 90071, or such other time or place as you and the Company shall designate. 

        The
Series A Notes will be delivered to the Initial Purchasers against payment by or on behalf of the Initial Purchasers of the purchase price therefor by wire transfer in
immediately available funds, by causing The Depository Trust Company ("DTC") to credit the Series A Notes to the account of the
Initial Purchasers at DTC. The Series A Notes will be evidenced by a single global security in definitive form (the "Global Note") and/or by
additional definitive securities, and will be registered, in the case of the Global Note, in the name of Cede & Co. as nominee of DTC, and in the other cases, in such names and in such
denominations as the Initial Purchasers shall request prior to 12:00 p.m., New York City time, on the second business day preceding the Closing Date. The Series A Notes to be delivered
to the Initial Purchasers shall be made available to the Initial Purchasers in New York City for inspection and packaging not later than 9:30 a.m., New York City time, on the business day next
preceding the Closing Date. 

        6.    Offering by Initial Purchasers.    It is understood that the Initial Purchasers propose to offer the
Series A Notes for sale only to Eligible Purchasers as set forth in the Final Memorandum. 

        7.    Agreements of the Company and the Subsidiary Guarantors.    The Company and the Subsidiary Guarantors jointly
and severally agree with each Initial Purchaser as follows: 

        (a)   The
Company and the Subsidiary Guarantors will furnish to the Initial Purchasers, without charge, as of the date of the Offering Memorandum, such number of copies of the
Offering Memorandum as may then be amended or supplemented as they may reasonably request. 

        (b)   The
Company and the Subsidiary Guarantors will not make any amendment or supplement to the Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they shall reasonably object after being so advised. 

        (c)   Prior
to the execution and delivery of this Agreement, the Company and the Subsidiary Guarantors shall have delivered or will deliver to the Initial Purchasers, without
charge, in such quantities as the Initial Purchasers shall have requested or may hereafter reasonably request, copies of the Preliminary Offering Memorandum. The Company and each of the Subsidiary
Guarantors consent to the use, in accordance with the securities or Blue Sky laws of the 

13

 

jurisdictions
in which the Series A Notes are offered by the Initial Purchasers and by dealers, prior to the date of the Offering Memorandum, of each Preliminary Offering Memorandum so
furnished by the Company and the Subsidiary Guarantors. The Company and each of the Subsidiary Guarantors consent to the use of the Offering Memorandum in accordance with the securities or Blue Sky
laws of the jurisdictions in which the Series A Notes are offered by the Initial Purchasers and by all dealers to whom Series A Notes may be sold, in connection with the offering and
sale of the Series A Notes. 

        (d)   If,
at any time prior to completion of the distribution of the Series A Notes by the Initial Purchasers to Eligible Purchasers, any event shall occur that in the
judgment of the Company, any of the
Subsidiary Guarantors or in the opinion of counsel for the Initial Purchasers should be set forth in the Offering Memorandum in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary to supplement or amend the Offering Memorandum in order to comply with any law, the Company and the Subsidiary Guarantors will
forthwith prepare an appropriate supplement or amendment thereto or such document, and will expeditiously furnish to the Initial Purchasers and dealers a reasonable number of copies thereof. 

        (e)   The
Company and each of the Subsidiary Guarantors will cooperate with the Initial Purchasers and with their counsel in connection with the qualification of the
Series A Notes for offering and sale by the Initial Purchasers and by dealers under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may designate and will file
such consents to service of process or other documents necessary or appropriate in order to effect such qualification; provided, that in no event shall the Company or any of the Subsidiary Guarantors
be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to service of process in suits, other than those arising out of
the offering or sale of the Series A Notes, in any jurisdiction where it is not now so subject. 

        (f)    For
a period of 180 days from the date of the Offering Memorandum, the Company and each of the Subsidiary Guarantors agree not to, directly or indirectly, sell,
offer to sell, contract to sell, grant any option to purchase, issue any instrument convertible into or exchangeable for, or otherwise transfer or dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the disposition in the future of), any debt securities of the Company or any of the Subsidiary Guarantors, except (i) for the
Series B Notes in connection with the Exchange Offer or (ii) with the prior consent of the Initial Purchasers. 

        (g)   So
long as any of the Notes are outstanding, the Company and the Subsidiary Guarantors will deliver without charge to the Initial Purchasers, as they may reasonably
request, promptly upon their becoming available, copies of (i) all reports or other publicly available information that the Company and the Subsidiary Guarantors shall mail or otherwise make
available to their security holders and (ii) all reports, financial statements and proxy or information statements filed by either the Company or any of the Subsidiary Guarantors or any
successor of either of them with the Commission or any national securities exchange and such other publicly available information concerning either of the Company or any of the Subsidiary Guarantors
or any successor of any of them or any of their respective subsidiaries, including without limitation, press releases. 

        (h)   If
this Agreement shall terminate or shall be terminated after execution and delivery pursuant to any provisions hereof or if this Agreement shall be terminated by the
Initial Purchasers because of any failure or refusal on the part of the Company or any of the Subsidiary Guarantors to comply with the terms or fulfill any of the conditions of this Agreement, the
Company and the Subsidiary Guarantors agree to reimburse the Initial Purchasers for all out-of-pocket expenses (including reasonable fees and expenses of its counsel)
reasonably incurred 

14

 

by
them in connection herewith, but without any further obligation on the part of the Company or any of the Subsidiary Guarantors for loss of profits or otherwise. 

        (i)    The
Company and the Subsidiary Guarantors will apply the net proceeds from the sale of the Series A Notes to be sold by it hereunder substantially in accordance
with the description set forth in the Offering Memorandum under the caption "Use of Proceeds." 

        (j)    Except
as stated in this Agreement and in the Preliminary Offering Memorandum and Offering Memorandum, the Company, the Subsidiary Guarantors and their respective
affiliates have not taken, nor will any of them take, directly or indirectly, any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the
price of the Notes to facilitate the sale or resale of the Notes. Except as permitted by the Act, the Company and the Subsidiary Guarantors will not distribute any offering material in connection with
the Exempt Resales. 

        (k)   The
Company and the Subsidiary Guarantors will use their best efforts to permit the Notes to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") market securities in accordance with the rules and regulations adopted by the National Association of Securities
Dealers, Inc. relating to trading in the PORTAL market and to permit the Notes to be eligible for clearance and settlement through DTC. 

        (l)    From
and after the Closing Date, so long as any of the Notes are outstanding and are "restricted securities" within the meaning of the Rule 144(a)(3) under the
Act or, if earlier, until three years after the Closing Date, and during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company and the
Subsidiary Guarantors will furnish to holders of the Notes and prospective purchasers of Notes designated by such holders, upon request of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Act to permit compliance with Rule 144A in connection with resale of the Notes. 

        (m)  The
Company and the Subsidiary Guarantors agree not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the
Act) that would be integrated with the sale of the Series A Notes in a manner that would require the registration under the Act of the sale to the Initial Purchasers or the Eligible Purchasers
of the Series A Notes. 

        (n)   The
Company and the Subsidiary Guarantors agree to comply with all the terms and conditions of the Registration Rights Agreement and all agreements set forth in the
representation letters of the Company and the Subsidiary Guarantors to DTC relating to the approval of the Notes by DTC for "book entry" transfer. 

        (o)   The
Company and the Subsidiary Guarantors agree to cause the Exchange Offer (as defined in the Registration Rights Agreement), if available, to be made in the
appropriate form, as contemplated by the Registration Rights Agreement, to permit registration of the Series B Notes to be offered in exchange for the Series A Notes, and to comply with
all applicable federal and state securities laws in connection with the Registered Exchange Offer. 

        (p)   The
Company and the Subsidiary Guarantors agree that prior to any registration of the Notes pursuant to the Registration Rights Agreement, or at such earlier time as may
be required, the Indenture shall be qualified under the TIA. 

        (q)   The
Company and the Subsidiary Guarantors will not voluntarily claim, and will resist actively all attempts to claim, the benefit of any usury laws against holders of
the Notes. 

        (r)   The
Company and the Subsidiary Guarantors will do and perform all things required or necessary to be done and performed under this Agreement by them prior to the Closing
Date, and 

15

 

to
satisfy all conditions precedent to the Initial Purchasers' obligations hereunder to purchase the Series A Notes. 

        8.    Expenses.    Whether or not the transactions contemplated by this Agreement are consummated or this Agreement
becomes effective or is terminated, the Company and the Subsidiary Guarantors agree to pay all costs, expenses, fees and taxes incident to and in connection with: (i) the preparation, printing,
filing and distribution of the Preliminary Offering Memorandum and the Offering Memorandum (including, without limitation, financial statements and exhibits) and all amendments and supplements thereto
(but not, however, legal fees and expenses of your counsel incurred in connection therewith), (ii) the preparation, printing (including, without limitation, word processing and duplication
costs) and delivery of this Agreement, the Indenture, the Registration Rights Agreement, all Blue Sky Memoranda and all other agreements, memoranda, correspondence and other documents printed and
delivered in connection therewith and with the Exempt Resales (but not, however, legal fees and expenses of your counsel incurred in connection with any of the foregoing other than fees of such
counsel plus reasonable disbursements incurred in connection with the preparation, printing and delivery of such Blue Sky Memoranda), (iii) the issuance and delivery by the Company of the Notes
and the Subsidiary Guarantees, (iv) the qualification of the Notes and the Subsidiary Guarantees for offer and sale under the securities or Blue Sky laws of the several states (including,
without limitation, the reasonable fees
and disbursements of your counsel relating to such registration or qualification), (v) furnishing such copies of the Preliminary Offering Memorandum and the Offering Memorandum, and all
amendments and supplements thereto, as may be reasonably requested for use in connection with the Exempt Resales, (vi) the preparation of certificates for the Notes and the Subsidiary
Guarantees (including, without limitation, printing and engraving thereof), (vii) the application for quotation of the Notes in the PORTAL market, (ix) approval of the Notes by DTC for
"book-entry" transfer, (x) rating the Series A Notes and the Series B Notes, (xi) the Trustee, any agent of the Trustee and the counsel for the Trustee in
connection with the Indenture and the Notes and (xii) the performance by the Company and the Subsidiary Guarantors of their other obligations under this Agreement. 

        9.    Conditions of Initial Purchasers' Obligations.    The respective obligations of the Initial Purchasers hereunder
are subject to the accuracy, when made and on the Closing Date, of the representations and warranties of the Company contained herein, to the performance by the Company and the Subsidiary Guarantors
of their respective obligations hereunder, and to each of the following additional terms and conditions: 

        (a)   The
Initial Purchasers shall not have discovered and disclosed to the Company on or prior to the Closing Date that the Offering Memorandum or any amendment or supplement
thereto contains an untrue statement of a fact which, in the opinion of the Initial Purchasers, is material or omits to state a fact which, in the opinion of the Initial Purchasers, is material and is
required to be stated therein or is necessary to make the statements therein not misleading. 

        (b)   All
corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement and the Offering Memorandum, and all other legal
matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Initial Purchasers, and the Company and the
Subsidiary Guarantors shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. 

        (c)   The
Initial Purchasers shall have received on the Closing Date an opinion, dated the Closing Date, in form and substance satisfactory to the Initial Purchasers and
counsel for the Initial Purchasers, of (i) Kummer Kaempfer Bonner & Renshaw, counsel for the Company and the Subsidiary Guarantors, to the effect set forth in  Exhibit B hereto and
(ii) McDonald Carano Wilson LLP to the effect that (1) the Company and the Subsidiary Guarantors possess all
licenses, 

16

 

including
licenses issued by the Nevada Gaming Commission and the Nevada Gaming Control Board, and has made all filings with, the appropriate regulatory entities necessary to own, lease and operate
its properties and to conduct the business now conducted by it and as proposed to be conducted in the Offering Memorandum, that all such licenses are in full force and effect, that to its knowledge
each of the Company and the Subsidiary Guarantors is in compliance with the terms and conditions of such licenses, and that to its knowledge no event has occurred (including, without limitation, the
receipt of any notice from any regulatory entity) which allows, or after notice or lapse of time, or both, would allow the revocation, modification, suspension or termination of any such license or
would result in any other material impairment of the rights of the Company and the Subsidiary Guarantors under such license, and (2) the information contained in the Offering Memorandum under
the caption "Regulation and Licensing" has been reviewed by it and fairly summarizes the matters therein described in all material respects. 

        (d)   The
Initial Purchasers shall have received from Latham & Watkins LLP, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date, with
respect to the issuance and sale of the Series A Notes, the Offering Memorandum and other related matters as the Initial Purchasers may reasonably require, and the Company shall have furnished
to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. 

        (e)   At
the time of execution of this Agreement, the Initial Purchasers shall have received from Deloitte & Touche LLP a letter, in form and substance satisfactory to
the Initial Purchasers, addressed to the Initial Purchasers and dated the date hereof (i) confirming that they are independent public accountants within the meaning of the Act and are in
compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Offering Memorandum, as of a
date not more than five days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with registered public offerings. 

        (f)    With
respect to the letter of Deloitte & Touche LLP referred to in the preceding paragraph and delivered to the Initial Purchasers concurrently with the execution
of this Agreement (the "initial letter"), the Company shall have furnished to the Initial Purchasers a letter (the
"bring-down letter") of such accountants, addressed to the Initial Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants within the meaning of the Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of
the date of their bring-down letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the
Offering Memorandum, as of a date not more than five days prior to the date of their bring-down letter), the conclusions and findings of such firm with respect to the financial information
and other matters covered by their initial letter and (iii) confirming in all material respects the conclusions and findings set forth in their initial letter. 

        (g)   The
Company shall have furnished to the Initial Purchasers a certificate, dated the Closing Date, of its Chairman of the Board, its President or a Vice President and its
Chief Financial Officer stating that: 

        (i)    The
representations, warranties and agreements of the Company in Section 2 are true and correct as of the Closing Date; the Company has complied with all its
agreements contained herein; and the conditions set forth in Section 9 have been fulfilled; and 

17

 

        (ii)   They
have carefully examined the Offering Memorandum and, in their opinion (A) as of its date, the Offering Memorandum did not include any untrue statement of a
material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) since the date of the Offering
Memorandum no event has occurred which should have been set forth in a supplement or amendment to the Offering Memorandum. 

        (h)   Subsequent
to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) of the rules and regulations pursuant to the Act and
(ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities. 

        (i)    Subsequent
to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York
Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or the settlement of such trading generally shall have been materially disrupted or minimum prices shall have been
established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on the financial markets in the United
States shall be such), including without limitation as a result of terrorist activities after the date hereof, or there shall have occurred any other calamity or crisis, as to make it, in the judgment
of the Initial Purchasers, impracticable or inadvisable to proceed with the delivery of the Series A Notes being delivered on such Closing Date on the terms and in the manner contemplated in
the Offering Memorandum or which, in the judgment of the Initial Purchasers would materially and adversely affect the financial markets or the markets for the Series A Notes and other debt
securities. 

        (j)    The
Company shall have obtained all necessary governmental consents and approvals required to consummate the offering and sale of the Notes and the Subsidiary
Guarantees, including without limitation, all consents or approvals required by the Nevada Gaming Commission and the Nevada Gaming Control Board required to provide for the Security Interests, and the
Initial Purchasers shall have received evidence to their satisfaction of the compliance by the Company with this condition. 

        (k)   The
Series A Notes shall have been approved by the NASD for trading and duly listed on PORTAL. 

        (l)    The
Company and the Subsidiary Guarantors shall have executed and delivered to the Trustee each of the Transaction Documents. 

        (m)  (i) A
majority in aggregate principal amount of the Company's outstanding 103/4% Senior Secured Notes due 2008 (the
"Outstanding Notes") shall have been validly tendered and not withdrawn pursuant to the Company's offer to purchase for cash all of its Outstanding
Notes and (ii) the Fourth Supplemental Indenture, dated as of May 24, 2004, to the Indenture, dated as of August 24, 2001, by and among the Company, as issuer, the Subsidiary
Guarantors and The Bank of New York, as trustee, as supplemented as of August 23, 2002, January 23, 2003 and February 6, 2003, pursuant to which the Outstanding Notes were issued,
shall be in full force and effect. 

18

 

        (n)   Concurrently
with the consummation of the transactions contemplated by this Agreement, the Company shall have entered into a five-year $150 million
credit facility as described in the Offering Memorandum. 

        (o)   The
Initial Purchasers shall have received such other documents, agreements, certificates and information as the Initial Purchasers shall have reasonably requested. 

        All
opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Initial Purchasers. 

        10.    Indemnification and Contribution.    

        (a)   The
Company and each Subsidiary Guarantor, jointly and severally, shall indemnify and hold harmless each Initial Purchaser, its directors, officers and employees and
each person, if any, who controls any Initial Purchaser within the meaning of the Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Series A Notes), to which the Initial Purchaser, director, officer, employee or
controlling person may become subject, under the Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Offering Memorandum or the Offering Memorandum or in any amendment or supplement thereto, or (B) in any materials or
information provided to investors by, or with the approval of, the Company in connection with the marketing of the offering of the Series A Notes ("Marketing
Materials"), including any roadshow or investor presentations made to investors by the Company (whether in person or electronically), or (C) in any blue sky application
or other document prepared or executed by the Company (or based upon any written information furnished by the Company) specifically for the purpose of qualifying any or all of the Series A
Notes under the securities laws of any state or other jurisdiction (any such application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any Preliminary Offering Memorandum or the Offering Memorandum, or in any amendment or supplement
thereto, or in any Marketing Materials or Blue Sky Application, any material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any Initial Purchaser in connection with, or relating in any manner to, the Series A Notes or the offering contemplated hereby, and which
is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company and the Subsidiary Guarantors shall not be liable under this clause (iii) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such
Initial Purchaser through their gross negligence or willful misconduct), and shall reimburse each Initial Purchaser and each such director, officer, employee or controlling person promptly upon demand
for any legal or other expenses reasonably incurred by that Initial Purchaser, director, officer, employee or controlling person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company and the Subsidiary
Guarantors will not be liable in any such case to the extent but only to the extent that that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information concerning such Initial Purchaser furnished to the Company through the
Initial Purchaser by or on behalf of any Initial Purchaser specifically for inclusion therein; provided, further, that the parties agree that such
information provided by or on behalf of the Initial Purchasers consists solely of the information described in Section 10(e) hereof. The foregoing 

19

 

indemnity
agreement is in addition to any liability which the Company or the Subsidiary Guarantors may otherwise have to any Initial Purchaser or to any director, officer, employee or controlling
person of the Initial Purchaser. 

        (b)   Each
Initial Purchaser, severally and not jointly, shall indemnify and hold harmless the Company, its officers and employees, each of its directors, and each person, if
any, who controls the Company within the meaning of the Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any such
director, officer or controlling person may
become subject, under the Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in the Preliminary Offering Memorandum or the Offering Memorandum or in any amendment or supplement thereto, or (B) in any Blue Sky Application or
(ii) the omission or alleged omission to state in the Preliminary Offering Memorandum or the Offering Memorandum, or in any amendment or supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with written information concerning such Initial Purchaser furnished to the Company by or on behalf of that Initial Purchaser
specifically for inclusion therein, which information is limited to the information set forth in Section 10(e), and shall reimburse the Company and any such director, officer or controlling
person for any legal or other expenses reasonably incurred by the Company or any such director, officer or controlling person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability that any Initial Purchaser may otherwise have
to the Company or any such director, officer, employee or controlling person. 

        (c)   Promptly
after receipt by an indemnified party under this Section 10 of notice of any claim or the commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under this Section 10, notify the indemnifying party in writing of the claim or the commencement of that action;  provided,
however, that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the extent it has been materially prejudiced by such failure and, provided further,
that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 10. If any such claim or
action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 10 for any
legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation;  provided, however, that the Initial Purchaser shall have the right to employ counsel to represent
jointly the Initial Purchaser and those Initial Purchasers and their respective directors, officers, employees and controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Initial Purchasers against the Company or the Subsidiary Guarantors under this Section 10 if, in the reasonable judgment of the Initial
Purchaser, it is advisable for the Initial Purchasers and those directors, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Company or the Subsidiary Guarantors. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld), settle or compromise or 

20

 

consent
to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or
not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. 

        (d)   If
the indemnification provided for in this Section 10 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under
Section 10(a) or 10(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits received by the Company and the Subsidiary Guarantors on the one hand and the Initial Purchasers on the other from the offering of
the Series A Notes or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the Company and the Subsidiary Guarantors, on the one hand and the Initial Purchasers on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by
the Company and the Subsidiary Guarantors, on the one hand and the Initial Purchasers on the other hand with respect to such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Series A Notes purchased under this Agreement (before deducting expenses) received by the Company and the Subsidiary Guarantors, on the one hand, and the total
discounts and commissions received by the Initial Purchasers with respect to the Series A Notes purchased under this Agreement, on the other hand, bear to the total gross proceeds from the
offering of the Series A Notes under this Agreement. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the Company, the Subsidiary Guarantors or the Initial Purchasers, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or omission. For purposes of the preceding two sentences, the net proceeds deemed to be received by the Company shall be
deemed to be also for the benefit of the Subsidiary Guarantors and information supplied by the Company shall also be deemed to have been supplied by the Subsidiary Guarantors. The Company, the
Subsidiary Guarantors and the Initial Purchasers agree that it would not be just and equitable if contributions pursuant to this Section 10(d) were to be determined by pro rata allocation (even
if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 10(d) shall be deemed to include,
for purposes of this Section 10(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10(d), no Initial Purchasers shall be required to contribute any amount in excess of the amount by which the total price at which the
Series A Notes purchased by them and distributed to the Eligible Purchasers exceeds the amount of any damages which the Initial Purchaser has otherwise paid or become liable to pay by reason of
any untrue or alleged untrue 

21

 

statement
or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial Purchasers' obligations to contribute as provided in this Section 10(d) are several in proportion to their respective
underwriting obligations and not joint. 

        (e)   The
Initial Purchasers severally confirm and the Company acknowledges that the statements with respect to the offering of the Series A Notes by the Initial
Purchasers set forth in the fifth, sixth, eighth and tenth paragraphs, under the caption "Plan of Distribution" in the Offering Memorandum are
correct and constitute the only information concerning such Initial Purchasers furnished in writing to the Company by or on behalf of the Initial Purchasers specifically for inclusion in the Offering
Memorandum. 

        11.    Termination.    The obligations of the Initial Purchasers hereunder may be terminated by the Initial Purchasers
by notice given to and received by the Company prior to delivery of and payment for the Series A Notes if, prior to that time, any of the events described in Section 9(i), shall have
occurred or if the Initial Purchasers shall decline to purchase the Series A Notes for any reason permitted under this Agreement. 

        12.    Reimbursement of Initial Purchasers' Expenses.    If the Company shall fail to tender the Series A Notes
for delivery to the Initial Purchasers (i) by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or (ii) because
any other condition of the obligations hereunder required to be fulfilled by the Company is not fulfilled, the Company will reimburse the Initial Purchasers for all reasonable expenses (including,
without limitation, professional and legal fees and disbursements) incurred by the Initial Purchasers in connection with this Agreement and the proposed purchase of the Series A Notes, and upon
demand the Company shall pay the full amount thereof to the Initial Purchasers. 

        13.    Notices, etc.    All statements, requests, notices and agreements hereunder shall be in writing, and: 

        (a)   if
to the Initial Purchasers, shall be delivered or sent by mail, telex or facsimile transmission to Lehman Brothers Inc., 745 Seventh Avenue, New York, New York
10019, Attention: John Cokinos (Phone: 212-526-1717), with a copy to Latham & Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, California
90071-2007, Attention: Gary Kashar (Fax: (213) 891-8763), and with a copy, in the case of any notice pursuant to Section 10(c), to the Director of Litigation,
Office of the General Counsel at the same address; and 

        (b)   if
to the Company or to the Subsidiary Guarantors, shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Sean Higgins (Fax: 702-740-4630). 

        Any
such statements, requests, notices or agreements shall take effect at the time of receipt thereof. 

        14.    Persons Entitled to Benefit of Agreement.    This Agreement shall inure to the benefit of and be binding upon
the Initial Purchasers, the Company, the Subsidiary Guarantors and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of the Company contained in this Agreement shall also be deemed to be for the benefit of the directors of the Initial
Purchasers, and any person or persons, if any, who control the Initial Purchasers within the meaning of Section 15 of the Act and (B) the indemnity agreement of the Initial Purchasers
contained in Section 10(b) of this Agreement shall be deemed to be for the benefit of directors of the Company, and any person controlling the Company within the meaning of Section 15 of
the Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in 

22

 

this
Section 15, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 

        15.    Survival.    The respective indemnities, representations, warranties and agreements of the Company, the
Subsidiary Guarantors and the Initial Purchasers contained in this Agreement or made by or on behalf on them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for
the Series A Notes and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. 

        16.    Definition of the Terms "Business Day" and "Subsidiary".    For purposes of this Agreement,
(a) "business day" means any day on which the New York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the rules and
regulations pursuant to the Act. 

        17.    Governing Law.    This Agreement shall be governed by and construed in accordance with
the laws of New York.

        Each
party irrevocably agrees that any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United States of America located in the City of New York or the courts of the
State of New York in each case located in the Borough of Manhattan in the City of New York (collectively, the "Specified Courts"), and irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. The parties further agree that service of any
process, summons, notice or document by mail to such party's address set forth above shall be effective service of process for any lawsuit, action or other proceeding brought in any such court. The
parties hereby irrevocably and unconditionally waive any objection to the laying of venue of any lawsuit, action or other proceeding in the Specified Courts, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any such lawsuit, action or other proceeding brought in any such court has been brought in an inconvenient forum. 

        18.    Counterparts.    This Agreement may be executed in one or more counterparts and, if executed in more than one
counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. 

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

(Signature
Pages Follow) 

23

        If the foregoing correctly sets forth the agreement among the Company, the Subsidiary Guarantors and the Initial Purchasers, please indicate your acceptance in the space provided for
that purpose below. 

	 	 	 	 	 	Very truly yours,
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	HERBST GAMING, INC.
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	By	/s/  MARY E. HIGGINS      

	 	 	 	 	 	Name:	Mary E. Higgins
	 	 	 	 	 	Title:	Chief Financial Officer
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	E-T-T, INC.
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	By	/s/  MARY E. HIGGINS      

	 	 	 	 	 	Name:	Mary E. Higgins
	 	 	 	 	 	Title:	Chief Financial Officer
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	FLAMINGO PARADISE GAMING, LLC
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	By	/s/  MARY E. HIGGINS      

	 	 	 	 	 	Name:	Mary E. Higgins
	 	 	 	 	 	Title:	Chief Financial Officer
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	MARKET GAMING, INC.
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	By	/s/  MARY E. HIGGINS      

	 	 	 	 	 	Name:	Mary E. Higgins
	 	 	 	 	 	Title:	Chief Financial Officer
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	E-T-T ENTERPRISES, L.L.C.
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	By	/s/  MARY E. HIGGINS      

	 	 	 	 	 	Name:	Mary E. Higgins
	 	 	 	 	 	Title:	Chief Financial Officer
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	CARDIVAN COMPANY
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	By	/s/  MARY E. HIGGINS      

	 	 	 	 	 	Name:	Mary E. Higgins
	 	 	 	 	 	Title:	Chief Financial Officer
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	CORRAL COIN, INC.
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	By	/s/  MARY E. HIGGINS      

	 	 	 	 	 	Name:	Mary E. Higgins
	 	 	 	 	 	Title:	Chief Financial Officer
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	 	 

	 	 	 	 	 	CORRAL COUNTRY COIN, INC.
	

 	
 	

 	

 	
 	

 	

 
	 	 	 	 	 	By	/s/  MARY E. HIGGINS      

	 	 	 	 	 	Name:	Mary E. Higgins
	 	 	 	 	 	Title:	Chief Financial Officer
	

 	
 	

 	

 	
 	

 	

 
	Agreed and Accepted:	 	 	 
	

 	
 	

 	

 	
 	

 	

 
	LEHMAN BROTHERS INC.

BANC OF AMERICA SECURITIES LLC

PIPER JAFFRAY & CO.

WELLS FARGO SECURITIES, LLC

COMERICA SECURITIES, INC.	 	 	 
	

 	
 	

 	

 	
 	

 	

 
	 	 	By	LEHMAN BROTHERS INC.	 	 	 
	

 	
 	

 	

 	
 	

 	

 
	 	 	By	/s/  MICHAEL KONIGSBERG      
	 	 	 
	 	 	Name:	Michael Konigsberg	 	 	 
	 	 	Title:	Managing Director	 	 	 
	 	 	 	 	 	 	 

SCHEDULE I

INITIAL PURCHASERS  

	Initial Purchasers
 
	 	Principal Amount

of Notes to be Purchased

	Lehman Brothers Inc.	 	$	113,600,000
	Banc of America Securities LLC	 	 	24,800,000
	Piper Jaffray & Co.	 	 	9,200,000
	Wells Fargo Securities, LLC	 	 	9,200,000
	Comerica Securities, Inc.	 	 	3,200,000
	 	 	

	TOTAL	 	$	160,000,000
	 	 	

   EXHIBIT A  

 FORM OF REGISTRATION RIGHTS AGREEMENT  

 

REGISTRATION RIGHTS AGREEMENT  

 by and among  

 HERBST GAMING, INC.,  

 and  

 THE GUARANTORS SIGNATORIES HERETO  

 and  

 LEHMAN BROTHERS INC.  

 BANC OF AMERICA SECURITIES LLC  

 PIPER JAFFRAY & CO.  

 WELLS FARGO SECURITIES, LLC  

 COMERICA SECURITIES, INC.  

 Dated as of June            , 2004  

 

  

A-1

        This Registration Rights Agreement (this "Agreement") is made and entered into as of June    , 2004, by and among Herbst
Gaming, Inc., a Nevada corporation (the "Company"), certain subsidiaries of the Company listed on the signature pages hereto (collectively, the
"Guarantors"), and Lehman Brothers Inc., Banc of America Securities LLC, Piper Jaffray & Co., Wells Fargo Securities, LLC and Comerica
Securities, Inc. (collectively, the "Initial Purchasers"), who have agreed to purchase the Company's 81/8% Senior Subordinated
Notes due 2012 (the "Series A Notes") pursuant to the Purchase Agreement (as defined below). 

        This
Agreement is made pursuant to the Purchase Agreement, dated May 27, 2004, (the "Purchase Agreement"), by and among the
Company, the Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Series A Notes, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers as set forth in Section 9(l) of the Purchase Agreement. Capitalized
terms used herein and not otherwise defined shall have the meaning assigned to them in the Indenture, dated June 11, 2004, among the Company, the Guarantors and U.S. Bank National Association,
as trustee, relating to the Series A Notes and the Series B Notes. 

        The
parties hereby agree as follows: 

SECTION 1. DEFINITIONS  

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

        "Act" shall mean the Securities Act of 1933, as amended. 

        "Affiliate" shall have the meaning set forth in Rule 144 of the Act. 

        "Agreement" shall have the meaning set forth in the preamble hereof. 

        "Broker-Dealer" shall mean any broker or dealer registered under the Exchange Act. 

        "Business Day" shall mean any day except a Saturday, Sunday or other day in the City of New York, or in the city of the corporate trust
office of the Trustee, on which banks are authorized to close. 

        "Certificated Securities" shall mean the Definitive Notes, as defined in the Indenture. 

        "Closing Date" shall mean the date hereof. 

        "Commission" shall mean the Securities and Exchange Commission. 

        "Company" shall have the meaning set forth in the preamble hereof. 

        "Consummate" shall mean the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration
Statement relating to the Series B Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of
the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Company to the Registrar under the Indenture of
Series B Notes in the same aggregate principal amount as the aggregate principal amount of Series A Notes tendered by Holders thereof pursuant to the Exchange Offer. 

        "Consummation Deadline" shall have the meaning set forth in Section 3(a) hereof. 

        "Effectiveness Deadline" shall have the meaning set forth in Sections 3(a) and 4(a) hereof. 

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

        "Exchange Offer" shall mean the exchange and issuance by the Company of a principal amount of Series B Notes (which shall be
registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Series A Notes that are tendered by such Holders in connection with such exchange
and issuance. 

 

        "Exchange Offer Registration Statement" shall mean the Registration Statement relating to the Exchange Offer, including the related
Prospectus. 

        "Exempt Resales" shall mean the transactions in which the Initial Purchasers propose to sell the Series A Notes to certain
"qualified institutional buyers," as such term is defined in Rule 144A under the Act and to certain non U.S. persons, as such term is defined in Rule 902 under the Act, in offshore
transactions in reliance upon Regulation S under the Act. 

        "Filing Deadline" shall have the meaning set forth in Sections 3(a) and 4(a) hereof. 

        "Guarantors" shall have the meaning set forth in the preamble hereof. 

        "Holders" shall have the meaning set forth in Section 2 hereof. 

        "indemnified party" shall have the meaning set forth in Section 8(c) hereof. 

        "indemnifying party" shall have the meaning set forth in Section 8(c) hereof. 

        "Indenture" shall have the meaning set forth in the preamble hereof. 

        "Initial Purchasers" shall have the meaning set forth in the preamble hereof. 

        "Notes" shall mean the Series A Notes and the Series B Notes. 

        "Prospectus" shall mean the prospectus included in a Registration Statement at the time such Registration Statement is declared effective,
as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such
Prospectus. 

        "Purchase Agreement" shall have the meaning set forth in the preamble hereof. 

        "Recommencement Date" shall have the meaning set forth in Section 6(d) hereof. 

        "Registration Default" shall have the meaning set forth in Section 5 hereof. 

        "Registration Statement" shall mean any registration statement of the Company and the Guarantors relating to (a) an offering of
Series B Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case,
(i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by reference therein. 

        "Regulation S" shall mean Regulation S promulgated under the Act. 

        "Rule 144" shall mean Rule 144 promulgated under the Act. 

        "Series A Notes" shall have the meaning set forth in the preamble hereof. 

        "Series B Notes" shall mean the Company's 81/8% Series B Senior Subordinated Notes due 2012 to be issued
pursuant to the Indenture (a) in the Exchange Offer or (b) as contemplated by Section 4 hereof. 

        "Shelf Registration Statement" shall have the meaning set forth in Section 4 hereof. 

        "Suspension Notice" shall have the meaning set forth in Section 6(d) hereof. 

        "TIA" shall mean the Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the
Indenture. 

        "Transfer Restricted Securities" shall mean each Note, until the earliest to occur of (i) the date on which such Series A
Note is exchanged in the Exchange Offer by a Person other than a Broker-Dealer for a Series B Note which is entitled to be resold to the public by the Holder thereof 

2

 

without
complying with the prospectus delivery requirements of the Act, (ii) following the exchange by a Broker-Dealer in the Exchange Offer of a Series A Note for a Series B
Note, the date on which such Series B Note is sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the Prospectus contained in the Exchange
Offer Registration Statement, (iii) the date on which such Series A Note has been effectively registered under the Act and disposed of in accordance with a Shelf Registration Statement
(and the purchasers thereof have been issued Series B Notes), or (iv) the date on which such Series A Note is distributed to the public pursuant to Rule 144 under the Act. 

SECTION 2. HOLDERS  

        A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns
Transfer Restricted Securities. 

SECTION 3. REGISTERED EXCHANGE OFFER  

        (a)   Unless
the Exchange Offer shall not be permitted by applicable federal law or Commission policy (after the procedures set forth in Section 6(a)(iii)(A) hereof
have been complied with), the Company and the Guarantors shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the Closing Date,
but in no event later than 60 days after the Closing Date (such 60th day being the "Filing Deadline"), (ii) use all commercially
reasonable efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 150 days after the Closing Date (such 150th
day being the "Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer
Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Series B Notes
to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) commence and use all commercially reasonable efforts to
Consummate the Exchange Offer on or prior to the 30th business day, or longer, if required by the federal securities laws, after the Registration Statement has become effective, (such 30th business
day being the "Consummation Deadline"). The Exchange Offer shall be on the appropriate form permitting (x) registration of the Series B
Notes to be offered in exchange for the Series A Notes that are Transfer Restricted Securities and (y) resales of Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a result of market-making activities or other trading activities (other than Series A Notes acquired directly
from the Company or any of its Affiliates) as contemplated by Section 3(c) hereof. 

        (b)   The
Company and the Guarantors shall use all commercially reasonable efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall
keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer;  provided, however, that in no
event shall such period be less than 20 Business Days. The Company and the Guarantors shall cause the Exchange Offer to
comply with all applicable federal and state securities laws. No securities other than the Series B Notes shall be included in the Exchange Offer Registration Statement. 

        (c)   The
Company shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any
Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution"
section shall also contain all other information with 

3

 

respect
to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or
disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the
date of this Agreement. 

        Because
such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a Prospectus meeting the requirements of the Act in connection
with its initial sale of any Series B Notes received by such Broker-Dealer in the Exchange Offer, the Company and the Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the Prospectus contained in the Exchange Offer Registration
Statement is available for sales of Series B Notes by Broker-Dealers, the Company and the Guarantors agree to use all commercially reasonable efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and (c) hereof and in conformity with the requirements of
this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the Consummation Deadline or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company and the Guarantors shall provide sufficient copies of the latest
version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than one day after such request, at any time during such period. 

SECTION 4. SHELF REGISTRATION  

        (a)    Shelf Registration.    If (i) the Company and the Guarantors are not (A) required to file the
Exchange Offer Registration Statement or (B) permitted to Consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the Company and
the Guarantors have complied with the procedures set forth in Section 6(a)(iii)(A) hereof) or (ii) any Holder of Transfer Restricted Securities notifies the Company within 20 Business
Days following the Consummation Deadline that (A) such Holder is prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes acquired directly from the Company or any of its Affiliates, then the Company and
the Guarantors shall: 

        (x)   use
all commercially reasonable efforts to cause to be filed, on or prior to 30 days after the earlier of (i) the date on which the Company determines that
the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) of this Section 4 and (ii) the date on which the Company receives the notice
specified in clause (a)(ii) of this Section 4, (such earlier date, the "Filing Deadline"), a shelf registration statement pursuant
to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the "Shelf Registration Statement")), relating
to all Transfer Restricted Securities, and 

        (y)   use
all commercially reasonable efforts to cause such Shelf Registration Statement to become effective on or prior to 90 days after the Filing Deadline for the
Shelf Registration Statement (such 90th day the "Effectiveness Deadline"). 

        If,
after the Company has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) hereof, the Company is required to file and make effective
a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e., clause (a)(i) of this Section 4), then the filing of the
Exchange Offer Registration Statement shall 

4

 

be
deemed to satisfy the requirements of clause (x) of this Section 4(a); provided, that in such event, the Company shall remain obligated
to meet the Effectiveness Deadline set forth in clause (y) of this Section 4(a). 

        To
the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this
Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and the Guarantors shall use all commercially reasonable
efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections
6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of
at least two years (as extended pursuant to Section 6(c)(i) hereof) following the Closing Date, or such shorter period as will terminate when all Transfer Restricted Securities covered
by such Shelf Registration Statement have been sold pursuant thereto. 

        (b)    Provision by Holders of Certain Information in Connection with the Shelf Registration Statement.    No Holder
of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the
Company in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in
connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant
to Section 5 hereof unless and until such Holder shall have provided all such information. Each selling Holder agrees to promptly furnish additional information required to be disclosed in
order to make the information previously furnished to the Company by such Holder not materially misleading. 

SECTION 5. LIQUIDATED DAMAGES  

        If (a) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (b) any
such Registration Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, (c) the Exchange Offer has not been Consummated on or prior
to the Consummation Deadline or (d) any Registration Statement required by this Agreement is filed and declared effective but thereafter ceases to be effective or fails to be usable for its
intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective immediately
(each such event referred to in clauses (a) through (d) of this Section 5, a "Registration Default"), then the Company and the
Guarantors hereby jointly and severally agree to pay to each Holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal $.05 per $1,000 principal amount of
Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence
of such Registration Default. The amount of the liquidated damages shall increase by an additional $.05 per $1,000 principal amount of Transfer Restricted Securities held by such Holder for each week
or portion thereof with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.50 per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or portion thereof; provided, that the Company and the Guarantors shall in no
event be required to pay liquidated damages for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (i) upon filing of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of clause (a) of this Section 5, (ii) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of clause (b) of this Section 5, (iii) upon Consummation of the Exchange Offer,
in the case of clause (c) of this Section 5, or (iv) upon the filing of a post-effective amendment to the 

5

 

Registration
Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of clause (d) of this Section 5, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clauses (a),
(b), (c) or (d) of this Section 5, as applicable, shall cease. 

        All
accrued liquidated damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date (as
defined in the Notes), as more fully set forth in the Indenture and the Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted
Securities, all obligations of the Company and the Guarantors to pay liquidated damages with respect to securities shall survive until such time as such obligations with respect to such securities
shall have been satisfied in full. 

SECTION 6. REGISTRATION PROCEDURES  

        (a)    Exchange Offer Registration Statement.    In connection with the Exchange Offer, the Company and the Guarantors
shall (i) comply with all applicable provisions of Section 6(c) hereof, (ii) use all commercially reasonable efforts to effect such exchange and to permit the resale of
Series B Notes by Broker-Dealers that tendered in the Exchange Offer Series A Notes that such Broker-Dealer acquired for its own account as a result of its market-making activities or
other trading activities (other than Series A Notes acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution
thereof, and (iii) comply with all of the following provisions: 

        (A)  If,
following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable
opinion of counsel to the Company raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Company and the Guarantors hereby agree to seek a
no-action letter or other favorable decision from the Commission allowing the Company and the Guarantors to Consummate an Exchange Offer for such Transfer Restricted Securities. The
Company and the Guarantors hereby agree to pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company and the Guarantors hereby agree to take
all such other actions as may be requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (1) participating in telephonic
conferences with the Commission, (2) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (3) diligently pursuing a resolution (which need not be favorable) by the Commission staff. 

        (B)  As
a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a
Broker-Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company and the Guarantors (which may be contained in
the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (1) it is not an Affiliate of the Company, (2) it is not engaged in, and does not
intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Series B Notes to be issued in the Exchange Offer and (3) it is
acquiring the Series B Notes in its ordinary course of business. As a condition to its participation in the Exchange Offer each Holder using the Exchange Offer to participate in a distribution
of the Series B Notes shall acknowledge and agree that, if the resales are of Series B Notes obtained by such Holder in exchange for Series A Notes acquired directly from the
Company or an Affiliate thereof, it (x) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the 

6

 

Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (a)(iii)(A) of this Section 6), and
(y) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K. 

        (C)  Prior
to effectiveness of the Exchange Offer Registration Statement, the Company and the Guarantors shall provide a supplemental letter to the Commission
(1) stating that the Company and the Guarantors are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as interpreted
in the Commission's letter to Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action letter obtained
pursuant to clause (a)(iii)(A) of this Section 6, (2) including a representation that neither the Company nor any Guarantor has entered into any arrangement or understanding with
any Person to distribute the Series B Notes to be received in the Exchange Offer and that, to the best of the Company's and each Guarantor's information and belief, each Holder participating in
the Exchange Offer is acquiring the Series B Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer and (3) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained
pursuant to clause (a)(iii)(A) of this Section 6, if applicable. 

        (b)    Shelf Registration Statement.    In connection with the Shelf Registration Statement, the Company and the
Guarantors shall: 

        (i)    comply
with all the provisions of Section 6(c) hereof and use all commercially reasonable efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished
to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company and the Guarantors shall prepare and file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution
thereof within the time periods and otherwise in accordance with the provisions hereof, and 

        (ii)   issue,
upon the request of any Holder or purchaser of Series A Notes covered by any Shelf Registration Statement contemplated by this Agreement, Series B
Notes having an aggregate principal amount equal to the aggregate principal amount of Series A Notes sold pursuant to the Shelf Registration Statement and surrendered to the Company for
cancellation; the Company shall register Series B Notes on the Shelf Registration Statement for this purpose and issue the Series B Notes to the purchaser(s) of securities subject to the
Shelf Registration Statement in the names as such purchaser(s) shall designate. 

        (c)    General Provisions.    In connection with any Registration Statement and any related Prospectus required by
this Agreement, the Company and the Guarantors shall: 

        (i)    use
all commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period
specified in Sections 3 or 4 of this Agreement, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to
contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not 

7

 

misleading
or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company and the Guarantors shall file promptly an
appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use all commercially reasonable efforts to cause such amendment to be declared effective
as soon as practicable; 

        (ii)   prepare
and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period set forth in Sections 3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; 

        (iii)  advise
each Holder promptly and, if requested by such Holder, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of
the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification
of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company and the Guarantors shall use all commercially reasonable efforts to obtain the
withdrawal or lifting of such order at the earliest possible time; 

        (iv)  subject
to Section 6(c)(i) hereof, if any fact or event contemplated by Section 6(c)(iii)(D) hereof shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were made, not misleading; 

        (v)   furnish
to each Holder in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration
Statement), which documents shall be subject to the review and comment of such Holders in connection with such sale, if any, for a period of at least five Business Days, and the Company shall not file
any such Registration Statement or Prospectus or any amendment or supplement to any such Registration 

8

 

Statement
or Prospectus (including all such documents incorporated by reference) to which such Holders shall reasonably object within five Business Days after the receipt thereof. A Holder shall be
deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a
material fact or omits to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; 

        (vi)  promptly
prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the
Initial Purchasers and each Holder in connection with such exchange or sale, if any, make the Company's and each Guarantor's representatives available for discussion of such document and other
customary due diligence matters, and include such information in such document prior to the filing thereof as such Holders may reasonably request; 

        (vii) make
available, at reasonable times, for inspection by each Holder and any attorney or accountant retained by such Holders, all financial and other records, pertinent
corporate documents of the Company and the Guarantors (other than portions of agreements and other documents that we are granted confidential treatment by the Commission) and cause the Company's and
each Guarantor's officers, directors and employees to supply all information reasonably requested by any such Holder, attorney or accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; 

        (viii) if
requested by any Holders in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such Holders may reasonably request to have included therein, including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is
notified of the matters to be included in such Prospectus supplement or post-effective amendment; 

        (ix)  furnish
to each Holder in connection with such exchange or sale without charge, at least one copy of the Registration Statement, as first filed with the Commission, and
of each amendment thereto, including all documents incorporated by reference therein and all exhibits, including exhibits incorporated therein by reference, (other than portions of agreements and
other documents that were granted confidential treatment by the Commission); 

        (x)   deliver
to each Holder without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons
reasonably may request; the Company and the Guarantors hereby consent to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection
with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; 

        (xi)  upon
the request of any Holder, enter into such agreements (including underwriting agreements) and make such representations and warranties and take all such other
actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this
Agreement as may be reasonably requested by
any Holder in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Company and the Guarantors shall: 

        (A)  upon
request of any Holder, furnish (or in the case of paragraphs (2) and (3) of this Section 6(c)(xi)(A), use its best efforts to cause to be
furnished) to each Holder, upon 

9

 

Consummation
of the Exchange Offer or upon the effectiveness of the Shelf Registration Statement, as the case may be: 

        (1)   a
certificate, dated such date, signed on behalf of the Company and each Guarantor by (x) the President or any Vice President of the Company and such Guarantor
and (y) a principal financial or accounting officer of the Company and such Guarantor, confirming, as of the date thereof, the matters set forth in Sections 9(g) and (h) of the Purchase
Agreement and such other similar matters as such Holders may reasonably request; 

        (2)   an
opinion, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the
Company and the Guarantors covering matters similar to those set forth in paragraph (c) of Section 9 of the Purchase Agreement and such other matters as such Holder may reasonably
request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors,
representatives of the independent public accountants for the Company and the Guarantors and have considered the matters required to be stated therein and the statements contained therein, although
such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to
the extent such counsel deems appropriate upon the statements of officers and other representatives of the Company and the Guarantors and without independent check or verification), no facts came to
such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto
became effective and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation of the Exchange Offer, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in
the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that
such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data
included in any Registration Statement contemplated by this Agreement or the related Prospectus; and 

        (3)   a
customary comfort letter, dated the date of Consummation of the Exchange Offer, or as of the date of effectiveness of the Shelf Registration Statement, as the case may
be, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings,
and affirming the matters set forth in the comfort letters delivered pursuant to Section 9(e) of the Purchase Agreement; and 

        (B)  deliver
such other documents and certificates as may be reasonably requested by the selling Holders to evidence compliance with the matters covered in clause (A)
of this Section 6(c)(xi) and with any customary conditions contained in the any agreement entered into by the Company and the Guarantors pursuant to clause (xi) of this
Section 6(c); 

        (xii) prior
to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and
qualification of the Transfer 

10

 

Restricted
Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that
neither the Company nor any Guarantor shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; 

        (xiii) in
connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, (A) cooperate
with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends and
(B) register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two Business Days prior to such sale of Transfer Restricted
Securities; 

        (xiv) use
all commercially reasonable efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to
the proviso contained in clause (xii) of this Section 6(c); 

        (xv) provide
a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities
and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; 

        (xvi) otherwise
use all commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security
holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering
a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); 

        (xvii) cause
the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection
therewith, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner; and 

        (xviii) provide
promptly to each Holder, upon request, each document filed with the Commission pursuant to the requirements of Sections 13 or 15(d) of the Exchange Act. 

        (d)    Restrictions on Holders.    Each Holder agrees by acquisition of a Transfer Restricted Security that, upon
receipt of the notice referred to in Section 6(c)(iii)(C) hereof or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each
case, a "Suspension Notice"), such Holder shall forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable
Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus
(in each case, the "Recommencement Date"). Each Holder receiving a Suspension Notice 

11

 

hereby
agrees that it shall either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Company with more recently
dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Sections 3 or 4
herein, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the
Recommencement Date. 

SECTION 7. REGISTRATION EXPENSES  

        (a)   All
expenses incident to the Company's and the Guarantors' performance of or compliance with this Agreement shall be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal
securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Series B Notes to be issued in the Exchange Offer and printing
of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company, the Guarantors and the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing the Series B Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified public accountants of the Company and the Guarantors (including the expenses of any special audit and comfort letters required by or
incident to such performance). 

        The
Company shall, in any event, bear its and the Guarantors' internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal
or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Guarantors. 

        (b)   In
connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf
Registration Statement), the Company and the Guarantors shall reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Series A Notes into in the
Exchange Offer and/or selling or reselling Series A Notes or Series B Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf
Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Latham & Watkins LLP, unless another firm shall be chosen by the
Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. 

SECTION 8. INDEMNIFICATION  

        (a)   The
Company and the Guarantors agree, jointly and severally, to indemnify and hold harmless each Holder, its directors, officers and each Person, if any, who controls
such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, judgments, (including
without limitation, any legal or other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto) provided by the Company to any Holder or any prospective purchaser of Series B Notes or registered Series A Notes, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities 

12

 

or
judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to any of the Holders furnished in writing to the Company by
any of the Holders. 

        (b)   Each
Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company and the Guarantors, and their respective
directors and officers, and each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company, or the Guarantors to the same
extent as the foregoing indemnity from the Company and the Guarantors set forth in Section 8(a) hereof, but only with reference to information relating to such Holder furnished in writing to
the Company by such Holder expressly for use in any Registration Statement. In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for
any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds
(i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such
Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 

        (c)   In
case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) hereof (the
"indemnified party"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying person") in writing and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b) hereof, a Holder shall not be required to assume the defense of such action pursuant to this Section 8(c) hereof, but may employ separate counsel and participate
in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such
counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party,
and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable
for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified pursuant to Section 8(a) hereof, and by the Company and the Guarantors,
in the case of parties indemnified pursuant to Section 8(b) hereof. The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is
entered into more than twenty business days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case
where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of the 

13

 

indemnified
party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could
have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party. 

        (d)   To
the extent that the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors, on the
one hand, and the Holders, on the other hand, from their sale of Transfer Restricted Securities or (ii) if the allocation provided by Section 8(d)(i) hereof is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in Section 8(d)(i) hereof but also the relative fault of the Company and the
Guarantors, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative fault of the Company and the Guarantors, on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or such
Guarantor, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include, subject to the limitations set forth in
Section 8(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. 

        The
Company, the Guarantors and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation
(even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter,
including any action that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total received by such Holder with respect
to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount
of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not
joint. 

14

 

SECTION 9. RULE 144A AND RULE 144  

        The Company and each Guarantor agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the
Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required
by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the
Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. 

SECTION 10. MISCELLANEOUS  

        (a)    Remedies.    The Company and the Guarantors acknowledge and agree that any failure by the Company and/or the
Guarantors to comply with their respective obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as
may be required to specifically enforce the Company's and the Guarantor's obligations under Sections 3 and 4 hereof. The Company and the Guarantors further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate. 

        (b)    No Inconsistent Agreements.    Neither the Company nor any Guarantor shall, on or after the date of this
Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Guarantor has previously entered into any agreement that remains in effect on the date hereof granting any registration rights with respect to its securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's and the Guarantors' securities under any
agreement in effect on the date hereof. 

        (c)    Amendments and Waivers.    The provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 10(c)(i), the Company has obtained the
written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver
or consent to departure
from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly
or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities subject to such Exchange Offer. 

        (d)    Third Party Beneficiary.    The Holders shall be third party beneficiaries to the agreements made hereunder
between the Company and the Guarantors, on the one hand, and the Initial Purchaser, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. 

15

 

        (e)    Notices.    All notices and other communications provided for or permitted hereunder shall be made in writing
by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: 

        (i)    if
to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and 

        (ii)   if
to the Company or the Guarantors: 

Herbst
Gaming, Inc.

3440 West Russell Road

Las Vegas, Nevada 89118

Telecopier No.: (702) 740-4630

Attention: Mary E. Higgins 

with
a copy to: 

Kummer
Kaempfer Bonner & Renshaw

3800 Howard Hughes Parkway

Seventh Floor

Las Vegas, Nevada 89109

Telecopier No.: (702) 796-7181

Attention: John N. Brewer, Esq. 

        All
such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. 

        Copies
of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. 

        Upon
the date of filing of the Exchange Offer or a Shelf Registration Statement, as the case may be, notice shall be delivered to the Initial Purchasers in the form attached hereto as  Exhibit A.

        (f)    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits
hereof. 

        (g)    Counterparts.    This Agreement may be executed in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 

        (h)    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. 

        (i)    Governing Law.    THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. 

16

 

        (j)    Severability.    In the event that any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby. 

        (k)    Entire Agreement.    This Agreement is intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with respect to such subject matter. 

(Signature Pages Follow)  

17

   
        IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 

	 	 	 	HERBST GAMING, INC.
	

 	

 	
 	

By:	

 
	 	 	 	 	
 Name:

Title:
	

 	

 	
 	

E-T-T, INC.
	

 	

 	
 	

By:	

 
	 	 	 	 	
 Name:

Title:
	

 	

 	
 	

FLAMINGO PARADISE GAMING, LLC
	

 	

 	
 	

By:	

 
	 	 	 	 	
 Name:

Title:
	

 	

 	
 	

MARKET GAMING, INC.
	

 	

 	
 	

By:	

 
	 	 	 	 	
 Name:

Title:
	

 	

 	
 	

E-T-T ENTERPRISES L.L.C.
	

 	

 	
 	

By:	

 
	 	 	 	 	
 Name:

Title:
	

 	

 	
 	

CARDIVAN COMPANY
	

 	

 	
 	

By:	

 
	 	 	 	 	
 Name:

Title:
	

 	

 	
 	

CORRAL COIN, INC.
	

 	

 	
 	

By:	

 
	 	 	 	 	
 Name:

Title:
	

 	

 	
 	

CORRAL COUNTRY COIN, INC.
	

 	

 	
 	

By:	

 
	 	 	 	 	
 Name:

Title:
	 	 	 	 	 

S-1

 

	

LEHMAN BROTHERS INC.

BANC OF AMERICA SECURITIES LLC

PIPER JAFFRAY & CO.

WELLS FARGO SECURITIES, LLC

COMERICA, INC.	
 	

 	

 
	

BY:	

LEHMAN BROTHERS INC.	
 	

 	

 
	

By:	

 	
 	

 	

 
	 	
 Name:

Title:	 	 	 
	

 	

 	
 	

 

S-2

EXHIBIT A  

NOTICE OF FILING OF A/B EXCHANGE OFFER REGISTRATION STATEMENT  

	To:	Lehman Brothers Inc.

Banc of America Securities, LLC

Piper Jaffray & Co.

Wells Fargo Securities, LLC

Comerica Securities, Inc.
	

 	

c/o Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

Attention: John Cokinos

Phone: (212) 526-1717
	

From:	

Herbst Gaming, Inc.

81/8% Senior Subordinated Notes due 2012
	

Date:	

            , 2004

        For
your information only (NO ACTION REQUIRED): 

        Today,                        ,
2004, we filed [an A/B Exchange Registration Statement] [a Shelf Registration Statement] with the Securities and
Exchange
Commission. We currently expect this registration statement to be declared effective within    business days of the date hereof. 

   EXHIBIT B  

 FORM OF OPINION OF KUMMER KAEMPFER BONNER & RENSHAW  

        1.     The
Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Nevada, is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification and has all power and
authority necessary to own or hold its properties and to conduct the businesses in which it is engaged, as described in the Offering Memorandum. 

        2.     Each
of Flamingo Paradise Gaming, LLC, E-T-T, Inc., Market Gaming, Inc., E-T-T Enterprises, L.L.C., Cardivan
Company, Corral Coin, Inc. and Corral Country Coin, Inc. have been duly incorporated or duly organized, and are validly existing as corporations or limited-liability companies, as the
case may be, in good standing under the laws of the State of Nevada, are duly qualified to do business and are in good standing as foreign corporations or limited-liability companies, as the case may
be, in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, are owned directly or indirectly by the
Company free and clear of all Liens, and have all power and authority necessary to own or hold their respective properties and conduct the businesses in which they are engaged, as described in the
Offering Memorandum. 

        3.     The
Purchase Agreement has been duly authorized, executed and delivered by the Company and each of the Subsidiary Guarantors. 

        4.     The
Registration Rights Agreement has been duly authorized, executed and delivered by the Company and the Subsidiary Guarantors and (assuming due authorization, execution
and delivery of the Registration Rights Agreement by the Initial Purchasers) constitutes a valid and legally binding agreement of the Company and the Subsidiary Guarantors, enforceable against the
Company and the Subsidiary Guarantors in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, to the extent the
Registration Rights Agreement provides for rights of indemnification, by principles of public policy. 

        5.     The
Indenture has been duly authorized, executed and delivered by the Company and the Subsidiary Guarantors and (assuming due authorization, execution and delivery of the
Indenture by the Trustee) constitutes a valid and legally binding agreement of the Company and the Subsidiary Guarantors, enforceable against the Company and the Subsidiary Guarantors in accordance
with its terms. 

        6.     The
Series A Notes have been duly authorized, executed, authenticated and delivered by the Company, and (assuming due authorization, execution and delivery of the
Indenture by the Trustee and authentication and delivery of the Series A Notes in accordance with the Indenture by the Trustee) are duly and validly issued and outstanding and constitute valid
and binding obligations of the Company entitled to the benefits of the Indenture and enforceable in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and by general equitable principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). 

        7.     The
Series B Notes have been duly authorized by the Company and if and when duly issued and authenticated in accordance with the terms of the Indenture and
delivered in accordance with the Exchange Offer provided for in the Registration Rights Agreement, will constitute valid and binding obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and 

B-1

 

by
general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). 

        8.     The
Series A Guarantees have been duly authorized, executed, and delivered by each of the Subsidiary Guarantors, and (assuming due authorization, execution and
delivery of the Indenture by the Trustee and authentication and delivery of the Series A Notes in accordance with the Indenture by the Trustee) are duly and validly issued and outstanding and
constitute valid and binding obligations of each of the Subsidiary Guarantors entitled to the benefits of the Indenture and enforceable in accordance with their terms. 

        9.     The
Series B Guarantees of the Series B Notes have been duly authorized by each of the Subsidiary Guarantors and if and when duly issued by the Subsidiary
Guarantors in accordance with the Indenture and the Registration Rights Agreement, will constitute valid and binding obligations of each of the Subsidiary Guarantors entitled to the benefits of the
Indenture and enforceable in accordance with their terms. 

        10.   When
the Series A Notes are issued and delivered pursuant to this Agreement, such Series A Notes will not be of the same class (within the meaning of
Rule 144A under the Act) as securities of the Company or any Subsidiary Guarantor that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that
are quoted in a United States automated inter-dealer quotation system. 

        11.   The
Company has an authorized capitalization as set forth in the Offering Memorandum; and, all of the issued shares of capital stock or other equity interests of each
subsidiary of the Company are owned directly or indirectly by the Company, free and clear of Liens known to such counsel, except as described in the Offering Memorandum. 

        12.   The
Transaction Documents conform in all material respects to the descriptions thereof contained in the Offering Memorandum. 

        13.   There
are no preemptive or other rights to subscribe for or to purchase the Notes pursuant to the Company's charter, by-laws or other organizational
document, or any agreement or other instrument known to such counsel. 

        14.   The
statements contained in the Offering Memorandum under the captions "Regulation and Licensing," "Description of the Notes," and "Material United States Federal Tax
Consequences," insofar as they describe federal statutes, rules and regulations, constitute a fair summary thereof. 

        15.   Neither
the Company nor any of its subsidiaries is, nor after giving effect to the offer and sale of the Series A Notes and the application of the use of proceeds
thereof as described in the Offering Memorandum will be, an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. 

        16.   The
Indebtedness evidenced by the Notes and the Transaction Documents, including all interest, costs, fees and other expenses due thereunder, is not usurious and does
not otherwise violate applicable usury laws. 

        17.   The
Indenture complies as to form in all material respects with the requirements of the TIA, as in effect on the date of such opinion, and the rules and regulations of
the Commission applicable to an indenture that is qualified thereunder. 

        18.   No
registration under the Act of the Series A Notes is required for the sale of the Series A Notes to the Initial Purchasers as contemplated hereby or for
the Exempt Resales (assuming (i) that the Eligible Purchasers who buy the Series A Notes in the Exempt Resales are QIBs or persons who are neither (a) U.S. Persons (as defined in
Rule 902 under the Act) nor (b) persons who purchase the Series A Notes for the benefit of such U.S. persons, (ii) the accuracy of the representations of the Initial
Purchasers and those of the Company and the Subsidiary Guarantors contained herein or 

B-2

 

(iii) the
due performance by the Initial Purchasers of the agreements set forth in Section 3 of this Agreement). 

        19.   The
issue and sale of the Series A Notes by the Company and the compliance by the Company and the Subsidiary Guarantors with all of the provisions of this
Agreement and the Transaction Documents will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter, by-laws or
operating agreement or other organizational document of the Company or any of its subsidiaries or any statute or any order, rule or regulation known to such counsel of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets; and, except for the registration of the Series B Notes under the Act and such
consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state securities laws, in connection with the purchase and distribution of
the Series A Notes by the Initial Purchasers, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement and the Transaction Documents by the Company and the Subsidiary Guarantors or the consummation of the transactions contemplated hereby and
thereby. 

        20.   To
such counsel's knowledge, there are no contracts, agreements or understandings between the Company or any Subsidiary Guarantor and any person granting such person the
right (other than rights that have been waived or satisfied) to require the Company or any Subsidiary Guarantor to file a registration statement under the Act with respect to any securities of
the Company or any Subsidiary Guarantor owned or to be owned by such person or to require the Company or any Subsidiary Guarantor to include such securities in the securities registered pursuant to
the Exchange Offer Registration Statement. 

        21.   The
Company is not required to deliver the information specified in Rule 144A(d)(4) of the Act. 

        22.   To
the best of such counsel's knowledge and other than as set forth in the Offering Memorandum, there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its
subsidiaries, might have a Material Adverse Effect on the consolidated financial position, stockholders' equity, results of operations, business or prospects of the Company and its subsidiaries; and,
to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. 

        In
rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America and the laws of the State of Nevada. 

        Such
counsel shall also have furnished to the Initial Purchasers a written statement, addressed to the Initial Purchasers and dated the Closing Date, in form and substance satisfactory
to the Initial Purchasers, to the effect that (x) such counsel has acted as counsel to the Company on a regular basis, has acted as counsel to the Company in connection with previous financing
transactions and has acted as counsel to the Company in connection with the preparation of the Offering Memorandum, and (y) based on the foregoing, no facts have come to the attention of such
counsel which lead it to believe that, as of its date and as of the date of such opinion the Offering Memorandum contained or contains any untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood
that such counsel expresses no belief with respect to the financial statements, schedules or other related financial data included in, or omitted from, the Offering Memorandum or any amendments or
supplements thereto). 

B-3

QuickLinks

Exhibit 10.58

PURCHASE AGREEMENTExhibit 10.59

 

 

	
  Published Deal CUSIP:

  	
  42703YAA5

  
	
  Revolver Facility CUSIP:

  	
  42703YAB3

  
	
  Term Facility CUSIP:

  	
  42703YAC1

  

 

 

EXECUTION

 

 

CREDIT
AGREEMENT

 

Dated as of  June 10, 2004

 

among

 

HERBST
GAMING, INC.,

 

as the Borrower,

 

BANK
OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender 

and

L/C Issuer,

 

and

 

The Other Lenders Party
Hereto

 

BANC
OF AMERICA SECURITIES LLC,

as a Co-Lead Arranger and
Sole Book Manager

 

U.S.
BANK, NATIONAL ASSOCIATION,

as a Co-Lead Arranger

 

WELLS
FARGO BANK, NATIONAL ASSOCIATION,

as Syndication Agent

 

LEHMAN BROTHERS INC.,

as Documentation Agent

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I. DEFINITIONS AND ACCOUNTING
  TERMS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.01.

  	
  Defined Terms

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.02.

  	
  Other Interpretive Provisions

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.03.

  	
  Accounting Terms.

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.04.

  	
  Rounding

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.05.

  	
  Times of Day

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.06.

  	
  Letter of Credit Amounts

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II. the COMMITMENTS and Credit
  Extensions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.01.

  	
  Revolving Loans

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.02.

  	
  Term Loans

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.03.

  	
  Borrowings, Conversions and Continuations
  of Loans.

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.04.

  	
  Letters of Credit.

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.05.

  	
  Swing Line Loans.

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.06.

  	
  Prepayments.

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.07.

  	
  Voluntary Termination or Reduction of the
  Revolving Commitments

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.08.

  	
  Scheduled Reductions of the Revolving
  Commitments.

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.09.

  	
  Amortization of the Term Loans; Mandatory
  Repayment of the Obligations.

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.10.

  	
  Interest.

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.11.

  	
  Fees

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.12.

  	
  Computation of Interest and Fees

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.13.

  	
  Evidence of Debt.

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.14.

  	
  Payments Generally; Administrative Agent’s
  Clawback.

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.15.

  	
  Sharing of Payments by Lenders

  	
  47

  

 

i

 

	
   

  	
  2.16.

  	
  Increases to the Commitments.

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III. TAXES, YIELD PROTECTION
  AND ILLEGALITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.01.

  	
  Taxes.

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.02.

  	
  Illegality

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.03.

  	
  Inability to Determine Rates

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.04.

  	
  Increased Costs; Reserves on Eurodollar
  Rate Loans.

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.05.

  	
  Compensation for Losses

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.06.

  	
  Mitigation Obligations; Replacement of
  Lenders.

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.07.

  	
  Survival

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV. CONDITIONS PRECEDENT TO
  Credit Extensions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.01.

  	
  Conditions of Initial Credit Extension

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.02.

  	
  Conditions to all Credit Extensions

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V. REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.01.

  	
  Existence, Qualification and Power;
  Compliance with Laws

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.02.

  	
  Authorization; No Contravention

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.03.

  	
  Governmental Authorization; Other Consents

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.04.

  	
  Binding Effect

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.05.

  	
  Financial Statements; No Material Adverse
  Effect.

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.06.

  	
  Litigation

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.07.

  	
  No Default

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.08.

  	
  Ownership of Property; Liens

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.09.

  	
  Environmental Compliance

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.10.

  	
  Insurance

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.11.

  	
  Taxes

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.12.

  	
  ERISA Compliance.

  	
  62

  

 

ii

 

	
   

  	
  5.13.

  	
  Subsidiaries; Equity Interests

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.14.

  	
  Margin Regulations; Investment Company Act;
  Public Utility Holding Company Act.

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.15.

  	
  Disclosure

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.16.

  	
  Compliance with Laws

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.17.

  	
  Intellectual Property; Licenses, Etc.

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.18.

  	
  Route Agreements; Casino Leases.

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI. AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.01.

  	
  Financial Statements

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.02.

  	
  Certificates; Other Information

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.03.

  	
  Notices

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.04.

  	
  Payment of Obligations

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.05.

  	
  Preservation of Existence, Etc.

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.06.

  	
  Maintenance of Properties

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.07.

  	
  Maintenance of Insurance

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.08.

  	
  Compliance with Laws

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.09.

  	
  Books and Records

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.10.

  	
  Inspection Rights

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.11.

  	
  Use of Proceeds

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.12.

  	
  Additional Subsidiaries and Collateral

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.13.

  	
  Capital Projects

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII. NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.01.

  	
  Liens

  	
  74

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.02.

  	
  Investments

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.03.

  	
  Indebtedness

  	
  76

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.04.

  	
  Fundamental Changes

  	
  77

  

 

iii

 

	
   

  	
  7.05.

  	
  Dispositions

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.06.

  	
  Restricted Payments

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.07.

  	
  Prepayment of Subordinated Obligations

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.08.

  	
  Change in Nature of Business

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.09.

  	
  Transactions with Affiliates

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.10.

  	
  Burdensome Agreements

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.11.

  	
  Use of Proceeds

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.12.

  	
  Senior Debt to EBITDA Ratio

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.13.

  	
  Total Debt to EBITDA Ratio

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.14.

  	
  Fixed Charge Ratio

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.15.

  	
  Capital Expenditures

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.16.

  	
  Hostile Acquisitions

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII. EVENTS OF DEFAULT AND
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.01.

  	
  Events of Default

  	
  81

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.02.

  	
  Remedies Upon Event of Default

  	
  83

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.03.

  	
  Application of Funds

  	
  84

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX. ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.01.

  	
  Appointment and Authority

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.02.

  	
  Rights as a Lender

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.03.

  	
  Exculpatory Provisions

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.04.

  	
  Reliance by Administrative Agent

  	
  86

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.05.

  	
  Delegation of Duties

  	
  86

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.06.

  	
  Resignation of Administrative Agent

  	
  87

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.07.

  	
  Non-Reliance on Administrative Agent and
  Other Lenders

  	
  87

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.08.

  	
  No Other Duties, Etc

  	
  88

  

 

iv

 

	
   

  	
  9.09.

  	
  Collateral and Guaranty Matters

  	
  88

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X. MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.01.

  	
  Amendments, Etc.

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.02.

  	
  Notices; Effectiveness; Electronic
  Communication.

  	
  90

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.03.

  	
  No Waiver; Cumulative Remedies

  	
  92

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.04.

  	
  Expenses; Indemnity; Damage Waiver.

  	
  92

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.05.

  	
  Payments Set Aside

  	
  94

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.06.

  	
  Successors and Assigns.

  	
  94

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.07.

  	
  Treatment of Certain Information;
  Confidentiality

  	
  98

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.08.

  	
  Right of Setoff

  	
  99

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.09.

  	
  Interest Rate Limitation

  	
  100

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.10.

  	
  Counterparts; Integration; Effectiveness

  	
  100

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.11.

  	
  Survival of Representations and Warranties

  	
  100

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.12.

  	
  Severability

  	
  100

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.13.

  	
  Replacement of Lenders

  	
  101

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.14.

  	
  Governing Law; Jurisdiction; Etc.

  	
  101

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.15.

  	
  Waiver of Jury Trial

  	
  102

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.16.

  	
  Arbitration Reference

  	
  103

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.17.

  	
  USA PATRIOT Act Notice

  	
  103

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.18.

  	
  Time of the Essence

  	
  103

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.19.

  	
  Designation as Senior Debt

  	
  103

  

 

v

 

	
   

  	
  SCHEDULES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.01

  	
  Casino Leases

  	
   

  
	
   

  	
  2.01

  	
  Commitments and Revolving Percentages

  	
   

  
	
   

  	
  5.05

  	
  Supplement to Interim Financial Statements

  	
   

  
	
   

  	
  5.06

  	
  Litigation

  	
   

  
	
   

  	
  5.09

  	
  Environmental Matters

  	
   

  
	
   

  	
  5.13

  	
  Subsidiaries

  	
   

  
	
   

  	
  5.17

  	
  Intellectual Property Matters

  	
   

  
	
   

  	
  7.01

  	
  Existing Liens

  	
   

  
	
   

  	
  7.03

  	
  Existing Indebtedness

  	
   

  
	
   

  	
  10.02

  	
  Administrative Agent’s Office; Certain Addresses for Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A

  	
  Assignment and
  Assumption

  	
   

  
	
   

  	
  B

  	
  Compliance
  Certificate

  	
   

  
	
   

  	
  C

  	
  Loan Notice

  	
   

  
	
   

  	
  D

  	
  Pledge Agreement

  	
   

  
	
   

  	
  E

  	
  Revolving Note

  	
   

  
	
   

  	
  F

  	
  Swing Line Loan
  Notice

  	
   

  
	
   

  	
  G

  	
  Term Note

  	
   

  
	
   

  	
  H

  	
  Opinion Matters

  	
   

  

 

vi

 

CREDIT
AGREEMENT

 

This CREDIT
AGREEMENT (“Agreement”) is entered into as of June 10, 2004,  among HERBST GAMING, INC., a Nevada corporation  (the “Borrower”), each lender listed on
the signature pages hereto or which from time to time becomes a party hereto
(collectively, the “Lenders” and individually, a “Lender”), and BANK OF
AMERICA, N.A., as Administrative Agent, Swing
Line Lender and L/C Issuer.

 

The Borrower has
requested that the Lenders provide the senior secured revolving and term credit
facilities described herein, and the Lenders are willing to do so on the terms
and conditions set forth herein.

 

In consideration
of the mutual covenants and agreements herein contained, the parties hereto
covenant and agree as follows:

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

1.01.                        Defined
Terms.  As used in this Agreement, the
following terms shall have the meanings set forth below:

 

“Administrative
Agent” means Bank of America in its capacity as administrative agent under
any of the Loan Documents, or any successor administrative agent.

 

“Administrative
Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address
or account as the Administrative Agent may from time to time notify to the
Borrower and the Lenders.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.

 

“Affiliate”
means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

 

“Aggregate
Revolving Commitments” means the commitments of the Revolving Lenders to
make Revolving Loans and to participate in Swing Line Loans and the issuance of
Letters of Credit, in an aggregate amount not to exceed $90,000,000.  The Aggregate Revolving Commitments are
subject to being increased pursuant to Section 2.16 and decreased pursuant
to Sections 2.07 and 2.08.

 

“Aggregate
Revolving Outstandings” means the aggregate Outstanding Amount of all
Revolving Loans and all L/C Obligations.

 

“Aggregate Term
Commitments” means the commitments of the Term Lenders to make Term Loans
on the Closing Date in an aggregate principal amount not to exceed $60,000,000.

 

1

 

The Aggregate Term Commitments are subject to being
increased pursuant to Section 2.16 and decreased pursuant to
Section 2.09.

 

“Agreement”
means this Credit Agreement.

 

“Applicable
Rate” means (a) during the Initial Pricing Period, the rates per annum
set forth opposite Pricing Level III, below, and (b) during each
subsequent Pricing Period, the rates per annum set forth opposite the Total
Debt to EBITDA Ratio in effect as of the Fiscal Quarter ending approximately
two months prior to the first day of that Pricing Period, provided that
(i) if the Borrower fails to deliver a Compliance Certificate in respect of any
Fiscal Quarter prior to the first day of the related Pricing Period, then Pricing
Level I shall apply as of the first Business Day of such Pricing Period
until the date upon which the required Compliance Certificate is delivered, and
(ii) in respect of each calendar quarter during which the Average Unused
Revolver Availability is in excess of two thirds of the Aggregate Revolving
Commitments (as in effect from time to time during that calendar quarter), the
commitment fee rates per annum set forth in the matrix below shall be reduced
by 0.10% per annum:

 

	
  Pricing

  Level

  	
   

  	
  Total Debt to EBITDA

  Ratio

  	
   

  	
  Base Rate +

  	
   

  	
  Eurodollar

  Rate +

  Letters of

  Credit

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Letter of Credit

  Risk

  Participation

  Fee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Equal to or greater than 4.50:1.00

  	
   

  	
  1.750

  	
  %

  	
  3.000

  	
  %

  	
  0.500

  	
  %

  	
  3.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Equal to or
  greater than 4.00:1.00 but less than 4.50:1.00

  	
   

  	
  1.500

  	
  %

  	
  2.750

  	
  %

  	
  0.500

  	
  %

  	
  2.750

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Equal to or
  greater than 3.50:1.00 but less than 4.00:1.00

  	
   

  	
  1.125

  	
  %

  	
  2.3750

  	
  %

  	
  0.450

  	
  %

  	
  2.375

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Equal to or
  greater than 3.00:1.00 but less than 3.50:1.00

  	
   

  	
  0.750

  	
  %

  	
  2.000

  	
  %

  	
  0.400

  	
  %

  	
  2.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V

  	
   

  	
  Less than
  3.00:1.00, but greater than or equal 
  to 2.50:1.00

  	
   

  	
  0.500

  	
  %

  	
  1.750

  	
  %

  	
  0.350

  	
  %

  	
  1.750

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI

  	
   

  	
  Less than
  2.50:1.00

  	
   

  	
  0.250

  	
  %

  	
  1.500

  	
  %

  	
  0.300

  	
  %

  	
  1.500

  	
  %

  

 

“Approved Fund”
means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

 

2

 

“Architect”
means an architect selected by Borrower and approved by the Administrative
Agent (which approval shall not be unreasonably withheld).

 

“Architect
Contract” means a contract between Borrower and the Architect approved by
the Administrative Agent relating to the design and construction of any
Significant Capital Project.

 

“Architect’s
Certificate and Consent” means a written certificate and consent executed
by the Architect in a form acceptable to the Administrative Agent.

 

“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an Eligible Assignee (with the consent of any party whose consent is required
by Section 10.06(b), and accepted by the Administrative Agent, in
substantially the form of Exhibit A or any other form approved by the
Administrative Agent.

 

“Attributable
Indebtedness” means, on any date, (a) in respect of any capital lease
of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, and
(b) in respect of any Synthetic Lease Obligation, the capitalized amount
of the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP
if such lease were accounted for as a capital lease.

 

“Audited
Financial Statements” means the audited consolidated balance sheet of the
Borrower and its Subsidiaries for the fiscal year ended December 31, 2003
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of the Borrower and its
Subsidiaries, including the notes thereto.

 

“Availability
Period” means the period from and including the Closing Date to the
earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Revolving Commitments pursuant to Section 2.07, and (c) the
date of termination of the commitment of each Revolving Lender to make Loans
and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant
to Section 8.02.

 

“Average Unused
Revolver Availability” means, for each calendar quarter (or, in the case of
the first calendar quarter ending following the Closing Date, the period since
the Closing Date), the average of the actual daily amount by which the
Aggregate Revolving Commitments exceed the sum of (i) the Outstanding
Amount of Revolving Loans (but not the Swing Line Loans) and (ii) the
Outstanding Amount of L/C Obligations.

 

“Bank of
America” means Bank of America, N.A. and its successors.

 

“BAS” means
Banc of America Securities LLC.

 

“Base Rate” means for any day a
fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate
plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America as its “prime rate.”  The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and

 

3

 

desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. 
Any change in such rate announced by Bank of America shall take effect
at the opening of business on the day specified in the public announcement of
such change.

 

“Base Rate Loan”
means a Loan that bears interest based on the Based Rate.

 

“Borrower”
has the meaning specified in the introductory paragraph hereto.

 

“Borrowing”
means a borrowing consisting of simultaneous Loans of the same Type and, in the
case of Eurodollar Rate Loans, having the same Interest Period made by each of
the Lenders pursuant to Article II.

 

“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the
state where the Administrative Agent’s Office is located and, if such day
relates to any Eurodollar Rate Loan, means any such day on which dealings in
Dollar deposits are conducted by and between banks in the London interbank
eurodollar market.

 

“Cash
Collateralize” has the meaning specified in Section 2.04(g).

 

“Change in Law”
means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental
Authority.

 

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

 

(a) the direct or
indirect sale, lease, transfer conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the Property of Borrower and its Subsidiaries,
taken as a whole, to any Person other than a Principal, members of the
immediate families of the Principals, or trusts for their respective benefit;

 

(b) the
Principals, members of the immediate families of the Principals, or trusts for
their respective benefit cease to collectively own, beneficially and of record,
more than 70% of the Equity Interests of Borrower having ordinary voting power.

 

“Casino Lease”
means each of the leases described on Schedule 1.01.

 

“Closing Date”
means the first date all the conditions precedent in Section 4.01 are
satisfied or waived in accordance with Section 10.01.

 

“Closing Date
Dividend” means a distribution by the Borrower in respect of its Equity
Interests made on the Closing Date in the amount of $15,000,000.

 

4

 

“Co-Lead
Arrangers” means each of BAS and U.S. Bank, National Association, in their
capacities as co-lead arrangers.

 

“Code”
means the Internal Revenue Code of 1986.

 

“Collateral”
means all of the collateral which is subject to the Liens granted by the
Collateral Documents.

 

“Collateral
Documents” means, collectively, the Security Agreement, the Pledge
Agreement, the Deeds of Trusts, and any other security agreement, pledge
agreement, deed of trust, mortgage or other collateral security agreement
hereafter executed and delivered by Borrower or the Subsidiaries to secure the
Obligations.

 

“Commitments”
means, collectively, the Revolving Commitments and the Term Commitment.

 

“Compliance
Certificate” means a certificate substantially in the form of
Exhibit B.

 

“Construction
Budget” means a line item construction budget for any Significant Capital
Project to be delivered to the Administrative Agent and the Lenders.

 

“Construction
Contract” means the construction contract between Borrower and the
Contractor relating to any Significant Capital Project.

 

“Contingent
Obligation” means, as to any Person, any (a) any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (ii) to purchase
or lease property, securities or services for the purpose of assuring the
obligee in respect of such Indebtedness or other obligation of the payment or
performance of such Indebtedness or other obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or
(iv) entered into for the purpose of assuring in any other manner the
obligee in respect of such Indebtedness or other obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person
securing any Indebtedness or other obligation of any other Person, whether or
not such Indebtedness or other obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain
any such Lien).  The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
as determined by the obligor thereunder in good faith.  The term “Contingent Obligation” as a verb
has a corresponding meaning.

 

5

 

“Contractor”
means a general contractor selected by Borrower and approved by the
Administrative Agent (which approval shall not be unreasonably withheld).

 

“Contractor’s
Certificate and Consent” means a written certificate and consent executed
by the Contractor in a form acceptable to the Administrative Agent.

 

“Contractual
Obligation” means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound.

 

“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

“Credit
Extension” means each of the following: (a) a Borrowing and
(b) an L/C Credit Extension.

 

“Debtor Relief
Laws” means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

“Deeds of Trust”
means (a) the deeds of trust executed on the Closing Date by Flamingo Paradise,
Market Gaming, E-T-T, Inc. and E-T-T Enterprises, L.L.C. encumbering their
respective interests in the four hotel, resort and\or casino properties owned
or leased by them in Las Vegas, Nevada, Pahrump, Nevada (two locations), and
Henderson, Nevada, and the office and warehouse space located on Russell Road
in Las Vegas to secure their respective Guarantees, (b) the deed of trust
executed by Borrower in respect of the training facility on Russell Road, Las
Vegas adjacent to the warehouse and office space, and (c) any future deeds of
trust executed by Borrower or its relevant Subsidiaries in accordance with
Section 6.12(d).

 

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

 

“Default Rate”
means (a) when used with respect to Obligations other than Letter of
Credit Fees, an interest rate equal to (i) the Base Rate plus
(ii) the Applicable Rate, if any, applicable to Base Rate Loans plus
(iii) 3% per annum; provided, however, that with respect to
a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the
interest rate (including any Applicable Rate) otherwise applicable to such Loan
plus 3% per annum, and (b) when used with
respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus
3% per annum.

 

“Defaulting
Lender” means any Lender that (a) has failed to fund any portion of
the Loans, participations in L/C Obligations or participations in Swing Line
Loans required to be funded by it hereunder within one Business Day of the date
required to be funded by it

 

6

 

hereunder, (b) has otherwise failed to pay over
to the Administrative Agent or any other Lender any other amount required to be
paid by it hereunder within one Business Day of the date when due, unless the
subject of a good faith dispute, or (c) has been deemed insolvent or
become the subject of a bankruptcy or insolvency proceeding.

 

“Disposition”
or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

 

“Documentation
Agent” means Lehman Brothers Inc., in its capacity as Documentation Agent.

 

“Dollar”
and “$” mean lawful money of the United States.

 

“EBITDA”
means, with respect to any fiscal period (and without duplication as to items
(b) though (g):

 

(a)                                  Net Income for that period; plus,

 

(b)                                 an amount equal to any extraordinary loss
plus any net loss realized by Borrower and its Subsidiaries in connection with
any Disposition to the extent such losses were deducted in computing Net
Income; minus

 

(c)           any extraordinary gain reflected in
such Net Income; plus

 

(d)                                 Interest Charges for that period to the
extent deducted in computing such Net Income; plus

 

(e)                                  pre-opening expenses for that period to
the extent deducted in computing such Net Income;  plus

 

(f)                                    depreciation, amortization and all other
non-cash expenses for that period to the extent such deducted in computing such
Net Income; plus

 

(g)                                 any non-cash losses associated with the
prepayment of Indebtedness.

 

“Eligible
Assignee” means (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund; and (d) any other Person (other than a natural
person) approved by (i) the Administrative Agent, the L/C Issuer and the
Swing Line Lender, and (ii) unless an Event of Default has occurred and is
continuing, the Borrower (each such approval not to be unreasonably withheld or
delayed); provided that notwithstanding the foregoing, “Eligible Assignee”
shall not include the Borrower or any of the Borrower’s Affiliates or
Subsidiaries.

 

“Environmental
Laws” means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or governmental restrictions relating
to pollution and the

 

7

 

protection of the environment or the release of any
materials into the environment, including those related to hazardous substances
or wastes, air emissions and discharges to waste or public systems.

 

“Environmental Liability” means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower, any other Loan
Party or any of their respective Subsidiaries directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of
any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

 

“Equity
Interests” means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the
warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests
in) such Person, all of the securities convertible into or exchangeable for
shares of capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or acquisition from such
Person of such shares (or such other interests), and all of the other ownership
or profit interests in such Person (including partnership, member or trust
interests therein), whether voting or nonvoting, and whether or not such
shares, warrants, options, rights or other interests are outstanding on any
date of determination.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974.

 

“ERISA
Affiliate” means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

“ERISA Event”
means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Sections 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e) an event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.

 

“E-T-T, Inc.”
means E-T-T, Inc., a Nevada corporation, its successors and permitted assigns.

 

8

 

“E-T-T
Enterprises L.L.C.” means E-T-T Enterprises, L.L.C., a Nevada limited
liability company, its successors and permitted assigns.

 

“E-T-T, Inc.
Guaranty” means the Guaranty executed on the Closing Date by , Inc. in
favor of the Administrative Agent and the Lenders, as at any time amended.

 

“E-T-T
Enterprises, L.L.C. Guaranty” means the Guaranty executed on the Closing
Date by E-T-T Enterprises, L.L.C. in favor of the Administrative Agent and the
Lenders, as at any time amended.

 

“Eurodollar
Rate” means for any Interest Period with respect to a Eurodollar Rate Loan:

 

(a)                                  the rate per annum equal to the rate
determined by the Administrative Agent to be the offered rate that appears on
the page of the Telerate screen (or any successor thereto) that displays an
average British Bankers Association Interest Settlement Rate for deposits in
Dollars (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or

 

(b)                                 if the rate referenced in the preceding
clause (a) does not appear on such page or service or such page or service
shall not be available, the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or other service
that displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such Interest Period)
with a term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or

 

(c)                                  if the rates referenced in the preceding
clauses (a) and (b) are not available, the rate per annum determined by the
Administrative Agent as the rate of interest at which deposits in Dollars for
delivery on the first day of such Interest Period in same day funds in the
approximate amount of the Eurodollar Rate Loan being made, continued or
converted by Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major banks in the
London interbank eurodollar market at their request at approximately
4:00 p.m. (London time) two Business Days prior to the first day of such
Interest Period.

 

“Eurodollar
Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.

 

“Event of
Default” has the meaning specified in Section 8.01.

 

“Excess Cash”
means, as of each date of determination, the amount by which the unrestricted
cash and cash equivalents owned by Borrower and its Subsidiaries as of that
date, exceeds $25,000,000.

 

“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender, the L/C Issuer or
any other recipient of any payment to be made by or on account of any
obligation of the

 

9

 

Borrower hereunder, (a) taxes imposed on or
measured by its overall net income (however denominated), and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable Lending Office is located, (b) any branch
profits taxes imposed by the United States or any similar tax imposed by any
other jurisdiction in which the Borrower is located and (c) in the case of
a Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 10.13), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
hereto (or designates a new Lending Office) or is attributable to such Foreign
Lender’s failure or inability (other than as a result of a Change in Law) to
comply with Section 3.01(e), except to the extent that such Foreign Lender
(or its assignor, if any) was entitled, at the time of designation of a new
Lending Office (or assignment), to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 3.01(a).

 

“Existing
Credit Agreement” means the Credit Agreement dated as of September 6,
2002, by and among the Borrower, Flamingo Paradise, and U.S. Bank, National
Association.

 

“Existing
Senior Secured Notes” means Borrower’s 10-3⁄4% Senior Secured Notes due 2008
in the aggregate unpaid principal amount of approximately $217,000,000 (of
which approximately $214,809,000 are held by third parties and the balance have
been purchased by the Borrower) issued pursuant to the Indenture dated as of
August 24, 2001 between the Borrower and The Bank of New York, as Trustee.

 

“Federal Funds
Rate”  means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Bank of America on such day on such transactions as determined by
the Administrative Agent.

 

“Fee Letter”
means the letter agreement, dated as of the Closing Date, among the Borrower,
the Administrative Agent and BAS relating to certain fees.

 

“Fiscal Quarter”
means the fiscal quarter of Borrower ending on each March 31,
June 30, September 30 and December 31.

 

“Fiscal Year”
means the fiscal year of Borrower ending on each December 31.

 

“Fixed Charge
Coverage Ratio” means, as of each date of determination, the ratio of:

 

10

 

(a)                                  EBITDA for the twelve month period ending
on that date less Maintenance Capital Expenditures made during that
period less the amount of cash taxes paid by Borrower and its
Subsidiaries in respect of their income during that period less cash
dividends paid by Borrower to its shareholders during that period pursuant to
Sections 7.06 (other than subsections 7.06(d) and (e)); to

 

(b)                                 Interest Charges during that period plus
the scheduled amortization of Indebtedness of Borrower and its Subsidiaries for
that period (which, in the case of any revolving credit facility, shall equal
the amount which is the positive difference, if any, between the highest
outstanding principal balance of that revolving credit facility during the
period and the committed amount of that revolving credit facility on the last
day of that period), provided that no payments of principal and call
premiums in respect of the Existing Senior Secured Notes shall be included.

 

“Flamingo Paradise” means Flamingo Paradise Gaming, LLC a Nevada
limited liability company, and its successors and permitted assigns.

 

“Flamingo Paradise Guaranty” means the Guaranty executed on the
Closing Date by Flamingo Paradise Gaming, LLC, in favor of the Administrative
Agent and the Lenders, as at any time amended.

 

“Foreign Lender”
means any Lender that is organized under the laws of a jurisdiction other than
that in which the Borrower is resident for tax purposes.  For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

 

“FRB” means
the Board of Governors of the Federal Reserve System of the United States.

 

“Fund”
means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

 

“Funded Debt”
means, as of each date of determination, for the Borrower and its Subsidiaries
on a consolidated basis, (a) the outstanding principal amount of all
obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures,
notes, loan agreements or other similar instruments, plus (b) all purchase
money Indebtedness, plus (c) all direct obligations arising under letters
of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments, plus (d) all obligations
in respect of the deferred purchase price of property or services (other than
trade accounts payable in the ordinary course of business), plus
(e) Attributable Indebtedness in respect of capital leases and Synthetic
Lease Obligations, plus (f) without duplication, all Contingent Obligations
with respect to outstanding Indebtedness of the types specified in clauses (a)
through (e) above of Persons other than the Borrower or any Subsidiary, plus
(g) all Indebtedness of the types referred to in clauses (a) through (f)
above of any partnership or joint venture (other than a joint venture that is
itself a corporation or limited

 

11

 

liability company) in which the Borrower or a
Subsidiary is a general partner or joint venturer, unless such Indebtedness is
expressly made non-recourse to the Borrower or such Subsidiary, minus
(h) Excess Cash.

 

“GAAP”
means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

“Gaming Board”
means, collectively, (a) the Nevada Gaming Commission, (b) the Nevada
State Gaming Control Board, and (c)  any other Governmental Authority that
holds regulatory, licensing or permit authority over gambling, gaming or casino
activities conducted by Borrower and the Subsidiaries within its jurisdiction.

 

“Gaming Laws”
means all Laws pursuant to which any Gaming Board possesses regulatory, licensing
or permit authority over gambling, gaming or casino activities conducted by
Borrower and the Subsidiaries within its jurisdiction.

 

“General
Subsidiary Guaranty” means the Guaranty executed by each Subsidiary of the
Borrower other than E-T-T, Inc., E-T-T Enterprises, L.L.C., Market Gaming and
Flamingo Paradise in favor of the Administrative Agent and the Lenders, as at
any time amended.

 

“Governmental
Authority” means the government of the United States or any other nation,
or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

 

“Growth Capital
Expenditures” means any Capital Expenditure which is not a Maintenance
Capital Expenditure, and in any event includes all Capital Expenditures
associated with the design, development and construction of any Significant
Capital Project.

 

“Guaranties”
means, collectively, (a) the Market Gaming Guaranty, (b) the Flamingo Paradise
Guaranty, (c) the E-T-T, Inc. Guaranty, (d) the E-T-T Enterprises, L.L.C.
Guaranty, (e) the General Subsidiary Guaranty, and (f) each other Guaranty of
the Obligations executed by a Subsidiary in favor of the Administrative Agent
and the Lenders, as at any time amended.

 

“Hazardous
Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum
or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all
other substances or wastes of any nature regulated pursuant to any
Environmental Law.

 

12

 

“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

 

(a)                                  all obligations of such Person for
borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments;

 

(b)                                 all direct or contingent obligations of
such Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(c)                                  net obligations of such Person under any
Swap Contract;

 

(d)                                 all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business and, in each case, not past due for more than 60 days after the date on
which such trade account payable was created);

 

(e)                                  indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse;

 

(f)                                    capital leases and Synthetic Lease
Obligations;

 

(g)                                 all obligations of such Person to
purchase, redeem, retire, defease or otherwise make any payment in respect of
any Equity Interest in such Person or any other Person, valued, in the case of
a redeemable preferred interest, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends; and

 

(h)                                 all Contingent Obligations of such Person
in respect of any of the foregoing.

 

For all purposes
hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a
general partner or a joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person.  The amount
of any net obligation under any Swap Contract on any date shall be deemed to be
the Swap Termination Value thereof as of such date.  The amount of any capital lease or Synthetic
Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitees”
has the meaning specified in Section 10.04(b).

 

“Initial
Pricing Period” means the period beginning on the Closing Date and ending
on August 31, 2004.  

 

13

 

“Interest
Charges” means, for any period, for the Borrower and its Subsidiaries on a
consolidated basis, the sum of (a) all interest, premium payments, debt
discount, fees, charges and related expenses of the Borrower and its
Subsidiaries in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in
each case to the extent treated as interest in accordance with GAAP, and
(b) the portion of rent expense of the Borrower and its Subsidiaries with
respect to such period under capital leases that is treated as interest in
accordance with GAAP.

 

“Interest
Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a
Eurodollar Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line
Loan), the first Business Day of each calendar month and the Maturity Date.

 

“Interest
Period” means, as to each Eurodollar Rate Loan, the period commencing on
the date such Eurodollar Rate Loan is disbursed or converted to or continued as
a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrower in its Loan Notice; provided
that:

 

(a)                                  any Interest Period that would otherwise
end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day;

 

(b)                                 any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and

 

(c)                                  no Interest Period shall extend beyond
the Maturity Date.

 

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance
or capital contribution to, Contingent Obligation or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture
interest in such other Person and any arrangement pursuant to which the
investor issues Contingent Obligations or accepts Indebtedness of such other
Person, or (c) the purchase or other acquisition (in one transaction or a
series of transactions) of assets of another Person that constitute a
business unit.  For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.

 

“IP Rights”
has the meaning specified in Section 5.17.

 

14

 

“IRS” means
the United States Internal Revenue Service.

 

“ISP”
means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).

 

“Issuer
Documents” means with respect to any Letter of Credit, the Letter Credit
Application, and any other document, agreement and instrument entered into by
the L/C Issuer and the Borrower (or any Subsidiary) or in favor the L/C Issuer
and relating to any such Letter of Credit.

 

“Laws”
means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

“L/C Advance”
means, with respect to each Lender, such Lender’s funding of its participation
in any L/C Borrowing in accordance with its Revolving Percentage.

 

“L/C Borrowing”
means an extension of credit resulting from a drawing under any Letter of
Credit which has not been reimbursed on the date when made or refinanced as a
Borrowing.

 

“L/C Credit
Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

 

“L/C Issuer”
means Bank of America in its capacity as issuer of Letters of Credit hereunder,
or any successor issuer of Letters of Credit hereunder.

 

“L/C
Obligations” means, as at any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.  For all purposes of this Agreement, if on any
date of determination a Letter of Credit has expired by its terms but any
amount may still be drawn thereunder by reason of the operation of Rule 3.14 of
the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.

 

“Lender”
has the meaning specified in the introductory paragraph hereto and, as the
context requires, includes the Swing Line Lender.

 

“Lending Office”
means, as to any Lender, the office or offices of such Lender described as such
in such Lender’s Administrative Questionnaire, or such other office or offices
as a Lender may from time to time notify the Borrower and the Administrative
Agent.

 

“Letter of
Credit” means any standby
letter of credit issued hereunder and shall include the Existing Letters of
Credit.

 

15

 

“Letter of
Credit Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.

 

“Letter of
Credit Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).

 

“Letter of
Credit Fee” has the meaning specified in Section 2.04(i).

 

“Letter of
Credit Sublimit” means an amount equal to the lesser of (a) $5,000,000
or (b) the Aggregate Revolving Commitments.   The Letter of Credit Sublimit is part of, and
not in addition to, the Aggregate Revolving Commitments.

 

“License
Revocation” means the revocation, failure to renew or suspension of, or the
appointment of a receiver, supervisor or similar official with respect to, any
casino, gambling or gaming license issued by any Gaming Board covering any
casino or gaming facility of Borrower or any of its Subsidiaries.

 

“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or
other security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any easement, right of way or other encumbrance
on title to real property, and any financing lease having substantially the
same economic effect as any of the foregoing).

 

“Loan”
means an extension of credit by a Lender to the Borrower under Article II
in the form of a Loan or a Swing Line Loan.

 

“Loan Documents”
means this Agreement, each Note, each Issuer Document, each Secured Swap
Contract, the Fee Letter, each Guaranty, and each Collateral Document.

 

“Loan Notice”
means a notice of (a) a Borrowing, (b) a conversion of Loans from one
Type to the other, or (c) a continuation of Eurodollar Rate Loans,
pursuant to Section 2.03(a), which, if in writing, shall be substantially
in the form of Exhibit C.

 

“Loan Parties”
means, collectively, the Borrower and each Subsidiary.

 

“Maintenance
Capital Expenditures” means, collectively (a) any Capital
Expenditures for the maintenance, repair, restoration or refurbishment of any
of the hotel, resort or casino properties of Borrower or any of its
Subsidiaries, (b) any Capital Expenditures associated with the slot route
operations of the Borrower and its Subsidiaries in respect of any one or more
capital projects which are not in excess of $1,000,000, but excluding
any Capital Expenditure which materially adds to or further improves the hotel,
resort or casino properties of Borrower and its Subsidiaries.

 

“Market Gaming” means Market Gaming, Inc., a Nevada corporation,
its successors and permitted assigns.

 

16

 

“Market Gaming
Guaranty” means the Guaranty executed on the Closing Date by Market Gaming
in favor of the Administrative Agent and the Lenders, as at any time amended.

 

“Material
Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), condition (financial or otherwise) or prospects of the Borrower
or the Borrower and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Loan Party to perform its obligations under
any Loan Document to which it is a party; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against any Loan
Party of any Loan Document to which it is a party.

 

“Maturity Date”
means June 10, 2009.

 

“Multiemployer
Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

 

“Negative
Pledge” means a Contractual Obligation that contains a covenant binding on
Borrower or any of the Subsidiaries that prohibits Liens on any of its or their
Property, other than (a) any such covenant contained in a Contractual
Obligation granting a Lien permitted under Section 7.01 which affects only
the Property that is the subject of such permitted Lien and (b) any such
covenant that does not apply to Liens securing the Obligations.

 

“Net Income”
means, for any period, the consolidated net income of Borrower and its
Subsidiaries for that period, determined in accordance with GAAP, consistently
applied.

 

“New Senior
Subordinated Notes” means Borrower’s 8-1/8% Senior Subordinated Notes due
2012 in the aggregate principal amount of $160,000,000 issued pursuant to the
Indenture dated as of June 11, 2004 between the Borrower and U.S. Bank,
National Association, as Trustee.

 

“Notes”
means, collectively, the Revolving Notes and the Term Notes.

 

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Loan Document (including without
limitation any Secured Swap Contract) or otherwise with respect to any
Loan or Letter of Credit, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against any Loan Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed
claims in such proceeding.

 

“Organization
Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or
articles of formation or organization and operating agreement; and (c) with
respect

 

17

 

to any partnership, joint venture, trust or other form
of business entity, the partnership, joint venture or other applicable
agreement of formation or organization and any agreement, instrument, filing or
notice with respect thereto filed in connection with its formation or
organization with the applicable Governmental Authority in the jurisdiction of
its formation or organization and, if applicable, any certificate or articles
of formation or organization of such entity.

 

“Other Taxes”
means all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made
hereunder or under any other Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document.

 

“Outstanding
Amount” means (i) with respect to Loans and Swing Line Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any borrowings and prepayments or repayments of Loans and Swing Line Loans, as
the case may be, occurring on such date; and (ii) with respect to any L/C
Obligations on any date, the amount of such L/C Obligations on such date after giving
effect to any L/C Credit Extension occurring on such date and any other changes
in the aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements by the Borrower of Unreimbursed Amounts.

 

“Overall
Commitments” means, collectively, the Aggregate Revolving Commitments and
the Aggregate Term Commitments.

 

“Participant”
has the meaning specified in Section 10.06(d).

 

“PBGC”
means the Pension Benefit Guaranty Corporation.

 

“Pension Plan”
means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject
to Title IV of ERISA and is sponsored or maintained by the Borrower or any
ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or
has an obligation to contribute, or in the case of a multiple employer or other
plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

 

“Percentage”
means with respect to any Lender at any time, the percentage (carried out to
the ninth decimal place) of the Overall Commitments, or, as the context
requires, the percentage of the Aggregate Revolving Commitments or Aggregate
Term Commitments, represented by that Lender’s Commitment of the same Type at
such time.  In respect of the Revolving
Commitments, if the Revolving Commitments have been terminated pursuant to
Section 8.02, then the Percentage of each Lender shall be determined based
on the Percentage of that Lender most recently in effect, giving effect to any
subsequent assignments.  The initial
Percentages of each Lender are set forth opposite the name of that Lender on
Schedule 2.01 or in the Assignment and Assumption pursuant to which that
Lender becomes a party hereto, as applicable.

 

“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.

 

18

 

“Plan”
means any “employee benefit plan” (as such term is defined in Section 3(3)
of ERISA) established by the Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

 

“Pledge
Agreement” means a pledge agreement executed and delivered by Borrower and
its Subsidiaries within 90 days of the Closing Date pursuant to
Section 6.12(a), substantially in the form of Exhibit D, with respect to
all Equity Interests held by them in their respective direct Subsidiaries,
either as originally executed or as it may from time to time be supplemented,
modified, amended, extended or supplanted.

 

“Pricing Period”
means, collectively, the Initial Pricing Period and each subsequent period of
three months beginning on the first day of each March, June, September and
December during the term of this Agreement.

 

“Principals”
means Edward J. Herbst, Timothy P. Herbst and Troy D. Herbst.

 

“Quarterly
Payment Date” means the last Business Day of each March, June,
September and December.

 

“Register”
has the meaning specified in Section 10.06(c).

 

“Related
Parties” means, with respect to any Person, such Person’s Affiliates and
the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.

 

“Reportable
Event” means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30 day notice period has been waived.

 

“Request for
Credit Extension” means (a) with respect to a Borrowing, conversion or
continuation of Loans, a Loan Notice, (b) with respect to an L/C Credit
Extension, a Letter of Credit Application, and (c) with respect to a Swing
Line Loan, a Swing Line Loan Notice.

 

“Requisite
Lenders” means, as of any date of determination, Lenders having more than
50% of the Overall Commitments or, if the commitment of each Lender to make
Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02, Lenders holding in the aggregate
more than 50% of the Total Outstandings (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations and
Swing Line Loans being deemed “held” by that Lender for purposes of this
definition); provided that the Commitment of, and the portion of the
Total Outstandings held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Requisite Lenders.

 

“Reserve Amount”
means, as of each date of determination, $10,000,000 or any lesser amount which
the Administrative Agent agrees is equal to the sum of (a) the outstanding
principal amount of the Existing Senior Secured Notes not repaid on the Closing
Date and remaining outstanding on that date, (b) Interest Charges with respect
to the Existing Senior Secured Notes which have then accrued and remain unpaid,
(c) Interest Charges which are

 

19

 

scheduled to accrue in respect of such unpaid Existing
Senior Secured Notes through September 1, 2005, and (d) any call premium
required to be paid in respect of any Existing Senior Secured Notes upon their
repayment on September 1, 2005.

 

“Responsible
Officer” means the chief executive officer, president, chief financial
officer, treasurer or assistant treasurer of a Loan Party.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.

 

“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any such capital stock or other Equity Interest, or on
account of any return of capital to the Borrower’s stockholders, partners or
members (or the equivalent Person thereof).

 

“Revolver
Reduction Amount” means as to each Quarterly Payment Date, the amount set
forth below opposite that Quarterly Payment Date, provided that in the
event that the amount of the Revolving Commitment is hereafter increased
pursuant to Section 2.16, then the Revolver Reduction Amount for each
subsequent Quarterly Payment Date shall be ratably increased in the same
proportion that the principal amount of the increase bears to $90,000,000:

 

	
  Quarterly Payment Date

  	
   

  	
  Revolver Reduction

  Amount

  	
   

  
	
  Closing Date through and including
  December 31, 2006

  	
   

  	
  $

  	
  0

  	
   

  
	
  March 31, 2007 through and including
  December 31, 2008

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  March 31, 2009 and thereafter

  	
   

  	
  $

  	
  2,500,000

  	
   

  

 

Revolving
Commitment”
means, as to each Lender, its obligation to (a) make Loans to the Borrower
pursuant to Section 2.01, (b) purchase participations in L/C
Obligations, and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite that Lender’s name on Schedule 2.01 or in the
Assignment and Assumption pursuant to which that Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement.

 

“Revolving
Lenders” means, those of the Lenders having Revolving Commitments.

 

“Revolving
Loans” means each Loan made under the Revolving Commitment.

 

20

 

“Revolving Note”
means a promissory note made by the Borrower in favor of a Revolving Lender
evidencing Revolving Loans made by that Lender, substantially in the form of
Exhibit E.

 

“Revolving
Percentage” means with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Revolving Commitments
represented by that Lender’s Revolving Commitment at such time.  If the commitment of each Lender to make
Revolving Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02 or if the
Revolving Commitments have expired, then the Revolving Percentage of each
Lender shall be determined based on the Revolving Percentage of that Lender
most recently in effect, giving effect to any subsequent assignments.  The initial Revolving Percentage of each
Lender is set forth opposite the name of that Lender on Schedule 2.01 or
in the Assignment and Assumption pursuant to which that Lender becomes a party
hereto, as applicable.

 

“Route
Agreements” means written agreements entered into by Borrower or any of its
Subsidiaries with another Person that provide for the installation and
operation of slot machines, video poker machines or other electronic gaming
devises at premises owned or operated by such Person.

 

“SEC” means
the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

 

“Secured Swap
Contract” means each Swap Contract to which the Borrower is now or
hereafter a party with any Lender or its Affiliates.

 

“Security
Agreement” means the security agreement executed and delivered by Borrower
and each of its Subsidiaries, either as originally executed or as it may from
time to time be supplemented, modified, amended, extended or supplanted.

 

“Senior Debt”
means, as of each date of determination, Funded Debt as of that date minus
Subordinated Debt as of that date.

 

“Senior Debt to
EBITDA Ratio” means, as of any date of determination, the ratio of
(a) the outstanding principal amount of the Senior Debt as of that date, to (b) EBITDA for the 
four Fiscal Quarter period then ended.

 

“Significant
Capital Project” means each capital project hereafter commenced by Borrower
or any of its Subsidiaries having an associated Capital Expenditures budget
which is in excess of $15,000,000.

 

“Subordinated
Debt” means the New Senior Subordinated Notes and any additional or
replacement subordinated Indebtedness permitted by Section 7.03(b).

 

“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than

 

21

 

securities or interests having such power only by
reason of the happening of a contingency) are at the time beneficially owned,
or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of the Borrower.

 

“Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options, bond
or bond price or bond index swaps or options or forward bond or forward bond
price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master
Agreement.

 

“Swap
Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for
any date prior to the date referenced in clause (a), the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which may
include a Lender or any Affiliate of a Lender).

 

“Swing Line”
means the revolving credit facility made available by the Swing Line Lender
pursuant to Section 2.05.

 

“Swing Line
Borrowing” means a borrowing of a Swing Line Loan pursuant to
Section 2.05.

 

“Swing Line
Lender” means Bank of America in its capacity as provider of Swing Line
Loans, or any successor swing line lender hereunder.

 

“Swing Line
Loan” has the meaning specified in Section 2.05(a).

 

“Swing Line
Loan Notice” means a notice of a Swing Line Borrowing pursuant to
Section 2.05(b), which, if in writing, shall be substantially in the form
of Exhibit F.

 

22

 

“Swing Line
Sublimit” means an amount equal to the lesser of (a) $10,000,000 and
(b) the Aggregate Revolving Commitments. 
The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Revolving Commitments.

 

“Syndication
Agent” means Wells Fargo Bank, National Association, in its capacity as
Syndication Agent.

 

“Synthetic
Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating
obligations that do not appear on the balance sheet of such Person but which,
upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).

 

“Taxes”
means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

 

“Term
Amortization Amount” means a principal payment in the amount of $3,750,000,
provided that if the Aggregate Term Commitments are hereafter increased
pursuant to Section 2.16, then the Term Amortization Amount for each
subsequent Quarterly Payment Date shall be ratably increased in the same
proportion that the principal amount of the increase bears to $60,000,000.

 

“Term
Commitments” means, as to each Lender, the commitment of that Lender to
make Term Loans to the Borrower pursuant to Section 2.02.

 

“Term Lenders”
means those of the Lenders having Term Commitments.

 

“Term Loans”
means each Loan made under the Term Commitments.

 

“Term Note”
means a promissory note made by the Borrower in favor of a Term Lender
evidencing Term Loans made by that Lender, substantially in the form of
Exhibit G.

 

“Terrible’s
Hotel & Casino” means Terrible’s Hotel and Casino, located at 4100
Paradise Road, Las Vegas, Nevada.

 

“Terrible’s
Expansion Project” means the design, development and construction of a
three level 450-space parking structure attached to Terrible’s Hotel &
Casino, the acquisition of approximately 100 additional slot machines for the
casino floor at Terrible’s Hotel & Casino, and related improvements.

 

“to the best
knowledge of” means, when modifying a representation, warranty or other
statement of any Person, that the fact or situation described therein is known
by the Person (or, in the case of a Person other than a natural Person, known
by a Responsible Officer of that Person) making the representation, warranty or
other statement, or with the exercise of reasonable due diligence under the
circumstances (in accordance with the standard of what a reasonable Person in
similar circumstances would have done) would have been known by the Person (or,
in the case

 

23

 

of a Person other than a natural Person, would have
been known by a Responsible Officer of that Person).

 

“Total Debt to
EBITDA Ratio” means, as of any date of determination, the ratio of
(a) the outstanding principal amount of the Funded Debt as of such date, to (b) EBITDA for the four Fiscal Quarter period then
ended.

 

“Total
Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

“Trademark
License Agreement” means the Trademark License Agreement dated as of
August 24, 2001 between Terrible Herbst, Inc., a Nevada corporation, and
Borrower, as Licensee.

 

“Type”
means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

 

“Unfunded
Pension Liability” means the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

 

“United States”
and “U.S.” mean the United States of America.

 

“Unreimbursed
Amount” has the meaning specified in Section 2.04(c)(i).

 

1.02.                        Other
Interpretive Provisions.  With
reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

 

(a)                                  The definitions
of terms herein shall apply equally to the singular and plural forms of the
terms defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,”
“hereof” and “hereunder,” and words of similar import when used
in any Loan Document, shall be construed to refer to such Loan Document in its
entirety and not to any particular provision thereof, (iv) all references
in a Loan Document to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules
to, the Loan Document in which such references appear, (v) any reference
to any law shall include all statutory and regulatory provisions consolidating,
amending

 

24

 

replacing
or interpreting such law and any reference to any law or regulation shall,
unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset”
and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

 

(b)                                 In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including;” the words “to”
and “until” each mean “to but excluding;” and the word “through”
means “to and including.”

 

(c)                                  Section headings
herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.

 

1.03.                        Accounting
Terms.

 

(a)                                  Generally.  All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed
herein.

 

(b)                                 Changes in GAAP.  If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and either the Borrower or the Requisite Lenders shall so
request, the Administrative Agent, the Lenders and the Borrower shall negotiate
in good faith to amend such ratio or requirement to preserve the original
intent thereof in light of such change in GAAP (subject to the approval of the
Requisite Lenders); provided  that, until so amended,
(i) such ratio or requirement shall continue to be computed in accordance
with GAAP prior to such change therein and (ii) the Borrower shall provide
to the Administrative Agent and the Lenders financial statements and other
documents required under this Agreement or as reasonably requested hereunder
setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

1.04.                        Rounding.  Any financial ratios required to be
maintained by the Borrower pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result
to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).

 

1.05.                        Times
of Day.  Unless otherwise specified,
all references herein to times of day shall be references to Pacific Saving
Daylight time (daylight or standard, as applicable).

 

25

 

1.06.                        Letter
of Credit Amounts.  Unless
otherwise specified, all references herein to the amount of a Letter of Credit
at any time shall be deemed to mean the maximum face amount of such Letter of
Credit after giving effect to all increases thereof contemplated by such Letter
of Credit or the Issuer Documents related thereto, whether or not such maximum
face amount is in effect at such time.

 

26

 

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01.                        Revolving
Loans.  Subject to the terms and
conditions set forth herein, each Revolving Lender severally agrees to make
Revolving Loans to the Borrower from time to time, on any Business Day during
the Availability Period, in an aggregate amount not to exceed at any time
outstanding the amount of that Revolving Lender’s Revolving Commitment; provided,
that after giving effect to any Borrowing, (i) the Aggregate Revolving
Outstandings shall not exceed the Aggregate Revolving Commitments minus
the Reserve Amount, and (ii) the aggregate Outstanding Amount of the
Revolving Loans of any Revolving Lender, plus that Revolving Lender’s
Revolving Percentage of the Outstanding Amount of all L/C Obligations, plus
that Revolving Lender’s Revolving Percentage of the Outstanding Amount of all
Swing Line Loans shall not exceed that Lender’s Revolving Commitment.  Within the limits of each Revolving Lender’s
Revolving Commitment, and subject to the other terms and conditions hereof, the
Borrower may borrow under this Section 2.01, prepay under
Section 2.06, and reborrow under this Section 2.01.  Revolving Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.

 

2.02.                        Term
Loans.  Subject to the terms and
conditions set forth herein, each Term Lender severally agrees to make a Term
Loan to the Borrower on the Closing Date in the amount of its Term
Commitment.  Term Loans may be Base Rate
Loans or Eurodollar Rate Loans, as further provided herein.  No Term Loan which is at any time prepaid or
repaid may be reborrowed, but each Term Loan may be converted, in whole or in
part, to a Term Loan of another Type, or continued from time to time, in the
manner contemplated by Section 2.03.

 

2.03.                        Borrowings,
Conversions and Continuations of Loans.

 

(a)                                  Each Borrowing,
each conversion of Loans from one Type to the other, and each continuation of
Eurodollar Rate Loans (whether such Borrowing consists of Revolving Loans or
Term Loans) shall be made upon the Borrower’s irrevocable notice to the
Administrative Agent, which may be given by telephone.  Each such notice must be received by the
Administrative Agent not later than 11:00 a.m. (i) three Business Days
prior to the requested date of any Borrowing of, conversion to or continuation
of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base
Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate
Loans.  Each telephonic notice by the
Borrower pursuant to this Section 2.03(a) must be confirmed promptly by
delivery to the Administrative Agent of a written Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower.  Each Borrowing of, conversion to or
continuation of Eurodollar Rate Loans shall be in a principal amount of
$2,000,000 or a whole multiple of $1,000,000 in excess thereof.  Except as provided in Sections 2.04(c)
and 2.05(c), each Borrowing of or conversion to Base Rate Loans shall be in a
principal amount of $2,000,000 or a whole multiple of $1,000,000 in excess
thereof.  Each Loan Notice (whether
telephonic or written) shall specify (i) whether the Loan Notice relates
to the Revolving Commitments or the Term Commitments, (ii) whether the
Borrower is requesting a Borrowing, a conversion of Loans from one

 

27

 

Type
to the other, or a continuation of Eurodollar Rate Loans, (iii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iv) the principal amount of Loans to be
borrowed, converted or continued, (v) the Type of Loans to be borrowed or
to which existing Loans are to be converted, and (vi) if applicable, the
duration of the Interest Period with respect thereto.  If the Borrower fails to specify a Type of
Loan in a Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Loans shall be
made as, or converted to, Base Rate Loans. 
Any such automatic conversion to Base Rate Loans shall be effective as
of the last day of the Interest Period then in effect with respect to the
applicable Eurodollar Rate Loans.  If the
Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar
Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one month.

 

(b)                                 Following
receipt of a Loan Notice, the Administrative Agent shall promptly notify each
relevant Lender of the amount of its Percentage of the applicable Loans, and if
no timely notice of a conversion or continuation is provided by the Borrower,
the Administrative Agent shall notify each Lender of the details of any
automatic conversion to Base Rate Loans described in the preceding
subsection.  In the case of a Borrowing,
each Lender having a Percentage of the relevant Commitments shall make the
amount of its Loan available to the Administrative Agent in immediately
available funds at the Administrative Agent’s Office not later than 1:00 p.m.
on the Business Day specified in the applicable Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 4.02 (and, if such Borrowing is the
initial Credit Extension, Section 4.01), the Administrative Agent shall
make all funds so received available to the Borrower in like funds as received
by the Administrative Agent either by (i) crediting the account of the
Borrower on the books of Bank of America with the amount of such funds or
(ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative
Agent by the Borrower; provided, however, that if, on the date
the Loan Notice with respect to such Borrowing is given by the Borrower, there
are L/C Borrowings outstanding, then the proceeds of such Borrowing, first,
shall be applied to the payment in full of any such L/C Borrowings, and second,
shall be made available to the Borrower as provided above.

 

(c)                                  Except as
otherwise provided herein, a Eurodollar Rate Loan may be continued or converted
only on the last day of an Interest Period for such Eurodollar Rate Loan.  During the existence of a Default, no Loans
may be requested as, converted to or continued as Eurodollar Rate Loans without
the consent of the Requisite Lenders.

 

(d)                                 The
Administrative Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon
determination of such interest rate.  At
any time that Base Rate Loans are outstanding, the Administrative Agent shall
notify the Borrower and the Lenders of any change in Bank of America’s prime
rate used in determining the Base Rate promptly following the public
announcement of such change.

 

28

 

(e)                                  After giving
effect to all Borrowings, all conversions of Loans from one Type to the other,
and all continuations of Loans as the same Type, there shall not be more than
ten Interest Periods in effect with respect to Loans.

 

2.04.                        Letters
of Credit.

 

(a)                                  The Letter of
Credit Commitment.

 

(i)                                     Subject
to the terms and conditions set forth herein, (A) the L/C Issuer agrees,
in reliance upon the agreements of the Revolving Lenders set forth in this
Section 2.04, (1) from time to time on any Business Day during the
period from the Closing Date until the Letter of Credit Expiration Date, to
issue Letters of Credit for the account of the Borrower, and to amend or extend
Letters of Credit previously issued by it, in accordance with
subsection (b) below, and (2) to honor drawings under the Letters of
Credit; and (B) the Revolving Lenders severally agree to participate in
Letters of Credit issued for the account of the Borrower and any drawings
thereunder; provided that after giving effect to any L/C Credit
Extension with respect to any Letter of Credit, (x) the Total Outstandings
shall not exceed the Overall Commitments minus the Reserve Amount,
(y) the aggregate Outstanding Amount of the Revolving Loans of any
Revolving Lender, plus that Revolving Lender’s Revolving Percentage of
the Outstanding Amount of all L/C Obligations, plus that Revolving
Lender’s Revolving Percentage of the Outstanding Amount of all Swing Line Loans
shall not exceed that Revolving Lender’s Revolving Commitment, and (z) the
Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit
Sublimit. Each request by the Borrower for the issuance or amendment of a
Letter of Credit shall be deemed to be a representation by the Borrower that
the L/C Credit Extension so requested complies with the conditions set forth in
the proviso to the preceding sentence. 
Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrower’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed.

 

(ii)                                  The
L/C Issuer shall not issue any Letter of Credit, if:

 

(A)                              subject to
Section 2.04(b)(iii), the expiry date of such requested Letter of Credit
would occur more than twelve months after the date of issuance or last
extension, unless all of the Revolving Lenders have approved such expiry date;
or

 

(B)                                the expiry date
of such requested Letter of Credit would occur after the Letter of Credit
Expiration Date, unless all the  Revolving Lenders have approved
such expiry date.

 

29

 

(iii)                               The
L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

 

(A)                              any order,
judgment or decree of any Governmental Authority or arbitrator shall by its
terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of
Credit, or any Law applicable to the L/C Issuer or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the L/C Issuer with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which the L/C Issuer
in good faith deems material to it;

 

(B)                                the issuance of
such Letter of Credit would violate one or more policies of the L/C Issuer;

 

(C)                                except as
otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of
Credit is in an initial face amount less than $100,000, in the case of a
commercial Letter of Credit, or $500,000, in the case of a standby Letter of
Credit;

 

(D)                               such Letter of
Credit is to be denominated in a currency other than Dollars;  or

 

(E)                                 a default of
any Revolving Lender’s obligations to fund under Section 2.04(c) exists or
any Revolving Lender is at such time a Defaulting Lender hereunder, unless the
L/C Issuer has entered into satisfactory arrangements with the Borrower or such
Revolving Lender to eliminate the L/C Issuer’s risk with respect to such
Revolving Lender.

 

(iv)                              The
L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be
permitted at such time to issue such Letter of Credit in its amended form under
the terms hereof.

 

(v)                                 The
L/C Issuer shall be under no obligation to amend any Letter of Credit if
(A) the L/C Issuer would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.

 

(vi)                              The
L/C Issuer shall act on behalf of the Revolving Lenders with respect to any
Letters of Credit issued by it and the documents associated

 

30

 

therewith, and
the L/C Issuer shall have all of the benefits and immunities (A) provided
to the Administrative Agent in Article IX with respect to any acts taken
or omissions suffered by the L/C Issuer in connection with Letters of Credit
issued by it or proposed to be issued by it and Issuer Documents pertaining to
such Letters of Credit as fully as if the term “Administrative Agent” as used
in Article IX included the L/C Issuer with respect to such acts or
omissions, and (B) as additionally provided herein with respect to the L/C
Issuer.

 

(b)                                 Procedures for
Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.

 

(i)                                     Each
Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to the L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the
Borrower.  Such Letter of Credit
Application must be received by the L/C Issuer and the Administrative Agent not
later than 11:00 a.m. at least two Business Days (or such later date and time
as the Administrative Agent and the L/C Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance date or date
of amendment, as the case may be.  In the
case of a request for an initial issuance of a Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the L/C
Issuer: (A) the proposed issuance date of the requested Letter of Credit
(which shall be a Business Day); (B) the amount thereof; (C) the
expiry date thereof; (D) the name and address of the beneficiary thereof;
(E) the documents to be presented by such beneficiary in case of any
drawing thereunder; (F) the full text of any certificate to be presented
by such beneficiary in case of any drawing thereunder; and (G) such other
matters as the L/C Issuer may require. 
In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer (A) the Letter of Credit to be amended;
(B) the proposed date of amendment thereof (which shall be a Business
Day); (C) the nature of the proposed amendment; and (D) such other
matters as the L/C Issuer may require. 
Additionally, the Borrower shall furnish to the L/C Issuer and the
Administrative Agent such other documents and information pertaining to
such requested Letter of Credit issuance or amendment, including any Issuer
Documents, as the L/C Issuer or the Administrative Agent may require.

 

(ii)                                  Promptly
after receipt of any Letter of Credit Application, the L/C Issuer will confirm
with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the Borrower and, if not, the L/C Issuer will provide the Administrative
Agent with a copy thereof.  Unless the
L/C Issuer has received written notice from any Revolving Lender, the
Administrative Agent or any Loan Party, at least one Business Day prior to the
requested date of issuance or amendment of the applicable Letter of Credit,
that one or more applicable conditions contained in Article IV shall not
then be satisfied, then, subject to the

 

31

 

terms and
conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter
of Credit for the account of the Borrower or enter into the applicable
amendment, as the case may be, in each case in accordance with the L/C Issuer’s
usual and customary business practices. 
Immediately upon the issuance of each Letter of Credit, each Revolving
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees
to, purchase from the L/C Issuer a risk participation in such Letter of Credit
in an amount equal to the product of such Revolving Lender’s Revolving
Percentage times the amount of such Letter of Credit.

 

(iii)                               If
the Borrower so requests in any applicable Letter of Credit Application, the
L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of
Credit that has automatic extension provisions (each, an “Auto-Extension Letter
of Credit”); provided that any such Auto-Extension Letter of Credit must
permit the L/C Issuer to prevent any such extension at least once in each twelve-month
period (commencing with the date of issuance of such Letter of Credit) by
giving prior notice to the beneficiary thereof not later than a day (the
“Non-Extension Notice Date”) in each such twelve-month period to be agreed upon
at the time such Letter of Credit is issued. 
Unless otherwise directed by the L/C Issuer, the Borrower shall not be
required to make a specific request to the L/C Issuer for any such
extension.  Once an Auto-Extension Letter
of Credit has been issued, the Lenders shall be deemed to have authorized (but
may not require) the L/C Issuer to permit the extension of such Letter of
Credit at any time to an expiry date not later than the Letter of Credit
Expiration Date; provided, however, that the L/C Issuer shall not
permit any such extension if (A) the L/C Issuer has determined that it
would not be permitted, or would have no obligation, at such time to issue such
Letter of Credit in its revised form (as extended) under the terms hereof (by
reason of the provisions of clause (ii) or (iii) of Section 2.04(a) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from the Administrative Agent that the
Requisite Lenders have elected not to permit such extension or (2) from
the Administrative Agent, any Lender or the Borrower that one or more of the
applicable conditions specified in Section 4.02 is not then satisfied, and
in each such case directing the L/C Issuer not to permit such extension.

 

(iv)                              Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of
Credit to an advising bank with respect thereto or to the beneficiary thereof,
the L/C Issuer will also deliver to the Borrower and the Administrative Agent a
true and complete copy of such Letter of Credit or amendment.

 

(c)                                  Drawings and
Reimbursements; Funding of Participations.

 

(i)                                     Upon
receipt from the beneficiary of any Letter of Credit of any notice of a drawing
under such Letter of Credit, the L/C Issuer shall notify the

 

32

 

Borrower and
the Administrative Agent thereof.  Not
later than 11:00 a.m. on the date of any payment by the L/C Issuer under a
Letter of Credit (each such date, an “Honor Date”), the Borrower shall
reimburse the L/C Issuer through the Administrative Agent in an amount equal to
the amount of such drawing.  If the
Borrower fails to so reimburse the L/C Issuer by such time, the Administrative
Agent shall promptly notify each Revolving Lender of the Honor Date, the amount
of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such
Revolving Lender’s Revolving Percentage thereof.  In such event, the Borrower shall be deemed
to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor
Date in an amount equal to the Unreimbursed Amount, without regard to the
minimum and multiples specified in Section 2.04 for the principal amount
of Base Rate Loans, but subject to the amount of the unutilized portion of the
Aggregate Revolving Commitments and the conditions set forth in
Section 4.02 (other than the delivery of a Loan Notice).  Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this Section 2.04(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of
such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice.

 

(ii)                                  Each
Lender shall upon any notice pursuant to Section 2.04(c)(i) make funds
available to the Administrative Agent for the account of the L/C Issuer at the
Administrative Agent’s Office in an amount equal to its Revolving Percentage of
the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified
in such notice by the Administrative Agent, whereupon, subject to the
provisions of Section 2.04(c)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to the Borrower in such
amount.  The Administrative Agent shall
remit the funds so received to the L/C Issuer.

 

(iii)                               With
respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing
of Base Rate Loans because the conditions set forth in Section 4.02 cannot
be satisfied or for any other reason, the Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the Default Rate.  In such event, each Revolving Lender’s
payment to the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.04(c)(ii) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Revolving Lender in satisfaction of its participation obligation under
this Section 2.04.

 

(iv)                              Until
each Revolving Lender funds its Loan or L/C Advance pursuant to this
Section 2.04(c) to reimburse the L/C Issuer for any amount drawn under any
Letter of Credit, interest in respect of such Revolving Lender’s Revolving
Percentage of such amount shall be solely for the account of the L/C Issuer.

 

33

 

(v)                                 Each
Revolving Lender’s obligation to make Loans or L/C Advances to reimburse the
L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this
Section 2.04(c), shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any setoff, counterclaim, recoupment,
defense or other right which such Lender may have against the L/C Issuer, the
Borrower or any other Person for any reason whatsoever; (B) the occurrence
or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Revolving Lender’s obligation to make Loans pursuant to this
Section 2.04(c) is subject to the conditions set forth in
Section 4.02 (other than delivery by the Borrower of a Loan Notice).  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of the Borrower to reimburse the L/C
Issuer for the amount of any payment made by the L/C Issuer under any Letter of
Credit, together with interest as provided herein.

 

(vi)                              If
any Revolving Lender fails to make available to the Administrative Agent for
the account of the L/C Issuer any amount required to be paid by such Revolving
Lender pursuant to the foregoing provisions of this Section 2.04(c) by the
time specified in Section 2.04(c)(ii), the L/C Issuer shall be entitled to
recover from such Revolving Lender (acting through the Administrative Agent),
on demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds
Rate and a rate determined by the L/C Issuer in accordance with banking
industry rules on interbank compensation. 
A certificate of the L/C Issuer submitted to any Revolving Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.

 

(d)                                 Repayment of
Participations.

 

(i)                                     At
any time after the L/C Issuer has made a payment under any Letter of Credit and
has received from any Revolving Lender such Revolving Lender’s L/C Advance in
respect of such payment in accordance with Section 2.04(c), if the
Administrative Agent receives for the account of the L/C Issuer any payment in
respect of the related Unreimbursed Amount or interest thereon (whether
directly from the Borrower or otherwise, including proceeds of Cash Collateral
applied thereto by the Administrative Agent), the Administrative Agent will
distribute to such Revolving Lender its Revolving Percentage thereof
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Revolving Lender’s L/C Advance was
outstanding) in the same funds as those received by the Administrative Agent.

 

(ii)                                  If
any payment received by the Administrative Agent for the account of the L/C
Issuer pursuant to Section 2.04(c)(i) is required to be returned under any
of the circumstances described in Section 10.05 (including

 

34

 

pursuant to
any settlement entered into by the L/C Issuer in its discretion), each
Revolving Lender shall pay to the Administrative Agent for the account of the
L/C Issuer its Revolving Percentage thereof on demand of the Administrative
Agent, plus interest thereon from the date of such demand to the date such
amount is returned by such Revolving Lender, at a rate per annum equal to the
Federal Funds Rate from time to time in effect. 
The obligations of the Revolving Lenders under this clause shall survive
the payment in full of the Obligations and the termination of this Agreement.

 

(e)                                  Obligations
Absolute.  The obligation of the Borrower to
reimburse the L/C Issuer for each drawing under each Letter of Credit and to
repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

 

(i)                                     any
lack of validity or enforceability of such Letter of Credit, this Agreement, or
any other Loan Document;

 

(ii)                                  the
existence of any claim, counterclaim, setoff, defense or other right that the
Borrower or any Subsidiary may have at any time against any beneficiary or any
transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

 

(iii)                               any
draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or any loss
or delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit;

 

(iv)                              any
payment by the L/C Issuer under such Letter of Credit against presentation of a
draft or certificate that does not strictly comply with the terms of such
Letter of Credit; or any payment made by the L/C Issuer under such Letter of
Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or

 

(v)                                 any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute
a defense available to, or a discharge of, the Borrower or any Subsidiary.

 

35

 

The Borrower shall
promptly examine a copy of each Letter of Credit and each amendment thereto
that is delivered to it and, in the event of any claim of noncompliance with
the Borrower’s instructions or other irregularity, the Borrower will
immediately notify the L/C Issuer.  The
Borrower shall be conclusively deemed to have waived any such claim against the
L/C Issuer and its correspondents unless such notice is given as aforesaid.

 

(f)                                    Role of L/C
Issuer.  Each
Revolving Lender and the Borrower agree that, in paying any drawing under a
Letter of Credit, the L/C Issuer shall not have any responsibility to obtain
any document (other than any sight draft, certificates and documents expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document.  None of
the L/C Issuer, the Administrative Agent, any of their respective Related
Parties nor any correspondent, participant or assignee of the L/C Issuer shall
be liable to any Revolving Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the
Requisite Lenders, as applicable; (ii) any action taken or omitted in the
absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Issuer Document.  The Borrower hereby assumes all risks of the
acts or omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit; provided, however, that this assumption is
not intended to, and shall not, preclude the Borrower’s pursuing such rights
and remedies as it may have against the beneficiary or transferee at law or
under any other agreement.  None of the
L/C Issuer, the Administrative Agent, any of their respective Related Parties
nor any correspondent, participant or assignee of the L/C Issuer shall be
liable or responsible for any of the matters described in clauses (i)
through (v) of Section 2.04(e); provided, however, that
anything in such clauses to the contrary notwithstanding, the Borrower may have
a claim against the L/C Issuer, and the L/C Issuer may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by the L/C Issuer’s willful misconduct or gross negligence
or the L/C Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit.   In furtherance and
not in limitation of the foregoing, the L/C Issuer may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary, and the
L/C Issuer shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.

 

(g)                                 Cash Collateral.  Upon the request of the Administrative Agent,
(i) if the L/C Issuer has honored any full or partial drawing request
under any Letter of Credit and such drawing has resulted in an L/C Borrowing,
or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation
for any reason remains outstanding, the Borrower shall, in each case,
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations.  Sections 2.06 and
8.02(c) set forth certain additional

 

36

 

requirements
to deliver Cash Collateral hereunder. 
For purposes of this Section 2.04, Section 2.06  and Section 8.02(c), “Cash Collateralize” means to
pledge and deposit with or deliver to the Administrative Agent, for the benefit
of the L/C Issuer and the Revolving Lenders, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in form
and substance satisfactory to the Administrative Agent and the L/C Issuer
(which documents are hereby consented to by the Revolving Lenders).  Derivatives of such term have corresponding
meanings.  The Borrower hereby grants to
the Administrative Agent, for the benefit of the L/C Issuer and the Revolving
Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all proceeds of the foregoing.  Cash Collateral shall be maintained in
blocked, non-interest bearing deposit accounts at Bank of America.

 

(h)                                 Applicability
of ISP and UCP.  Unless otherwise expressly agreed
by the L/C Issuer and the Borrower when a Letter of Credit is issued (including
any such agreement applicable to an Existing Letter of Credit), (i) the
rules of the ISP shall apply to each standby Letter of Credit, and
(ii) the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce at
the time of issuance shall apply to each commercial Letter of Credit.

 

(i)                                     Letter of
Credit Fees.  The
Borrower shall pay to the Administrative Agent for the account of each Lender
in accordance with its Revolving Percentage a Letter of Credit fee (the “Letter
of Credit Fee”)  for each Letter of Credit equal
to the Applicable Rate times the daily maximum amount available to be
drawn under such Letter of Credit (whether or not such maximum amount is then
in effect under such Letter of Credit). 
Letter of Credit Fees shall be (i) computed on a quarterly basis in
arrears and (ii) due and payable on the first Business Day after the end
of each March, June, September and December, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Letter
of Credit Expiration Date and thereafter on demand.  If there is any change in the Applicable Rate
during any quarter, the daily maximum amount of each Letter of Credit shall be
computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect.   Notwithstanding anything to the contrary
contained herein, upon the request of the Requisite Lenders, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

 

(j)                                     Fronting Fee
and Documentary and Processing Charges Payable to L/C Issuer.  The Borrower shall pay directly to the L/C
Issuer for its own account a fronting fee with respect to each Letter of
Credit, at the rate per annum specified in the Fee Letter, computed on the
actual daily maximum amount available to be drawn under such Letter of Credit
(whether or not such maximum amount is then in effect under such Letter of
Credit) and on a quarterly basis in arrears, and due and payable on the first
Business Day after the end of each March, June, September and December,
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on
demand.  In addition, the Borrower shall
pay directly to the L/C Issuer for its own account the customary issuance,
presentation, amendment and other processing fees, and other standard costs and
charges, of the L/C

 

37

 

Issuer
relating to letters of credit as from time to time in effect.  Such customary fees and standard costs and
charges are due and payable on demand and are nonrefundable.

 

(k)                                  Conflict with
Issuer Documents.  In the
event of any conflict between the terms hereof and the terms of any Issuer
Document, the terms hereof shall control.

 

2.05.                        Swing
Line Loans.

 

(a)                                  The Swing Line.  Subject to the terms and conditions set forth
herein, the Swing Line Lender agrees, in reliance upon the agreements of the
other Revolving Lenders set forth in this Section 2.05, to make loans
(each such loan, a “Swing Line Loan”) to the Borrower from time to time on any
Business Day during the Availability Period in an aggregate amount outstanding
not to exceed at any time the amount of the Swing Line Sublimit; provided,
however, that after giving effect to any Swing Line Loan, (i) the
Total Outstandings shall not exceed the Overall Commitments minus the
Reserve Amount, and (ii) the aggregate Outstanding Amount of the Revolving
Loans of any Revolving Lender, plus that Revolving Lender’s Revolving
Percentage of the Outstanding Amount of all L/C Obligations, plus that
Revolving Lender’s Revolving Percentage of the Outstanding Amount of all Swing
Line Loans shall not exceed that Revolving Lender’s Revolving Commitment, and provided,
further, that the Borrower shall not use the proceeds of any Swing Line
Loan to refinance any outstanding Swing Line Loan.  Within the foregoing limits, and subject to
the other terms and conditions hereof, the Borrower may borrow under this
Section 2.05, prepay under Section 2.06, and reborrow under this
Section 2.05.  Each Swing Line Loan
shall be a Base Rate Loan.  Immediately
upon the making of a Swing Line Loan, each Revolving Lender shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the Swing
Line Lender a risk participation in such Swing Line Loan in an amount equal to
the product of that Revolving Lender’s Revolving Percentage times the
amount of such Swing Line Loan.

 

(b)                                 Borrowing
Procedures.  Each Swing
Line Borrowing shall be made upon the Borrower’s irrevocable notice to the
Swing Line Lender and the Administrative Agent, which may be given by
telephone.  Each such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the requested borrowing date, and shall specify (i) the
amount to be borrowed, which shall be a minimum of $100,000, and (ii) the
requested borrowing date, which shall be a Business Day.  Each such telephonic notice must be confirmed
promptly by delivery to the Swing Line Lender and the Administrative Agent of a
written Swing Line Loan Notice, appropriately completed and signed by a
Responsible Officer of the Borrower. 
Promptly after receipt by the Swing Line Lender of any telephonic Swing
Line Loan Notice, the Swing Line Lender will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has also
received such Swing Line Loan Notice and, if not, the Swing Line Lender will
notify the Administrative Agent (by telephone or in writing) of the contents
thereof.  Unless the Swing Line Lender
has received notice (by telephone or in writing) from the Administrative Agent
(including at the request of any

 

38

 

Lender)
prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing
(A) directing the Swing Line Lender not to make such Swing Line Loan as a
result of the limitations set forth in the proviso to the first sentence of
Section 2.05(a), or (B) that one or more of the applicable conditions
specified in Article V is not then satisfied, then, subject to the terms
and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on
the borrowing date specified in such Swing Line Loan Notice, make the amount of
its Swing Line Loan available to the Borrower at its office by crediting the
account of the Borrower on the books of the Swing Line Lender in immediately
available funds.

 

(c)                                  Refinancing of
Swing Line Loans.

 

(i)                                     The
Swing Line Lender at any time in its sole and absolute discretion may request,
on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line
Lender to so request on its behalf), that each Revolving Lender make a Base
Rate Loan in an amount equal to the product of that Revolving Lender’s
Revolving Percentage times the amount of Swing Line Loans then
outstanding.  Such request shall be made
in writing (which written request shall be deemed to be a Loan Notice for
purposes hereof) and in accordance with the requirements of Section 2.03,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
Revolving Commitments and the conditions set forth in Section 4.02.  The Swing Line Lender shall furnish the
Borrower with a copy of the applicable Loan Notice promptly after delivering
such notice to the Administrative Agent. 
Each Revolving Lender shall make an amount equal to its Revolving
Percentage of the amount specified in such Loan Notice available to the
Administrative Agent in immediately available funds for the account of the
Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m.
on the day specified in such Loan Notice, whereupon, subject to
Section 2.05(c)(ii), each Revolving Lender that so makes funds available
shall be deemed to have made a Base Rate Loan to the Borrower in such
amount.  The Administrative Agent shall
remit the funds so received to the Swing Line Lender.

 

(ii)                                  If
for any reason any Swing Line Loan cannot be refinanced by such a Borrowing in
accordance with Section 2.05(c)(i), the request for Base Rate Loans submitted
by the Swing Line Lender as set forth herein shall be deemed to be a request by
the Swing Line Lender that each of the Revolving Lenders fund its risk
participation in the relevant Swing Line Loan and each Revolving Lender’s
payment to the Administrative Agent for the account of the Swing Line Lender
pursuant to Section 2.05(c)(i) shall be deemed payment in respect of such
participation.

 

(iii)                               If
any Revolving Lender fails to make available to the Administrative Agent for
the account of the Swing Line Lender any amount required to be paid by that
Revolving Lender pursuant to the foregoing provisions of this
Section 2.05(c) by the time specified in Section 2.05(c)(i), the
Swing Line

 

39

 

Lender shall
be entitled to recover from that Revolving Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Swing Line Lender at a rate per annum equal to
the greater of the Federal Funds Rate and a rate determined by the Swing Line
Lender in accordance with banking industry rules on interbank
compensation.  A certificate of the Swing
Line Lender submitted to any Revolving Lender (through the Administrative
Agent) with respect to any amounts owing under this clause (iii) shall be
conclusive absent manifest error.

 

(iv)           Each
Revolving Lender’s obligation to make Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section 2.05(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
which that Revolving Lender may have against the Swing Line Lender, the
Borrower or any other Person for any reason whatsoever, (B) the occurrence
or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Revolving Lender’s obligation to make Loans pursuant to this
Section 2.05(c) is subject to the conditions set forth in
Section 4.02.  No such funding of
risk participations shall relieve or otherwise impair the obligation of the
Borrower to repay Swing Line Loans, together with interest as provided herein.

 

(d)                                 Repayment of
Participations.

 

(i)                                     At
any time after any Revolving Lender has purchased and funded a risk
participation in a Swing Line Loan, if the Swing Line Lender receives any
payment on account of such Swing Line Loan, the Swing Line Lender will
distribute to that Revolving Lender its Revolving Percentage of such payment
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which that Revolving Lender’s risk participation was
funded) in the same funds as those received by the Swing Line Lender.

 

(ii)                                  If
any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender under any of the circumstances described in Section 10.05
(including pursuant to any settlement entered into by the Swing Line Lender in
its discretion), each Revolving Lender shall pay to the Swing Line Lender its
Revolving Percentage thereof on demand of the Administrative Agent, plus
interest thereon from the date of such demand to the date such amount is
returned, at a rate per annum equal to the Federal Funds Rate.  The Administrative Agent will make such demand
upon the request of the Swing Line Lender. 
The obligations of the Revolving Lenders under this clause shall survive
the payment in full of the Obligations and the termination of this Agreement.

 

40

 

(e)                                  Interest for
Account of Swing Line Lender.  The Swing Line Lender shall be responsible
for invoicing the Borrower for interest on the Swing Line Loans.  Until each Revolving Lender funds its Base
Rate Loan or risk participation pursuant to this Section 2.05 to refinance
that Revolving Lender’s Revolving Percentage of any Swing Line Loan, interest
in respect of such Revolving Percentage shall be solely for the account of the
Swing Line Lender.

 

(f)                                    Payments
Directly to Swing Line Lender.  The Borrower shall make all payments of
principal and interest in respect of the Swing Line Loans directly to the Swing
Line Lender.

 

2.06.                        Prepayments.

 

(a)                                  The Borrower
may, upon notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Loans in whole or in part without premium or penalty; provided
that (i) such notice must be received by the Administrative Agent not
later than 11:00 a.m. (A) three Business Days prior to any date of
prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of
Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in
a principal amount of $2,000,000 or a whole multiple of $1,000,000 in excess
thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $2,000,000 or a whole multiple of $1,000,000 in excess
thereof or, in each case, if less, the entire principal amount thereof then
outstanding.  Each such notice shall
specify the date and amount of such prepayment and the Type(s) of Loans to be
prepaid.  The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of the
amount of that Lender’s Percentage of such prepayment.  If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest on the amount prepaid, together
with any additional amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the
Loans of the Lenders in accordance with their respective Percentages.

 

(b)                                 The Borrower
may, upon notice to the Swing Line Lender (with a copy to the Administrative
Agent), at any time or from time to time, voluntarily prepay Swing Line Loans
in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 1:00 p.m. on the date of the prepayment,
and (ii) any such prepayment shall be in a minimum principal amount of
$500,000.  Each such notice shall specify
the date and amount of such prepayment. 
If such notice is given by the Borrower, the Borrower shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein.

 

(c)                                  If for any
reason the Total Outstandings at any time exceed the Overall Commitments then
in effect minus the Reserve Amount, the Borrower shall immediately
prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate
amount equal to such excess; provided, however, that the Borrower
shall not be required

 

41

 

to Cash Collateralize the L/C Obligations pursuant to this
Section 2.06(c) unless after the prepayment in full of the Loans the Total
Outstandings exceed the Overall Commitments then in effect minus the
Reserve Amount.

 

2.07.                        Voluntary
Termination or Reduction of the Revolving Commitments.  The Borrower may, upon notice to the
Administrative Agent, terminate the Aggregate Revolving Commitments, or from
time to time permanently ratably reduce the Aggregate Revolving Commitments; provided
that (i) any such notice shall be received by the Administrative Agent not
later than 11:00 a.m. five Business Days prior to the date of termination or
reduction, (ii) any such partial reduction shall be in an aggregate amount
of $2,000,000 or any whole multiple of $1,000,000 in excess thereof,
(iii) the Borrower shall not terminate or reduce the Aggregate Revolving
Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Outstanding Amounts under the Aggregate Revolving Commitments
would exceed the Aggregate Revolving Commitments, and (iv) if, after
giving effect to any reduction of the Aggregate Revolving Commitments, the
Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the
Aggregate Revolving Commitments, such Sublimit shall be automatically reduced
by the amount of such excess.  The
Administrative Agent will promptly notify the Revolving Lenders of any such
notice of termination or reduction of the Aggregate Revolving Commitments.  Any reduction of the Aggregate Revolving
Commitments shall be applied to the Revolving Commitment of each Revolving
Lender according to its Revolving Percentage. 
All fees accrued until the effective date of any termination of the
Aggregate Revolving Commitments shall be paid on the effective date of such
termination.  Any voluntary reduction of
the Revolving Commitments under this Section 2.07 shall be applied to
reduce the Revolver Reduction Amounts due in respect of the Revolving
Commitments in the inverse order of their occurrence.

 

2.08.                        Scheduled
Reductions of the Revolving Commitments.  On each Quarterly Payment Date, the Revolving
Commitments shall automatically be ratably reduced by the applicable Revolver
Reduction Amount.  If after giving effect
to the applicable Revolver Reduction Amount, the sum of (i) the aggregate
principal amount under the Revolving Notes, (ii) the Swing Line Outstandings
and (iii) the Letters of Credit Usage shall exceed the then effective Revolving
Commitment, Borrower shall immediately repay the outstanding Advances under the
Revolving Commitment to the extent in excess of the Revolving Commitment.

 

2.09.                        Amortization
of the Term Loans; Mandatory Repayment of the Obligations.

 

(a)                                  On each
Quarterly Payment Date, commencing with the Quarterly Payment Date occurring on
March 31, 2006, the Borrower shall make the Term Amortization Amount;

 

(b)                                 In any event,
the Borrower shall repay to the Lenders on the Maturity Date the aggregate
principal amount of the Loans outstanding on such date.

 

(c)                                  The Borrower
shall repay each Swing Line Loan on the earlier to occur of (i) the date
ten Business Days after such Loan is made, or (ii) the Maturity Date.

 

42

 

2.10.                        Interest.

 

(a)                                  Subject to the
provisions of subsection (b) below, (i) each Eurodollar Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; (ii) each Base Rate Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on
the outstanding principal amount thereof from the applicable borrowing date at
a rate per annum equal to the Base Rate plus the Applicable Rate.

 

(b)                                 (i)                                     If any amount
of principal of any Loan is not paid when due (without regard to any applicable
grace periods), whether at stated maturity, by acceleration or otherwise, such
amount shall thereafter bear interest at a fluctuating interest rate per annum
at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.

 

(ii)                                  If
any amount (other than principal of any Loan) payable by the Borrower under any
Loan Document is not paid when due (without regard to any applicable grace
periods), whether at stated maturity, by acceleration or otherwise, then upon
the request of the Requisite Lenders, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws.

 

(iii)                               Upon the request of the Requisite Lenders,
while any Event of Default exists, the Borrower shall pay interest on the
principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws.

 

(iv)                              Accrued
and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.

 

(c)                                  Interest on each
Loan shall be due and payable in arrears on each Interest Payment Date
applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable
in accordance with the terms hereof before and after judgment, and before and
after the commencement of any proceeding under any Debtor Relief Law.

 

2.11.                        Fees.  In addition to certain fees described in
subsections (i) and (j) of Section 2.04:

 

(a)                                  Commitment Fee.  The Borrower shall
pay to the Administrative Agent for the account of each Lender in accordance
with its Revolving Percentage, a commitment fee equal to the Applicable Rate times
Average Unused Revolver Availability. 
The commitment fee shall accrue at all times during the Availability
Period, including at any time during which one or more of the conditions in
Article IV is not met,

 

43

 

and
shall be due and payable quarterly in arrears on the last Business Day of each
March, June, September and December, commencing with the first such date
to occur after the Closing Date, and on the Maturity Date.  The commitment fee shall be calculated
quarterly in arrears, and if there is any change in the Applicable Rate during
any quarter, the actual daily amount shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect.

 

(b)                                 Upfront Fees.  On the Closing Date, the Borrower shall pay
to each Lender through the Administrative Agent certain upfront fees in the
amounts specified in the Fee Letter; each Lender having been heretofore advised
of the amount of the upfront fees to which it is entitled.

 

(c)                                  Arrangement Fee.  On the Closing Date, the Borrower shall pay
to BAS, for the account of Co-Lead Arrangers, the Documentation Agent and
Syndication Agent, certain arrangement fees in the amounts specified in the Fee
Letter; each of the aforementioned Lenders having been heretofore advised by
BAS and the Borrower of the amount of the arrangement fees to which it is
entitled.

 

(d)                                 Other Fees.  The Borrower shall
pay to the BAS and the Administrative Agent for their own respective accounts
fees in the amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.

 

2.12.                        Computation
of Interest and Fees.  All
computations of interest for Base Rate Loans when the Base Rate is determined
by Bank of America’s “prime rate” shall be made on the basis of a year of 365
or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed (which
results in more fees or interest, as applicable, being paid than if computed on
the basis of a 365-day year).  Interest
shall accrue on each Loan for the day on which the Loan is made, and shall not
accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid, provided that any Loan that is repaid on the same day
on which it is made shall, subject to Section 2.14(a), bear interest for
one day.  Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.

 

2.13.                        Evidence
of Debt.

 

(a)                                  The Credit
Extensions made by each Lender shall be evidenced by one or more accounts or
records maintained by such Lender and by the Administrative Agent in the
ordinary course of business.  The
accounts or records maintained by the Administrative Agent and each Lender
shall be conclusive absent manifest error of the amount of the Credit
Extensions made by the Lenders to the Borrower and the interest and payments
thereon.  Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to the
Obligations.  In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the

 

44

 

Administrative
Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through
the Administrative Agent, the Borrower shall execute and deliver to such Lender
(through the Administrative Agent) a Note, which shall evidence such Lender’s
Loans in addition to such accounts or records. 
Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

 

(b)                                 In addition to
the accounts and records referred to in subsection (a), each Lender and
the Administrative Agent shall maintain in accordance with its usual practice
accounts or records evidencing the purchases and sales by such Lender of
participations in Letters of Credit and Swing Line Loans.  In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts
and records of any Lender in respect of such matters, the accounts and records
of the Administrative Agent shall control in the absence of manifest error.

 

2.14.                        Payments
Generally; Administrative Agent’s Clawback.

 

(a)                                  General.  All payments to be made by the Borrower shall
be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by the Borrower hereunder shall
be made to the Administrative Agent, for the account of the respective Lenders
to which such payment is owed, at the Administrative Agent’s Office in Dollars
and in immediately available funds not later than 2:00 p.m. on the date
specified herein.  The Administrative
Agent will promptly distribute to each Lender its Revolving Percentage (or
other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative
Agent after 2:00 p.m. shall be deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrower
shall come due on a day other than a Business Day, payment shall be made on the
next following Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.

 

(b)                                 (i) Funding
by Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing that
such Lender will not make available to the Administrative Agent such Lender’s
share of such Borrowing, the Administrative Agent may assume that such Lender
has made such share available on such date in accordance with Section 2.03
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Borrowing available
to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount in immediately available funds with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(A) in the case of a payment to be made by such Lender, the greater of the
Federal Funds

 

45

 

Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation and (B) in the case of a payment
to be made by the Borrower, the interest rate applicable to Base Rate
Loans.  If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the
applicable Borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lender’s Loan included in such Borrowing.  Any payment by the Borrower shall be without
prejudice to any claim the Borrower may have against a Lender that shall have
failed to make such payment to the Administrative Agent.

 

(ii)                                  Payments
by Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders or the L/C Issuer
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the L/C Issuer, as the case may be, the amount due.  In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the L/C Issuer, as the case
may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or the L/C Issuer, in
immediately available funds with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

 

A notice of the
Administrative Agent to any Lender or the Borrower with respect to any amount
owing under this subsection (b) shall be conclusive, absent manifest
error.

 

(c)                                  Failure to
Satisfy Conditions Precedent.  If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided
in the foregoing provisions of this Article II, and such funds are not
made available to the Borrower by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV are
not satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

 

(d)                                 Obligations of
Lenders Several.  The
obligations of the Lenders hereunder to make Loans, to fund participations in
Letters of Credit and Swing Line Loans and to make payments pursuant to
Section 10.04(c) are several and not joint.  The failure of any Lender to make any Loan,
to fund any such participation or to make any payment under Section 10.04(c)
on any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be

 

46

 

responsible for the failure of any other Lender to so make its Loan, to
purchase its participation or to make its payment under Section 10.04(c).

 

(e)                                  Funding Source.  Nothing herein shall be deemed to obligate
any Lender to obtain the funds for any Loan in any particular place or manner
or to constitute a representation by any Lender that it has obtained or will
obtain the funds for any Loan in any particular place or manner.

 

2.15.                        Sharing
of Payments by Lenders.  If
any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
the Loans made by it, or the participations in L/C Obligations or in Swing Line
Loans held by it resulting in such Lender’s receiving payment of a proportion
of the aggregate amount of such Loans or participations and accrued interest
thereon greater than its pro  rata share thereof as provided
herein, then the Lender receiving such greater proportion shall (a) notify
the Administrative Agent of such fact, and (b) purchase (for cash at face
value) participations in the Loans and subparticipations in L/C Obligations and
Swing Line Loans of the other Lenders, or make such other adjustments as shall
be equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and other amounts owing them, provided
that:

 

(i)                                     if
any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and

 

(ii)                                  the
provisions of this Section shall not be construed to apply to (x) any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or subparticipations in L/C Obligations or Swing Line Loans to any
assignee or participant, other than to the Borrower or any Subsidiary thereof
(as to which the provisions of this Section shall apply).

 

Each Loan Party
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Loan Party rights of setoff
and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of such Loan Party in the amount of such participation.

 

2.16.                        Increases
to the Commitments.

 

(a)                                  Request for
Increase.  Provided
there exists no Default, upon notice to the Administrative Agent (which shall
promptly notify the Lenders), the Borrower may from time to time, request an
increase in the Overall Commitments by an amount (for all such requests) not
exceeding $40,000,000; provided that (i) any such request for an
increase shall be in a minimum amount of $10,000,000,
and (ii) the

 

47

 

Borrower
may make a maximum of two such requests. 
At the time of sending such notice, the Borrower (in consultation with
the Administrative Agent) shall specify:

 

(i)                                     whether
the requested increase will consist of additional Revolving Commitments or
additional Term Commitments;

 

(ii)                                  the
amount of any upfront fees payable in connection with such increased
Commitments (which fees may be variable depending on the amount of the
Commitment offered by a prospective Lender);

 

(iii)                               the
time period within which each Lender is requested to respond (which shall in no
event be less than ten Business Days from the date of delivery of such notice
to the Lenders).

 

(b)                                 Lender
Elections to Increase.  Each
Lender shall notify the Administrative Agent within the specified time period
whether or not it agrees to assume a portion of the proposed increase.  Any Lender not responding within such time
period shall be deemed to have declined to assume a portion of the increase, and
no Lender shall be obligated to subscribe for any increase to its Commitments.

 

(c)                                  Notification by
Administrative Agent; Additional Lenders.  The Administrative Agent shall notify the
Borrower and each Lender of the Lenders’ responses to each request made
hereunder.  To achieve the full amount of
a requested increase and subject to the approval of the Administrative Agent
and the L/C Issuer (which approvals shall not be unreasonably withheld), the
Borrower may also invite additional Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to the
Administrative Agent and its counsel.

 

(d)                                 Effective Date
and Allocations.  If the
Overall Commitments are increased in accordance with this Section, the
Administrative Agent and the Borrower shall determine the effective date (the
“Increase Effective Date”) and the final allocation of such increase.  The Administrative Agent shall promptly
notify the Borrower and the Lenders of the final allocation of such increase and
the Increase Effective Date.

 

(e)                                  Conditions to
Effectiveness of Increase.  As a
condition precedent to such increase, the Borrower shall:

 

(i)                                     deliver
to the Administrative Agent a certificate of each Loan Party dated as of the
Increase Effective Date (in sufficient copies for each Lender) signed by a
Responsible Officer of such Loan Party (A) certifying and attaching the
resolutions adopted by such Loan Party approving or consenting to such
increase, and (B) in the case of the Borrower, certifying that, before and
after giving effect to such increase, (1) the representations and
warranties contained in Article V and the other Loan Documents are true
and correct on and as of the Increase Effective Date, except to the extent that
such representations and warranties specifically refer to an earlier date, in
which case they are true and

 

48

 

correct as of
such earlier date, and except that for purposes of this Section 2.17, the
representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of Section 6.01,
and (2) no Default exists;

 

(ii)                                  prepay
any Loans outstanding on the Increase Effective Date (and pay any additional
amounts required pursuant to Section 3.05) to the extent necessary to keep
the outstanding Loans under each Commitment ratable with any revised Percentage
under any Commitment arising from any nonratable increase in any of the
Commitments under this Section;

 

(iii)                               deliver
such amendments to the Loan Documents and favorable opinions of counsel from
counsel to the Loan Parties reasonably requested by the Administrative Agent
to, among other things, assure the continued priority and perfection of the
Administrative Agent’s Liens and the effectiveness of the Guaranties to
guarantee the Overall Commitments (as so increased) and the Obligations
thereunder;

 

(iv)                              deliver
to the Administrative Agent such endorsements to title insurance policies as
the Administrative Agent may reasonably request to provide full coverage for
the Increased Commitments;

 

(v)                                 deliver
to the Administrative Agent satisfactory evidence that any required regulatory
approvals have been obtained; and

 

(vi)                              such
other assurances, certificates, documents, consents or opinions as the
Administrative Agent, the L/C Issuer, the Swing Line Lender or the Requisite
Lenders reasonably may require.

 

(f)                                    Conflicting
Provisions.  This
Section shall supersede any provisions in Sections 2.15 or 10.01 to
the contrary.

 

49

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01.                        Taxes.

 

(a)                                  Payments Free
of Taxes.  Any and all
payments by or on account of any obligation of the Borrower hereunder or under
any other Loan Document shall be made free and clear of and without reduction
or withholding for any Indemnified Taxes or Other Taxes, provided that
if the Borrower shall be required by applicable law to deduct any Indemnified
Taxes (including any Other Taxes) from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent, Lender or L/C Issuer, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall timely pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.

 

(b)                                 Payment of
Other Taxes by the Borrower.  Without limiting the provisions of
subsection (a) above, the Borrower shall timely pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable law.

 

(c)                                  Indemnification
by the Borrower.  The
Borrower shall indemnify the Administrative Agent, each Lender and the L/C
Issuer, within 10 days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Administrative Agent, such Lender or the L/C Issuer, as the case
may be, and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to the Borrower by a Lender or
the L/C Issuer (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender or the L/C
Issuer, shall be conclusive absent manifest error.

 

(d)                                 Evidence of
Payments.  As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

 

(e)                                  Status of
Lenders.  Any Foreign Lender that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is resident for tax purposes, or any
treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall

 

50

 

deliver
to the Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the
Borrower or the Administrative Agent, shall deliver such other documentation
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements.

 

Without limiting
the generality of the foregoing, in the event that the Borrower is resident for
tax purposes in the United States, any Foreign Lender shall deliver to the
Borrower and the Administrative Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the request of the Borrower or the Administrative Agent, but only if such
Foreign Lender is legally entitled to do so), whichever of the following is
applicable:

 

(i)                                     duly
completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a party,

 

(ii)                                  duly
completed copies of Internal Revenue Service Form W-8ECI,

 

(iii)                               in
the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of the Borrower within the meaning of
section 881(c)(3)(B) of the Code, or (C) a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Code and
(y) duly completed copies of 
Internal Revenue Service Form W-8BEN, or

 

(iv)                              any
other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together
with such supplementary documentation as may be prescribed by applicable law to
permit the Borrower to determine the withholding or deduction required to be
made.

 

(f)                                    Treatment of
Certain Refunds.  If the
Administrative Agent, any Lender or the L/C Issuer determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent, such
Lender or the L/C Issuer, as

 

51

 

the
case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the
Borrower, upon the request of the Administrative Agent, such Lender or the L/C
Issuer, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or the L/C Issuer in the
event the Administrative Agent, such Lender or the L/C Issuer is required to
repay such refund to such Governmental Authority.  This subsection shall not be construed
to require the Administrative Agent, any Lender or the L/C Issuer to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to the Borrower or any other Person.

 

3.02.                        Illegality.  If any Lender determines that any Law has
made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Loans, or to determine or charge interest rates based upon
the Eurodollar Rate, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take
deposits of, Dollars in the London interbank market, then, on notice thereof by
such Lender to the Borrower through the Administrative Agent, any obligation of
such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate
Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies
the Administrative Agent and the Borrower that the circumstances giving rise to
such determination no longer exist.  Upon
receipt of such notice, the Borrower shall, upon demand from such Lender (with
a copy to the Administrative Agent), prepay or, if applicable, convert all
Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day
of the Interest Period therefor, if such Lender may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender
may not lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion, the
Borrower shall also pay accrued interest on the amount so prepaid or converted.

 

3.03.                        Inability
to Determine Rates.  If the
Requisite Lenders determine that for any reason in connection with any request
for a Eurodollar Rate Loan or a conversion to or continuation thereof that
(a) Dollar deposits are not being offered to banks in the London interbank
eurodollar market for the applicable amount and Interest Period of such
Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for
determining the Eurodollar Rate
for any requested Interest Period with respect to a proposed Eurodollar Rate
Loan , or (c) the Eurodollar Rate
for any requested Interest Period with respect to a proposed Eurodollar Rate
Loan does not adequately and fairly reflect the cost to that Lenders of funding
such Loan, the Administrative Agent will promptly so notify the Borrower and
each Lender.  Thereafter, the obligation
of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended
until the Administrative Agent (upon the instruction of the Requisite
Lenders) revokes such notice.  Upon
receipt of such notice, the Borrower may revoke any pending request for a
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for
a Borrowing of Base Rate Loans in the amount specified therein.

 

52

 

3.04.                        Increased
Costs; Reserves on Eurodollar Rate Loans.

 

(a)                                  Increased Costs
Generally.  If any
Change in Law shall:

 

(1)                                  impose, modify or deem
applicable any reserve, special deposit, compulsory loan, insurance charge or
similar requirement against assets of, deposits with or for the account of, or
credit extended or participated in by, any Lender (except any reserve
requirement contemplated by Section 3.04(e)) or the L/C Issuer;

 

(2)                                  subject any Lender or
the L/C Issuer to any tax of any kind whatsoever with respect to this
Agreement, any Letter of Credit, any participation in a Letter of Credit or any
Eurodollar Loan made by it, or change the basis of taxation of payments to that
Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or
Other Taxes covered by Section 3.01 and the imposition of, or any change
in the rate of, any Excluded Tax payable by that Lender or the L/C Issuer); or

 

(3)                                  impose on any Lender
or the L/C Issuer or the London interbank market any other condition, cost or
expense affecting this Agreement or Eurodollar Loans made by that Lender or any
Letter of Credit or participation therein;

 

and the result of
any of the foregoing shall be to increase the cost to that Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any
such Loan), or to increase the cost to that Lender or the L/C Issuer of
participating in, issuing or maintaining any Letter of Credit (or of
maintaining its obligation to participate in or to issue any Letter of Credit),
or to reduce the amount of any sum received or receivable by that Lender or the
L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of that Lender or the L/C Issuer, the Borrower
will pay to that Lender or the L/C Issuer, as the case may be, such additional
amount or amounts as will compensate that Lender or the L/C Issuer, as the case
may be, for such additional costs incurred or reduction suffered.

 

(b)                                 Capital
Requirements.  If any
Lender or the L/C Issuer determines that any Change in Law affecting that
Lender or the L/C Issuer or any Lending Office of that Lender or that Lender’s
or the L/C Issuer’s holding company, if any, regarding capital requirements has
or would have the effect of reducing the rate of return on that Lender’s or the
L/C Issuer’s capital or on the capital of that Lender’s or the L/C Issuer’s
holding company, if any, as a consequence of this Agreement, the Commitments of
that Lender or the Loans made by, or participations in Letters of Credit held
by, that Lender, or the Letters of Credit issued by the L/C Issuer, to a level
below that which that Lender or the L/C Issuer or that Lender’s or the L/C
Issuer’s holding company could have achieved but for such Change in Law (taking
into consideration that Lender’s or the L/C Issuer’s policies and the policies
of that Lender’s or the L/C Issuer’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to that Lender or the
L/C Issuer, as the case may be, such additional amount or amounts as will
compensate that Lender or the L/C Issuer or that Lender’s or the L/C Issuer’s
holding company for any such reduction suffered.

 

53

 

(c)                                  Certificates
for Reimbursement.  A
certificate of a Lender or the L/C Issuer setting forth the amount or amounts
necessary to compensate that Lender or the L/C Issuer or its holding company,
as the case may be, as specified in subsection (a) or (b) of
this Section and delivered to the Borrower shall be conclusive absent
manifest error.  The Borrower shall pay
that Lender or the L/C Issuer, as the case may be, the amount shown as due on
any such certificate within 10 days after receipt thereof.

 

(d)                                 Delay in
Requests.  Failure or
delay on the part of any Lender or the L/C Issuer to demand compensation
pursuant to the foregoing provisions of this Section shall not constitute
a waiver of that Lender’s or the L/C Issuer’s right to demand such
compensation, provided that the Borrower shall not be required to
compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of
this Section for any increased costs incurred or reductions suffered more
than nine months prior to the date that that Lender or the L/C Issuer, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of that Lender’s or the L/C Issuer’s
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
nine-month period referred to above shall be extended to include the period of
retroactive effect thereof).

 

(e)                                  Reserves on
Eurodollar Rate Loans.  The Borrower shall pay to each
Lender, as long as that Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits (currently known as “Eurocurrency liabilities”), additional
interest on the unpaid principal amount of each Eurodollar Rate Loan equal to
the actual costs of such reserves allocated to such Loan by that Lender (as
determined by that Lender in good faith, which determination shall be
conclusive), which shall be due and payable on each date on which interest is
payable on such Loan, provided the Borrower shall have received at least
10 days’ prior notice (with a copy to the Administrative Agent) of such
additional interest from that Lender.  If
a Lender fails to give notice 10 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 10 days from receipt of
such notice.

 

3.05.                        Compensation
for Losses.  Upon demand of
any Lender (with a copy to the Administrative Agent) from time to time,
the Borrower shall promptly compensate that Lender for and hold that Lender
harmless from any loss, cost or expense incurred by it as a result of:

 

(f)                                    any
continuation, conversion, payment or prepayment of any Loan other than a Base
Rate Loan on a day other than the last day of the Interest Period for such Loan
(whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise);

 

(g)                                 any failure by
the Borrower (for a reason other than the failure of that Lender to make a
Loan) to prepay, borrow, continue or convert any Loan other than a Base
Rate Loan on the date or in the amount notified by the Borrower; or

 

54

 

(h)                                 any assignment of a Eurodollar Rate Loan on a day other than the last day
of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 10.13;

 

(i)                                     including any
loss of anticipated profits and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were
obtained.  The Borrower shall also pay
any customary administrative fees charged by that Lender in connection with the
foregoing.

 

For purposes of
calculating amounts payable by the Borrower to the Lenders under this
Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate  for such Loan
by a matching deposit or other borrowing in the London interbank eurodollar
market for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.

 

3.06.                        Mitigation
Obligations; Replacement of Lenders.

 

(j)                                     Designation of a Different Lending Office.  If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 3.01, or if any Lender gives a notice
pursuant to Section 3.02, then that Lender shall use reasonable efforts to
designate a different Lending Office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of that Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Section 3.01 or 3.04, as the case may be, in the future, or eliminate the
need for the notice pursuant to Section 3.02, as applicable, and
(ii) in each case, would not subject that Lender to any unreimbursed cost
or expense and would not otherwise be disadvantageous to that Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

(k)                                  Replacement of
Lenders.  If any Lender requests
compensation under Section 3.04, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 3.01, the Borrower may replace that
Lender in accordance with Section 10.13.

 

3.07.                        Survival.  All of the Borrower’s obligations under this
Article III shall survive termination of the Overall Commitments and
repayment of all other Obligations hereunder.

 

55

 

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01.                        Conditions
of Initial Credit Extension.  The obligation of the L/C Issuer and each
Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions precedent:

 

(a)                                  The
Administrative Agent’s receipt of the following, each of which shall be originals
or telecopies (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the signing Loan Party, each
dated the Closing Date (or, in the case of certificates of governmental
officials, a recent date before the Closing Date) and each in form and
substance satisfactory to the Administrative Agent and each of the Lenders:

 

(i)                                     executed
counterparts of this Agreement, sufficient in number for distribution to the
Administrative Agent, each Lender and the Borrower;

 

(ii)                                  Revolving
Notes executed by the Borrower in favor of each Revolving Lender requesting a
Revolving Note;

 

(iii)                               A
promissory note executed by the Borrower in favor of the Swing Line Lender in
the amount of the Swing Line;

 

(iv)                              Term
Notes executed by the Borrower in favor of each Term Lender requesting a Term
Note;

 

(v)                                 the
Flamingo Paradise Guaranty, the Market Gaming Guaranty, the E-T-T, Inc.
Guaranty, the E-T-T Enterprise, L.L.C. Guaranty, and the General Subsidiary
Guaranty, executed by each Subsidiary of the Borrower;

 

(vi)                              the
Security Agreement executed by Borrower and each Subsidiary;

 

(vii)                           a
Deed of Trust executed by Flamingo Paradise with respect to the real property
and improvements constituting Terrible’s Hotel & Casino to secure the
Flamingo Paradise Guaranty;

 

(viii)                        a
Deed of Trust executed by Market Gaming with respect to the real property and
improvements constituting its Henderson, Nevada casino to secure the Market
Gaming Guaranty;

 

(ix)                                Deeds
of Trust executed by E-T-T, Inc. in respect of its interests in the casino
properties located at Town Center, Pahrump and Lakeside, Pahrump and its
interest in the office and warehouse space on Russell Road to secure the E-T-T,
Inc. Guaranty;

 

56

 

(x)                                   Deeds
of Trust executed by E-T-T Enterprises, L.L.C. in respect of its interest the
Lakeside, Pahrump casino property and 
its interest in the Russell Road office and warehouse space to secure
the E-T-T Enterprises, L.L.C Guaranty;

 

(xi)                                A
Deed of Trust executed by Borrower in respect of its leasehold interest in the
“training facility” adjacent to the Russell Road office and warehouse space to
secure the obligations under this Agreement;

 

(xii)                             Landlord
consents executed by each of the landlords in respect of Deeds of Trust which
encumber leaseholds, provided that the Borrower shall be entitled to up
to sixty days following the Closing Date to provide such a consent from its
landlord in respect of the Henderson location;

 

(xiii)                          a
letter agreement executed by Terrible Herbst, Inc. in respect of the Trademark
License Agreement, consenting to the collateral assignment of the rights of the
Borrower thereunder to the Administrative Agent;

 

(xiv)                         such
certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may require evidencing the identity, authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents to which
such Loan Party is a party;

 

(xv)                            such
documents and certifications as the Administrative Agent may reasonably require
to evidence that each Loan Party is duly organized or formed, and that the
Borrower and  each Loan Party is validly
existing, in good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect;

 

(xvi)                         a
favorable opinion of Kummer Kaempfer Bonner & Renshaw, counsel to the Loan
Parties, addressed to the Administrative Agent and each Lender, as to the
matters set forth in Exhibit H and such other matters concerning the Loan
Parties and the Loan Documents as the Requisite Lenders may reasonably request;

 

(xvii)                      the
commitment of United Title of Nevada, as agent for Chicago Title Company to
issue an ALTA policy of title insurance with respect to the Deeds of Trust,
subject to tie-in endorsements, in the amount of $100,000,000, insuring the
Deeds of Trust (subject to tie-in endorsements as to each of the Deeds of
Trust), together with such endorsements to coverage and reinsurance as the
Administrative Agent may require;

 

57

 

(xviii)                   flood
certificates regarding the real property owned or leased by Borrower and its
Subsidiaries which is subject to the Deeds of Trust;

 

(xix)                           a
certificate of a Responsible Officer of each Loan Party either
(A) attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Loan Party and
the validity against such Loan Party of the Loan Documents to which it is a
party, and such consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or approvals are so
required;

 

(xx)                              a
certificate signed by a Responsible Officer of the Borrower certifying
(A) that the conditions specified in Sections 4.02(a) and
(b) have been satisfied, and (B) that there has been no event or
circumstance since December 31, 2003 that has had or could be reasonably
expected to have, either individually or in the aggregate, a Material Adverse
Effect;

 

(xxi)                           evidence
that all insurance required to be maintained pursuant to the Loan Documents has
been obtained and is in effect;

 

(xxii)                        evidence
that the Existing Credit Agreement has been or concurrently with the Closing
Date will be terminated and all Liens securing obligations under the Existing
Credit Agreement have been or concurrently with the Closing Date have been, or
will be concurrently be released;

 

(xxiii)                     evidence
that the outstanding principal balance of the Existing Senior Secured Notes
shall be reduced to an amount not to exceed $4,071,000 concurrently with the
Closing Date; and

 

(xxiv)                    such
other assurances, certificates, documents, consents or opinions as the
Administrative Agent, the L/C Issuer, the Swing Line Lender or the Requisite
Lenders reasonably may require.

 

(b)                                 The New Senior
Subordinated Notes shall have been or concurrently with the Closing Date will
be issued in a principal amount of $160,000,000.

 

(c)                                  Any fees required
to be paid on or before the Closing Date shall have been paid.

 

(d)                                 Unless waived
by the Administrative Agent, the Borrower shall have paid all fees, charges and
disbursements of counsel to the Administrative Agent to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of such fees,
charges and disbursements as shall constitute its reasonable estimate of such
fees, charges and disbursements incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not thereafter preclude
a final settling of accounts between the Borrower and the Administrative
Agent).

 

58

 

Without limiting
the generality of the provisions of Section 9.04, for purposes of
determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

4.02.                        Conditions
to all Credit Extensions.  The
obligation of each Lender to honor any Request for Credit Extension (other than
a Loan Notice requesting only a conversion of Loans to the other Type, or a
continuation of Eurodollar Rate Loans) is subject to the following conditions
precedent:

 

(a)                                  The
representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document, or which are contained
in any document furnished at any time under or in connection herewith or
therewith, shall be true and correct on and as of the date of such Credit
Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date, and except that for purposes of this
Section 4.02, the representations and warranties contained in subsections
(a) and (b) of Section 5.05 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01.

 

(b)                                 No Default
shall exist, or would result from such proposed Credit Extension or from the
application of the proceeds thereof.

 

(c)                                  The
Administrative Agent and, if applicable, the L/C Issuer or the Swing Line
Lender shall have received a Request for Credit Extension in accordance with
the requirements hereof.

 

Each Request for
Credit Extension (other than a Loan Notice requesting only a conversion of
Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted
by the Borrower shall be deemed to be a representation and warranty that the
conditions specified in Sections 4.02(a) and (b) have been satisfied on
and as of the date of the applicable Credit Extension.

 

59

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

The Borrower
represents and warrants to the Administrative Agent and the Lenders that:

 

5.01.                        Existence,
Qualification and Power; Compliance with Laws.  Each Loan Party (a) is duly organized or
formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite
power and authority and all requisite governmental licenses, authorizations,
consents and approvals to (i) own its assets and carry on its business and
(ii) execute, deliver and perform its obligations under the Loan Documents
to which it is a party, (c) is duly qualified and is licensed and in good
standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license, and (d) is in compliance with all Laws; except
in each case referred to in clause (b)(i), (c) or (d), to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

5.02.                        Authorization;
No Contravention.  The
execution, delivery and performance by each Loan Party of each Loan Document to
which such Person is party, have been duly authorized by all necessary
corporate or other organizational action, and do not and will not
(a) contravene the terms of any of such Person’s Organization Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, or require any payment to be made under
(i) any Contractual Obligation to which such Person is a party or
affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject; or (c) violate any Law.  Each Loan Party is in compliance with all
Contractual Obligations referred to in clause (b)(i), except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

5.03.                        Governmental
Authorization; Other Consents.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document.

 

5.04.                        Binding
Effect.  This Agreement has been, and
each other Loan Document, when delivered hereunder, will have been, duly
executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms.

 

5.05.                        Financial
Statements; No Material Adverse Effect.

 

(a)                                  The Audited
Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present the financial condition of
the

 

60

 

Borrower
and its Subsidiaries as of the date thereof and their results of operations for
the period covered thereby in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein; and
(iii) show all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness.

 

(b)                                 The unaudited
consolidated balance sheet of the Borrower and its Subsidiaries dated
March 31, 2004 and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for the fiscal quarter ended on
that date (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present the financial condition of the Borrower
and its Subsidiaries as of the date thereof and their results of operations for
the period covered thereby, subject, in the case of clauses (i) and (ii), to
the absence of footnotes and to normal year-end audit adjustments.  Schedule 5.05 sets forth all material indebtedness
and other liabilities, direct or contingent, of the Borrower and its
consolidated Subsidiaries as of the date of such financial statements,
including liabilities for taxes, material commitments and Indebtedness.

 

(c)                                  Since the date
of the Audited Financial Statements, there has been no event or circumstance,
either individually or in the aggregate, that has had or could reasonably be
expected to have a Material Adverse Effect.

 

(d)                                 The
consolidated forecasted balance sheet and statements of income and cash flows
of the Borrower and its Subsidiaries delivered pursuant to Section 6.01(c)
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were fair in light of the conditions existing at the time of
delivery of such forecasts, and represented, at the time of delivery, the
Borrower’s best estimate of its future financial performance.

 

5.06.                        Litigation.  There are no actions, suits, proceedings,
claims or disputes pending or, to the best knowledge of the Borrower and its
Subsidiaries after due and diligent investigation, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, by or
against the Borrower or any of its Subsidiaries or against any of their
properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) except as specifically disclosed in Schedule 5.06,
either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect , and there has been
no adverse change in the status, or financial effect on any Loan Party or any
Subsidiary thereof, of the matters described on Schedule 5.06.

 

5.07.                        No
Default.  Neither the Borrower nor any
Subsidiary is in default under or with respect to any Contractual Obligation
including any Route Agreements that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or
would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.

 

61

 

5.08.                        Ownership
of Property; Liens.  Each of the
Borrower and each Subsidiary has good record and marketable title in fee simple
to, or valid leasehold interests in, all real property necessary or used in the
ordinary conduct of its business, except for such defects in title as could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.  The property of
the Borrower and its Subsidiaries is subject to no Liens, other than Liens
permitted by Section 7.01.

 

5.09.                        Environmental
Compliance.  The
Borrower and its Subsidiaries conduct in the ordinary course of business a
review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, and as a result thereof
the Borrower has reasonably concluded that, except as specifically disclosed in
Schedule 5.09, such Environmental Laws and claims could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

5.10.                        Insurance.  The properties of the Borrower and its
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of the Borrower, in such amounts with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the
Borrower or the applicable Subsidiary operates.

 

5.11.                        Taxes.  The Borrower and its Subsidiaries have filed
all Federal, state and other material tax returns and reports required to be
filed, and have paid all Federal, state and other material taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings diligently conducted
and for which adequate reserves have been provided in accordance with
GAAP.  Neither any Loan Party nor any
Subsidiary thereof is party to any tax sharing agreement.

 

5.12.                        ERISA
Compliance.

 

(a)                                  Each Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other Federal or state Laws. 
Each Plan that is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to the best knowledge of the Borrower and its
Subsidiaries, nothing has occurred which would prevent, or cause the loss of,
such qualification.  The Borrower and
each ERISA Affiliate have made all required contributions to each Plan subject
to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.

 

(b)                                 There are no
pending or, to the best knowledge of the Borrower and its Subsidiaries,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could reasonably be expected to have a
Material Adverse Effect.  There has been
no prohibited transaction or violation of

 

62

 

the
fiduciary responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  (i) No
ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA);
(iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate
has engaged in a transaction that could be subject to Sections 4069 or
4212(c) of ERISA.

 

5.13.                        Subsidiaries;
Equity Interests.  As of the
Closing Date, the Borrower has no Subsidiaries other than those specifically
disclosed in Schedule 5.13, and all of the outstanding Equity Interests in
such Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by a Loan Party in the amounts specified on Schedule 5.13
free and clear of all Liens.  The
Borrower has no equity investments in any other corporation or entity other
than those specifically disclosed in Schedule 5.13.  All of the outstanding Equity Interests in
the Borrower have been validly issued and are fully paid and nonassessable, and
are, as of the Closing Date, owned by the Principals.

 

5.14.                        Margin
Regulations; Investment Company Act; Public Utility Holding Company Act.

 

(a)                                  The Borrower is
not engaged and will not engage, principally or as one of its important
activities, in the business of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the FRB), or extending credit for the purpose
of purchasing or carrying margin stock.

 

(b)                                 None of the
Borrower, any Person Controlling the Borrower, or any Subsidiary (i) is a “holding
company,” or a “subsidiary company” of a “holding company,” or an “affiliate”
of a “holding company” or of a “subsidiary company” of a “holding company,”
within the meaning of the Public Utility Holding Company Act of 1935, or
(ii) is or is required to be registered as an “investment company” under
the Investment Company Act of 1940.

 

5.15.                        Disclosure.  No report, financial statement, certificate
or other information furnished (whether in writing or orally) by or on behalf
of any Loan Party to the Administrative Agent or any Lender in connection with
the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such

 

63

 

information was prepared in good faith based upon assumptions believed
to be reasonable at the time.

 

5.16.                        Compliance
with Laws.  Each of the
Borrower and each Subsidiary is in compliance in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which
(a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or
(b) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.17.                        Intellectual
Property; Licenses, Etc.  The Borrower
and its Subsidiaries own, or possess the right to use, all of the trademarks,
service marks, trade names, copyrights, patents, patent rights, franchises,
licenses and other intellectual property rights (collectively, “IP Rights”)
that are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person.  To the best knowledge of the Borrower and its
Subsidiaries, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Borrower or any Subsidiary infringes upon any rights held by
any other Person.  Except as specifically
disclosed in Schedule 5.17, no claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of the Borrower and its
Subsidiaries, threatened, which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.  The Trademark License Agreement is in full
force and effect, and Borrower and its Subsidiaries are not in material breach
of the Trademark License Agreement.

 

5.18.                        Route
Agreements; Casino Leases.

 

(a)                                  As of the Closing Date Borrower and its
Subsidiaries are party to Route Agreements providing for the operation of not
less than 6800 slot machines, video poker machines or other electronic gaming
devises at premises owned or operated by the counterparties thereto.  There is no default on behalf of Borrower or
any of its Subsidiaries in respect of any Route Agreements accounting for more
than 5% of the EBITDA of Borrower and its Subsidiaries which would entitle the
counterparties to such Route Agreements to terminate the same.

 

(b)                                 As of the Closing Date, no default on
behalf of the Borrower or any of its Subsidiaries exists under any of the
Casino Leases which would entitle the landlords under any of the Casino Leases
to terminate the same.

 

5.19.                        Existing
Senior Secured Notes.                      Giving effect
to the transactions which occur on the Closing Date, (a) the principal balance
of the Existing Senior Secured Notes does not exceed $4,071,000, and (b)
substantially all of the restrictive covenants of Borrower and its Subsidiaries
in respect of the Existing Senior Secured Notes (other than the covenant to
make payments in respect thereof when due and certain other minor informational
covenants and the like) are no longer binding upon the Borrower (it being
acknowledged that the trustee for the holders of the Existing Senior Secured
Notes shall retain its security therefor until the payment in

 

64

 

full of the remaining balance of the Existing Senior Secured Notes and
all amounts accrued in respect thereof.

 

65

 

ARTICLE VI.

AFFIRMATIVE COVENANTS

 

So long as any
Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, the Borrower shall, and shall (except in the case of the
covenants set forth in Sections 6.01, 6.02, and 6.03) cause each
Subsidiary to:

 

6.01.                        Financial
Statements.  Deliver to
the Administrative Agent and each Lender, in form and detail satisfactory to the
Administrative Agent and the Requisite Lenders:

 

(a)                                  as soon as
available, but in any event within 90 days after the end of each fiscal year of
the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such fiscal year, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be
audited and accompanied by a report and opinion of an independent certified
public accountant of nationally recognized standing reasonably acceptable to
the Requisite Lenders, which report and opinion shall be prepared in accordance
with generally accepted auditing standards and shall not be subject to any
“going concern” or like qualification or exception or any qualification or
exception as to the scope of such audit; and

 

(b)                                 as soon as
available, but in any event within two calendar months after the end of each
fiscal quarter (including the fourth Fiscal Quarter in each fiscal year of the
Borrower), a consolidated balance sheet of the Borrower and its Subsidiaries as
at the end of such fiscal quarter, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal
quarter and for the portion of the Borrower’s fiscal year then ended, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a Responsible
Officer of the Borrower as fairly presenting the financial condition, results
of operations, shareholders’ equity and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes;

 

(c)                                  as soon as
available, but in any event at least 15 days before the end of each fiscal year
of the Borrower, forecasts prepared by management of the Borrower, in form
satisfactory to the Administrative Agent and the Requisite Lenders, of
consolidated balance sheets and statements of income or operations of the
Borrower and its Subsidiaries on a quarterly basis for the immediately
following fiscal year (including the fiscal year in which the Maturity Date
occurs) and by Fiscal Year for each of the next succeeding Fiscal Years through
the Maturity Date, substantially in the form of the financial projections
delivered to the Administrative Agent and the Lenders prior to the Closing
Date.

 

66

 

(d)                                 in the event
that a Significant Capital Project is hereafter commenced at Terrible’s Hotel
& Casino, then concurrently with the requirements of 6.01 (a) and (b), a
quarterly profit and loss statement for Terrible’s Hotel and Casino,
substantially in the form of the financial projections delivered to the
Administrative Agent and the Lenders prior to the Closing Date.

 

As to any
information contained in materials furnished pursuant to Section 6.02(c),
the Borrower shall not be separately required to furnish such information under
clause (a) or (b) above, but the foregoing shall not be in derogation of the
obligation of the Borrower to furnish the information and materials described
in clauses (a) and (b) above at the times specified therein.

 

6.02.                        Certificates;
Other Information.  Deliver to
the Administrative Agent and each Lender, in form and detail satisfactory to
the Administrative Agent and the Requisite Lenders:

 

(a)                                  concurrently
with the delivery of the financial statements referred to in
Sections 6.01(a) and (b), a duly completed Compliance Certificate
signed by a Responsible Officer of the Borrower;

 

(b)                                 promptly after
any request by the Administrative Agent or any Lender, copies of any detailed
audit reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of the
Borrower by independent accountants in connection with the accounts or books of
the Borrower or any Subsidiary, or any audit of any of them;

 

(c)                                  promptly after
the same are available, copies of each annual report, proxy or financial
statement or other report or communication sent to the stockholders of the
Borrower, and, within 5 days of their filing with the SEC, copies of all
annual, regular, periodic and special reports and registration statements which
the Borrower may file or be required to file with the SEC under Section 13
or 15(d) of the Securities Exchange Act of 1934, and not otherwise
required to be delivered to the Administrative Agent pursuant hereto;

 

(d)                                 promptly, and
in any event within five Business Days after receipt thereof by any Loan Party
or any Subsidiary thereof, copies of each notice or other correspondence
received from the SEC (or comparable agency in any applicable non-United States
jurisdiction) concerning any investigation or possible investigation or
other inquiry by such agency regarding financial or other operational results
of any Loan Party or any Subsidiary thereof;

 

(e)                                  promptly after
request by the Administrative Agent, copies of the Nevada “Regulation 6.090
Report” and “6-A Report”, and copies of any written communication to Borrower
or any of the Subsidiaries from any Gaming Board advising it of a violation of
or non-compliance with any Gaming Law by Borrower or any of the Subsidiaries;
and

 

67

 

(f)                                    concurrently
with the payment thereof, a certificate signed by a Responsible Officer of the
Borrower certifying that all of the outstanding Indebtedness in respect of the
Existing Senior Notes has been indefeasibly paid in full.

 

Documents required
to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(c)
(to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) on which the Borrower posts
such documents, or provides a link thereto on the Borrower’s website on the
Internet at the website address listed on Schedule 10.02; or (ii) on
which such documents are posted on the Borrower’s behalf on an Internet or
intranet website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that: (i) the Borrower shall
deliver paper copies of such documents to the Administrative Agent or any
Lender that requests the Borrower to deliver such paper copies until a written
request to cease delivering paper copies is given by the Administrative Agent
or such Lender and (ii) the Borrower shall notify the Administrative Agent
and each Lender (by telecopier or electronic mail) of the posting of any such
documents and provide to the Administrative Agent by electronic mail electronic
versions (i.e., soft copies) of such documents.  Notwithstanding anything contained herein, in
every instance the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Section 6.02(b) to the Administrative
Agent.  Except for such Compliance
Certificates, the Administrative Agent shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by the Borrower with
any such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.

 

6.03.                        Notices.  Promptly notify the Administrative Agent and
each Lender:

 

(a)                                  of the occurrence of any
Default;

 

(b)                                 Promptly upon a
Responsible Officer becoming aware that (i) any Person has commenced a legal
proceeding with respect to a claim against Borrower or any of the Subsidiaries
that is $1,000,000 or more in excess of the amount thereof that is fully
covered by insurance, (ii) any creditor or lessor under a written credit
agreement or material lease has asserted a default thereunder on the part of
Borrower or any of the Subsidiaries, (iii) any Person has commenced a legal
proceeding with respect to a claim against Borrower or any of the Subsidiaries
under a contract that is not a credit agreement or material lease in excess of
$1,000,000 or which otherwise may reasonably be expected to result in a
Material Adverse Effect, (iv) any labor union has notified Borrower of its
intent to strike Borrower or any of the Subsidiaries on a date certain and such
strike would involve more than 100 employees of Borrower and the Subsidiaries,
or (v) any Gaming Board has indicated its intent to consider or act upon a
License Revocation or a fine or penalty of $100,000 or more with respect to
Borrower or any of the Subsidiaries, a written notice describing the pertinent
facts relating thereto and what action Borrower or the Subsidiaries are taking
or propose to take with respect thereto;

 

68

 

(c)                                  of the occurrence of any
ERISA Event; and

 

(d)                                 of any material
change in accounting policies or financial reporting practices by the Borrower
or any Subsidiary thereof.

 

Each notice
pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto.  Each
notice pursuant to Section 6.03(a) shall describe with particularity
any and all provisions of this Agreement and any other Loan Document that have
been breached.

 

6.04.                        Payment
of Obligations.  Pay and
discharge as the same shall become due and payable, all its obligations and
liabilities, including (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by
the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid,
would by law become a Lien upon its property; and (c) all Indebtedness, as
and when due and payable, but subject to any subordination provisions contained
in any instrument or agreement evidencing such Indebtedness.

 

6.05.                        Preservation
of Existence, Etc.  (a) Preserve,
renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization except in a
transaction permitted by Section 7.04 or 7.05; (b) take all
reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.

 

6.06.                        Maintenance
of Properties. 
(a) Maintain, preserve and protect all of its material properties
and equipment necessary in the operation of its business in good working order
and condition, ordinary wear and tear excepted; (b) make all necessary
repairs thereto and renewals and replacements thereof except where the failure
to do so could not reasonably be expected to have a Material Adverse Effect;
and (c) use the standard of care typical in the industry in the operation
and maintenance of its facilities.

 

6.07.                        Maintenance
of Insurance.

 

(a)                                  Maintain with financially sound and
reputable insurance companies not Affiliates of the Borrower, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons  and providing
for not less than 30 days’ prior notice to the Administrative Agent of
termination, lapse or cancellation of such insurance.

 

69

 

(b)                                 Without limitation on the foregoing, the
Borrower and its Subsidiaries shall maintain liability, casualty and other
insurance which is consistent with the coverages (including all deductibles and
retentions) maintained by Borrower and its Subsidiaries as of the Closing
Date.  All such insurance shall be
carried through insurance companies rated A+ or better by A.M. Best.

 

(c)                                  In any event, Borrower shall maintain and
keep in force the following insurance:

 

(i)                                     at all times during any period of
construction of any material capital projects (including the Terrible’s
Expansion Project and each Significant Capital Project), and with respect to
any Property affected by such construction, a policy or policies of builder’s
“all risk” insurance in nonreporting form in an amount not less than the full
insurable completed value of such portion of the affected Property on a
replacement cost basis;

 

(ii)                                  a policy or policies of fire and hazards
“all risk” insurance providing extended coverage in an amount not less the
amount of the related Construction Budget, calculated on a replacement cost
basis;

 

(iii)                               business interruption insurance (including insurance
against income loss during a period of at least one year);

 

(iv)                              comprehensive liability insurance naming
on an “occurrence” basis, against claims for “personal injury” liability,
including bodily injury, death or property damage liability, with an aggregate
limit of not less than $25,000,000;

 

(v)                                 policies of worker’s compensation
insurance as may be required by applicable laws (including employer’s liability
insurance, if required by the Administrative Agent), covering all employees of
Borrower, its Subsidiaries and each relevant contractor and subcontractor; and

 

(vi)                              If any Property is required to be insured
pursuant to the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Act of 1968, and the regulations promulgated thereunder, because it
is located in an area which has been identified by the Secretary of Housing and
Urban Development as a Flood Hazard Area, then Borrower shall provide, maintain
and keep in force at all times a flood insurance policy covering the Property
in limits that would exceed the damage caused by what is expected to be the
most severe flood (or any greater limits to the extent required by applicable
law from time to time).

 

(c)                                  Each such policy shall name the
Administrative Agent as an additional insured, and shall to the extent
relevant, include a waiver of subrogation against the Administrative Agent and
the Lenders, contain a provision that provides for a severability of interests,
and shall provide that an act or omission by one of the insured shall not
reduce or avoid coverage with respect to the other insureds, insure against
loss or damage by hazards customarily included

 

70

 

within “all risk”
and “extended coverage” policies and any other risks or hazards which the
Administrative Agent or the Majority Lenders may reasonably specify (and shall
include boiler and machinery insurance), shall contain a Lender’s Loss Payable
Endorsement in a form acceptable to the Administrative Agent in favor of the
Administrative Agent and shall be primary and noncontributory with any other
insurance carried by the Administrative Agent or the Lenders.

 

(d)                                 Borrower shall supply the Administrative
Agent with certificates of each policy required hereunder and any other policy
of insurance maintained in connection with any of the Property, and, if
requested, an original or underlyer of each such policy and all endorsements
thereto.  When any insurance policy
required hereunder expires, Borrower shall furnish the Administrative Agent
with proof acceptable to the Administrative Agent that the policy has been
reinstated, renewed or a new policy issued, continuing in force the insurance
covered by the policy which expired.  If
Borrower fails to pay any such premium, the Administrative Agent shall have the
right, but not the obligation, to obtain reasonable replacement coverage and
advance funds to pay the premiums for it on behalf of the Lenders.  Borrower shall repay the Administrative Agent
immediately on demand for any advance for such premiums, which shall be
considered to be an additional Loan bearing interest from the date of demand at
the Default Rate.

 

6.08.                        Compliance
with Laws.  Comply in
all material respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its business or property, except
in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate
proceedings diligently conducted; or (b) the failure to comply therewith
could not reasonably be expected to have a Material Adverse Effect.

 

6.09.                        Books
and Records.  Maintain
proper books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower or
such Subsidiary, as the case may be.

 

6.10.                        Inspection
Rights.  Permit representatives and
independent contractors of the Administrative Agent and each Lender to visit
and inspect any of its properties, to examine its corporate, financial and
operating records, and (subject to Section 10.07) to make copies thereof
or abstracts therefrom, and to discuss its affairs, finances and accounts with
its directors, officers, and independent public accountants, all at the expense
of the Borrower and at such reasonable times during normal business hours and
as often as may be reasonably desired, upon reasonable advance notice to the
Borrower; provided, however, that when an Event of Default exists
the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.  The Administrative Agent
acknowledge that the provisions of the Borrower’s Route Agreements are of a
confidential and proprietary nature.

 

6.11.                        Use of
Proceeds.  Use the
proceeds of the Credit Extensions (a) on the Closing Date, (i) to
refinance the outstanding obligations of the Borrower under the Existing Credit

 

71

 

Agreement, (ii) to fund redemption or repurchase the Existing
Senior Secured Notes (other than amounts not in excess of $4,071,000 as to
which the Reserve Amount is maintained), (iii) to pay fees and expenses
related to such transactions; and (b) thereafter, for proper working
capital and general corporate purposes of the Borrower and its Subsidiaries not
in contravention of any Law or of any Loan Document.

 

6.12.                        Additional
Subsidiaries and Collateral.

 

(a)                                  Diligently
pursue the approval of the Nevada Gaming Commission to the pledge of the Equity
Interests in each of its Subsidiaries to the Administrative Agent pursuant to
the Pledge Agreement and, promptly upon receipt thereof and in any event within
90 days following the Closing Date execute and deliver the Pledge Agreement to
the Administrative Agent, together with stock certificates representing 100% of
the Equity Interests held by Borrower and its Subsidiaries in their respective
direct Subsidiaries (to the extent certificated), together with appropriate
stock powers (which stock certificates shall be maintained by the
Administrative Agent in the State of Nevada);

 

(b)                                 Notify the
Administrative Agent at the time that any at the time that any Person becomes a
Subsidiary, and promptly thereafter (and in any event within thirty days),
cause such Person to (i) execute and deliver to the Administrative Agent a
Guaranty or a joinder to a Guaranty, as the Administrative Agent shall deem
appropriate for such purpose, and (ii) deliver to the Administrative Agent
Collateral Documents of the types referred to in Section 4.01(a) and
favorable opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
documentation referred to in clauses (i) and (ii));

 

(c)                                  Notify the
Administrative Agent at the time of acquisition or the formation of any
Subsidiary, cause to be delivered to the Administrative Agent in pledge all of
the Equity Interests held by Borrower and its Subsidiaries in such Subsidiary;

 

(d)                                 Notify the
Administrative Agent at the time of the acquisition by Borrower or any of its
Subsidiaries of any fee or leasehold interest in real property, notice thereof
and, if requested by the Administrative Agent, a Deed of Trust and other
Collateral Documents in relation thereto.

 

(e)                                  Within 90 days
following the Closing Date, provide the Administrative Agent with (i) landlord
consent and non-disturbance agreements from Centennial Acquisitions and
Terrible Herbst, Inc. in respect of the Searchlight location, (ii) a Deed of
Trust in respect of all interests of the Borrower and its Subsidiaries in the
Searchlight location, (iii) an ALTA policy of title insurance insuring the deed
of trust referred to in clause (ii), and (iv) a landlord consent and
non-disturbance agreement from the 1993 Samuel Josephson Revocable Trust in
respect of the Henderson location, in each case in form and substance
reasonably acceptable to the Administrative Agent.

 

72

 

6.13.                        Capital
Projects.  Prior to
the commencement of any Significant Project (other than the Terrible’s
Expansion Project), Borrower shall provide to Administrative Agent (a) the
final Construction Budget, (b) the Architect Contract, along with the
Architect’s Certificate and Consent, (c) the Construction Contract, along with
the Contractor’s Certificate and Consent, and (d) an acceptable policy of builder’s
all-risk insurance as required by Section 6.07.

 

73

 

ARTICLE VII.

NEGATIVE COVENANTS

 

So long as any
Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary
to, directly or indirectly:

 

7.01.                        Liens.  Create, incur, assume or suffer to exist any
Lien or Negative Pledge upon any of its property, assets or revenues, whether
now owned or hereafter acquired, other than the following:

 

(a)                                  Liens and
Negative Pledges pursuant to any Loan Document;

 

(b)                                 Liens and
Negative Pledges existing on the date hereof and listed on Schedule 7.01
and any renewals or extensions thereof, provided that (i) the
property covered thereby is not changed, (ii) the amount secured or
benefited thereby is not increased, (iii) the direct or any contingent
obligor with respect thereto is not changed, and (iv) any renewal or
extension of the obligations secured or benefited thereby is permitted by
Section 7.03(b);

 

(c)                                  Liens and
Negative Pledges on or with respect to Property acquired by Borrower or any
Subsidiaries that were in existence at the time of the acquisition of such
Property and were not created in contemplation of such acquisition;

 

(d)                                 any Lien or
Negative Pledge created by an agreement or instrument entered into by Borrower
or any Subsidiary in the ordinary course of its business which consists of a
restriction on the assignability, transfer or hypothecation of such agreement
or instrument;

 

(e)                                  Liens for taxes
not yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP;

 

(f)                                    carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
arising in the ordinary course of business which are not overdue for a period
of more than 30 days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;

 

(g)                                 pledges or
deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation,
other than any Lien imposed by ERISA;

 

(h)                                 deposits to
secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety bonds (other than bonds

 

74

 

related
to judgments or litigation), performance bonds and other obligations of a like
nature incurred in the ordinary course of business;

 

(i)                                     easements,
rights-of-way, restrictions and other similar encumbrances affecting real
property which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business of
the applicable Person;

 

(j)                                     Liens securing
judgments for the payment of money not constituting an Event of Default under
Section 8.01(h) or securing appeal or other surety bonds related to such
judgments;

 

(k)                                  Liens securing
Indebtedness permitted under Section 7.03(f) and Negative Pledges with
respect to the property financed by such Indebtedness;  provided that (i) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness and (ii) the Indebtedness secured thereby does not exceed the
cost or fair market value, whichever is lower, of the property being acquired
on the date of acquisition; and

 

(l)                                     Liens securing
Indebtedness permitted under 7.03(g), provided that the same are
released promptly following the repayment of such Indebtedness.

 

7.02.                        Investments.  Make any Investments, except:

 

(a)                                  Investments
held by the Borrower or such Subsidiary in the form of cash equivalents or
short-term marketable debt securities;

 

(b)                                 advances to
officers, directors and employees of the Borrower and Subsidiaries in the
ordinary course of business for travel, entertainment, relocation and analogous
ordinary business purposes;

 

(c)                                  Investments of
the Borrower in any Subsidiary and Investments of any Subsidiary in the
Borrower or in another Subsidiary;

 

(d)                                 Investments
consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course
of business, and Investments received in satisfaction or partial satisfaction
thereof from financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss;

 

(e)                                  Contingent
Obligations permitted by Section 7.03;

 

(f)                                    Investments
made in the ordinary course of business by Borrower and its Subsidiaries in
Persons with whom they are parties to Route Agreements;

 

75

 

(g)                                 other
Investments made when no Default or Event of Default has occurred and remains
continuing in an aggregate amount not to exceed $60,000,000 during the term of
this Agreement.

 

7.03.                        Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness, except:

 

(a)                                  Indebtedness
under the Loan Documents;

 

(b)                                 Indebtedness
under the New Senior Subordinated Notes and under additional or replacement
Subordinated Debt having a maturity which is at least one year following the
Maturity Date (or, in the case of any replacement Subordinated Debt, not
earlier than that of the New Senior Subordinated Notes) and having
representations, warranties, covenants, defaults and other provisions (other
than economic terms) which are either (i) substantively identical to those
contained in the Indenture for the New Senior Subordinated Notes, or (ii) on
terms and conditions no more onerous to the Lenders or Borrower than those
contained in the Indenture for the new Senior Subordinated Notes, in each case
as determined by Administrative Agent;

 

(c)                                  Indebtedness
outstanding on the date hereof and listed on Schedule 7.03 and any
refinancings, refundings, renewals or extensions thereof; provided that
(i) the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder, and (ii) the terms
relating to principal amount, amortization, maturity, collateral (if
any) and subordination (if any), and other material terms taken as a
whole, of any such refinancing, refunding, renewing or extending Indebtedness,
and of any agreement entered into and of any instrument issued in connection
therewith, are no less favorable in any material respect to the Loan Parties or
the Lenders than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended and the interest
rate applicable to any such refinancing, refunding, renewing or extending
Indebtedness does not exceed the then applicable market interest rate;

 

(d)                                 Contingent
Obligations of the Borrower in respect of Indebtedness otherwise permitted
hereunder of the Borrower;

 

(e)                                  obligations
(contingent or otherwise) of the Borrower or any Subsidiary existing or arising
under any Swap Contract, provided that (i) such obligations are (or
were) entered into by such Person in the ordinary course of business for the
purpose of directly mitigating risks associated with liabilities, commitments,
investments, assets, or property held or reasonably anticipated by such Person,
or changes in the value of securities issued by such Person, and not for
purposes of speculation or taking a “market view;” and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

 

76

 

(f)                                    Indebtedness in
respect of capital leases, Synthetic Lease Obligations and purchase money
obligations for fixed or capital assets within the limitations set forth in
Section 7.01(k); provided, however, that the aggregate
amount of all such Indebtedness at any one time outstanding shall not exceed
$10,000,000;

 

(g)                                 Indebtedness in
respect of Existing Senior Notes in an aggregate principal amount not to exceed
$4,071,000 not tendered to the Borrower as of the Closing Date, provided
that such Existing Senior Notes shall be repaid not later than
September 15, 2005; and

 

(h)                                 unsecured
Indebtedness in an aggregate principal amount not to exceed $5,000,000 at any
time outstanding.

 

7.04.                        Fundamental
Changes.  Merge, dissolve, liquidate,
consolidate with or into another Person, or Dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except that, so long as no Default exists or would result therefrom:

 

(a)                                  any Subsidiary
may merge with the Borrower, provided that the Borrower shall be the
continuing or surviving Person; and

 

(b)                                 any Subsidiary
may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or to another Subsidiary; provided
that if the transferor in such a transaction is a wholly-owned Subsidiary, then
the transferee must either be the Borrower or a wholly-owned Subsidiary.

 

7.05.                        Dispositions.  Make any Disposition or enter into any
agreement to make any Disposition, except:

 

(a)                                  Dispositions of
obsolete or worn out property, whether now owned or hereafter acquired, in the
ordinary course of business;

 

(b)                                 Dispositions of
inventory in the ordinary course of business;

 

(c)                                  Dispositions of
equipment or real property to the extent that (i) such property is
exchanged for credit against the purchase price of similar replacement property
or (ii) the proceeds of such Disposition are reasonably promptly applied
to the purchase price of such replacement property;

 

(d)                                 Dispositions of
property by Borrower or any Subsidiary to the Borrower or to any Subsidiary;

 

(e)                                  Dispositions
permitted by Section 7.04; and

 

(f)                                    Other
Dispositions of Property having an aggregate value, during the term of this
Agreement, not to exceed $5,000,000, provided that no Default or Event
of Default shall have occurred and remain continuing or result from such
Disposition.

 

77

 

provided, however, that each Disposition
pursuant to this Section shall be for fair market value.

 

7.06.                        Restricted
Payments.  Declare or
make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except that, so long as no Default shall
have occurred and be continuing at the time of any action described below or
would result therefrom:

 

(a)                                  each Subsidiary
may make Restricted Payments to the Borrower, the Subsidiaries and any other
Person that owns an Equity Interest in such Subsidiary, ratably according to
their respective holdings of the type of Equity Interest in respect of which
such Restricted Payment is being made;

 

(b)                                 the Borrower
and each Subsidiary may declare and make dividend payments or other
distributions payable solely in the common stock or other common Equity
Interests of such Person;

 

(c)                                  the Borrower
and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests
issued by it with the proceeds received from the substantially concurrent issue
of new shares of its common stock or other common Equity Interests;

 

(d)                                 the Borrower
may declare and pay the Closing Date Dividend on the Closing Date;

 

(e)                                  following the
Closing Date, the Borrower may declare and pay distributions to its
shareholders in respect of accrued tax liabilities arising from periods prior
to June 30, 2004 and from the Closing Date Dividend in an aggregate amount
not to exceed $3,000,000; and

 

(f)                                    the Borrower
may declare and pay cash dividends to its stockholders in an aggregate amount
not to exceed, as of any date of determination, 60% of Net Income for the
period (taken as one accounting period) beginning July 1, 2004 to the end
of the Borrower’s then most recently ended Fiscal Quarter for which a
Compliance Certificate has then been delivered to the Administrative Agent, provided
that giving pro  forma effect to the making of such payment as of
the last day of such Fiscal Quarter, Borrower is in pro  forma
compliance with the Fixed Charge Coverage Ratio.

 

7.07.                        Prepayment
of Subordinated Obligations.  Pay any (a) scheduled interest on any
Subordinated Debt unless the payment thereof is then permitted pursuant to the
terms of the indenture or other agreement governing such Subordinated Debt, or
(b) principal (including sinking fund payments) or any other amount (other than
scheduled interest payments) with respect to any Subordinated Debt, or purchase
or redeem (or offer to purchase or redeem) any Subordinated Debt, or deposit
any monies, securities or other Property with any trustee or other Person to provide
assurance that the principal or any portion thereof of any Subordinated Debt
will be paid when due or otherwise to provide for the defeasance of any
Subordinated Debt

 

78

 

except to the extent that the source of such payment, purchase or
redemption consists entirely of proceeds from the issuance of Equity Interests
in Borrower or new Subordinated Debt provided, in each case, that in no
event shall Borrower make any such payment, purchase or redemption any Default
or Event of Default has occurred and remains continuing or would result
therefrom.

 

7.08.                        Change
in Nature of Business. 
Engage in any material line of business substantially different from
those lines of business conducted by the Borrower and its Subsidiaries on the
date hereof or any business substantially related or incidental thereto.

 

7.09.                        Transactions
with Affiliates.  Enter into
any transaction of any kind with any Affiliate of the Borrower, whether or not
in the ordinary course of business, other than on fair and reasonable terms
substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s
length transaction with a Person other than an Affiliate.

 

7.10.                        Burdensome
Agreements.  Enter into
any Contractual Obligation (other than this Agreement or any other Loan
Document) that limits the ability (a) of any Subsidiary to make Restricted
Payments to the Borrower or any Subsidiary or to otherwise transfer property to
the Borrower or any Subsidiary, or (b) of any Subsidiary to guarantee the
Indebtedness of the Borrower.

 

7.11.                        Use of
Proceeds.  Use the
proceeds of any Credit Extension, whether directly or indirectly, and whether
immediately, incidentally or ultimately, to purchase or carry margin stock
(within the meaning of Regulation U of the FRB) or to extend credit to others
for the purpose of purchasing or carrying margin stock or to refund
indebtedness originally incurred for such purpose.

 

7.12.                        Senior
Debt to EBITDA Ratio.  Permit the
Senior Debt to EBITDA Ratio as of the last day of any Fiscal Quarter ending
during a period set forth below to exceed the ratio set forth below opposite
that period:

 

	
  Period

  	
   

  	
  Maximum Senior Debt to

  EBITDA Ratio

  	
   

  
	
  Closing Date through and including
  September 30, 2006

  	
   

  	
  2.75:1.00

  	
   

  
	
  December 31, 2006 and thereafter

  	
   

  	
  2.25:1.00

  	
   

  

 

7.13.                        Total
Debt to EBITDA Ratio.  Permit the
Total Debt to EBITDA Ratio as of the last day of any Fiscal Quarter ending
during a period set forth below to exceed the ratio set forth below opposite
that period:

 

	
  Period

  	
   

  	
  Maximum Total Debt to

  EBITDA Ratio

  	
   

  
	
  Closing Date
  through and including March 31, 2008

  	
   

  	
  5.00:1.00

  	
   

  
	
  June 30,
  2008 and thereafter

  	
   

  	
  4.50:1.00

  	
   

  

 

79

 

7.14.                        Fixed
Charge Ratio.  Permit the
Fixed Charge Coverage Ratio as of the last day of any Fiscal Quarter ending
during a period set forth below to be less than the ratio set forth below
opposite that period:

 

	
  Period

  	
   

  	
  Minimum Fixed

  Charge Coverage Ratio

  	
   

  
	
  Closing Date through
  and including June 30, 2007

  	
   

  	
  1.25:1.00

  	
   

  
	
  September 30, 2007
  through and including September 30, 2008

  	
   

  	
  1.15:1.00

  	
   

  
	
  December 31, 2008
  and thereafter

  	
   

  	
  1.10:1.00

  	
   

  

 

7.15.                        Capital
Expenditures.  Make or
become legally obligated to make any Capital Expenditure other than:

 

(a)                                  Maintenance Capital Expenditures in an
aggregate principal amount not to exceed $17,500,000 in any Fiscal Year;

 

(b)                                 Growth Capital Expenditures in an
aggregate principal amount not to exceed $60,000,000 during the term of this
Agreement; and

 

(c)                                  to the extent construed as Capital
Expenditures, any amount expended to consummate an Investment permitted by
Section 7.02(g).

 

7.16.                        Hostile
Acquisitions.  Directly or
indirectly use the proceeds of any Loan in connection with the acquisition of
part or all of a voting interest of five percent or more in any corporation or
other business entity if such acquisition is opposed by the board of directors
or management of such corporation or business entity.

 

80

 

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.01.                        Events
of Default.  Any of the
following shall constitute an Event of Default:

 

(a)                                  Non-Payment.  The Borrower or any other Loan Party fails to
pay (i) when and as required to be paid herein, any amount of principal of
any Loan or any L/C Obligation, or (ii) within three days after the same
becomes due, any interest on any Loan or on any L/C Obligation, or any fee due
hereunder, or (iii) within five days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or

 

(b)                                 Specific
Covenants.  The
Borrower fails to perform or observe any term, covenant or agreement contained
in any of Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.11 or 6.12 or
Article VII; or

 

(c)                                  Other Defaults.  Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in subsection (a) or (b)
above) contained in any Loan Document on its part to be performed or observed
and such failure continues for 30 days; or

 

(d)                                 Representations
and Warranties.  Any
representation, warranty, certification or statement of fact made or deemed
made by or on behalf of the Borrower or any other Loan Party herein, in any
other Loan Document, or in any document delivered in connection herewith or
therewith shall be incorrect or misleading when made or deemed made; or

 

(e)                                  Cross-Default.  (i) The Borrower or any Subsidiary (A)
fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Contingent Obligation (other than Indebtedness hereunder and Indebtedness
under Swap Contracts) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $5,000,000,
or (B) fails to observe or perform any other agreement or condition
relating to any such Indebtedness or Contingent Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, the effect of which default or other event is to cause, or to
permit the holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Contingent Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to be demanded or to become due
or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Contingent
Obligation to become payable or cash collateral in respect thereof to be demanded;
or

 

81

 

(ii) there
occurs under any Swap Contract an Early Termination Date (as defined in such
Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so
defined) under such Swap Contract as to which the Borrower or any Subsidiary is
an Affected Party (as so defined) and, in either event, the Swap Termination
Value owed by the Borrower or such Subsidiary as a result thereof is greater
than $5,000,000; or

 

(f)                                    Insolvency
Proceedings, Etc.  Any Loan
Party or any of its Subsidiaries institutes or consents to the institution of
any proceeding under any Debtor Relief Law, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar
officer for it or for all or any material part of its property; or any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar
officer is appointed without the application or consent of such Person and the
appointment continues undischarged or unstayed for 60 calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or
any material part of its property is instituted without the consent of such
Person and continues undismissed or unstayed for 60 calendar days, or an order
for relief is entered in any such proceeding; or

 

(g)                                 Inability to
Pay Debts; Attachment. 
(i) The Borrower or any Subsidiary becomes unable or admits in
writing its inability or fails generally to pay its debts as they become due,
or (ii) any writ or warrant of attachment or execution or similar process
is issued or levied against all or any material part of the property of any
such Person and is not released, vacated or fully bonded within 30 days after
its issue or levy; or

 

(h)                                 Judgments.  There is entered against the Borrower or any
Subsidiary (i) a final judgment or order for the payment of money in an
aggregate amount exceeding $5,000,000 to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a
period of 10 consecutive days during which a stay of enforcement of such
judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)                                     ERISA.  (i) An ERISA Event occurs with respect
to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of the Borrower under Title IV of ERISA
to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
excess of $5,000,000, or (ii) the Borrower or any ERISA Affiliate fails to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $5,000,000; or

 

82

 

(j)                                     Invalidity of
Loan Documents.  Any provision of any Loan Document, at any
time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any
other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any
Loan Party denies that it has any or further liability or obligation under any
Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or

 

(k)                                  Change of
Control.  Any Change of Control occurs;

 

(l)                                     License
Revocation.  Any License
Revocation in respect of locations accounting for more than 5% of the
Borrower’s EBITDA occurs and remains continuing for more than three Business
Days.

 

8.02.                        Remedies
Upon Event of Default.  If
any Event of Default occurs and is continuing, the Administrative Agent shall,
at the request of, or may, with the consent of, the Requisite Lenders, take any
or all of the following actions:

 

(a)                                  declare the
commitment of each Lender to make Loans and any obligation of the L/C Issuer to
make L/C Credit Extensions to be terminated, whereupon such commitments and
obligation shall be terminated;

 

(b)                                 declare the
unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any
other Loan Document to be immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower;

 

(c)                                  require that
the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the
then Outstanding Amount thereof); and

 

(d)                                 exercise on
behalf of itself and the Lenders all rights and remedies available to it and
the Lenders under the Loan Documents;

 

provided, however, that upon the
occurrence of an actual or deemed entry of an order for relief with respect to
the Borrower under the Bankruptcy Code of the United States, the obligation of
each Lender to make Loans and any obligation of the L/C Issuer to make L/C
Credit Extensions shall automatically terminate, the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and the obligation of the Borrower to
Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any
Lender. Each of the Administrative Agent and the Lenders acknowledges that its
ability to pursue the remedies described above is subject to, and limited by,
the terms of applicable Gaming Laws.

 

83

 

8.03.                        Application
of Funds.  After the
exercise of remedies provided for in Section 8.02 (or after the Loans have
automatically become immediately due and payable and the L/C Obligations have
automatically been required to be Cash Collateralized as set forth in the
proviso to Section 8.02), any amounts received on account of the
Obligations shall be applied by the Administrative Agent in the following
order:

 

First, to payment of that portion of the
Obligations constituting fees, indemnities, expenses and other amounts
(including fees, charges and disbursements of counsel to the Administrative
Agent and amounts payable under Article III) payable to the Administrative
Agent in its capacity as such;

 

Second, to payment of that portion of the
Obligations constituting fees, indemnities and other amounts (other than
principal and interest) payable to the Lenders and the L/C Issuer (including
fees, charges and disbursements of counsel to the respective Lenders and the
L/C Issuer (including fees and time
charges for attorneys who may be employees of any Lender or the L/C Issuer)
and amounts payable under Article III), ratably among them in proportion
to the amounts described in this clause Second payable to them;

 

Third, to payment of that portion of the
Obligations constituting accrued and unpaid interest on the Loans, L/C
Borrowings and other Obligations (including without limitation Secured Swap
Contracts, ratably among the Lenders and the L/C Issuer (and, in the case of
any Secured Swap Contracts, any relevant Affiliate of any Lender counterparties
thereto)), ratably among the Lenders and the L/C Issuer in proportion to the
respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion of the
Obligations constituting unpaid principal of the Loans and L/C Borrowings,
ratably among the Lenders and the L/C Issuer in proportion to the respective
amounts described in this clause Fourth held by them;

 

Fifth, to the Administrative Agent for the
account of the L/C Issuer, to Cash Collateralize that portion of L/C
Obligations comprised of the aggregate undrawn amount of Letters of Credit; and

 

Last, the balance, if any, after all of the
Obligations have been indefeasibly paid in full, to the Borrower or as
otherwise required by Law.

 

Subject to
Section 2.04(c), amounts used to Cash Collateralize the aggregate undrawn
amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash
Collateral after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other Obligations, if any, in the
order set forth above.

 

84

 

ARTICLE IX.

ADMINISTRATIVE AGENT

 

9.01.                        Appointment
and Authority.  Each of the
Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act
on its behalf as the Administrative Agent hereunder and under the other Loan
Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto.  The
provisions of this Article are solely for the benefit of the
Administrative Agent, the Lenders and the L/C Issuer, and neither the Borrower nor any other Loan Party
shall have rights as a third party beneficiary of any of such provisions.

 

9.02.                        Rights
as a Lender.  The Person
serving as the Administrative Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Administrative Agent and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Administrative Agent
hereunder in its individual capacity. 
Such Person and its Affiliates may accept deposits from, lend money to,
act as the financial advisor or in any other advisory capacity for and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.

 

9.03.                        Exculpatory
Provisions.  The
Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the
foregoing, the Administrative Agent:

 

(a)                                  shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing;

 

(b)                                 shall not have
any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby or by the
other Loan Documents that the Administrative Agent is required to exercise as
directed in writing by the Requisite Lenders (or such other number or percentage
of the Lenders as shall be expressly provided for herein or in the other Loan
Documents), provided that the Administrative Agent shall not be required
to take any action that, in its opinion or the opinion of its counsel, may
expose the Administrative Agent to liability or that is contrary to any Loan
Document or applicable law; and

 

(c)                                  shall not,
except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Affiliates that is
communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.

 

85

 

The Administrative
Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Requisite Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Administrative Agent
shall believe in good faith shall be necessary, under the circumstances as
provided in Sections 10.01 and 8.02) or (ii) in the absence of its
own gross negligence or willful misconduct. 
The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until notice describing such Default is given to the
Administrative Agent by the Borrower, a Lender or the L/C Issuer.

 

The Administrative
Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth herein or therein or the occurrence of any Default, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document or
(v) the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.

 

9.04.                        Reliance
by Administrative Agent.  The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed
by it to be genuine and to have been signed, sent or otherwise authenticated by
the proper Person.  The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon.  In
determining compliance with any condition hereunder to the making of a Loan, or
the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or the L/C Issuer, the Administrative Agent may
presume that such condition is satisfactory to such Lender or the L/C Issuer
unless the Administrative Agent shall have received notice to the contrary from
such Lender or the L/C Issuer prior to the making of such Loan or the issuance
of such Letter of Credit.  The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

 

9.05.                        Delegation
of Duties.  The
Administrative Agent may perform any and all of its duties and exercise its
rights and powers hereunder or under any other Loan Document by or through any
one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties.  The exculpatory provisions of this
Article shall apply to any such sub-agent and to the Related Parties of
the Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

 

86

 

9.06.                        Resignation
of Administrative Agent.  The
Administrative Agent may at any time give notice of its resignation to the
Lenders, the L/C Issuer and the Borrower. 
Upon receipt of any such notice of resignation, the Requisite Lenders
shall have the right, in consultation with the Borrower, to appoint a
successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States.  If no such successor shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting
the qualifications set forth above; provided that if the Administrative
Agent shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any collateral security held by the
Administrative Agent on behalf of the Lenders or the L/C Issuer under any of
the Loan Documents, the retiring Administrative Agent shall continue to hold
such collateral security until such time as a successor Administrative Agent is
appointed) and (2) all payments, communications and determinations
provided to be made by, to or through the Administrative Agent shall instead be
made by or to each Lender and the L/C Issuer directly, until such time as the
Requisite Lenders appoint a successor Administrative Agent as provided for
above in this Section.  Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and
the retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section).  The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the retiring
Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 10.04
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative
Agent was acting as Administrative Agent.

 

Any resignation by
Bank of America as Administrative Agent pursuant to this Section shall
also constitute its resignation as L/C Issuer and Swing Line Lender.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, (a) such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring L/C Issuer and Swing Line Lender, (b) the retiring
L/C Issuer and Swing Line Lender shall be discharged from all of their
respective duties and obligations hereunder or under the other Loan Documents,
and (c) the successor L/C Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangement satisfactory to the retiring L/C Issuer to
effectively assume the obligations of the retiring L/C Issuer with respect to
such Letters of Credit.

 

9.07.                        Non-Reliance
on Administrative Agent and Other Lenders.  Each Lender and the L/C Issuer acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender or any of their Related Parties and based on such

 

87

 

documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement.  Each Lender and the L/C Issuer also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

 

9.08.                        No
Other Duties, Etc.  Anything
herein to the contrary notwithstanding, none of the Co-Lead Arrangers,
Syndication Agent, or Documentation Agent listed on the cover page hereof shall
have any powers, duties or responsibilities under this Agreement or any of the
other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, a Lender or the L/C Issuer hereunder.

 

9.09.                        Collateral
and Guaranty Matters.  The Lenders and
the L/C Issuer irrevocably authorize the Administrative Agent, at its option
and in its discretion:

 

(a)                                  to release any Lien on any property
granted to or held by the Administrative Agent under any Loan Document
(i) upon termination of the Overall Commitments and payment in full of all
Obligations (other than contingent indemnification obligations) and the
expiration or termination of all Letters of Credit, (ii) that is sold or
to be sold as part of or in connection with any sale permitted hereunder or
under any other Loan Document, or (iii) subject to Section 10.01, if
approved, authorized or ratified in writing by the Requisite Lenders;

 

(b)                                 to subordinate any Lien on any property
granted to or held by the Administrative Agent under any Loan Document to the
holder of any Lien on such property that is permitted by Section 7.01(k);
and

 

(c)                                  to release any Subsidiary from its
Guaranty if such Person ceases to be a 
Subsidiary as a result of a transaction permitted hereunder.

 

Upon request by
the Administrative Agent at any time, the Requisite Lenders will confirm in writing
the Administrative Agent’s authority to release or subordinate its interest in
particular types or items of property, or to release any Subsidiary from its
Guaranty pursuant to this Section 9.09.

 

88

 

ARTICLE X.

MISCELLANEOUS

 

10.01.                  Amendments,
Etc.  No amendment or waiver of
any provision of this Agreement or any other Loan Document, and no consent to
any departure by the Borrower or any other Loan Party therefrom, shall be
effective unless in writing signed by the Requisite Lenders and the Borrower or
the applicable Loan Party, as the case may be, and acknowledged by the
Administrative Agent, and each such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall:

 

(a)                                  waive any
condition set forth in Section 4.01(a) without the written consent of
each Lender;

 

(b)                                 extend or
increase the Commitments of any Lender (or reinstate any Commitments terminated
pursuant to Section 8.02) without the written consent of that Lender;

 

(c)                                  postpone any
date fixed by this Agreement or any other Loan Document for any payment or
mandatory prepayment of principal, interest, fees or other amounts due to the
Lenders (or any of them) or any scheduled or mandatory reduction of any of
the Commitments hereunder or under any other Loan Document, without the written
consent of each Lender directly affected thereby;

 

(d)                                 reduce the
principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or (subject to clause (v) of the second proviso to this
Section 10.01 regarding the Fee Letter) any fees or other amounts
payable hereunder or under any other Loan Document, without the written consent
of each Lender directly affected thereby; provided, however, that
only the consent of the Requisite Lenders shall be necessary (i) to amend
the definition of “Default Rate” or to waive any obligation of the Borrower to
pay interest or Letter of Credit Fees at the Default Rate or (ii) to amend
any financial covenant hereunder (or any defined term used therein) even
if the effect of such amendment would be to reduce the rate of interest on any
Loan or L/C Borrowing or to reduce any fee payable hereunder;

 

(e)                                  change
Section 2.15 or Section 8.03 in a manner that would alter the pro
rata sharing of payments required thereby without the written consent of each
Lender;

 

(f)                                    change any
provision of this Section or the definition of “Requisite Lenders” or any
other provision hereof specifying the number or percentage of Lenders required
to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender;

 

(g)                                 impose any greater
restriction on the ability of any Lender to assign any of its rights or
obligations under any Commitment of that Lender hereunder without the written
consent of Lenders having more than 50% of the same class of Commitment;

 

89

 

(h)                                 release any
Subsidiary from its Guaranty without the written consent of each Lender (except
in the case of any permitted sale or disposition of that Subsidiary);

 

(i)                                     release any
Collateral having a value which is in excess of $5,000,000 from the Lien of the
Collateral Documents without the written consent of each Lender (except in
connection with the permitted sale, transfer or other disposition of that
Collateral to a Person other than Borrower or a Subsidiary); or

 

(j)            waive the requirement of the
imposition of the Reserve Amount;

 

and, provided
further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any
Issuer Document relating to any Letter of Credit issued or to be issued by it;
(ii) no amendment, waiver or consent shall, unless in writing and signed
by the Swing Line Lender in addition to the Lenders required above, affect the
rights or duties of the Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iv) Section 10.06(h) may not be amended,
waived or otherwise modified without the consent of each Granting Lender all or
any part of whose Loans are being funded by an SPC at the time of such
amendment, waiver or other modification; and (v) the Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed only by the
parties thereto.  Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
the Commitments of that Lender may not be increased or extended without the
consent of that Lender.

 

10.02.                  Notices;
Effectiveness; Electronic Communication.

 

(a)                                  Notices
Generally.  Except in
the case of notices and other communications expressly permitted to be given by
telephone (and except as provided in subsection (b) below), all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

 

(i)                                     if
to the Borrower, the Administrative Agent, the L/C Issuer or the Swing Line
Lender, to the address, telecopier number, electronic mail address or telephone
number specified for such Person on Schedule 10.02; and

 

(ii)                                  if
to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified in its Administrative Questionnaire.

 

90

 

Notices sent by
hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by telecopier
shall be deemed to have been given when sent (except that, if not given during
normal business hours for the recipient, shall be deemed to have been given at
the opening of business on the next business day for the recipient).  Notices delivered through electronic
communications to the extent provided in subsection (b) below, shall be
effective as provided in such subsection (b).

 

(b)                                 Electronic
Communications.  Notices and
other communications to the Lenders and the L/C Issuer hereunder may be
delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to
notices to any Lender or the L/C Issuer pursuant to Article II if such
Lender or the L/C Issuer, as applicable, has notified the Administrative Agent
that it is incapable of receiving notices under such Article by electronic
communication.  The Administrative Agent
or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may
be limited to particular notices or communications.

 

Unless the
Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient,
such notice or communication shall be deemed to have been sent at the opening
of business on the next business day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address
therefor.

 

(c)                                  Change of
Address, Etc.  Each of the
Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender
may change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the other parties hereto.  Each other Lender may change its address,
telecopier or telephone number for notices and other communications hereunder
by notice to the Borrower, the Administrative Agent, the L/C Issuer and the
Swing Line Lender.

 

(d)                                 Reliance by
Administrative Agent, L/C Issuer and Lenders.  The Administrative Agent, the L/C
Issuer and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Loan Notices and Swing Line Loan Notices) purportedly
given by or on behalf of the Borrower even if (i) such notices were not
made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrower shall indemnify the
Administrative Agent, the L/C Issuer, each Lender and the Related Parties of
each of them from all losses, costs, expenses and liabilities resulting from
the reliance by such

 

91

 

Person
on each notice purportedly given by or on behalf of the Borrower.  All telephonic notices to and other
telephonic communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

10.03.                  No
Waiver; Cumulative Remedies.  No failure by any Lender, the L/C Issuer or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.

 

10.04.                  Expenses;
Indemnity; Damage Waiver.

 

(a)                                  Costs and
Expenses.  The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates (including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent), in connection with
the syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the L/C Issuer in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all out-of-pocket expenses incurred by the Administrative
Agent, any Lender or the L/C Issuer (including the fees, charges and
disbursements of any counsel for the Administrative Agent, any Lender or the
L/C Issuer), and shall pay all fees and
time charges for attorneys who may be employees of the Administrative Agent,
any Lender or the L/C Issuer, in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the
other Loan Documents, including its rights under this Section, or (B) in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

 

(b)                                 Indemnification
by the Borrower.  The
Borrower shall indemnify the Administrative Agent, the Co-Lead Arrangers, the
Syndication Agent and the Documentation Agent (and any sub-agents of such
persons), each Lender and the L/C Issuer, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (including the fees, charges and disbursements
of any counsel for any Indemnitee), and
shall indemnify and hold harmless each Indemnitee from all fees and time
charges and disbursements for attorneys who may be employees of any Indemnitee,
incurred by any Indemnitee or asserted against any Indemnitee by any third
party or by the Borrower or any other Loan Party arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement,
any

 

92

 

other
Loan Document or any agreement or instrument contemplated hereby or thereby,
the performance by the parties hereto of their respective obligations hereunder
or thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Loan or Letter of Credit or the use or proposed use of
the proceeds therefrom (including any refusal by the L/C Issuer to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way
to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrower or any other Loan Party, and
regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by the Borrower or any
other Loan Party against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if the
Borrower or such Loan Party has obtained a final and nonappealable judgment in
its favor on such claim as determined by a court of competent jurisdiction.

 

(c)                                  Reimbursement
by Lenders.  To the
extent that the Borrower for any reason fails to indefeasibly pay any amount
required under subsection (a) or (b) of this Section to be paid
by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or
any Related Party of any of the foregoing, each Lender severally agrees to pay to
the Administrative Agent (or any such sub-agent), the L/C Issuer or such
Related Party, as the case may be, such Lender’s Revolving Percentage
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount, provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity
as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) or L/C Issuer in connection with
such capacity.  The obligations of the
Lenders under this subsection (c) are subject to the provisions of
Section 2.14(d).

 

(d)                                 Waiver of
Consequential Damages, Etc.  To the fullest extent permitted by applicable
law, the Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof.  No Indemnitee referred to in
subsection (b) above shall be liable for any damages arising from the use
by unintended recipients of any information or other materials distributed by
it through telecommunications, electronic or other information transmission
systems in connection

 

93

 

with
this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby.

 

(e)                                  Payments.  All amounts due under this Section shall
be payable not later than ten Business Days after demand therefor.

 

(f)                                    Survival.  The agreements in this Section shall
survive the resignation of the Administrative Agent and the L/C Issuer, the replacement of any Lender, the termination
of the Overall Commitments and the repayment, satisfaction or discharge of all
the other Obligations.

 

10.05.                  Payments
Set Aside.  To the
extent that any payment by or on behalf of the Borrower is made to the
Administrative Agent, the L/C Issuer or any Lender, or the Administrative
Agent, the L/C Issuer or any Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent,
the L/C Issuer or such Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Law or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such setoff had not occurred, and (b) each Lender and the L/C Issuer
severally agrees to pay to the Administrative Agent upon demand its applicable
share (without duplication) of any amount so recovered from or repaid by the
Administrative Agent, plus interest thereon from the date of such demand to the
date such payment is made at a rate per annum equal to the Federal Funds Rate
from time to time in effect.  The
obligations of the Lenders and the L/C Issuer under clause (b) of the preceding
sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

10.06.                  Successors
and Assigns.

 

(a)                                  Successors and
Assigns Generally.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted
hereby, except that neither the
Borrower nor any other Loan Party may assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of subsection (b) of
this Section, (ii) by way of participation in accordance with the
provisions of subsection (d) of this Section, (iii) by way of pledge
or assignment of a security interest subject to the restrictions of
subsection (f) of this Section, or (iv) to an SPC in accordance with
the provisions of subsection (h) of this Section 10.06 and any other
attempted assignment or transfer by any party hereto shall be null and
void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the L/C Issuer and the

 

94

 

Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

 

(b)                                 Assignments by
Lenders.  Any Lender may at any time
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans (including for purposes of this subsection (b),
participations in L/C Obligations and in Swing Line Loans) at the time owing to
it); provided that:

 

(i)                                     No
Lender shall assign any portion of its Revolving Commitment or Term Commitment
unless an equal percentage of its other Commitment is concurrently assigned to
the same Lender;

 

(ii)                                  except
in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitments and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, the aggregate amount of the Commitments (which for this
purpose includes Loans outstanding thereunder) or, if the Commitments are not
then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment, determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $5,000,000  unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed);

 

(iii)                               each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement with
respect to the Loans or the Commitments assigned, except that this clause (iii)
shall not apply to rights in respect of Swing Line Loans;

 

(iv)                              each
assignment must be approved by the Administrative Agent, the L/C Issuer and the
Swing Line Lender unless the Person that is the proposed assignee is itself a
Lender (whether or not the proposed assignee would otherwise qualify as an
Eligible Assignee); and

 

(v)                                 the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500, and the Eligible Assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire.

 

Subject to
acceptance and recording thereof by the Administrative Agent pursuant to
subsection (c) of this Section, from and after the effective date
specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Agreement and, to the

 

95

 

extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of
Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrower (at its expense)
shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance
with subsection (d) of this Section.

 

(c)                                  Register.  The Administrative Agent, acting solely for
this purpose as an agent of the Borrower, shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans and L/C Obligations owing
to, each Lender pursuant to the terms hereof from time to time (the
“Register”).  The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by each of the Borrower
and the L/C Issuer at any reasonable time and from time to time upon reasonable
prior notice.  In addition, at any time
that a request for a consent for a material or substantive change to the Loan
Documents is pending, any Lender wishing to consult with other Lenders in
connection therewith may request and receive from the Administrative Agent a
copy of the Register.

 

(d)                                 Participations.  Any Lender may at any time, without the
consent of, or notice to, the Borrower or the Administrative Agent, sell
participations to any Person (other than a natural person or the Borrower or
any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in
all or a portion of that Lender’s rights and/or obligations under this
Agreement (including all or a portion of any of its Commitments and/or the
Loans (including that Lender’s participations in L/C Obligations and/or Swing
Line Loans) owing to it); provided that (i) that Lender’s
obligations under this Agreement shall remain unchanged, (ii) that Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (iii) the Borrower, the Administrative Agent, the
Lenders and the L/C Issuer shall continue to deal solely and directly with that
Lender in connection with that Lender’s rights and obligations under this
Agreement.

 

Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any  provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso

 

96

 

to Section 10.01 that affects such
Participant.  Subject to
subsection (e) of this Section, the Borrower agrees that each Participant
shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to subsection (b) of this
Section.  To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender, provided such
Participant agrees to be subject to Section 2.13 as though it were a
Lender.

 

(e)                                  Limitations
upon Participant Rights.  A
Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04  than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 3.01
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 3.01(e) as though it were a Lender.

 

(f)                                    Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

 

(g)                                 Electronic
Execution of Assignments.  The
words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Assumption shall be deemed to include electronic signatures or
the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or
the use of a paper-based recordkeeping system, as the case may be, to the
extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.

 

(h)                                 Special Purpose
Funding Vehicles. 
Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a special purpose funding vehicle identified as
such in writing from time to time by the Granting Lender to the Administrative
Agent and the Borrower (an “SPC”) the option to provide all or any part of any
Loan that such Granting Lender would otherwise be obligated to make pursuant to
this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to
exercise such option or otherwise fails to make all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof or, if it fails to do so, to make such payment to the Administrative
Agent as is required under Section 2.14(b)(ii).  Each party hereto hereby agrees that
(i) neither the grant to any SPC nor the exercise by any SPC of such
option shall increase the costs or expenses or otherwise increase or change the
obligations of the Borrower under this Agreement (including its obligations

 

97

 

under
Section 3.04), (ii) no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement for which a Lender would be
liable, and (iii) the Granting Lender shall for all purposes, including
the approval of any amendment, waiver or other modification of any provision of
any Loan Document, remain the lender of record hereunder.  The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender.  In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior debt of any
SPC, it will not institute against, or join any other Person in instituting
against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceeding under the laws of the United States or any State
thereof.  Notwithstanding anything to the
contrary contained herein, any SPC may (i) with notice to, but without
prior consent of the Borrower and the Administrative Agent and with the payment
of a processing fee of $3,500, assign all or any portion of its right to
receive payment with respect to any Loan to the Granting Lender and
(ii) disclose on a confidential basis any non-public information relating
to its funding of Loans to any rating agency, commercial paper dealer or
provider of any surety or Contingent Obligation or credit or liquidity
enhancement to such SPC.

 

(i)                                     Resignation as
L/C Issuer or Swing Line Lender after Assignment.  Notwithstanding anything to the contrary
contained herein, if at any time Bank of America assigns all of its Commitment
and Loans pursuant to subsection (b) above, Bank of America may,
(i) upon 30 days’ notice to the Borrower and the Lenders, resign as L/C
Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as Swing
Line Lender.  In the event of any such
resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled
to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender
hereunder; provided, however, that no failure by the Borrower to
appoint any such successor shall affect the resignation of Bank of America as L/C
Issuer or Swing Line Lender, as the case may be.  If Bank of America resigns as L/C Issuer, it
shall retain all the rights and obligations of the L/C Issuer hereunder with
respect to all Letters of Credit outstanding as of the effective date of its
resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Loans or fund
risk participations in Unreimbursed Amounts pursuant to
Section 2.04(c)).  If Bank of
America resigns as Swing Line Lender, it shall retain all the rights of the
Swing Line Lender provided for hereunder with respect to Swing Line Loans made
by it and outstanding as of the effective date of such resignation, including
the right to require the Lenders to make Base Rate Loans or fund risk
participations in outstanding Swing Line Loans pursuant to
Section 2.05(c).

 

10.07.                  Treatment
of Certain Information; Confidentiality.  Each of the Administrative Agent, the Lenders
and the L/C Issuer agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, advisors and representatives (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such

 

98

 

Information
confidential), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners),
(c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party hereto,
(e) in connection with the exercise of any remedies hereunder or under any
other Loan Document or any action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same
as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the Borrower
and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to the
Administrative Agent, any Lender, the L/C Issuer or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower.

 

For purposes of this
Section, “Information” means all information received from the Borrower
or any Subsidiary relating to the Borrower or any Subsidiary or any of their
respective businesses, other than any such information that is available to the
Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis
prior to disclosure by the Borrower or any Subsidiary, provided that, in
the case of information received from the Borrower or any Subsidiary after the
date hereof, such information is clearly identified at the time of delivery as
confidential.  Any Person required to
maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

 

10.08.                  Right
of Setoff.  If an Event
of Default shall have occurred and be continuing, each Lender, the L/C Issuer
and each of their respective Affiliates is hereby authorized at any time and
from time to time, but only after obtaining the prior written consent of the
Administrative Agent, to the
fullest extent permitted by applicable law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by such Lender, the L/C Issuer or any such Affiliate to or for the
credit or the account of the Borrower or
any other Loan Party against any and all of the obligations of the
Borrower or such Loan Party now
or hereafter existing under this Agreement or any other Loan Document to such
Lender or the L/C Issuer, irrespective of whether or not such Lender or the L/C
Issuer shall have made any demand under this Agreement or any other Loan
Document and although such obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to
a branch or office of such Lender or the L/C Issuer different from the branch
or office holding such deposit or obligated on such indebtedness.  The rights of each Lender, the L/C Issuer and
their respective Affiliates under this Section are in addition to other
rights and remedies (including other rights of setoff) that such Lender, the
L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to
notify the Borrower and the Administrative Agent promptly after any such setoff
and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application.

 

99

 

10.09.                  Interest
Rate Limitation. 
Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable Law
(the “Maximum Rate”).  If the
Administrative Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
of the Loans or, if it exceeds such unpaid principal, refunded to the
Borrower.  In determining whether the
interest contracted for, charged, or received by the Administrative Agent or a
Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate,
and spread in equal or unequal parts the total amount of interest throughout
the contemplated term of the Obligations hereunder.

 

10.10.                  Counterparts;
Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement and the other Loan Documents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof that, when taken together, bear
the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of
a manually executed counterpart of this Agreement.

 

10.11.                  Survival
of Representations and Warranties.  All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by
the Administrative Agent and each Lender, regardless of any investigation made
by the Administrative Agent or any Lender or on their behalf and
notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain outstanding.

 

10.12.                  Severability.  If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

100

 

10.13.                  Replacement
of Lenders.  If any
Lender requests compensation under Section 3.04, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01, if any
Lender is a Defaulting Lender or if any
other circumstance exists hereunder that gives the Borrower the right to
replace a Lender as a party hereto, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in, and consents required by,
Section 10.06), all of its interests, rights and obligations under this
Agreement and the related Loan Documents to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that:

 

(a)                                  the Borrower
shall have paid to the Administrative Agent the assignment fee specified in
Section 10.06(b);

 

(b)                                 such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and L/C Advances, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.05) from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower
(in the case of all other amounts);

 

(c)                                  in the case of
any such assignment resulting from a claim for compensation under
Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such
compensation or payments thereafter; and

 

(d)                                 such assignment
does not conflict with applicable Laws.

 

A Lender shall not
be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.

 

10.14.                  Governing
Law; Jurisdiction; Etc.

 

(a)                                  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEVADA.

 

(b)                                 SUBMISSION TO
JURISDICTION.  THE
BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEVADA SITTING IN CLARK
COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE DISTRICT OF NEVADA, AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION
OR

 

101

 

ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH NEVADA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, IN SUCH FEDERAL COURT. 
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.  NOTHING IN THIS AGREEMENT OR IN ANY
OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY
LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)                                  WAIVER OF VENUE.  THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

 

(d)                                 SERVICE OF
PROCESS.  EACH LOAN PARTY  IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

 

10.15.                  Waiver
of Jury Trial.  EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS

 

102

 

BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

10.16.                  Arbitration Reference.

 

(a)                                  At the option of the Administrative Agent
from time to time (exercised in accordance with consent of the Requisite
Lenders) or of Borrower, any controversy or claim between or among the parties
arising out of or relating to this Agreement or any agreements or instruments
relating hereto or delivered in connection herewith and any claim based on or
arising from an alleged tort, shall be determined by arbitration.  The arbitration shall be conducted in
accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision in this Agreement, and under the
Commercial Rules of the American Arbitration Association (“AAA”).  The arbitrators shall give effect to statutes
of limitation in determining any claim. 
Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrators.  Judgment
upon the arbitration award may be entered in any court having
jurisdiction.  The institution and
maintenance of an action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to arbitration if
any other party contests such action for judicial relief.

 

(b)                                 No provision of this section shall
limit the right of any party to this Agreement to exercise self-help remedies
such as setoff, to foreclose against or sell any real or personal property
collateral or security or to obtain provisional or ancillary remedies from a
court of competent jurisdiction before, after, or during the pendency of any
arbitration or other proceeding.  The
exercise of a remedy does not waive the right of either party to resort to
arbitration or reference.  At the
Administrative Agent’s option, foreclosure under a deed of trust or mortgage
may be accomplished either by exercise of power of sale under the deed of trust
or mortgage or by judicial foreclosure.

 

10.17.                  USA
PATRIOT Act Notice.  Each Lender
that is subject to the Act (as hereinafter defined) and the Administrative
Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower
that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Act”), it is required to
obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender or the Administrative Agent, as applicable, to
identify the Borrower in accordance with the Act.

 

10.18.                  Time of
the Essence.  Time is of
the essence of the Loan Documents.

 

10.19.                  Designation
as Senior Debt.  All
Obligations are hereby certified and designated to be “Designated Senior
Indebtedness” for purposes of and as defined in that the Indenture dated as of
June 11, 2004, between the Borrower and U.S. Bank National Association, as
trustee,  and all supplemental indentures
thereto.

 

103

 

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

 

	
   

  	
  HERBST
  GAMING, INC., a Nevada

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward Herbst

  
	
   

  	
  Edward
  Herbst, President and Chief Executive

  Officer

  

 

1

 

	
   

  	
  BANK OF
  AMERICA, N.A.,
as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gina Meador

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Gina Meador

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

2

 

	
   

  	
  BANK OF
  AMERICA, N.A., as a Lender, L/C

  Issuer and Swing Line Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter J. Vitale

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Peter J. Vitale

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

3

 

	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, 
as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Denette Corrales

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Denette Corrales

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

4

 

	
   

  	
  WELLS
  FARGO BANK, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cathy Santoro

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Cathy Santoro

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

5

 

	
   

  	
  THE CIT
  GROUP/EQUIPMENT FINANCING,

  INC., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carl E. Myrick

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Carl E. Myrick, SVP

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

6

 

	
   

  	
  COMERICA
  WEST INCORPORATED, 
as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eoin Collins

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Eoin Collins

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  
					

 

7

 

	
   

  	
  LEHMAN COMMERCIAL
  PAPER INC., 
as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Francis Chang

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Francis Chang,

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
					

 

8

 

	
   

  	
  NEVADA
  STATE BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven A. Strunk

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Steven A. Strunk

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

9

 

EXHIBIT A

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (this “Assignment and Assumption”) is
dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the
“Assignee”).  Capitalized terms used but
not defined herein shall have the meanings given to them in the Credit
Agreement identified below (as amended, restated, extended or otherwise
modified from time to time, the “Credit Agreement”), receipt of a copy of which
is hereby acknowledged by the Assignee. 
The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes
from the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including, without limitation, the Letters of Credit and the Swing Line Loans
included in such facilities) and (ii) to the extent permitted to be assigned
under applicable law, all claims, suits, causes of action and any other right
of the Assignor (in its capacity as a Lender) against any Person, whether known
or unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to
the rights and obligations sold and assigned pursuant to clause (i) above (the
rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as, the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.

 

	
  1.                                       Assignor:

  	
   

  
	
  2.                                       Assignee:

  	
   

  

 

3.                                       Borrower(s):                              HERBST
GAMING, INC.

 

4.                                       Administrative
Agent: Bank of America, N.A.

 

5.                                       Credit
Agreement:  Credit Agreement, dated
as of June 10, 2004, among HERBST GAMING, INC., the Lenders from time to
time party thereto, and BANK OF
AMERICA, N.A., as Administrative Agent

 

1

 

6.                                       Assigned
Interest:

 

	
  Facility

  Assigned(1)

  	
   

  	
  Aggregate

  Amount of

  Commitment/Loans

  for all Lenders*

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned*

  	
   

  	
  Percentage

  Assigned of

  Commitment/Loans

  	
   

  	
  CUSIP

  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

7.                                       Trade
Date:                                                              ](2)

 

Effective Date:
                             ,
20     [THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN
THE REGISTER THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed
to:

 

	
   

  	
  ASSIGNOR

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Consented to and Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BANK OF AMERICA, N.A.,

  	
   

  	
   

  
	
  as Administrative Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Consented to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
							

 

*  Amount to be adjusted by the
counterparties to take into account any payments or prepayments made between
the Trade Date and the Effective Date.

(1)     Fill in the appropriate terminology for the types
of facilities under the Credit Agreement that are being assigned under this
Assignment (e.g. “Revolving Commitment”, “Term Commitment”, etc.).

(2)     To be completed if the Assignor and the Assignee
intend that the minimum assignment amount is to be determined as of the Trade
Date.

 

2

 

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.                                                    Representations
and Warranties.

 

1.1.                                           Assignor.  The Assignor (a) represents and warrants that
(i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

 

1.2.                                           Assignee.  The Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it meets all requirements of an Eligible Assignee under the
Credit Agreement (subject to receipt of such consents as may be required under
the Credit Agreement), (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Lender thereunder and, to
the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to Section 6.01
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is a
Foreign Lender, attached hereto is any documentation required to be delivered
by it pursuant to the terms of the Credit Agreement, duly completed and
executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

2.                                                    Payments.  From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.

 

3

 

3.                                                    General
Provisions.  This Assignment and
Assumption shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns.  This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument.  Delivery of an executed
counterpart of a signature page of this Assignment and Assumption by telecopy
shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption.  This
Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of California.

 

4

 

EXHIBIT
B

 

FORM OF COMPLIANCE CERTIFICATE

 

Financial Statement Date:          ,

 

To:                              Bank of America, N.A., as
Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of
June 10, 2004 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among HERBST GAMING, INC., a
Nevada corporation (the “Borrower”), each Lender from time to time party
thereto and BANK OF AMERICA, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender.

 

The undersigned Responsible Officer hereby certifies as of the date
hereof that he/she is the                       
of the Borrower, and that, as such, he/she is authorized to execute and deliver
this Certificate to the Administrative Agent on the behalf of the Borrower, and
that:

 

[Use following paragraph 1 for fiscal year-end financial statements]

 

1.                                       Attached
hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.01(a) of the Agreement for the fiscal year of the
Borrower ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.

 

[Use following paragraph 1 for fiscal quarter-end financial statements]

 

1.                                       Attached
hereto as Schedule 1 are the unaudited financial statements required by
Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower
ended as of the above date.  Such
financial statements fairly present the financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries in accordance
with GAAP as at such date and for such period, subject only to normal year-end
audit adjustments and the absence of footnotes.

 

2.                                       The
undersigned has reviewed and is familiar with the terms of the Agreement and
has made, or has caused to be made under his/her supervision, a detailed review
of the transactions and condition (financial or otherwise) of the Borrower
during the accounting period covered by the attached financial statements.

 

3.                                       A
review of the activities of the Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining
whether during such fiscal period the Borrower performed and observed all its
Obligations under the Loan Documents, and to the best knowledge of the
undersigned during such fiscal period, the Borrower performed and observed each
covenant and condition of the Loan Documents applicable to it.

 

1

 

4.                                       The
representations and warranties of the Borrower contained in Article V of
the Agreement, and any representations and warranties of the Borrower that are
contained in any document furnished at any time under or in connection with the
Loan Documents, are true and correct on and as of the date hereof, except to
the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date,
and except that for purposes of this Compliance Certificate, the
representations and warranties contained in subsections (a) and (b) of
Section 5.05 of the Agreement shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01 of the Agreement, including the statements in connection with
which this Compliance Certificate is delivered.

 

5.                                       The
financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this
Certificate.

 

IN WITNESS WHEREOF,
the undersigned has executed this Certificate as of                             ,
              .

 

	
   

  	
  HERBST GAMING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

2

 

For the Quarter/Year ended                           (“Statement
Date”)

 

SCHEDULE 2
to the Compliance Certificate

($ in 000’s)

 

I.                                         Section 7.12
– Senior Debt to EBITDA Ratio.

 

	
  A.

  	
   

  	
  Outstanding principal amount of Senior Debt at
  Statement Date:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  EBITDA for the subject period (Line I.A.9):

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Senior Debt to EBITDA  Ratio
  (Line A  ̧ Line B):

  	
   

  	
   

  	
  : 1.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Minimum Senior Debt to
  EBITDA Ratio:

  	
   

  	
   

  
	
   

  	
   

  	
  Closing Date through
  and including  September 30, 2006

  	
   

  	
  2.75:1.00

  
	
   

  	
   

  	
  December 31, 2006
  and thereafter

  	
   

  	
  2.25:1.00

  
							

 

II.                                     Section 7.13 – Total Debt to
EBITDA Ratio

 

	
  A.

  	
   

  	
  Outstanding principal amount of Funded Debt at
  Statement Date:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  EBITDA for Subject Period:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Total Debt to EBITDA  Ratio
  (Line A  ̧ Line B):

  	
   

  	
   

  	
  : 1.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Minimum Total Debt to EBITDA Ratio:

  	
   

  	
   

  
	
   

  	
   

  	
  Closing Date through and including  March 31, 2008

  	
   

  	
  5.00:1.00

  
							

 

III.                                 Section 7.14
– Fixed Charge Coverage Ratio.

 

	
  A.

  	
   

  	
  EBITDA for the period ending on above date (“Subject
  Period”):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.                                       Net Income for Subject Period:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                                       Extraordinary loss plus any net
  loss realized by Borrower and its Subsidiaries in connection with any
  Disposition to the extent such losses were deducted in computing Net Income
  during Subject Period:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.                                       Extraordinary gain reflected in Net
  Income during Subject Period:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.                                       Interest charges deducted in computing
  Net Income during Subject Period:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.                                       Pre-opening expenses deducted in Net
  Income during Subject Period:

  	
   

  	
  $

  	
   

  

 

3

 

	
   

  	
   

  	
  6.                                       Depreciation, Amortization and all
  other non-cash expenses deducted in computing Net Income during Subject
  Period:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.                                       Non-cash losses associated with
  prepayment of Indebtedness during Subject Period:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.                                       EBITDA (Lines 1 + 2 – 3 + 4 + 5 + 6 +
  7):

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Interest Charges plus scheduled amortization
  of Indebtedness of Borrower and its Subsidiaries during Subject Period:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Fixed Charge Coverage Ratio (Line I.A.8  ̧ Line B):

  	
   

  	
   

  	
  : 1.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Minimum Fixed Charge
  Coverage Ratio:

  	
   

  	
   

  
	
   

  	
   

  	
  Closing Date through
  and including June 30, 2007

  	
   

  	
  1.25:1.00

  
	
   

  	
   

  	
  September 30, 2007
  through and including September 30, 2008

  	
   

  	
  1.15:1.00

  
	
   

  	
   

  	
  December 31, 2008
  and thereafter

  	
   

  	
  1.10:1.00

  
							

 

IV.                                Section 7.15
— Capital Expenditures.

 

	
  A.

  	
   

  	
  Maintenance Capital
  Expenditures in an made during fiscal year to date:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Maximum annual aggregate
  principal amount:

  	
   

  	
  $

  	
  17,500,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Excess (deficient) for
  covenant compliance (Line IV.A – IV.B):

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Growth Capital
  Expenditures in an made during fiscal year to date:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Maximum annual aggregate
  principal amount:

  	
   

  	
  $

  	
  60,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Excess (deficient) for
  covenant compliance (Line IV.D – IV.E):

  	
   

  	
  $

  	
   

  

 

4

 

EXHIBIT
F

 

FORM OF SWING LINE LOAN NOTICE

 

Date:                   ,
         

 

To:                              Bank of America, N.A., as Swing Line
Lender

Bank of America, N.A., as
Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that
certain Credit Agreement, dated as of June 10, 2004 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
among Herbst Gaming, Inc., a Nevada corporation (the “Borrower”), the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent, L/C Issuer and Swing Line thereto, and Bank of America, N.A., as
Administrative Agent, L/C Issuer and Swing Line Lender.

 

The undersigned hereby
requests a Swing Line Loan:

 

1.                                       On                       
(a Business Day).

 

2.                                       In the amount of $                          .

 

The
Swing Line Borrowing requested herein complies with the requirements of the
provisos to the first sentence of Section 2.05(a) of the Agreement.

 

	
   

  	
  HERBST GAMING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

2

 

EXHIBIT
C

 

FORM OF LOAN NOTICE

 

Date:                  ,
            

 

To:                              Bank
of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of June 10,
2004 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being
used herein as therein defined), among Herbst Gaming, Inc., a Nevada
corporation (the “Borrower”), the Lenders from time to time party thereto, and
Bank of America, N.A., as Administrative Agent.

 

The undersigned hereby requests (select one):

 

	
  o  A Borrowing of Loans

  	
  o  A conversion or continuation of Loans

  
	
   

  	
   

  
	
  1.                                       On
                                          
  (a Business Day).

  
	
   

  	
   

  
	
  2.                                       In
  the amount of $                                 .

  
	
   

  	
   

  
	
  3.                                       Comprised
  of                                                                            

  	
  .

  
	
                                           [Base
  Rate Loan or Eurodollar Rate Loan]

  
	
   

  	
   

  
	
  4.                                       For
  Eurodollar Rate Loans:  with an
  Interest Period of         months.

  
	
   

  	
   

  
	
  5.                                       Under
  the                                                    

  	
  Commitment.

  
	
                                      [Revolving or Term]

  
						

 

The Borrowing, if any, requested herein complies with the provisos to
the first sentence of Sections 2.01 and 2.02 of the Agreement.

 

	
   

  	
  HERBST GAMING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

1

 

Exhibit D

 

PLEDGE
AGREEMENT

 

This
PLEDGE AGREEMENT (this “Agreement”), dated as 
                            ,
2004,  is made by the Persons listed on
the signature pages hereto together with each of the Persons who may become a
party hereto pursuant to Section 15 of this Agreement (each a “Grantor”
and collectively, “Grantors”), jointly and severally in favor of Bank of
America, N.A., as the Administrative Agent (“Administrative Agent”) under the
Credit Agreement referred to below for the ratable benefit of each of the
lenders which are parties to the Credit Agreement from time to time
(collectively, the “Lenders” and individually, a “Lender”), as Secured Party,
with reference to the following facts:

 

RECITALS

 

A.                                   Pursuant to the
Credit Agreement dated as of June 10, 2004, by and among Herbst Gaming,
Inc., a Nevada corporation (“Borrower”), the Lenders and Administrative Agent
(as be amended, extended, renewed, supplemented or otherwise modified from time
to time, the “Credit Agreement”), the Lenders have agreed to extend certain
credit facilities to Borrower.

 

B.                                     The Credit
Agreement provides, as a condition precedent to the Lenders’ obligation to
extend credit facilities to Borrower, that Grantors shall enter into this
Agreement, and shall pledge certain Pledged Collateral to Secured Party, all
under the terms and conditions set forth in this Agreement.

 

C.                                     Each Grantor
expects to realize direct and indirect benefits as a result of the availability
of the aforementioned credit facilities.

 

AGREEMENT

 

NOW,
THEREFORE, in order to induce the Lenders to extend credit facilities to
Borrower under the Credit Agreement, and for other good and valuable
consideration, the receipt and adequacy of which hereby are acknowledged,
Grantors hereby jointly and severally represent, warrant, covenant, agree, and pledge
as follows:

 

1.                                       Definitions.  This Agreement is the “Pledge
Agreement” referred to in the Credit Agreement. 
Terms defined in the Credit Agreement and not otherwise defined in this
Agreement shall have the meanings given those terms in the Credit Agreement as
though set forth herein in full.  The
following terms shall have the meanings respectively set forth after each:

 

“Certificates” means all certificates,
instruments or other documents now or hereafter representing or evidencing any
Pledged Securities.

 

1

 

“Distributions” means dividends,
distributions, redemption payments, liquidation payments, and all rights to any
of the foregoing (other than any Distributions made by Borrower in accordance
with the Credit Agreement).

 

“Gaming Board” means, collectively,
(a) the Nevada Gaming Commission, (b) the Nevada State Gaming Control
Board, and (c) any other Governmental Agency that holds regulatory,
licensing or permit authority over gambling, gaming or casino activities
conducted by Borrower and its Subsidiaries within its jurisdiction.

 

“Gaming Laws” means all Laws pursuant to
which any Gaming Board possesses regulatory, licensing or permit authority over
gambling, gaming or casino activities conducted by Borrower and its
Subsidiaries within its jurisdiction, including, without limitation, the Nevada
Gaming Control Act, as amended from time to time, and the rules and regulations
of any Gaming Board promulgated thereunder.

 

“Issuer” means any issuer of any Pledged
Securities.

 

“Pledged Collateral” means (a) the
Pledged Securities, and any Certificates or other written evidences
representing such equity interests and any interest of any Grantor in the
entries on the books of any securities intermediary or financial intermediary
pertaining thereto, (b) all proceeds and products of any of the foregoing,
and (c) any and all collections, Distributions, interest or premiums with
respect to any of the foregoing.

 

“Pledged Securities” means (a) any and all
shares of capital stock or member or other equity interests in all of the
Subsidiaries of Borrower now or hereafter owned by Grantors, (b) any and
all securities now or hereafter issued in substitution, exchange or replacement
therefor, or with respect thereto, and (c) any and all warrants, options
or other rights to subscribe to or acquire any additional shares of capital
stock or member or other equity interests in any Subsidiary of Borrower owned
by Grantors.

 

“Secured Obligations” means (a) with respect
to Borrower, all of the Obligations of Borrower at any time or from time to
time owed to Secured Party under the Loan Agreement and any of the other Loan
Documents, (b) with respect to Flamingo Paradise Gaming, LLC, a Nevada limited
liability company (“Flamingo”), all of the Obligations of Flamingo at any time
or from time to time owed to Secured Party under the Guaranty of even date
herewith, by Flamingo in favor of Secured Party, (c) with respect to Market
Gaming, Inc., a Nevada corporation (“Market Gaming”), all of the Obligations of
Market Gaming at any time or from time to time owed to Secured Party under the
Guaranty of even date herewith, by Market Gaming in favor of Secured Party, (d)
with respect to E-T-T, Inc., a Nevada corporation (“ETT”), all of the Obligations
of ETT at any time or from time to time owed to Secured Party under the
Guaranty of even date herewith, by ETT in favor of Secured Party, and (e) with
respect to all other Subsidiaries, all of the Obligations of such Subsidiaries
at any time or from time to time owed to Secured Party under the Guaranty of
even date herewith, by such Subsidiaries in favor of Secured Party, all whether
due or to become due, matured or unmatured, liquidated or unliquidated, or
contingent or noncontingent.

 

2

 

“Secured Party” means the Administrative
Agent (acting as the Administrative Agent and/or on behalf of the Lenders, the
L/C Issuer, and any party to a Secured Swap Contract that is an Affiliate of a
Lender) and the Lenders which are parties to the Credit Agreement from time to
time.  Subject to the terms and
conditions of the Credit Agreement, any right, remedy, privilege or power of
Secured Party shall be exercised by the Administrative Agent.

 

2.                                       Incorporation of Representations, Warranties,
Covenants and Other Provisions of Loan Documents.  This
Agreement is one of the Loan Documents referred to in the Credit
Agreement.  All representations,
warranties, affirmative and negative covenants and other provisions contained
in any Loan Document that are applicable to Loan Documents generally are fully
applicable to this Agreement and are incorporated herein by this reference as
though set forth herein in full.  In
addition, each Grantor hereby represents and warrants to Secured Party as
follows:

 

(a)                                  Each Grantor
has good and marketable title to the Pledged Collateral in which such Grantor
is purporting to grant a security interest to Administrative Agent on behalf of
Secured Party, and the Pledged Collateral is not subject to any Lien other
than Permitted Encumbrances and other encumbrances permitted pursuant to
the Credit Agreement;

 

(b)                                 Each Grantor
has the right and power to pledge the Pledged Collateral owned by such Grantor
to Administrative Agent on behalf of Secured Party without the consent,
approval or authorization of, or notice to, any Person (other than such
consents, approvals, authorization or notices which have been obtained or given
prior to the date hereof) and such pledge constitutes the valid, binding and
enforceable obligation of such Grantor, enforceable against such Grantor in
accordance with the terms hereof and the other Loan Documents, except as
enforcement may be limited by Debtor Relief Laws or equitable principles
relating to the granting of specific performance and other equitable remedies
as a matter of judicial discretion;

 

(c)                                  Upon delivery
to Administrative Agent of the Pledged Collateral referred to in this
Agreement, Administrative Agent will have a first priority perfected security
interest in the Pledged Collateral securing the Secured Obligations, except
with respect to that portion of the Pledged Collateral security Indebtedness
under the Existing Senior Notes, as permitted by Article VII of the Credit
Agreement, which shall be subject to the Liens related thereto until such time
as such Indebtedness has been paid off, but in no event later than
September 15, 2005;

 

(d)                                 All shares of
capital stock or member or other equity interest that constitute a portion of
the Pledged Collateral are duly authorized, validly issued in accordance with
all applicable Laws, fully paid and non-assessable, and represent one hundred
percent (100%) of the issued and outstanding shares of common stock or member
or other equity interest of each of the Subsidiaries of Borrower.

 

3.                                       Creation of Security Interest.

 

3.1                                 Pledge of
Pledged Collateral.  Each
Grantor hereby pledges to Administrative Agent on behalf of Secured Party and
grants to Administrative Agent on behalf

 

3

 

of Secured Party a security
interest in and to all Pledged Collateral for the benefit of Secured Party,
together with all products, proceeds, Distributions, cash, instruments and
other property, and any and all rights, titles, interests, privileges, benefits
and preferences appertaining or incidental to the Pledged Collateral.  The security interest and pledge created by
this Section 3.1 shall continue in effect so long as any Secured
Obligation is owed to Secured Party or any commitment to extend credit to the
Borrower under the Loan Documents remains outstanding from the Lenders.

 

3.2                                 Delivery of
Certain Pledged Collateral.  Within 90 days following the Closing Date,
Grantors shall obtain approval in accordance with Gaming Laws for the pledge of
the Pledged Collateral.  On or before
September 15, 2005, Grantors shall cause to be delivered to Administrative
Agent for the benefit of Secured Party the Certificates evidencing the capital
stock, membership interest or other equity interests listed on Schedule 1
hereto.  All such certificates shall be
held in the State of Nevada at a location approved by the Nevada State Gaming
Control Board and shall be made available for inspection by agents or employees
of the Nevada State Gaming Control Board immediately upon request during normal
business hours.  Following the date of
this Agreement, subject to compliance with Gaming Laws, additional Pledged
Collateral may from time to time be delivered to Administrative Agent for the
benefit of Secured Party by agreement between Secured Party and Grantors.  All Certificates at any time delivered to
Administrative Agent for the benefit of Secured Party shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed and undated
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party. 
Administrative Agent shall hold all Certificates pledged hereunder
pursuant to this Agreement unless and until released in accordance with
Section 3.3 of this Agreement.

 

3.3                                 Release of
Pledged Collateral.  Pledged
Collateral that is required to be released from the pledge and security
interest created by this Agreement in order to permit any Grantor to consummate
any disposition of stock or assets, merger, consolidation, amalgamation,
acquisition, or dividend payment or distribution that such Grantor is entitled
to consummate pursuant to the Loan Documents, if any, shall be so released by
Administrative Agent at such times and to the extent necessary to permit such Grantor
to consummate such permitted transactions promptly following Administrative
Agent’s receipt of written request therefor by such Grantor specifying the
purpose for which release is requested and such further certificates or other
documents as Secured Party reasonably shall request in its discretion to
confirm that such Grantor is permitted to consummate such permitted transaction
and to confirm Secured Party’s replacement Lien on appropriate collateral
(unless replacement collateral is not required pursuant to the Loan
Documents).  Any request for any
permitted release shall be transmitted to Administrative Agent on behalf of
Secured Party.  Administrative Agent, at
the expense of Grantors, promptly shall redeliver all Certificates and shall
execute and deliver to Grantors all documents requested by Grantors that are
reasonably necessary to release Pledged Collateral of record whenever Grantors
shall be entitled to the release thereof in accordance with this
Section 3.3.

 

4.                                       Security for Obligations.  This
Agreement and the pledge and security interests granted herein secure the
prompt payment, in full in cash, and full performance of, all Secured
Obligations, whether for principal, interest, fees, expenses or otherwise,
including, without limitation, all interest that accrues on all or any part of
the Secured Obligations after the

 

4

 

filing of any petition or
pleading against Borrower, any Grantor or any other Person for a proceeding
under any Debtor Relief Law.

 

5.                                       Further Assurances.

 

5.1                                 Subject to
compliance with applicable Gaming Laws, each Grantor agrees that at any time,
and from time to time, at its own expense such Grantor will promptly execute,
deliver and file (or authorize Secured Party to file) or record all further
financing statements, instruments and documents, and will take all further
actions, including, without limitation, causing the issuers of, or obligors on
any of the Pledged Collateral to so execute, deliver, file or take other actions,
that may be necessary or desirable, or that Secured Party reasonably may
request, in order to perfect and protect any pledge or security interest
granted hereby or to enable Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral and to preserve,
protect and maintain the Pledged Collateral and the value thereof, including,
without limitation, payment of all taxes, assessments and other charges imposed
on or relating to the Pledged Collateral. 
It is hereby acknowledged and agreed that, notwithstanding anything
contained herein or in any other Collateral Document, Grantors shall not be
required under any circumstances to take any further action to perfect any
interest granted to Secured Party in any cage cash, deposit accounts, markers,
instruments or other cash items which are used in connection with the casino
operations of Grantors.  Subject to
compliance with applicable Gaming Laws, Grantors hereby (a) irrevocably
direct the issuers of or obligors on any such Pledged Collateral, or each
securities intermediary, registrar, transfer agent or trustee for any such
Pledged Collateral, to accept the provisions of this Agreement as conclusive
evidence of the right of Secured Party to effect any transfer or exercise any
right hereunder or with respect to any such Pledged Collateral, notwithstanding
any other notice or direction to the contrary heretofore or hereafter given by
such Grantor or any other Person to any of such parties; and (b) covenant
and agree to transfer or reinvest any such Pledged Collateral, immediately upon
Secured Party’s request, in such manner as may be deemed necessary or desirable
by Secured Party to create and perfect, and to continue and preserve, an
indefeasible security interest in such Pledged Collateral in favor of
Administrative Agent on behalf of Secured Party, or the priority, control and
exclusivity thereof, free of all other Liens and claims except as may be
permitted by the terms hereof or of the Credit Agreement.

 

5.2                                 Grantor agrees
to assist Secured Party in obtaining all approvals of any Gaming Board or other
Governmental Authority that are required by law for or in connection with any
action or transaction contemplated by this Agreement or by Article 8 or
Article 9 of the Uniform Commercial Code as in effect in the State of
Nevada and, at Secured Party’s request after and during the continuance of an
Event of Default, to prepare, sign and file with the appropriate Gaming Board
the transferor’s portion of any application or applications for consent to the
transfer of control thereof necessary or appropriate under applicable Gaming
Laws for approval of any sale or transfer of the Pledged Collateral pursuant to
the exercise of Secured Party’s remedies hereunder and under the Loan
Documents.

 

6.                                       Voting Rights; Dividends; etc.  So
long as no Default or Event of Default under the Credit Agreement occurs and
remains continuing:

 

5

 

6.1                                 Voting Rights.  Grantors shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Pledged
Securities, or any part thereof, for any purpose not inconsistent with the
terms of this Agreement, the Credit Agreement, or the other Loan Documents (provided,
however, that Grantors shall not exercise or shall refrain from
exercising, any such right if it would result in a Default).

 

6.2                                 Interest and
Distribution Rights.  Grantors
shall be entitled to receive and to retain and use any and all interest,
premiums or Distributions (other than any Distribution representing a return of
capital, redemption or liquidation payment, sale or other disposition proceeds
or other similar payment) paid in respect of the Pledged Collateral; provided,
however, that any and all such Distributions received in the form of
capital stock (or other equity interest) shall be, and the Certificates
representing such capital stock (or other equity interest) forthwith shall be
delivered subject to compliance with Gaming Laws to Administrative Agent to hold
as, Pledged Collateral and shall, if received by any Grantor, be received in
trust for the benefit of Secured Party, be segregated from the other property
of such Grantor, and forthwith be delivered to Administrative Agent for the
benefit of Secured Party as Pledged Collateral in the same form as so received
(with any necessary endorsements) in suitable form for transfer by delivery or
accompanied by executed and undated instruments of transfer or assignment in
blank, all in form and substance satisfactory to Secured Party.

 

7.                                       Rights During Event of Default.  When
an Event of Default has occurred and is continuing, subject to compliance with
Gaming Laws:

 

7.1                                 Voting and
Distribution Rights.  At the
option of Secured Party, all rights of any Grantor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 6.1 above, and to receive the interest, premiums and
Distributions which it would otherwise be authorized to receive and retain
pursuant to Section 6.2 above, shall cease, and all such rights shall
thereupon become vested in Administrative Agent for the benefit of Secured
Party who shall thereupon, at the direction of Secured Party, have the sole
right to exercise such voting and other consensual rights and to receive and to
hold as Pledged Collateral such Distributions. 
Administrative Agent shall give notice to each applicable Grantor of
Secured Party’s election to exercise voting rights with respect to the Pledged
Collateral; provided, however, that (i) neither the giving
of such notice nor the receipt thereof by any Grantor shall be a condition to
exercise of any rights of Secured Party hereunder, and (ii) neither
Administrative Agent nor any Lender shall incur any liability for failing to
give such notice.

 

7.2                                 Distributions
Held in Trust.  All
Distributions which are received by any Grantor contrary to the provisions of
this Agreement shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of such Grantor, and forthwith shall be
paid over to Administrative Agent for the account of Secured Party as Pledged
Collateral in the same form as so received (with any necessary endorsements).

 

7.3                                 Irrevocable
Proxy.  Each Grantor hereby revokes
all previous proxies with regard to the Pledged Securities and, to the extent
allowable under applicable Gaming Laws, appoints Administrative Agent for the
benefit of Secured Party as its proxyholder to attend and vote at any and all
meetings of the shareholders (or other equity holders, as

 

6

 

applicable) of the
corporations (or other entities, as applicable) which issued the Pledged
Securities, and any adjournments thereof, held on or after the date of the
giving of this proxy and prior to the termination of this proxy and to execute
any and all written consents of shareholders (or other equity holders, as
applicable) of such corporations (or other entities, as applicable) executed on
or after the date of the giving of this proxy and prior to the termination of
this proxy, with the same effect as if such Grantor had personally attended the
meetings or had personally voted its shares (or other equity interests, as
applicable) or had personally signed the written consents; provided, however,
that the proxyholder shall have rights hereunder only upon the occurrence and
during the continuance of an Event of Default under the Credit Agreement and
subject to compliance with Gaming Laws. 
Each Grantor hereby authorizes Administrative Agent to, subject to
compliance with Gaming Laws, substitute another Person as the proxyholder and,
upon the occurrence or during the continuance of any Event of Default, hereby
authorizes and directs the proxyholder to file this proxy and the substitution
instrument with the secretary or other appropriate officer of the appropriate
corporation or other entity as applicable. 
This proxy is coupled with an interest and is irrevocable until such
time as no commitment to extend credit to Borrower remains outstanding from the
Lenders and until such time as all Secured Obligations have been paid and
performed in full.

 

8.                                       Transfers and Other Liens.  Each
Grantor agrees that, except as specifically permitted under the Loan Documents,
it will not (i) sell, assign, exchange, transfer or otherwise dispose of,
or contract to sell, assign, exchange, transfer or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral,
(ii) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral, except for Permitted Encumbrances and other encumbrances
permitted pursuant to the Credit Agreement, or (iii) take any action with
respect to the Pledged Collateral which is inconsistent with the provisions or
purposes of this Agreement or any other Loan Document.

 

9.                                       Secured Party Appointed Attorney-in-Fact.  Each
Grantor hereby irrevocably appoints Administrative Agent for the benefit of
Secured Party as such Grantor’s attorney-in-fact, with full authority in the
place and stead of such Grantor, and in the name of such Grantor, or otherwise,
from time to time, in Secured Party’s sole and absolute discretion to do any of
the following acts or things: 
(a) to do all acts and things and to execute all documents
necessary or advisable to perfect and continue perfected the security interests
created by this Agreement and to preserve, maintain and protect the Pledged
Collateral; (b) to do any and every act which such Grantor is obligated to
do under this Agreement; (c) to prepare, sign, file and record, in such
Grantor’s name, any financing statement covering the Pledged Collateral; and
(d) to endorse and transfer the Pledged Collateral upon foreclosure by
Secured Party; provided, however, that Administrative Agent shall
be under no obligation whatsoever to take any of the foregoing actions, and
neither Administrative Agent nor any Lender shall have any liability or
responsibility for any act (other than Administrative Agent’s or such Lender’s
own gross negligence or willful misconduct) or omission taken with respect
thereto.  The foregoing power of attorney
is coupled with an interest and is irrevocable. 
Each Grantor hereby agrees to repay immediately upon demand all
reasonable costs and expenses incurred or expended by Secured Party in exercising
any right or taking any action under this Agreement, together with interest as
provided for in the Credit Agreement.

 

7

 

10.                                 Administrative Agent May Perform Obligations. If any Grantor fails to perform any
Obligation contained herein, Administrative Agent for the benefit of Secured
Party may, but without any obligation to do so and without notice to or demand
upon Grantors, perform the same and take such other action as Secured Party may
deem necessary or desirable to protect the Pledged Collateral or Secured
Party’s security interests therein, Administrative Agent being hereby
authorized (without limiting the general nature of the authority hereinabove
conferred) to pay, purchase, contest and compromise any Lien which in the
reasonable judgment of Secured Party appears to be prior or superior to Secured
Party’s security interests, and in exercising any such powers and authority to
pay necessary expenses, employ counsel and pay reasonable attorneys’ fees.  Each Grantor hereby agrees to repay
immediately upon demand all sums so expended by Secured Party, together with
interest from the date of expenditure at the rates provided for in the Credit
Agreement.  Neither Administrative Agent
nor any Lender shall be under any duty or obligation to preserve, maintain
or protect the Pledged Collateral or any of any Grantor’s rights or interest
therein, exercise any voting rights with respect to the Pledged Collateral,
whether or not a Default or Event of Default has occurred or is continuing, or
make or give any notices of default, presentments, demands for performance,
notices of nonperformance or dishonor, protests, notices of protest or notice
of any other nature whatsoever in connection with the Pledged Collateral on
behalf of any Grantor or any other Person having any interest therein; and
neither Administrative Agent nor any Lender assumes and none shall be obligated
to perform the Secured Obligations of any Grantor, if any, with respect to the
Pledged Collateral.

 

11.                                 Reasonable Care. 
Administrative Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Pledged Collateral in its possession if
the Pledged Collateral is accorded treatment substantially similar to that which
Administrative Agent accords its own property, it being understood that
Administrative Agent shall not have any responsibility for ascertaining or
taking action with respect to maturities, calls, conversions, exchanges,
tenders or other matters relative to any Pledged Collateral, whether or not
Administrative Agent has or is deemed to have knowledge of such matters, or
taking any necessary steps to preserve rights against any Person with respect
to any Pledged Collateral.  The
Administrative Agent shall comply with the conditions, if any, imposed by the
Gaming Board in connection with the approvals of the security interest granted
hereunder by Grantor, including, without limitation, any conditions requiring
Administrative Agent to permit representatives of the Gaming Board to inspect
such securities and Certificates. 
Administrative Agent shall not surrender possession of any Pledged
Collateral to any party other than Grantors without the prior approval of the
Gaming Board or as otherwise permitted by applicable Gaming Laws.

 

12.                                 Events of Default and Remedies.

 

12.1                           Rights Upon
Event of Default.  Upon the
occurrence and during the continuance of an Event of Default under the Credit
Agreement, Grantors shall be in default hereunder and Secured Party shall have
in any jurisdiction where enforcement is sought, in addition to all other
rights and remedies that Secured Party may have under this Agreement and under
applicable Law or in equity, all of its rights and remedies as a secured party
under the Uniform Commercial Code as enacted in any such jurisdiction, and in
addition the following rights and remedies, all of which may be exercised with
or without further notice to any Grantor:

 

8

 

(a)                                  to notify any
Issuer of any Pledged Securities and any and all other obligors on any Pledged
Collateral that the same has been pledged to Administrative Agent for the
benefit of Secured Party and that all Distributions and other payments thereon
are to be made directly and exclusively to Administrative Agent for the account
of Secured Party; to renew, extend, modify, amend, accelerate, accept partial
payments on, make allowances and adjustments and issue credits with respect to,
release, settle, compromise, compound, collect or otherwise liquidate, on terms
acceptable to Secured Party, in whole or in part, the Pledged Collateral and
any amounts owing thereon or any guaranty or security therefor; to enter into
any other agreement relating to or affecting the Pledged Collateral; and to
give all consents, waivers and ratifications with respect to the Pledged
Collateral and exercise all other rights (including voting rights), powers and
remedies and otherwise act with respect thereto as if Secured Party were the
owner thereof;

 

(b)                                 to enforce
payment and prosecute any action or proceeding with respect to any and all of
the Pledged Collateral and take or bring, in Secured Party’s name(s) or in the
name of the applicable Grantor(s), all steps, actions, suits or proceedings
deemed by Secured Party necessary or desirable to effect collection of or to
realize upon the Pledged Collateral;

 

(c)                                  in accordance
with applicable Law, to take possession of the Pledged Collateral with or
without judicial process;

 

(d)                                 to endorse, in
the name of the applicable Grantor(s), all checks, notes, drafts, money orders,
instruments and other evidences of payment relating to the Pledged Collateral;

 

(e)                                  to transfer any
or all of the Pledged Collateral into the name of Secured Party or its nominee
or nominees; and

 

(f)                                    in accordance
with applicable Law (including applicable Gaming Laws), to foreclose the Liens
and security interests created under this Agreement or under any other
agreement relating to the Pledged Collateral by any available judicial
procedure or without judicial process, and to sell, assign or otherwise dispose
of the Pledged Collateral or any part thereof, either at public or private sale
or at any broker’s board or securities exchange, in lots or in bulk, for cash,
on credit or on future delivery, or otherwise, with or without representations
or warranties, and upon such terms as shall be acceptable to Secured Party;

 

all at the sole option of and in the sole discretion of Secured Party.

 

12.2                           Notice of Sale.  Secured Party shall give Grantors at least
ten (10) days’ written notice of sale of all or any part of the Pledged
Collateral.  Subject to Compliance with
Gaming Laws, any sale of the Pledged Collateral shall be held at such time or
times and at such place or places as Secured Party may determine in the
exercise of its sole and absolute discretion. 
Secured Party may bid (which bid may be, in whole or in part, in the
form of cancellation of Secured Obligations) for and purchase for the account
of Secured Party or any nominee of Secured Party the whole or any part of the
Pledged Collateral.  Secured Party shall
not be obligated to make any sale of the Pledged Collateral if it shall
determine not to do so regardless of the fact that notice of sale of the Pledged
Collateral may have been given.  Secured

 

9

 

Party may, without notice or
publication, adjourn the sale from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned.

 

12.3                           Private Sales.  Subject to compliance with Gaming Laws, upon
the occurrence and during the continuance of an Event of Default under the
Credit Agreement, whether or not any of the Pledged Collateral has been
effectively registered under the Securities Act of 1933, as amended, or other
applicable Laws, Secured Party may, in its sole and absolute discretion, sell
all or any part of the Pledged Collateral at private sale in such manner and
under such circumstances as Secured Party may deem necessary or advisable in
order that the sale may be lawfully conducted. 
Without limiting the foregoing, Secured Party may (i) approach and
negotiate with a limited number of potential purchasers, and (ii) restrict
the prospective bidders or purchasers to Persons who will represent and agree
that they are purchasing the Pledged Collateral for their own account for
investment and not with a view to the distribution or resale thereof.  In the event that any of the Pledged Collateral
is sold at private sale, each Grantor agrees that if the Pledged Collateral is
sold for a price which Secured Party in good faith believes to be reasonable,
then, (A) the sale shall be deemed to be commercially reasonable in all
respects, (B) such Grantor shall not be entitled to a credit against the
Secured Obligations in an amount in excess of the purchase price, and
(C) Secured Party shall not incur any liability or responsibility to such
Grantor in connection therewith, notwithstanding the possibility that a
substantially higher price might have been realized at a public sale.  Each Grantor recognizes that a ready market
may not exist for Pledged Collateral which is not regularly traded on a
recognized securities exchange or in another recognized market, and that a sale
by Secured Party of any such Pledged Collateral for an amount substantially
less than a pro rata share of the fair market value of such Issuer’s assets
minus liabilities may be commercially reasonable in view of the difficulties that
may be encountered in attempting to sell a large amount of Pledged Collateral
or Pledged Collateral that is privately traded.

 

12.4                           Title of
Purchasers.  Subject to
compliance with Gaming Laws, upon consummation of any sale of Pledged
Collateral pursuant to this Section 12, Administrative Agent on behalf of
Secured Party shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Pledged Collateral so sold.  Each such purchaser at any such sale shall
hold the Pledged Collateral sold absolutely free from any claim or right on the
part of Grantors, and each Grantor hereby waives (to the extent permitted by
applicable Law) all rights of redemption, stay and appraisal which it now has
or may at any time in the future have under any rule of Law or statute now
existing or hereafter enacted.  If the
sale of all or any part of the Pledged Collateral is made on credit or for
future delivery, Secured Party shall not be required to apply any portion of
the sale price to the Secured Obligations until such amount actually is
received by Secured Party, and any Pledged Collateral so sold may be retained
by Secured Party until the sale price is paid in full by the purchaser or
purchasers thereof.  Secured Party shall
not incur any liability in case any such purchaser or purchasers shall fail to
pay for the Pledged Collateral so sold, and, in case of any such failure, the
Pledged Collateral may be sold again upon like notice.

 

12.5                           Disposition of
Proceeds of Sale.  The net
cash proceeds resulting from the collection, liquidation, sale or other
disposition of the Pledged Collateral shall be applied, first, to the
reasonable costs and expenses (including reasonable attorneys’ fees) of

 

10

 

retaking, holding, storing,
processing and preparing for sale, selling, collecting and liquidating the
Pledged Collateral, and the like; second, to the satisfaction of all
Secured Obligations, with application as to any particular Secured Obligation
to be in the order set forth in the Credit Agreement or other Loan Documents;
and, third, to all other indebtedness secured hereby in such order and
manner as Secured Party in its sole and absolute discretion may determine.

 

13.                                 Continuing Effect.  This
Agreement shall remain in full force and effect and continue to be effective
should any petition be filed by or against any Grantor for liquidation or
reorganization, should any Grantor become insolvent or make an assignment for
the benefit of creditors or should a receiver or trustee be appointed for all
or any significant part of any Grantor’s assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable Law, rescinded or reduced in amount, or must otherwise be restored
or returned by Administrative Agent or any Lender, whether as a “voidable
preference,” “fraudulent conveyance” or otherwise (and whether by litigation,
settlement, demand or otherwise), all as though such payment or performance had
not been made.  In the event that any
payment or any part thereof is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount paid
and not so rescinded, reduced, restored or returned.

 

14.                                 Regulatory Matters. 
Administrative Agent, on behalf of Secured Party, acknowledges and
agrees that:

 

(a)                                  In the event
that Secured Party exercises one or more of the remedies set forth in Section 12
of this Agreement, including but not limited to re-registration of the Pledged
Collateral pursuant to applicable Gaming Laws, such exercise of remedies would
be deemed a separate transfer of the Pledged Collateral and would require the
separate and prior approval of the Gaming Board pursuant to applicable Gaming
Laws as in effect on the date hereof.

 

(b)                                 The approval by
the Gaming Board of this Agreement shall not act or be construed as the
approval, either express or implied, for the Secured Party to take any actions
or steps provided for in this Agreement for which prior approval of the Gaming
Board is required, without first obtaining such prior and separate approval of
the Gaming Board to the extent then required by applicable Law.

 

15.                                 Additional Grantors.  From
time to time following the Closing Date, additional Subsidiaries of Borrower
may become parties hereto, as additional Grantors, by executing and delivering
to Administrative Agent an Instrument of Joinder substantially in the form of
Exhibit A hereto, accompanied by such documentation as Administrative
Agent may require in connection therewith, wherein such additional Grantors
agree to become a party hereto and to be bound hereby.  Upon delivery of such Instrument of Joinder
to and acceptance thereof by Administrative Agent, notice of which acceptance
is hereby waived by Grantors, each such additional Grantor shall be as fully a
party hereto as if such Grantor were an original signatory hereof.  Each Grantor expressly agrees that its
Obligations and the Liens upon its property granted herein shall not be
affected or diminished by the addition or release of additional Grantors
hereunder, nor by any election of Secured Party not to cause Borrower or any
Subsidiary of Borrower to become an additional Grantor hereunder.  This Agreement shall be

 

11

 

fully effective as to any
Grantor who is or becomes a party hereto regardless of whether any other Person
becomes or fails to become or ceases to be a Grantor hereunder.

 

16.                                 Covenant Not to Issue Uncertificated
Securities.  Each Grantor represents and warrants to
Secured Party that all of the capital stock (or other equity interests) of each
of the Issuers is in certificated form (as contemplated by Article 8 of
the Uniform Commercial Code as in effect in the State of Nevada), and covenants
to Secured Party that it will not cause or permit any Issuer to issue any
capital stock (or other equity interest) in uncertificated form or seek to
convert all or any part of its existing capital stock (or other equity
interest) into uncertificated form (as contemplated by Article 8 of the
Uniform Commercial Code as in effect in the State of Nevada).  The foregoing representations, warranties and
covenants shall survive the execution and delivery of this Agreement.

 

17.                                 Covenant Not to Dilute Interests of Secured
Party in Pledged Securities.  Each Grantor represents, warrants and
covenants to Secured Party that it will not at any time cause or permit any
Issuer to issue any additional capital stock (or other equity interest), or any
warrants, options or other rights to acquire any additional capital stock (or
other equity interest), if the effect thereof would be to dilute in any way the
interests of Secured Party in any Pledged Securities or in any Issuer.

 

18.                                 Indemnity.  Each Grantor agrees to
indemnify and hold harmless Secured Party, and each of them, from and against
any and all claims, demands, losses, judgments and liabilities (including
without limitation liabilities for penalties) of whatsoever kind or nature, and
to reimburse Secured Party for all costs and expenses, including without
limitation reasonable attorneys’ fees and expenses and/or costs and expenses
associated with, arising out of or in connection with this Agreement, or any
waiver, supplementation, extension, renewal or amendment of any term or
provision hereof or the exercise by Secured Party of any right or remedy
granted to it hereunder or under the other Loan Documents (including in
connection with any workout, restructuring or bankruptcy, insolvency or other
similar proceeding), other than arising from the gross negligence or willful
misconduct of Secured Party.  In no event
shall Secured Party be liable for any matter or thing in connection with this
Agreement other than to account for monies actually received by it in
accordance with the terms hereof.  If and
to the extent that the agreements of the Grantors under this Section 18
are unenforceable for any reason, each Grantor hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable Law.

 

19.                                 GOVERNING LAW. 
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEVADA.

 

20.                                 Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one and
the same agreement.

 

21.                                 Additional Powers and Authorization.  The
Administrative Agent has been appointed as the Administrative Agent hereunder
pursuant to the Credit Agreement and shall be entitled to the benefits of the
Credit Agreement and the other Loan Documents. 
Notwithstanding

 

12

 

anything contained herein to
the contrary, the Administrative Agent may employ agents, trustees, or
attorneys-in-fact and may vest any of them with any property (including,
without limitation, the Pledged Collateral), title, right or power deemed
necessary for the purposes of such appointment.

 

22.                                 Incorporation of Suretyship Provisions and
Waivers.  The attached Exhibit B,
“Suretyship Provisions and Waivers,” is hereby incorporated by this reference
as though set forth herein in full.

 

23.                                 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH GRANTOR (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.

 

13

 

IN
WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed as
of the date first above written.

 

	
   

  	
  “Grantors”

  
	
   

  	
   

  
	
   

  	
  HERBST GAMING, INC.,

  
	
   

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  E-T-T, INC.,

  
	
   

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
									

 

14

 

ACCEPTED
AND AGREED

AS
OF THE DATE FIRST

ABOVE
WRITTEN:

 

“Secured
Party”

 

BANK
OF AMERICA, N.A.,

as Administrative Agent

 

	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  
	
  Title:

  	
   

  	
   

  
					

 

15

 

SCHEDULE 1

 

PLEDGED SECURITIES

 

	
  Name
  of Issuer

  	
   

  	
  Name of Owner

  	
   

  	
  Certificate

  Number(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage

  Ownership

  	
   

  
	
  Market
  Gaming, Inc.

  	
   

  	
  Herbst
  Gaming, Inc.

  	
   

  	
  4

  	
   

  	
  3,000

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flamingo
  Paradise Gaming, LLC

  	
   

  	
  Herbst
  Gaming, Inc.

  	
   

  	
  9 & 10

  	
   

  	
  N/A

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E-T-T
  Enterprises L.L.C.

  	
   

  	
  Herbst
  Gaming, Inc.

  	
   

  	
  4

  	
   

  	
  N/A

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E-T-T,
  Inc.

  	
   

  	
  Herbst
  Gaming, Inc.

  	
   

  	
  4

  	
   

  	
  3,000

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cardivan
  Company

  	
   

  	
  E-T-T,
  Inc.

  	
   

  	
  7

  	
   

  	
  1,250

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Corral
  Coin, Inc.

  	
   

  	
  E-T-T,
  Inc.

  	
   

  	
  11

  	
   

  	
  600

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Corral
  Country Coin, Inc.

  	
   

  	
  E-TT,
  Inc.

  	
   

  	
  1

  	
   

  	
  2,500

  	
   

  	
  100

  	
  %

  

 

1

 

EXHIBIT
A

 

INSTRUMENT
OF JOINDER

 

THIS
INSTRUMENT OF JOINDER (“Joinder”) is executed as of                              ,
        , by                                            ,
a                                                      
(“Joining Party”), and delivered to Bank of America, N.A., as Administrative
Agent, pursuant to the Pledge Agreement dated as of            ,
2004 made by Herbst Gaming, Inc., a Nevada corporation and E-T-T, Inc., a
Nevada corporation,  as initial Grantors,
in favor of the Administrative Agent and the Lenders referred to below (as
amended, extended, renewed, supplemented or otherwise modified, the “Pledge
Agreement”).  Terms used but not defined
in this Joinder shall have the meanings defined for those terms in the Pledge
Agreement.

 

RECITALS

 

(a)                                  The Pledge
Agreement was made by the Grantors in favor of the Administrative Agent for the
benefit of the Lenders that are parties to that certain Credit Agreement (as
amended, extended, renewed, supplemented or otherwise modified, the “Credit
Agreement”) dated as of June 10, 2004, by and among Herbst Gaming, Inc.
(“Borrower”), the Lenders which are parties thereto (the “Lenders”), Bank of
America, N.A., as the Administrative Agent for the Lenders (the “Administrative
Agent”).

 

(b)                                 Joining Party
is required pursuant to the Credit Agreement and the Pledge Agreement to become
a Grantor under the terms and conditions of the Pledge Agreement.

 

(c)                                  Joining Party
expects to realize direct and indirect benefits as a result of the continued
availability to Borrower of the credit facilities under the Credit Agreement.

 

NOW THEREFORE, Joining Party agrees as follows:

 

AGREEMENT

 

                (i)                                     By
this Joinder, Joining Party becomes a “Grantor” under and pursuant to
Section 15 of the Pledge Agreement. 
Joining Party agrees that, upon its execution hereof, it will become a
Grantor under the Pledge Agreement with respect to all Secured Obligations as
set forth in Section 4 of the Pledge Agreement, and will be bound by all
terms, conditions, and duties applicable to a Grantor under the Pledge
Agreement.

 

                (ii)                                  Concurrently
with the execution hereof, Joining Party shall cause to be pledged and
delivered to Administrative Agent the Certificates evidencing the capital stock
or other equity interests (if certificated) of all of the Subsidiaries of
Borrower listed on Schedule 1 hereto. 
All Certificates delivered to Secured Party shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
Administrative Agent.  All Certificates
delivered pursuant to this Joinder shall also be considered “Certificates” and
shall constitute “Pledged Collateral” as defined in the Pledge Agreement.

 

A-1

 

 

                (iii)                               The
effective date of this Joinder is
              ,
     .

 

	
   

  	
  “Joining Party”

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  a

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:                                                       

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:                                                  

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:                                                 

  	
   

  
	
   

  	
   

  
	
  ACKNOWLEDGED:

  	
   

  
	
   

  	
   

  
	
  BANK OF AMERICA, N.A.,

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
  By:                                                 

  	
   

  
	
   

  
	
  Name:                                                 

  	
   

  
	
   

  
	
  Title:                                                 

  	
   

  
						

 

A-2

 

SCHEDULE 1
TO INSTRUMENT OF JOINDER

TO
 PLEDGE AGREEMENT

 

Pledged
Securities

 

Joining Party:

 

	
  Issuer

  	
   

  	
  Class

  of

  Interest

  	
   

  	
  Certificate

  No(s).

  	
   

  	
  Number

  of

  Shares/Interests

  	
   

  	
  Percentage

  of

  Ownership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-3

 

EXHIBIT
B

 

SURETYSHIP
PROVISIONS AND WAIVERS

 

1.                                       Waivers and Consents.  Each
Grantor acknowledges that the Liens created or granted herein will or may
secure obligations of Persons other than such Grantor and, in full recognition
of that fact, each Grantor consents and agrees that Secured Party may, at any
time and from time to time, without notice or demand, and without affecting the
enforceability or security hereof:

 

(a)                                  supplement,
modify, amend, extend, renew, accelerate, or otherwise change the time for
payment or the terms of the Secured Obligations or any part thereof, including
any increase or decrease of the rate(s) of interest thereon;

 

(b)                                 supplement,
modify, amend or waive, or enter into or give any agreement, approval or
consent with respect to, the Secured Obligations or any part thereof or any of
the Loan Documents or any additional security or guaranties, or any condition,
covenant, default, remedy, right, representation or term thereof or thereunder;

 

(c)                                  accept new or
additional instruments, documents or agreements in exchange for or relative to
any of the Loan Documents or the Secured Obligations or any part thereof;

 

(d)                                 accept partial
payments on the Secured Obligations;

 

(e)                                  receive and
hold additional security or guaranties for the Secured Obligations or any part
thereof;

 

(f)                                    release,
reconvey, terminate, waive, abandon, subordinate, exchange, substitute,
transfer and enforce any security or guaranties, and apply any security and
direct the order or manner of sale thereof as Secured Party in its sole and
absolute discretion may determine;

 

(g)                                 release any
Person or any guarantor from any personal liability with respect to the Secured
Obligations or any part thereof;

 

(h)                                 settle, release
on terms satisfactory to Secured Party or by operation of applicable laws or
otherwise liquidate or enforce any Secured Obligations and any security or guaranty
therefor in any manner, consent to the transfer of any security and bid and
purchase at any sale; and

 

(i)                                     consent to the
merger, change or any other restructuring or termination of the corporate or
other existence of Borrower or any other Person, and correspondingly
restructure the Secured Obligations, and any such merger, change, restructuring
or termination shall not affect the liability of any Grantor or the continuing
existence of any Lien hereunder, under any other Loan Document to which any Grantor
is a party or the enforceability hereof or thereof with respect to all or any
part of the Secured Obligations.

 

B-1

 

Upon
the occurrence of and during the continuance of any Event of Default, Secured
Party may enforce this Agreement independently as to each Grantor and
independently of any other remedy or security Secured Party at any time may
have or hold in connection with the Secured Obligations, and it shall not be
necessary for Secured Party to marshal assets in favor of any Grantor or any
other Person or to proceed upon or against and/or exhaust any other security or
remedy before proceeding to enforce this Agreement.  Each Grantor expressly waives any right to
require Secured Party to marshal assets in favor of any Grantor, or any other
Person or to proceed against any other Person or any collateral provided by any
other Person, and agrees that Secured Party may proceed against any Person
and/or collateral in such order as it shall determine in its sole and absolute
discretion.  Secured Party may file a
separate action or actions against any Grantor, whether or not action is
brought or prosecuted with respect to any other security or against any other
Grantor, Borrower or any other Person, or whether or not any other Person is
joined in any such action or actions. 
Each Grantor agrees that Secured Party and Borrower and any Person may
deal with each other in connection with the Secured Obligations or otherwise,
or alter any contracts or agreements now or hereafter existing between any of
them, in any manner whatsoever, all without in any way altering or affecting
the validity of, or the pledge or security interest granted or created by, this
Agreement.  Secured Party’s rights
hereunder shall be reinstated and revived, and the enforceability of this
Agreement shall continue, with respect to any amount at any time paid on
account of the Secured Obligations which thereafter shall be required to be
restored or returned by Secured Party upon the bankruptcy, insolvency or
reorganization of any Grantor or any other Person or otherwise (and whether by
litigation, settlement, demand or otherwise), all as though such amount had not
been paid.  Each Grantor agrees that the
Liens created or granted herein and the enforceability of this Agreement at all
times shall remain effective to secure the full amount of all the Secured
Obligations including, without limitation, the amount of all loans and interest
thereon at the rates provided for in the Credit Agreement and the note(s)
thereunder, even though the Secured Obligations, including any part
thereof or any other security or guaranty therefor, may be or hereafter may
become invalid or otherwise unenforceable as against Borrower or any other
Person and whether or not Borrower or any other Person shall have any personal
liability with respect thereto.  Each
Grantor expressly waives any and all defenses now or hereafter arising or
asserted by reason of (a) any disability or other defense of Borrower or
any other Person with respect to the Secured Obligations, (b) the
unenforceability or invalidity of any security or guaranty for the Secured
Obligations or the lack of perfection or continuing perfection or failure or
subordination of priority of any security for the Secured Obligations,
(c) the cessation for any cause whatsoever of the liability of Borrower or
any other Obligor (other than by reason of the full payment and performance of
all Secured Obligations), (d) any failure of Secured Party to marshal assets
in favor of such Grantor or any other Person, (e) except as otherwise
provided in this Agreement, any failure of Secured Party to give notice of sale
or other disposition of collateral to such Grantor or any other Person or any
defect in any notice that may be given in connection with any sale or
disposition of collateral, (f) except as otherwise provided in this
Agreement, any failure of Secured Party to comply with applicable Laws in
connection with the sale or other disposition of any Pledged Collateral or other
security for any Secured Obligation, including, without limitation, any
failure of Secured Party to conduct a commercially reasonable sale or other
disposition of any Pledged Collateral or other security for any Secured
Obligation, (g) any act or omission of Secured Party or others that
directly or indirectly results in or aids the discharge or release of Borrower
or any other Person or the Secured Obligations or any other

 

B-2

 

security
or guaranty therefor by operation of Law or otherwise, (h) any Law which
provides that the obligation of a surety or guarantor must neither be larger in
amount nor in other respects more burdensome than that of the principal or
which reduces a surety’s or guarantor’s obligation in proportion to the
principal obligation, (i) any failure of Secured Party to file or enforce
a claim in any bankruptcy or other proceeding with respect to any Person,
(j) the election by Secured Party, in any bankruptcy proceeding of any Person,
of the application or non-application of Section 1111(b)(2) of the United
States Bankruptcy Code, (k) any extension of credit or the grant of any
Lien under Section 364 of the United States Bankruptcy Code, (l) any
use of cash collateral under Section 363 of the United States Bankruptcy
Code, (m) any agreement or stipulation with respect to the provision of
adequate protection in any bankruptcy proceeding of any Person, (n) the
avoidance of any Lien in favor of Secured Party for any reason, (o) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against any Person, including
any discharge of, or bar or stay against collecting, all or any of the Secured
Obligations (or any interest thereon) in or as a result of any such proceeding,
(p) to the extent permitted, the benefits of any form of one-action rule
under any applicable Law, or (q) any action taken by Secured Party that is
authorized by this Section 1 or any other provision of any Loan
Document.  Until no part of any
commitment to lend remains outstanding and all of the Secured Obligations have
been paid and performed in full, Grantors shall have no right of subrogation,
contribution, reimbursement or indemnity, and each Grantor expressly waives any
right to enforce any remedy that Secured Party now has or hereafter may have
against any other Person and waives the benefit of, or any right to participate
in, any other security now or hereafter held by Secured Party.  Each Grantor waives all rights and defenses
arising out of an election of remedies by Secured Party, even though that
election of remedies, such as a non-judicial foreclosure with respect to
security for the Secured Obligations has destroyed such Grantor’s rights of subrogation
and reimbursement against the principal. 
Each Grantor expressly waives all setoffs and counterclaims and all
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all other
notices or demands of any kind or nature whatsoever with respect to the Secured
Obligations, and all notices of acceptance of this Agreement or of the
existence, creation or incurring of new or additional Secured Obligations.

 

2.                                       Condition of Borrower and its Subsidiaries.  Each
Grantor represents and warrants to Secured Party that such Grantor has
established adequate means of obtaining from Borrower and its Subsidiaries on a
continuing basis, financial and other information pertaining to the businesses,
operations and condition (financial and otherwise) of Borrower and its
Subsidiaries, and their Properties, and such Grantor now is and hereafter will
be completely familiar with the businesses, operations and condition (financial
and otherwise) of Borrower and its Subsidiaries and their Properties.  To the maximum extent permitted by law, each
Grantor hereby expressly waives and relinquishes any duty on the part of
Secured Party (should any such duty exist) to disclose to such Grantor any matter,
fact or thing related to the businesses, operations or condition (financial or
otherwise) of Borrower or its Subsidiaries, or their Properties, whether now
known or hereafter known by Secured Party during the life of this Agreement.  With respect to any of the Obligations,
Secured Party need not inquire into the powers of any Borrower or any of its
Subsidiaries thereof, or the officers or employees acting or purporting to act
on their behalf, and all Secured Obligations made or created in good faith reliance
upon the professed exercise of such powers shall be secured hereby.

 

B-3

 

3.                                       Liens on Real Property.  In
the event that all or any part of the Secured Obligations at any time are
secured by any one or more deeds of trust or mortgages or other instruments
creating or granting Liens on any interests in real property, each Grantor
authorizes Secured Party, upon the occurrence of and during the
continuance of any Event of Default, at its sole option, without notice or
demand and without affecting any obligations of any Grantor, the enforceability
of this Agreement, or the validity or enforceability of any Liens of Secured
Party on any collateral, to foreclose any or all of such deeds of trust or
mortgages or other instruments by judicial or nonjudicial sale.  To the maximum extent permitted by law, each
Grantor expressly waives any defenses to the enforcement of this Agreement or
any Liens created or granted hereby or to the recovery by Secured Party against
Borrower, any other Obligor or any guarantor or any other Person liable
therefor of any deficiency after a judicial or nonjudicial foreclosure or sale,
even though such a foreclosure or sale may impair the subrogation rights of
such Grantor and may preclude such Grantor from obtaining reimbursement or
contribution from any other Person.  Each
Grantor expressly waives any defenses or benefits that may be derived from
Nevada Revised Statutes Sections 40.430 (and judicial decisions relating
thereto), 40.451, 40.455, 40.457 and 40.459, or comparable provisions of the
Laws of any other jurisdiction, and all other suretyship defenses it otherwise
might or would have under any other applicable Law.  Each Grantor expressly waives any right to
receive notice of any judicial or nonjudicial foreclosure or sale of any real
property or interest therein subject to any such deeds of trust or mortgages or
other instruments and any Grantor’s failure to receive any such notice shall
not impair or affect such Grantor’s obligations hereunder and under the other
Loan Documents or the enforceability of this Agreement or any Liens created or
granted hereby.

 

4.                                       Waiver of Rights of Subrogation. 
Notwithstanding anything to the contrary elsewhere contained herein or
in any other Loan Document to which any Grantor is a Party, each Grantor hereby
waives with respect to Borrower and its successors and assigns (including any
surety) and any other Person any and all rights at Law or in equity, to
subrogation, to reimbursement, to exoneration, to indemnity, to contribution,
to setoff or to any other rights that could accrue to a surety against a
principal, to a guarantor against a maker or obligor, to an accommodation party
against the party accommodated, or to a holder or transferee against a maker
and which such Grantor may have or hereafter acquire against Borrower or any
other Person in connection with or as a result of such Grantor’s execution,
delivery and/or performance of this Agreement or any other Loan Document to
which such Grantor is a Party.  Each
Grantor agrees that it shall not have or assert any such rights against
Borrower or its successors and assigns or any other Person (including
any surety) which is directly or indirectly a creditor of any other Person or
any surety for any other Person, either directly or as an attempted setoff to
any action commenced against such Grantor by Borrower (as borrower or in any
other capacity) or any other Person. 
Each Grantor hereby acknowledges and agrees that this waiver is intended
to benefit Secured Party and shall not limit or otherwise affect such Grantor’s
liability hereunder, under any other Loan Document to which such Grantor is a
Party, or the enforceability hereof or thereof.

 

5.                                       Waiver of Discharge. 
Without limiting the generality of the foregoing, each Grantor hereby
waives discharge by waiving all defenses based on suretyship or impairment of
collateral.

 

B-4

 

6.                                       Understandings with Respect to Waivers and
Consents.  Each Grantor warrants and agrees that each of
the waivers and consents set forth herein is made after consultation with legal
counsel and with full knowledge of its significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such Grantor
otherwise may have against Borrower, Secured Party or others, or against
collateral, and that, under the circumstances, the waivers and consents herein
given are reasonable and not contrary to public policy or Law.  If any of the waivers or consents herein are
determined to be contrary to any applicable Law or public policy, such waivers
and consents shall be effective to the maximum extent permitted by Law.

 

B-5

 

EXHIBIT E

 

FORM OF REVOLVING NOTE

 

	
  $

  	
   

  	
   

  	
  June 10,
  2004

  

 

FOR VALUE RECEIVED, the undersigned promises to pay to
the order of                 
                                              
(the “Revolving Lender”), the principal amount of                                                 DOLLARS
($                    )
or such lesser aggregate amount of Revolving Loan as may be made by the
Revolving Lender with respect to the Revolving Commitment under the Credit
Agreement referred to below, together with interest on the principal amount of
each Revolving Loan made hereunder and remaining unpaid from time to time from
the date of each such Revolving Loan until the date of payment in full, payable
as hereinafter set forth.

 

Reference is made to the Credit Agreement dated as of
June 10, 2004, by and among the undersigned, as Borrower, the Lenders
which are parties thereto from time to time and Bank of America N.A., as
Administrative Agent (“Administrative Agent”) (as amended, extended,
renewed, supplemented or otherwise modified from time to time, the “Credit
Agreement”).  Terms defined in the Credit
Agreement and not otherwise defined herein are used herein with the meanings
given those terms in the Credit Agreement. 
This is one of the Revolving Notes referred to in the Credit Agreement,
and any holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Credit Agreement as originally executed or as it
may from time to time be supplemented, modified or amended.  The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events upon the terms and conditions therein specified.

 

The principal indebtedness evidenced by this Revolving
Note shall be payable as provided in the Credit Agreement and in any event on
the Maturity Date.

 

Interest shall be payable on the outstanding daily
unpaid principal amount of each Revolving Loan from the date of each such
Revolving Loan until payment in full and shall accrue and be payable at the
rates and on the dates set forth in the Credit Agreement both before and after
Default, before and after maturity, before and after judgment, and before and
after the commencement of any proceeding under any Debtor Relief Law, with
interest on overdue principal and interest to bear interest at the Default Rate
set forth in Section 2.11 of the Credit Agreement, to the fullest extent
permitted by applicable Law.

 

Each payment hereunder shall be made to the
Administrative Agent at the Administrative Agent’s Office for the account of
the Revolving Lender in immediately available funds not later than
2:00 p.m. on the day of payment (which must be a Business Day).  All payments received after 2:00 p.m. on
any particular Business Day shall be deemed received on the next succeeding
Business Day.  All payments shall be made
in lawful money of the United States of America without setoff, counterclaim,
recoupment or deduction of any kind.

 

The Revolving Lender shall use its best efforts to
keep a record of Revolving Loans made by it and payments received by it with
respect to this Revolving Note, and such record shall, as against Borrower, be
presumptive evidence of the amounts owing under this Revolving Note.

 

1

 

The undersigned hereby promises to pay all costs and
expenses of any rightful holder hereof incurred in collecting the undersigned’s
obligations hereunder or in enforcing or attempting to enforce any of such
holder’s rights hereunder, including reasonable attorneys’ fees and
disbursements, whether or not an action is filed in connection therewith.

 

The undersigned hereby waives presentment, demand for
payment, dishonor, notice of dishonor, protest, notice of protest and any other
notice or formality, to the fullest extent permitted by applicable Laws.

 

This Revolving Note shall be delivered to and accepted
by the Revolving Lender, or by the Administrative Agent on its behalf, in the
State of Nevada, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.

 

	
   

  	
  HERBST GAMING, INC.,

  	 

	
   

  	
  a Nevada corporation

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	 

	
   

  	
  Title:

  	
   

  	
   

  	 

							

 

2

 

EXHIBIT
C

 

FORM OF LOAN NOTICE

 

Date:                ,
        

 

To:                              Bank
of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of
June 10, 2004 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among Herbst Gaming, Inc., a
Nevada corporation (the “Borrower”), the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent.

 

The undersigned hereby requests (select one):

 

o  A
Borrowing of Loans                                                                                                                                                       o  A
conversion or continuation of Loans

 

	
  6.                                       On
                                          
  (a Business Day).

  
	
   

  	
   

  
	
  7.                                       In
  the amount of $                                 .

  
	
   

  	
   

  
	
  8.                                       Comprised
  of                                                                                       

  	
  .

  
	
                                             [Base
  Rate Loan or Eurodollar Rate Loan]

  
	
   

  	
   

  
	
  9.                                       For
  Eurodollar Rate Loans:  with an
  Interest Period of         months.

  
	
   

  	
   

  
	
  10.                                 Under
  the                                                              

  	
  Commitment.

  
	
                                      [Revolving or Term]

  
						

 

The Borrowing, if any, requested herein complies with the provisos to
the first sentence of Sections 2.01 and 2.02 of the Agreement.

 

	
   

  	
  HERBST GAMING, INC.

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  Title:

  	
   

  	
   

  	 

							

 

1

 

EXHIBIT
F

 

FORM OF SWING LINE LOAN NOTICE

 

Date:                          ,
           

 

To:                              Bank of
America, N.A., as Swing Line Lender

Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of
June 10, 2004 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
among Herbst Gaming, Inc., a Nevada corporation (the “Borrower”), the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent, L/C Issuer and Swing Line Lender.

 

The undersigned hereby requests a Swing Line Loan:

 

1.                                       On                          
(a Business Day).

 

2.                                       In the amount
of $                           .

 

The Swing Line Borrowing requested herein complies with the
requirements of the provisos to the first sentence of
Section 2.05(a) of the Agreement.

 

	
   

  	
  HERBST GAMING, INC.

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  Title:

  	
   

  	
   

  	 

							

 

1

 

EXHIBIT G

 

FORM OF TERM NOTE

 

	
  $

  	
   

  	
   

  	
  June 10,
  2004

  

 

FOR VALUE RECEIVED, the undersigned promises to pay to
the order of                                          (the
“Term Lender”), the principal amount of                                    
DOLLARS ($                    )
made by the Term Lender with respect to the Term Commitments under the Credit
Agreement referred to below, together with interest on the principal amount of
each Term Loan made hereunder and remaining unpaid from time to time from the
date of each such Term Loan until the date of payment in full, payable as
hereinafter set forth.

 

Reference is made to the Credit Agreement dated as of
June 10, 2004, by and among the undersigned, as Borrower, the Lenders
which are parties thereto from time to time and Bank of America N.A., as
Administrative Agent (“Administrative Agent”) (as amended, extended, renewed,
supplemented or otherwise modified from time to time, the “Credit
Agreement”).  Terms defined in the Credit
Agreement and not otherwise defined herein are used herein with the meanings
given those terms in the Credit Agreement. 
This is one of the Term Notes referred to in the Credit Agreement, and
any holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Credit Agreement as originally executed or as it
may from time to time be supplemented, modified or amended.  The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events upon the terms and conditions therein specified.

 

The principal indebtedness evidenced by this Term Note
shall be payable as provided in the Credit Agreement and in any event on the
Maturity Date.

 

Interest shall be payable on the outstanding daily
unpaid principal amount of each Term Loan from the date of each such Term Loan
until payment in full and shall accrue and be payable at the rates and on the
dates set forth in the Credit Agreement both before and after Default, before
and after maturity, before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law, with interest on
overdue principal and interest to bear interest at the Default Rate set forth
in Section 2.11 of the Credit Agreement, to the fullest extent permitted
by applicable Law.

 

Each payment hereunder shall be made to the
Administrative Agent at the Administrative Agent’s Office for the account of
the Term Lender in immediately available funds not later than 2:00 p.m. on
the day of payment (which must be a Business Day).  All payments received after 2:00 p.m. on
any particular Business Day shall be deemed received on the next succeeding
Business Day.  All payments shall be made
in lawful money of the United States of America without setoff, counterclaim,
recoupment or deduction of any kind.

 

The Term Lender shall use its best efforts to keep a
record of Term Loans made by it and payments received by it with respect to
this Term Note, and such record shall, as against Borrower, be presumptive
evidence of the amounts owing under this Term Note.

 

The undersigned hereby promises to pay all costs and
expenses of any rightful holder hereof incurred in collecting the undersigned’s
obligations hereunder or in enforcing or attempting to enforce any of such
holder’s rights hereunder, including reasonable attorneys’ fees and
disbursements, whether or not an action is filed in connection therewith.

 

1

 

The undersigned hereby waives presentment, demand for
payment, dishonor, notice of dishonor, protest, notice of protest and any other
notice or formality, to the fullest extent permitted by applicable Laws.

 

This Term Note shall be delivered to and accepted by
the Term Lender, or by the Administrative Agent on its behalf, in the State of Nevada,
and shall be governed by, and construed and enforced in accordance with, the
local Laws thereof.

 

	
   

  	
  HERBST GAMING, INC.,

  	 

	
   

  	
  a Nevada corporation

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	 

	
   

  	
  Title:

  	
   

  	
   

  	 

							

 

 

 

SCHEDULE 1.01

 

CASINO LEASES

 

 

SEE ATTACHED

 

2

LEASE AGREEMENT

 

THIS LEASE, made
this 1st day of August, 1998, by and between E-T-T Enterprises, L.L.C.
(hereinafter “Lessor”), and E-T-T, Inc.(Hereinafter “Lessee”).

 

WITNESSETH: that
the Lessor in consideration of the rent herein specified to be paid by the
Lessee, and the covenants and conditions herein mentioned, does hereby lease,
let and demise, unto Lessee, and the Lessee does hereby rent from the Lessor
that certain real property and personal property along with all improvements
thereto, to wit, a casino building consisting of approximately 15,300 square
feet and 32 acres of unimproved land (Hereinafter the ”Property”) situated
in the County of Nye, State of Nevada, whose street address is 5870 Homestead
Road, Pahrump, Nevada. A legal description of the land, along with a floorplan
and site plan, is attached hereto as Exhibit “A” and incorporated herein
by reference. A complete list of the personal property, furniture,
fixtures and equipment which Lessor shall lease to Lessee pursuant to this
Lease is attached hereto as “Exhibit B” and incorporated herein by
reference.

 

TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.

 

THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terms and conditions, namely:

 

1.                                       TERM:     This
Lease shall be a twenty (20) year lease commencing on August 1, 1998.

 

2.                                       RENTAL:     The
Lessee agrees to pay to the Lessor as rental for the Property the sum of One
Hundred Thousand Dollars ($100,000.00) per month on the first of each month for
the duration of said lease.

 

1

 

3.                                       RIGHTS
& TITLE:     Lessee agrees that buildings and
improvements hereafter located or erected on premises at any time during the
term of his Lease, or extension thereof, shall be and remain property of Lessor
and Lessee shall have no title, rights or interest in said buildings and improvements
other than such interest granted hereby.

 

4.                                       QUIET
POSSESSION:     Lessor hereby covenants, warrants,
and agrees that at all times during the term hereof, provided Lessee is
not in default hereunder, Lessee shall have the full, peaceful and quite
possession of the Property, and, further that Lessor has full right and
power to make and enter into this lease.

 

5.                                       TAXES
AND UTILITY CHARGES:     Lessee agrees to pay all
real taxes, and assessments which may be levied against the improvements
thereon and any personal property and trade fixtures located therein and will
pay charges for light, power and other public utilities used by it in
connection with the use of the Property.

 

6.                                       ALTERATIONS:     The
Lessee agrees that before commencing any construction work on said premises or
making any alterations on improvements placed upon the Property that he
will notify Lessor in order that a notice of non-responsibility may be
posted on the Property and recorded in accordance with the provisions of
the Mechanic’s Lien Law of the State of Nevada.

 

7.                                       REQUIREMENTS
FOR ALTERATIONS:     Lessee covenants and agrees
that such alterations and/or changes shall be at his sole cost and expense and
that prior written consent of the Lessor shall be obtained therefore; and
provided that such changes and alterations shall conform with building codes
and zoning regulations now or hereinafter legally effective, and
promulgated by the State, County or Municipal authorities.

 

8.                                       REPAIRS:     Lessee
agrees, at his cost and expense, to maintain and keep in good order, condition
and repair the casino and all ancillary buildings or improvements to be

 

2

 

constructed thereon by Lessee and all fixtures and equipment, including
visible plumbing and electrical fixtures. 
The Lessee agrees to keep the Property clean and to have no nuisance,
unsightly rubbish, or to commit or cause to be committed by its employees,
and/or sub- tenants, any violation of the laws, rules or regulations of
the State, County or Municipal Board of Health or appropriate
sanitary agency.

 

9.                                       TITLE
TO FIXTURES:     All fixtures and other property
and materials installed in the building on the Property by the Lessee shall be
and remain the property of the Lessee, and at the expiration of the
Lease, the Lessee may, within thirty (30) days, remove from said premises
all of such fixtures, property, and materials, provided that all expenses
connected with the removal thereof shall be at the expense of the Lessee. The
Lessee further agrees to repair at his sole expense all damage that may result
from the removal of such building, fixtures and other property and to
restore the Property to the condition in which they were prior to the
start of construction and that no building or improvements placed upon
said premises by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.

 

10.                                 LIABILITY
AND FIRE INSURANCE:     The Lessor shall require
the Lessee to carry, maintain and have in full force and effect fire,
workmen’s compensation, public liability, and product liability insurance with
a recognized insurance company authorized to transact business in the State of
Nevada for the benefit of the Lessor and Lessee, and for the protection of all
persons who may suffer injury while in, on or about the Property.  Said policy shall carry an amount of
coverage for injury to one person in any one accident in the sum of One
Hundred Thousand Dollars ($100,000.00) and for more injury to more than one
person in any one accident in the sum of Three Hundred Thousand Dollars
($300,000.00).  Lessor shall be furnished
with copies of said policies and all endorsements thereto.

 

3

 

The Lessee shall
carry insurance against loss by destruction of the Property caused by fire,
explosion or other action of the elements, except loss caused by earthquake,
equal to ninety per cent (90%) of the value of the improvements.

 

11.                                 COMPLIANCE
WITH THE LAW:                The
Lessee shall conduct his business in such manner as will comply with all
requirements of all State, Federal, County and Municipal authorities,
appertaining to the business conducted upon the Property, and Lessee shall
not permit the Property to be used for any unlawful purposes.

 

12.                                 DEFAULT:     In
the event Lessee shall be in default in the payment of any rent herein
reserved, or in the performance of any of the covenants or conditions of this
Lease to be kept and performed by the Lessee, and such default shall
continue for thirty (30) days from and after service upon the Lessee of
written notice of such default, signed by the Lessor or their duly
authorized agents, then and in any such event, the Lessor may, at their option
declare this Lease terminated and repossess themselves of the Property and take
such action or pursue such remedy as may be permitted under the law of the
State of Nevada.  However, if Lessee
commences the necessary work to cure said default before the expiration of the
thirty (30) days, but the work takes in excess of thirty days, then Lessor
shall not be allowed to declare this Lease terminated.

 

13.                                 LIENS:     The
Lessee agrees that he will, at all times, save the Lessor and keep it blameless
and the Property free and harmless of and from any liability on account of
or in respect to any mechanic’s liens or liens in the nature thereof,
for work and labor done, or materials furnished at the instance and
request of the Lessee, in, on or about the Property; provided, however, that
the Lessee shall have the right to contest the claim of such lien, in
which event the Lessee shall, at his expense, furnish to the Lessor a
sufficient surety bond executed by a reputable and responsible surety company,
in at least double the amount of

 

4

 

such claim of such lien, conditioned upon the diligent prosecution of
such defense, and to hold the Lessor from and clear of all loss, costs,
damages, and expenses of every kind and nature, arising either directly or
indirectly out of said contest, and to pay any judgment that may be
obtained forthwith upon the same being entered.

 

14.                                 ATTORNEY
FEE:     In the event of litigation arising from
default in performance of any of the provisions of this Lease by either the
Lessor or Lessee, the prevailing party in such litigation shall be
entitled to receive from the other party reasonable attorney fees and costs of
action incurred in connection with said litigation.  In the event that either Lessor or Lessee shall
by reason of acts of omission or commission in violation of the terms of the
Lease, be made a party to any litigation commenced by a person other than the
parties hereto, then such party performing the said act or suffering the said
omission shall pay all costs, expenses and reasonable attorney fees
incurred by the other party which arise from or are in connection with
such litigation.

 

15.                                 INDEMNIFICATION:     Lessee
shall indemnify and hold harmless Lessor and its agents, servants, employees
and representatives from and against all claims, damages, losses and expenses,
including attorneys’ fees arising out of or resulting from Lessee’s occupancy,
provided however, that Lessor, its agents, employees representatives,
successors, or assigns are not negligent with regards to same.  This Paragraph shall have full force and
effect upon execution of this Lease Agreement.

 

16.                                 ASSIGNMENT:     The
Lessee shall not have the right to assign this Lease or hypothecate the same
without first receiving the written consent of the Lessor, which
consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
portion of the Property, providing that the tenancy of such sub-tenant
shall be subject to all the terms, covenants and conditions of this Lease.

 

5

 

17.                                 WAIVER:     The
waiver of either party of any of the covenants herein contained shall not
be deemed a waiver of such party’s right to enforce the same or any other
covenant contained herein.

 

18.                                 HOLDING
OVER:     If the Lessee shall hold over the
Property beyond the term herein specified, or any renewal thereof, with
the consent, express or implied of the Lessor such holding over shall be
construed to be a month-to-month tenancy, unless otherwise mutually agreed
upon.

 

19.                                 PHRASE
INTERPRETATION:     The term “Lessor” shall
include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.

 

20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:     Any and all
notices shall be forwarded to the following addresses:

 

	
  Lessor:

  
	
   

  
	
   

  	
  E-T-T Enterprises, L.L.C.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Edward J. Herbst, Member

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Timothy Herbst, Vice President

  

 

21.                                 NO
OTHER AGREEMENTS:     Both parties hereby certify
and declare that neither party has made any representations nor agreements
to or with any other party in addition to, or in conflict with the terms,
covenants and conditions hereof, and this Lease contains all of the terms,
covenants and conditions and representations between the parties upon the
subject matter hereof.

 

6

 

22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED:     If, at
any time during the term hereof, proceedings in bankruptcy shall be
instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file,
or any person shall file any Petition in Bankruptcy under Chapters 10 or
11 of the Bankruptcy Act of the United States of America as such act
is now in force or as same may be amended, and shall be judicially
approved, or if a Receiver of the business or assets of the Lessee shall
be appointed and if such appointment be not vacated within sixty (60) days
after notice thereof to Lessee, or if a general assignment is made by the
Lessee for the benefit of creditors, or any sheriff, Marshall, constable,
or other duly constituted public official take possession thereof by authority
of any attachment or execution proceedings, and offer same for sale publicly,
the Lessor may, at its option, in either or any of such events, without notice
to Lessee or any other person or persons, immediately recapture and take
possession of the Property and terminate this Lease with or without the process
of law, such process being expressly waived by Lessee.

 

23.                                 CARE
OF PREMISES:     Lessee agrees that it will water,
cultivate, trim and keep in a neat condition any shrubs, plants or lawn planted
on the Property and will keep the parking areas and black top in a neat and
clean condition and will use for parking.

 

24.                                 OPTION
TO RENEW:     Lessee upon giving written notice to
Lessor, at least sixty (60) days prior to the date of the expiration of
the term aforesaid, provided he has faithfully complied with the terms hereof,
shall have the option of renewing this Lease for up to five (5) additional
ten (10) year terms, subject to the same terms, covenants and conditions
and agreements as contained herein other than this paragraph.  The monthly rental for each renewal term
shall be determined at the time of each renewal.

 

7

 

25.                                 TIME
IS OF ESSENCE:     Time is of the essence in this
Lease and of each and every one of the provisions herein contained.

 

26.                                 BINDING
EFFECT:     The covenants and agreements contained
in this Lease shall be binding upon the parties hereto and upon their
respective heirs, executors, administrators, successors and assigns.

 

IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.

 

 

	
  LESSOR:

  
	
  E-T-T Enterprises, L.L.C.

  
	
   

  
	
   

  
	
    /s/ Edward J. Herbst

  	
   

  
	
   

  	
  Edward J. Herbst, Member

  
	
   

  
	
   

  
	
  LESSEE:

  
	
  E-T-T, Inc.

  
	
   

  
	
   

  
	
    /s/ Timothy P. Herbst

  	
   

  
	
   

  	
  Timothy P. Herbst

  
	
   

  	
  Vice President

  
			

 

8

 

LEASE AGREEMENT

 

THIS LEASE, made this 27th day of November 2002, by and between
Herbst Grandchildren’s Trust (hereinafter “Lessor”), and Herbst Gaming, Inc.
(Hereinafter

 

“Lessee”).

 

WITNESSETH: that the Lessor in consideration of the rent herein
specified to be paid by the Lessee, and the covenants and conditions herein
mentioned, does hereby lease, let and demise, unto Lessee, and the Lessee does
hereby rent from the Lessor that certain real property along with all
improvements thereto, which include a warehouse and office building, as well
as, a convenience store, situated in the County of Clark, State of Nevada,
whose street addresses are 5775 S. Polaris and 3475 W. Russell Road, Las Vegas,
Nevada 89118, as well as, that certain piece of unimproved property whose
street address is 3560 W. Russell Road, Las Vegas, Nevada 89118 (Hereinafter
collectively the “Property”) and whose legal descriptions are attached hereto
as Exhibit “A” & “B”.

 

TO HAVE AND TO HOLD the same unto the said Lessee, its successors and
assigns for the period and upon the terms and conditions hereinafter set forth.

 

THIS INDENTURE OF LEASE is made by the Lessor and accepted by the
Lessee upon each of the following terms and conditions, namely:

 

1.                                       TERM:  This Lease shall be a ten (10) year lease
commencing on November 27, 2002.

 

2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for the Property  the sum of Forty-three Thousand Five Hundred
Twenty-five ($43,525) per month on the first of each month for the duration of
said lease.

 

9

 

3.                                       RIGHTS
& TITLE:  Lessee agrees that
buildings and improvements hereafter located or erected on premises at any time
during the term of his Lease, or extension thereof, shall be and remain
property of Lessor and Lessee shall have no title, rights or interest in said
buildings and improvements other than such interest granted hereby.

 

4.                                       QUIET
POSSESSION:  Lessor hereby covenants,
warrants, and agrees that at all times during the term hereof, provided
Lessee is not in default hereunder, Lessee shall  have the full, peaceful and quiet possession
of the Property, and, further that Lessor has full  right and power to make and enter into this
lease.

 

5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal 
property and trade fixtures located therein and will pay charges for
light, power and other  public  utilities used by it in connection with the
use of the Property.

 

6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon the Property  that he will
notify Lessor in order that a notice of non-responsibility may be posted on the
Property and recorded in accordance with the provisions of the Mechanic’s Lien
Law of the  State of Nevada.

 

7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that  such alterations and/or
changes shall be at his sole cost and expense and that prior written consent of
the Lessor shall be obtained therefore; and provided that such changes and  alterations shall conform with building codes
and zoning regulations now or hereinafter 
legally effective, and promulgated by the State, County or Municipal
authorities.

 

10

 

8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in  good order,
condition and repair the service station and all ancillary buildings or  improvements to be constructed thereon by Lessee
and all fixtures and equipment, including visible plumbing and electrical
fixtures.  The Lessee agrees to keep the
Property clean and to have no nuisance, unsightly rubbish, or to commit or
cause to be committed by its employees, and/or sub-tenants, any violation of
the laws, rules or regulations of the State, County or Municipal Board of
Health or appropriate sanitary agency.

 

9.                                       TITLE
TO FIXTURES:  All fixtures and other
property and materials  installed in the
building on the Property by the Lessee shall be and remain the property  of the Lessee, and at the expiration of the
Lease, the Lessee may, within thirty (30) days, 
remove from said premises all of such fixtures, property, and materials,
provided that all  expenses connected
with the removal thereof shall be at the expense of the Lessee.  The Lessee further agrees to repair at his
sole expense all damage that may result from the removal of  such building, fixtures and other property
and to restore the Property to the condition in 
which they were prior to the start of construction and that no building
or improvements  placed upon said
premises by Lessee shall be removed during the term of this Lease or extension
thereof without the consent of Lessor first had and obtained.

 

10.                                 LIABILITY
AND FIRE INSURANCE:  The Lessor shall
require the Lessee to carry, maintain and have in full force and effect fire,
workmen’s compensation, public 
liability, and product liability insurance with a recognized insurance
company authorized to transact business in the State of Nevada for the benefit
of the Lessor and Lessee, and for the protection of all persons who may suffer
injury while in, on or about the Property. 
Said

 

11

 

policy shall carry an amount of coverage for injury to one person in
any one accident in the  sum of One
Hundred Thousand Dollars ($100,000.00) and for more injury to more than one
person in any one accident in the sum of Three Hundred Thousand Dollars ($300,000.00).
Lessor shall be furnished with copies of said policies and all endorsements
thereto.

 

The Lessee shall carry insurance against loss by destruction of the
Property caused by fire, explosion or other action of the elements, except loss
caused by earthquake, equal to ninety per cent (90%) of the value of the
improvements.

 

11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in  such manner as
will comply with all requirements of all State, Federal, County and  Municipal authorities, appertaining to the
business conducted upon the Property, and Lessee  shall not permit the Property to be used for
any unlawful purposes.

 

12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to 
be kept and performed by the Lessee, and such default shall continue for
thirty (30) days from and after service upon the Lessee of written notice of
such default, signed by the Lessor  or
their duly authorized agents, then and in any such event, the Lessor may, at
their option  declare this Lease
terminated and repossess themselves of the Property and take such action  or pursue such remedy as may be permitted
under the law of the State of Nevada. 
However,  if Lessee commences the
necessary work to cure said default before the expiration of the  thirty (30) days, but the work takes in
excess of thirty days, then Lessor shall not be allowed  to declare this Lease terminated.

 

12

 

13.                                 LIENS:  The Lessee agrees that he will, at all times,
save the Lessor and keep it blameless and the Property free and harmless of and
from any liability on account of or in 
respect to any mechanic’s liens or liens in the nature thereof, for work
and labor done, or materials furnished at the instance and request of the
Lessee, in, on or about the Property; 
provided, however, that the Lessee shall have the right to contest the
claim of such lien, in  which event the
Lessee shall, at his expense, furnish to the Lessor a sufficient surety bond
executed by a reputable and responsible surety company, in at least double the
amount of  such claim of such lien,
conditioned upon the diligent prosecution of such defense, and to hold the
Lessor from and clear of all loss, costs, damages, and expenses of every kind
and nature, arising either directly or indirectly out of said contest, and to
pay any judgment that may be obtained forthwith upon the same being entered.

 

14.                                 ATTORNEYS
FEES:  In the event of litigation
arising from default in performance of any of the provisions of this Lease by
either the Lessor or Lessee, the 
prevailing party in such litigation shall be entitled to receive from
the other party reasonable attorney fees and costs of action incurred in
connection with said litigation.  In the
event that either Lessor or Lessee shall by reason of acts of omission or
commission in violation of the  terms of
the Lease, be made a party to any litigation commenced by a person other than
the parties hereto, then such party performing the said act or suffering the
said omission shall  pay all costs,
expenses and reasonable attorney fees incurred by the other party which
arise  from or are in connection with
such litigation.

 

15.                                 INDEMNIFICATION:  Lessee shall indemnify and hold harmless
Lessor  and its agents, servants,
employees and representatives from and against all claims, damages, 

 

13

 

losses and expenses, including attorneys’ fees arising out of or
resulting from Lessee’s  occupancy,
provided however, that Lessor, its agents, employees, representatives,
successors, or assigns are not negligent with regards to same.  This Paragraph shall have full force and  effect upon execution of this Lease
Agreement.

 

16.                                 ASSIGNMENT:  The Lessee shall not have the right to assign
this Lease or hypothecate the same without first receiving the written consent
of the Lessor, which consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
portion  of the Property, providing that
the tenancy of such sub-tenant shall be subject to all the  terms, covenants and conditions of this
Lease.

 

17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s right
to enforce the same or any other covenant contained herein.

 

18.                                 HOLDING
OVER:  If the Lessee shall hold over
the Property beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor 
such holding over shall be construed to be a month-to-month tenancy,
unless otherwise mutually agreed upon.

 

19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular,  if
necessary.  The term “Lessee” or the
phrase “the term hereof” shall include any renewal or renewal thereof where
permitted by the context hereof.

 

14

 

20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:

 

	
  Lessor:

  
	
   

  
	
   

  	
  Herbst Grandchildren’s Trust

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Jerry E. Herbst, Trustee

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  Herbst Gaming, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Timothy Herbst, Vice President

  

 

21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that  neither
party has made any representations nor agreements to or with any other party
in  addition to, or in conflict with the
terms, covenants and conditions hereof, and this Lease  contains all of the terms, covenants and
conditions and representations between the parties  upon the subject matter hereof.

 

22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy shall
be instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor  shall file, or any person shall file any
Petition in Bankruptcy under Chapters 10 or 11 of the  Bankruptcy Act of the United States of
America as such act is now in force or as same may be amended, and shall be
judicially approved, or if a Receiver of the business or assets of the  Lessee shall be appointed and if such
appointment be not vacated within sixty (60) days after 

 

15

 

notice thereof to Lessee, or if a general assignment is made by the
Lessee for the benefit of  creditors, or
any sheriff, Marshall, constable, or other duly constituted public official
take possession thereof by authority of any attachment or execution
proceedings, and offer same  for sale
publicly, the Lessor may, at its option, in either or any of such events,
without notice to Lessee or any other person or persons, immediately recapture
and take possession of the Property and terminate this Lease with or without
the process of law, such process being 
expressly waived by Lessee.

 

23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and  keep in
a neat condition any shrubs, plants or lawn planted on the Property and will
keep the parking areas and black top in a neat and clean condition and will use
for parking.

 

24.                                 OPTION
TO RENEW:  Lessee upon giving written
notice to Lessor, at least  sixty (60)
days prior to the date of the expiration of the term aforesaid, provided he
has  faithfully complied with the terms
hereof, shall have the option of renewing this Lease for up to five (5)
additional ten (10) year terms, subject to the same terms, covenants and
conditions and agreements as contained herein other than this paragraph.  The monthly rental for each renewal term
shall be determined at the time of each renewal.

 

25.                                 TIME
IS OF THE ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.

 

16

 

26.                                 BINDING
EFFECT:  The covenants and agreements
contained in this Lease shall be binding upon the parties hereto and upon their
respective heirs, executors, administrators, successors and assigns.

 

IN WITNESS WHEREOF, the parties have caused this Lease to be executed
by their duly authorized officers as of the day and year first herein written.

 

 

	
  LESSOR:

  	
   

  
	
  HERBST GRANDCHILDREN’S TRUST

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/ Timothy P. Herbst

  	
   

  	
   

  
	
   

  	
  Timothy P. Herbst, Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LESSEE:

  	
   

  
	
  HERBST GAMING, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
    /s/ Edward J. Herbst

  	
   

  	
   

  
	
   

  	
  Edward J. Herbst

  	
   

  
	
   

  	
  President

  	
   

  
				

 

17

 

LEASE AGREEMENT

 

THIS LEASE, made
this 1st day of July, 1997, by and between The Herbst Family
Limited Partnership II(hereinafter “Lessor”), and E-T-T Enterpprises,
L.L.C. (Hereinafter “Lessee”).

 

WITNESSETH: that
the Lessor in consideration of the rent herein specified to be paid
by the Lessee, and the covenants and conditions herein mentioned,
does hereby lease, let and demise, unto Lessee, and the Lessee does
hereby rent from the Lessor that certain real property(Hereinafter the
“Property”) situated in the County of Clark, State of Nevada, whose legal
descriptions are attached hereto as Exhibit “A”, and incorporated herein by reference.

 

TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the period
and upon the terms and conditions hereinafter set forth.

 

THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the following
terms and conditions, namely:

 

1.                                       TERM:  This Lease shall be a twenty (20) year lease
commencing on July 1, 1997.

 

2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for said demised premises the sum of Fourteen Thousand Four Hundred
Sixteen Dollars ($14,416.00) per month on the first of each month for the
duration of said lease.

 

3.                                       SECURITY:  Lessee agrees that buildings and improvements
hereafter located or erected on premises at 
any  time  during 
the  term  of his Lease, or extension thereof, shall be
and remain charged with the lien in favor of Lessor as security for the
enforcement of all

 

1

 

agreements of this lease by Lessee to be kept and performed.  Such lien shall be prior to all other
contracts, liens and other encumbrances whatsoever effecting the demised
premises provided however that Lessor agrees that it will subordinate such lien
for the actual cost of financing the erection of any improvements required by
the Lessee in order to finance same, as well as, any lien required by Chevron
U.S.A., Inc.

 

4.                                       QUIET
POSSESSION:  Lessor hereby covenants,
warrants, and agrees that at all times during the term hereof, provided Lessee
is not in default hereunder, Lessee shall have the full, peaceful and quiet
possession of the demised premises, and, further that Lessor has full right and
power to make and enter into this lease.

 

5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities used
by it in connection with the use of the demised premises.

 

6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon said premises by him that he will notify Lessor in order that a
notice of non-responsibility may be posted on said premises and recorded in
accordance with the provisions of the Mechanic’s Lien Law of the State of
Nevada.

 

7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and alterations shall conform with
building codes and zoning regulations now or hereinafter

 

2

 

legally effective, and promulgated by the State, County or Municipal
authorities.

 

8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the service station and
all ancillary buildings or improvements to be constructed thereon by Lessee and
all fixtures and equipment, including visible plumbing and electrical
fixtures.  The Lessee agrees to keep the
premises clean and to have no nuisance, unsightly rubbish, or to commit or
cause to be committed by its employees, and/or sub-tenants, any violation of the
laws, rules or regulations of the State, County or Municipal Board of Health or
appropriate sanitary agency.

 

9.                                       TITLE
TO FIXTURES:  All buildings, fixtures
and other property and materials installed in the demised premises by the
Lessee shall be and remain the property of the Lessee, and at the expiration of
the Lease, the Lessee may, within thirty (30) days, remove from said premises
all of such fixtures, property, and materials, provided that all expenses
connected with the removal thereof shall be at the expense of the Lessee.  The Lessee further agrees to repair at his
sole expense all damage that may result from the removal of such building,
fixtures and other property and to restore said premises to the condition in
which they were prior to the start of construction and that no building or
improvements placed upon said premises by Lessee shall be removed during the
term of this Lease or extension thereof without the consent of Lessor first had
and obtained.

 

10.                                 LIABILITY
AND FIRE  INSURANCE:  The Lessor shall require the Lessee to carry,
maintain and have in full force and effect fire, workmen’s compensation, public
liability, and product liability insurance with a recognized insurance company
authorized to transact business in the State of Nevada for the benefit of the
Lessor and Lessee, and for the

 

3

 

protection of all persons who may suffer injury while in, on or about
said premises.  Said policy shall carry
an amount of coverage for injury to one person in any one accident in the sum
of One Hundred Thousand Dollars ($100,000.00) and for more injury to more than
one person in any one accident in the sum of Three Hundred Thousand Dollars
($300,000.00).  Lessor shall be furnished
with copies of said policies and all endorsements thereto.

 

The Lessee shall
carry insurance against loss by destruction of the demised premises caused by
fire, explosion or other action of the elements, except loss caused by
earthquake, equal to ninety per cent (90%) of the value of the improvements.

 

11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of all
State, Federal, County and Municipal authorities, appertaining to the business
conducted upon the demised premises, and Lessee shall not permit the demised
premises to be used for any unlawful purposes.

 

12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the Lessee,
and such default shall continue for thirty (30) days from and after service
upon the Lessee of written notice of such default, signed by the Lessor or
their duly authorized agents, then and in any such event, the Lessor may, at
their option declare this Lease terminated and repossess themselves of said
premises and take such action or pursue such remedy as may be permitted under
the law of the State of Nevada.  However,
if Lessee commences the necessary work to cure said default before the
expiration of the thirty (30) days, but the work takes in excess of thirty
days, then Lessor shall not be allowed to declare this Lease terminated.

 

4

 

13.                                 LIENS:  The Lessee agrees that he will, at all times,
save the Lessor and keep it blameless and the demised premises free and
harmless of and from any liability on account of or in respect to any
mechanic’s liens or liens in the nature thereof, for work and labor done, or
materials furnished at the instance and request of the Lessee, in, on or about
the demised premises; provided, however, that the Lessee shall have the right
to contest the claim of such lien, in which event the Lessee shall, at his
expense, furnish to the Lessor a sufficient surety bond executed by a reputable
and responsible surety company, in at least double the amount of such claim of
such lien, conditioned upon the diligent prosecution of such defense, and to
hold the Lessor from and clear of all loss, costs, damages, and expenses of
every kind and nature, arising either directly or indirectly out of said
contest, and to pay any judgment that may be obtained forthwith upon the same
being entered.

 

14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease by
either the Lessor or Lessee, the prevailing party in such litigation shall be
entitled to receive from the other party reasonable attorney fees and costs of
action incurred in connection with said litigation.  In the event that either Lessor or Lessee
shall by reason of acts of omission or commission in violation of the terms of
the Lease, be made a party to any litigation commenced by a person other than
the parties hereto, then such party performing the said act or suffering the
said omission shall pay all costs, expenses and reasonable attorney fees
incurred by the other party which arise from or are in connection with such
litigation.

 

15.                                 INDEMNIFICATION:  Lessee shall indemnify and hold harmless
Lessor and its agents, servants, employees and representatives from and against
all claims, damages, losses

 

5

 

and expenses, including attorneys’ fees arising out of or resulting
from Lessee’s occupancy, provided, however, that Lessor, its agents, employees,
representatives, successors, or assigns are not negligent with regards to
same.  This Paragraph shall have full
force and effect upon execution of this Lease Agreement.

 

16.                                 ASSIGNMENT:  The Lessee shall not have the right to assign
this Lease or hypothecate the same without first receiving the written consent
of the Lessor, which consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
portion of the Property, providing that the tenancy of such sub-tenant shall be
subject to all the terms, covenants and conditions of this Lease.

 

17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall  not be
deemed a waiver of such party’s right to enforce the same or any other covenant
contained herein.

 

18.                                 HOLDING
OVER:  If the Lessee shall hold over
the premises beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor such holding over shall be construed
to be a month-to-month tenancy, unless otherwise mutually agreed upon.

 

19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.

 

20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:

 

6

 

	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T Enterprises, L.L.C.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Edward
  J. Herbst

  
	
   

  
	
  Lessor:

  
	
   

  
	
   

  	
  Herbst Family Limited Partnership II

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Jerry
  Herbst

  

 

21.                                 NO
OTHER AGREEMENTS:  Both parties hereby
certify and declare that neither party has made any representations nor
agreements to or with any other party in addition to, or in conflict with the
terms, covenants and conditions hereof, and this Lease contains all of the
terms, covenants and conditions and representations between the parties upon
the subject matter hereof.

 

22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy shall
be instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10 or 11 of the
Bankruptcy Act of the United States of America as such act is now in force or
as same may be amended, and shall by judicially approved, or if a Receiver of
the business or assets of the Lessee shall be appointed and if such appointment
be not vacated within sixty (60) days after notice thereof to Lessee, or if a
general assignment is made by the Lessee for the benefit of creditors, or any
sheriff, Marshall, constable, or other duly constituted public official take
possession thereof by authority of any attachment or execution proceedings, and
offer same

 

7

 

for sale publicly, the Lessor may, at its option, in either or any of
such events, without notice to Lessee or any other person or persons,
immediately recapture and take possession of the demised premises and terminate
this Lease with or without the process of law, such process being expressly
waived by Lessee.

 

23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs, plants or
lawn planted on said premises and will keep the parking areas and black top in
a neat and clean condition and will use for parking.

 

24.                                 OPTION
TO RENEW:  The Lessee upon giving
written notice to Lessor, at least sixty (60) days prior to the date of the
expiration of the term aforesaid, provided he has faithfully complied with the
terms hereof, shall have the option of renewing this Lease for up to five (5)
additional ten (10) year terms subject to the same terms, covenants and
conditions and agreements as contained herein other than this paragraph.  The monthly rental for each renewal term
shall be determined at the time of each renewal.

 

25.                                 RIGHT
OF FIRST REFUSAL:  In the event of a
contemplated sale of the premises during the demised term, the Lessor agrees to
give Lessee a notice in writing at least ten (10) days before the contemplated
sale of substance of terms on which it is proposed to be made, which notice
shall be registered mail directed to Lessee at his principal place of business
for notices; and thereupon within ten (10) days from the date of mailing of
notice the Lessee shall have the right to purchase premises upon the terms and
conditions proposed, and on the failure of the Lessee to exercise such option
within the time aforesaid the option hereby granted to Lessee shall be and
stand canceled.

 

26.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every

 

8

 

one of the
provisions herein contained.

 

27.                                 BINDING
EFFECT:  The covenants and agreements
contained in this Lease shall be binding upon the parties hereto and upon their
respective heirs, executors, administrators, successors and assigns.

 

IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.

 

 

	
  LESSOR:

  
	
  The Herbst Family Limited Partnership II

  
	
   

  
	
    /s/ Jerry Herbst

  	
   

  
	
   

  	
  Jerry Herbst, Partner

  
	
   

  
	
   

  
	
  LESSEE:

  
	
   

  
	
  E-T-T Enterprises, L.L.C.

  
	
   

  
	
    /s/ Timothy P. Herbst

  	
   

  
	
   

  	
  Timothy P. Herbst, Member

  
			

 

9

 

LEASE AGREEMENT

 

THIS LEASE, made
this 1st day of July, 1997, by and between E-T-T Enterprises,
L.L.C.(hereinafter “Lessor”), and Terrible Herbst, Inc.(Hereinafter “Lessee”).

 

WITNESSETH: that
the Lessor in consideration of the rent herein specified to be paid by the
Lessee, and the covenants and conditions herein mentioned, does hereby lease,
let and demise, unto Lessee, and the Lessee does hereby rent from the Lessor
that certain real property along with all improvements thereto, to wit,
all property and buildings used in the operation of a gasoline station and
mini-market and 15,000 square feet of warehouse space (Hereinafter the
“Property”) situated in County of Clark, State of Nevada, whose street
address is and which is set forth in the floorplan and site plan,
both of which are attached hereto as Exhibit “A”.

 

TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.

 

THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terms and conditions, namely:

 

1.                                       TERM:  This Lease shall be a twenty (20) year lease
commencing on July 1, 1997.

 

2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for the Property the sum of Nineteen Thousand Dollars ($19,000.00)
per month on the first of each month for the duration of said lease.

 

3.                                       RIGHTS
& TITLE:  Lessee agrees that
buildings and improvements hereafter located or erected on premises at any time
during the term of this Lease, or extension thereof, shall be and remain
property of Lessor and Lessee shall have no title, rights or interest in said
buildings and improvements other than such interest granted hereby.

 

1

 

4.                                       QUIET
POSSESSION:  Lessor hereby covenants,
warrants, and agrees that at all times during the term hereof, provided Lessee
is not in default hereunder, Lessee shall have the full, peaceful and
quiet possession of the Property, and, further that Lessor has full
right and power to make and enter into this lease.

 

5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities
used by it in connection with the use of the Property.

 

6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon the Property that he will notify Lessor in order that a notice
of non-responsibility may be posted on the Property and recorded in accordance
with the provisions of the Mechanic’s Lien Law of the State of Nevada.

 

7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and alterations shall confirm
with building codes and zoning regulations now or hereinafter
legally effective, and promulgated by the State, County or Municipal
authorities.

 

8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the service station
and all ancillary buildings or improvements to be constructed thereon by
Lessee and all fixtures and equipment, including visible plumbing and
electrical fixtures.  The Lessee agrees
to keep the Property clean and to have no nuisance, unsightly rubbish, or to
commit or cause to be committed by its employees, and/or sub-tenants, any
violation of the laws, rules or regulations of the State, County or

 

2

 

Municipal Board of Health or appropriate sanitary agency.

 

9.                                       TITLE
TO FIXTURES:  All fixtures and other
property and materials installed in the building on the Property by
the Lessee shall be and remain the property of the Lessee, and at the
expiration of the Lease, the Lessee may, within thirty (30) days,
remove from said premises all of such fixtures, property, and materials,
provided that all expenses connected with the removal thereof shall be at the
expense of the Lessee.  The Lessee
further agrees to repair at his sole expense all damage that may result from
the removal of such building, fixtures and other property and to restore
the Property to the condition in which they were prior to the start of
construction and that no building or improvements placed upon said
premises by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.

 

10.                                 LIABILITY
AND FIRE INSURANCE:  The Lessor shall
require the Lessee to carry, maintain and have in full force and effect fire,
workmen’s compensation, public liability, and product liability insurance with
a recognized insurance company authorized to transact business in the
State of Nevada for the benefit for the Lessor and Lessee, and for the
protection of all persons who may suffer injury while in, on or about the
Property.  Said policy shall carry
an amount of coverage for injury to one person in any one accident in the
sum of One Hundred Thousand Dollars ($100,000.00) and for more injury to
more than one person in any one accident in the sum of Three Hundred Thousand
Dollars ($300,000.00).  Lessor shall be
furnished with copies of said policies and all endorsements thereto.

 

The Lessee shall
carry insurance against loss by destruction of the Property caused by fire,
explosion or other action of the elements, except loss caused by earthquake,
equal to ninety per cent (90%) of the value of the improvements.

 

3

 

11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of all
State, Federal, County and Municipal authorities, appertaining to the
business conducted upon the Property, and Lessee shall not permit the Property
to be used for any unlawful purposes.

 

12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the Lessee,
and such default shall continue for thirty (30) days from and after
service upon the Lessee of written notice of such default, signed by the Lessor
or their duly authorized agents, then and in any such event, the Lessor
may, at their option declare this Lease terminated and repossess themselves of
the Property and take such action or pursue such remedy as may be
permitted under the law of the State of Nevada. 
However, if Lessee commences the necessary work to cure said
default before the expiration of the thirty (30) days, but the work takes
in excess of thirty days, then Lessor shall not be allowed to declare this
Lease terminated.

 

13.                                 LIENS:  The Lessee agrees that he will, at all times,
save the Lessor and keep it blameless and the Property free and harmless of and
from any liability on account of or in respect to any mechanic’s liens or liens
in the nature thereof, for work and labor done, or materials furnished at the
instance and request of the Lessee, in, on or about the Property; provided,
however, that the Lessee shall have the right to contest the claim of such lien,
in which event the Lessee shall, at his expense, furnish to the Lessor a
sufficient surety bond executed by a reputable and responsible surety company,
in at least double the amount of such claim of such lien, conditioned upon
the diligent prosecution of such defense, and to hold the Lessor from and
clear of all loss, costs, damages, and expenses of every kind and
nature, arising either directly or indirectly out of said contest, and to
pay any judgment that

 

4

 

may be obtained forthwith upon the same being entered.

 

14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease
by either the Lessor or Lessee, the prevailing party in such litigation shall
be entitled to receive from the other party reasonable attorney fees and costs
of action incurred in connection with said litigation.  In the event that either Lessor or Lessee
shall by reason of acts of omission or commission in violation of the terms of
the Lease, be made a party to any litigation commenced by a person other than
the parties hereto, then such party performing the said act or suffering the
said omission shall pay all costs, expenses and reasonable attorney
fees incurred by the other party which arise from or are in connection
with such litigation.

 

15.                                 INDEMNIFICATION:                            Lessee
shall indemnity and hold harmless Lessor and its agents, servants,
employees and representatives from and against all claims, damages, losses and
expenses, including attorneys’ fees arising out of or resulting from Lessee’s
occupancy, provided however, that Lessor, its agents, employees,
representatives, successors, or assigns are not negligent with regards to
same.

 

Additionally,
Lessee shall indemnify, defend and hold harmless Lessor from and
against any and all expenses (including attorney’s fees), liabilities and
claims of whatsoever kind and nature including, but not limited to , those
for damage to property (including) property of Lessee), or for injury to
or death of any person, directly or indirectly arising out of or in
any way connected with the storage, handling, distribution, sale or use of any
petroleum products on the Property, or in the operation of any vehicle or
vehicles in connection with Lessee’s business.

 

This Paragraph
shall have full force and effect upon execution of this Lease Agreement.

 

5

 

16.                                 ASSIGNMENT:  The Lessee shall not have the right to assign
this Lease or hypothecate the same without first receiving the written consent
of the Lessor, which consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
portion of the Property, providing that the tenancy of such sub-tenant
shall be subject to all the terms, covenants and conditions of this Lease.

 

17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s right
to enforce the same or any other covenant contained herein.

 

18.                                 HOLDING
OVER:  If the Lessee shall hold over
the Property beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor such holding over shall be
construed to be a month-to-month tenancy, unless otherwise mutually agreed
upon.

 

19.                                 PHRASE
INTERPREATION:  The term “Lessor”
shall include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.

 

20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:

 

	
  Lessor:

  
	
   

  
	
   

  	
  E-T-T Enterprises, L.L.C.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Edward
  J. Herbst, Member

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  Terrible Herbst, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Jerry
  E. Herbst, President

  

 

6

 

21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations nor
agreements to or with any other party in addition to, or in conflict with
the terms, covenants and conditions hereof, and this Lease contains all of the
terms, covenants and conditions and representations between the parties
upon the subject matter hereof.

 

22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy shall
be instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10 or 11 of the
Bankruptcy Act of the United States of America as such act is now in force or
as same may be amended, and shall be judicially approved, or if a Receiver of
the business or assets of the Lessee shall be appointed and if such
appointment be not vacated within sixty (60) days after notice thereof to
Lessee, or if a general assignment is made by the Lessee for the benefit of
creditors, or any sheriff, Marshall, constable, or other duly constituted
public official take possession thereof by authority of any attachment or
execution proceedings, and offer same for sale publicly, the Lessor may, at its
option, in either or any of such events, without notice to Lessee or any
other person or persons, immediately recapture and take possession of the
Property and terminate this Lease with or without the process of Law, such
process being expressly waived by Lessee.

 

23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs,
plants or lawn planted on the Property and will keep the parking areas and
black top in a neat and clean condition and will use for parking.

 

24.                                 OPTION
TO RENEW:  Lessee understand and
acknowledges that Lessor holds interest in the Property through that
certain lease, which is attached hereto as Exhibit

 

7

 

“B” and that Lessee’s option to renew this Agreement is subject to and
conditioned upon Lessor renewing Exhibit “B”.  So long as Lessor renews, then the Lessee
upon giving written notice to Lessor, at least sixty (60) days prior to the
date of the expiration of the term aforesaid, provided he has faithfully
complied with the terms hereof, shall have the option of renewing this Lease
for up to five (5) additional ten (10) year terms, subject to the same
terms, covenants and conditions and agreements as contained herein other
than this paragraph.  The monthly rental for each renewal term shall
be determined at the time of each renewal.

 

25.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.

 

26.                                 BINDING
EFFECT:  The covenants and agreements
contained in this Lease shall be binding upon the parties hereto and upon
their respective heirs, executors, administrators, successors and assigns.

 

IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.

 

 

	
  LESSOR:

  
	
  E-T-T Enterprises, L.L.C.

  
	
   

  
	
   

  
	
  /s/ Edward J. Herbst, Member

  	
   

  
	
  Edward J. Herbst, Member

  
	
   

  
	
   

  
	
  LESSEE:

  
	
  Terrible Herbst, Inc.

  
	
   

  
	
   

  
	
  /s/ Jerry E. Herbst

  	
   

  
	
  Jerry E. Herbst

  
	
  President

  
			

 

8

 

LEASE AGREEMENT

 

THIS LEASE, made
this 1st day of July, 1997, by and between E-T-T Enterprises,
L.L.C.(hereinafter “Lessor”), and E-T-T, Inc.(Hereinafter “Lessee”).

 

WITNESSETH: that
the Lessor in consideration of the rent herein specified to be paid by the
Lessee, and the covenants and conditions herein mentioned, does hereby lease,
let and demise, unto Lessee, and the Lessee does hereby rent from the Lessor
that certain real property along with all improvements thereto, to wit,
approximately 19,000 square feet of office space and 35,000 square feet of
warehouse space(Hereinafter the “Property”) situated in the County of
Clark, State of Nevada, whose street address is 3440 W. Russell Road, Las
Vegas, Nevada and which is set forth in the floorplan, both of which are
attached hereto as Exhibit “A”.

 

TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.

 

THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the following
terms and conditions, namely:

 

1.                                       TERM:  This Lease shall be a twenty (20) year lease
commencing on July 1, 1997.

 

2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for the Property the sum of Thirty-two Thousand One Hundred Dollars
($32,100.00) per month on the first of each month for the duration of said
lease.

 

3.                                       RIGHTS
& TITLE:  Lessee agrees that
buildings and improvements hereafter located or erected on premises at any time
during the term of this Lease, or extension thereof, shall be and remain
property of Lessor and Lessee shall have no title, rights or interest in said
buildings and improvements other than such interest granted hereby.

 

1

 

4.                                       QUIET
POSSESSION:  Lessor hereby covenants,
warrants, and agrees that at all times during the term hereof, provided
Lessee is not in default hereunder, Lessee shall have the full, peaceful
and quiet possession of the Property, and, further that Lessor has full
right and power to make and enter into this lease.

 

5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities
used by it in connection with the use of the Property.

 

6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon the Property that he will notify Lessor in order that a notice
of non-responsibility may be posted on the Property and recorded in accordance
with the provisions of the Mechanic’s Lien Law of the State of Nevada.

 

7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and alterations shall confirm
with building codes and zoning regulations now or hereinafter
legally effective, and promulgated by the State, County or Municipal
authorities.

 

8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the service station
and all ancillary buildings or improvements to be constructed thereon by
Lessee and all fixtures and equipment, including visible plumbing and
electrical fixtures.  The Lessee agrees
to keep the Property clean and to have no nuisance, unsightly rubbish, or to
commit or cause to be committed by its employees, and/or sub-tenants, any
violation of the laws, rules or regulations of the State, County or

 

2

 

Municipal Board of
Health or appropriate sanitary agency.

 

9.                                       TITLE
TO FIXTURES:  All fixtures and other
property and materials installed in the building on the Property by
the Lessee shall be and remain the property of the Lessee, and at the
expiration of the Lease, the Lessee may, within thirty (30) days, remove from
said premises all of such fixtures, property, and materials, provided that all
expenses connected with the removal thereof shall be at the expense of the
Lessee.  The Lessee further agrees to
repair at his sole expense all damage that may result from the removal of
such building, fixtures and other property and to restore the Property to
the condition in which they were prior to the start of construction and
that no building or improvements placed upon said premises by Lessee shall
be removed during the term of this Lease or extension thereof without the
consent of Lessor first had and obtained.

 

10.                                 LIABILITY
AND FIRE INSURANCE:  The Lessor shall
require the Lessee to carry, maintain and have in full force and effect fire,
workmen’s compensation, public liability, and product liability insurance with
a recognized insurance company authorized to transact business in the
State of Nevada for the benefit for the Lessor and Lessee, and for the
protection of all persons who may suffer injury while in, on or about the
Property.  Said policy shall carry
an amount of coverage for injury to one person in any one accident in the
sum of One Hundred Thousand Dollars ($100,000.00) and for more injury to
more than one person in any one accident in the sum of Three Hundred Thousand Dollars
($300,000.00).  Lessor shall be furnished
with copies of said policies and all endorsements thereto.

 

The Lessee shall
carry insurance against loss by destruction of the Property caused by fire,
explosion or other action of the elements, except loss caused by earthquake,
equal to ninety per cent (90%) of the value of the improvements.

 

3

 

11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of all
State, Federal, County and Municipal authorities, appertaining to the business
conducted upon the Property, and Lessee shall not permit the Property to be
used for any unlawful purposes.

 

12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the
Lessee, and such default shall continue for thirty (30) days from and
after service upon the Lessee of written notice of such default, signed by
the Lessor or their duly authorized agents, then and in any such event,
the Lessor may, at their option declare this Lease terminated and
repossess themselves of the Property and take such action or pursue such
remedy as may be permitted under the law of the State of Nevada.  However, if Lessee commences the necessary
work to cure said default before the expiration of the thirty (30) days,
but the work takes in excess of thirty days, then Lessor shall not be allowed
to declare this Lease terminated.

 

13.                                 LIENS:  The Lessee agrees that he will, at all times,
save the Lessor and keep it blameless and the Property free and harmless of and
from any liability on account of or in respect to any mechanic’s liens or liens
in the nature thereof, for work and labor done, or materials furnished at the
instance and request of the Lessee, in, on or about the Property; provided,
however, that the Lessee shall have the right to contest the claim of such
lien, in which event the Lessee shall, at his expense, furnish to the
Lessor a sufficient surety bond executed by a reputable and responsible surety
company, in at least double the amount of such claim of such lien,
conditioned upon the diligent prosecution of such defense, and to hold the
Lessor from and clear of all loss, costs, damages, and expenses of every kind
and nature, arising either directly or indirectly out of said contest, and
to pay any judgment that

 

4

 

may be obtained forthwith upon the same being entered.

 

14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease
by either the Lessor or Lessee, the prevailing party in such litigation
shall be entitled to receive from the other party reasonable attorney fees and
costs of action incurred in connection with said litigation.  In the event that either Lessor or Lessee
shall by reason of acts of omission or commission in violation of the terms
of the Lease, be made a party to any litigation commenced by a person
other than the parties hereto, then such party performing the said act or
suffering the said omission shall pay all costs, expenses
and reasonable attorney fees incurred by the other party which arise from
or are in connection with such litigation.

 

15.                                 INDEMNIFICATION:                            Lessee
shall indemnity and hold harmless Lessor and its agents, servants,
employees and representatives from and against all claims, damages, losses
and expenses, including attorneys’ fees arising out of or resulting from
Lessee’s occupancy, provided however, that Lessor, its agents, employees,
representatives, successors, or assigns are not negligent with regards to
same.  This Paragraph shall have full
force and effect upon execution of this Lease Agreement.

 

16.                                 ASSIGNMENT:  The Lessee shall not have the right to assign
this Lease or hypothecate the same without first receiving the written
consent of the Lessor, which consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
portion of the Property, providing that the tenancy of such sub-tenant
shall be subject to all the terms, covenants and conditions of this Lease.

 

17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s
right to enforce the same or any other covenant contained herein.

 

5

 

18.                                 HOLDING
OVER:  If the Lessee shall hold over
the Property beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor such holding over shall be
construed to be a month-to-month tenancy, unless otherwise mutually agreed
upon.

 

19.                                 PHRASE
INTERPREATION:  The term “Lessor”
shall include the singular, if necessary.  The term “Lessee” or the
phrase “the term hereof” shall include any renewal or renewal thereof where
permitted by the context hereof.

 

20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:

 

	
  Lessor:

  
	
   

  
	
   

  	
  E-T-T Enterprises, L.L.C.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Edward
  J. Herbst, Member

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Timothy
  Herbst, Vice President

  

 

21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations
nor agreements to or with any other party in addition to,
or in conflict with the terms, covenants and conditions hereof, and
this Lease contains all of the terms, covenants and conditions and
representations between the parties upon the subject matter hereof.

 

22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy
shall be instituted by or against the Lessee and result in an adjudication
of bankruptcy, or if the Lessee shall file or any creditor shall

 

6

 

file, or any person shall file any Petition in Bankruptcy
under Chapters 10 or 11 of the Bankruptcy Act of the United States of America
as such act is now in force or as same may be amended, and shall be judicially
approved, or if a Receiver of the business or assets of the Lessee shall
be appointed and if such appointment be not vacated within sixty (60) days
after notice thereof to Lessee, or if a general assignment is made by the
Lessee for the benefit of creditors, or any sheriff, Marshall, constable, or
other duly constituted public official take possession thereof by authority of
any attachment or execution proceedings, and offer same for sale publicly,
the Lessor may, at its option, in either or any of such events, without notice
to Lessee or any other person or persons, immediately recapture and take
possession of the Property and terminate this Lease with or without the process
of Law, such process being expressly waived by Lessee.

 

23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs,
plants or lawn planted on the Property and will keep the parking areas and
black top in a neat and clean condition and will use for parking.

 

24.                                 OPTION
TO RENEW:  Lessee understand and
acknowledges that Lessor holds interest in the Property through that
certain lease, which is attached hereto as Exhibit “B” and that Lessee’s
option to renew this Agreement is subject to and conditioned upon Lessor
renewing Exhibit “B”.  So long as Lessor
renews, then the Lessee upon giving written notice to Lessor, at least
sixty (60) days prior to the date of the expiration of the term aforesaid,
provided he has faithfully complied with the terms hereof, shall have the
option of renewing this Lease for up to five (5) additional ten (10) year
terms, subject to the same terms, covenants and conditions and agreements
as contained herein other than this paragraph.  The monthly rental
for each renewal term shall be determined at the time of each renewal.

 

7

 

25.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.

 

26.                                 BINDING
EFFECT:  The covenants and agreements
contained in this Lease shall be binding upon the parties hereto and upon
their respective heirs, executors, administrators, successors and assigns.

 

IN WITNESS WHEREOF,
the parties have caused this Lease to be executed by their duly authorized
officers as of the day and year first herein written.

 

 

	
  LESSOR:

  
	
  E-T-T Enterprises, L.L.C.

  
	
   

  
	
   

  
	
  /s/ Edward J. Herbst, Member

  	
   

  
	
  Edward J. Herbst, Member

  
	
   

  
	
  LESSEE:

  
	
  E-T-T, Inc.

  
	
   

  
	
   

  
	
  /s/ Timothy P. Herbst

  	
   

  
	
  Timothy P. Herbst

  
	
  Vice President

  
			

 

8

 

LEASE

 

1.                                       PARTIES. 
This Lease (this “Lease”)
is made and entered into as of the 9th day of February, 1994, by and between THE 1993 SAMUEL JOSEPHSON REVOCABLE FAMILY TRUST under
Declaration of Trust dated September 13, 1993 (“Landlord”) and PHOENIX ASSOCIATES, a Nevada limited partnership (“Tenant”). 
This Lease is made in furtherance of the sale (the “Sale”) of the “Premises” (as hereinbelow defined) by Tenant
to Landlord effective concurrently with the effectiveness hereof.

 

2.                                       PREMISES. 
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord,
on the terms and conditions hereinafter set forth, the building currently known
as “Lucky Strike Casino & Bowl,”
formerly known as “Henderson Bowl,”
and commonly described as 642 South Boulder Highway, Henderson, Nevada (the “Premises”), together with any and all
related realty conveyed to Landlord by Tenant pursuant to the Sale.  Tenant accepts the Premises “as is.”

 

3.                                       TERM. 
The term (the “Term”) of
the leasehold interest granted herein shall be for twenty (20) years effective
upon the consummation of the Sales; provided, however, that Tenant shall have
five (5) consecutive extension options thereafter to extend the Term for an
additional ten (10) years per each such extension option upon written notice to
Landlord prior to expiration of the Term as then in effect and under the
terms and conditions as provided in this Lease except that the Basic Rent
in respect of such option periods shall be equal to the amount thereof
immediately prior to commencement of each such option period plus the
additional sum of $2,500 monthly and that such Basic Rent shall again increase
by $2,500 monthly after the completion of the fifth year of each such option
period.

 

4.                                       RENT. 
Tenant shall pay to Landlord as basic rent (the “Basic Rent”) for the Premises, monthly in
arrears on the last day of each month during the Term, the following
sums:  during the first five years of the Term, $25,000 monthly,
during the sixth through tenth years of the Term, $27,500 monthly, during the
eleventh through fifteenth years of the Term, $30,000 monthly, and during the
sixteenth through twentieth years of the Term, $32,500 monthly.  Rent for any period during the Term of this
Lease which is for less than one (1) month shall be a pro rata portion of
the monthly installation paid on the last day of the month in question.  Rent shall be payable without notice or
demand and without any deduction, off-set, or abatement in lawful money of the
United States to the Landlord at the address stated herein for notices or to
such other persons or such other places as Landlord may designate to Tenant in
writing.

 

5.                                       INTENTIONALLY LEFT BLANK.

 

6.                                       USE. 
Tenant may utilize the Premises in any manner it determines and for any
purpose not wholly inconsistent with its present use unless it receives
Landlord’s consent to such other purpose (which consent shall not be
unreasonably withheld and shall only be withheld for good cause upon a
reasonable basis) provided that it does not breach any
applicable governmental laws, rules, and regulations.  Landlord covenants to cooperate in all

 

1

 

may seek with respect to the Property, any operations thereat, any
adjacent property, and/or any operations thereat.  Landlord expressly acknowledges that there is
no express or implied covenant of continuous operation of Tenant hereunder.

 

7.                                       TAXES. 
Tenant shall pay all real property taxes and general assessments levied
and assessed against the Premises during the Term of this Lease.  Tenant shall pay prior to the delinquency all
taxes assessed against and levied upon the trade fixtures, furnishings,
equipment, and other personal property of Tenant contained in the
Premises.  Tenant shall endeavor to cause
such trade fixtures, furnishings, and equipment and all other personal
property to be assessed and billed separately from the property of
Landlord.  If any of Tenant’s sole
personal property shall be assessed with Landlord’s property, Tenant shall pay
to Landlord the taxes attributable to Tenant within ten (10) days after receipt
of a written statement from Landlord setting forth the taxes applicable to
Tenant’s property.

 

8.                                       UTILITIES. 
Tenant shall make all arrangements and pay for all water, gas,
heat, light, power, telephone, and other utility services supplied to the
Premises together with any taxes thereon and for all connection charges.  If any such services are not separately
metered to Tenant, the Tenant shall pay a reasonable proportion, to be
determined by Landlord, of all charges jointly metered with other premises.

 

9.                                       MAINTENANCE AND REPAIRS.  Landlord shall have no obligations to
maintain or repair the Premises.

 

10.                                 ALTERATIONS AND ADDITIONS.  Tenant may, without Landlord’s consent, make
any alterations, improvements, or additions in or about the Premises as Tenant
may determine.  Before commencing any
work relating to the alterations, additions, or improvements affecting the
Premises, Tenant shall notify Landlord in writing of the expected date of the
commencement of such work so that Landlord can post and record the appropriate
notices of non-responsibility to protect Landlord from any mechanic’s liens,
materialman liens, or any other liens. 
In any event, Tenant shall pay, when due, all claims for labor and
materials furnished to or for Tenant at or for use in the Premises.  Tenant shall not permit any
mechanic’s liens or materialmen’s liens to be levied against the Premises
for any labor or material furnished to Tenant or claims to have been furnished
to Tenant or Tenant’s agents or contractor in connection with work or any
character performed or claimed to have been performed on the Premises by or at
the direction of Tenant; provided, however, that Tenant shall have the
right to contest the validity of any such lien if, immediately on demand by
Landlord, Tenant procures and records a lien release bond meeting the
requirements of Landlord and shall provide for the payment of any sum that
the claimant may recover on the claim (together with the costs of suit, if it
is recovered in the action).

 

11.                                 FIRE INSURANCE.  Tenant at its cost shall maintain during the
Term of this Lease on the Premises a policy or policies of standard fire and
extended coverage insurance from an insurer acceptable to Landlord to the
extent of at least full replacement value thereof or such greater amount
as set forth below.  Said insurance
policies shall be issued in the names of Landlord and Tenant, as their
interests may appear and shall be in such form and amount as are
satisfactory to Landlord, in its sole reasonable discretion.  Tenant at its cost shall maintain during
the Term of this Lease on all its personal property, Tenant’s improvements and

 

2

 

alterations in or about the Premises, a policy of standard fire and
extended coverage insurance, with vandalism and malicious mischief
enforcements, to the extent of their full replacement value.  The proceeds from any such policy shall be
used by Tenant for the replacement of personal property or the restoration of
Tenant’s improvements or alterations.

 

12.                                 LIABILITY INSURANCE.  Tenant at its sole cost and expense shall
maintain during the Term of this Lease public liability and property damage
insurance, from an insurer and in form acceptable to Landlord, with a single
combined liability limit of One Million and 00/100 Dollars ($1,000,000.00) and
property damage limits of not less than One Million and 00/100 Dollars
($1,000,000.00), insuring against all liability of Tenant and its authorized
representatives arising out of and in connection with Tenant’s use or occupancy
of the Premises.  Both public liability insurance and property damage
insurance shall insure performance by Tenant of the indemnity provisions below,
but the limits of such insurance shall not, however, limit the liability
of Tenant hereunder.  Both Landlord and
Tenant shall be named as additional insureds, and the policies shall contain
cross-liability endorsements.  If Tenant
shall fail to procure and maintain such insurance, Landlord may, but shall not
be required to, procure and maintain same at the expense of Tenant and the
cost thereof shall become due and payable as additional rental to Landlord
together with Tenant’s next rental installment.

 

13.                                 INDEMNITY, ETC.

 

(a)                                  Hold Harmless. 
Tenant shall indemnify and hold Landlord harmless from and
against any and all claims arising from Tenant’s use or occupancy of the
Premises or from the conduct of its business or from any activity, work, or
things which may be permitted or suffered by Tenant in or about the Premises
including all damage, costs, attorney fees, expenses, and liabilities
incurred in the defense of any claim or action or proceeding arising
therefrom.  Except for Landlord’s willful
or negligent conduct, Tenant hereby assumes all risk of damage to property
or injury to person in or about the Premises from any cause and Tenant hereby
waives all claims in respect thereof against Landlord.

 

(b)                                 Waiver of Subrogation.  Tenant and Landlord each waives any and all
rights of recovery against the other or against the officers, employees,
agents, and representatives of the other, for loss of or damage to such
waiving party or its property or the property of others under its control where
such loss or damage is insured against under any insurance policy in force at
the time of such loss or damage.  Each
party shall cause each insurance policy obtained by it hereunder to provide
that the insurance company waives all right of recovery by way of
subrogation against either party in connection with any damage covered by any
such policy.

 

(c)                                  Exemption
of Landlord from Liability.  Tenant
hereby agrees that Landlord shall not be liable for any injury to Tenant’s
business or loss of income therefrom or for damage to the goods, wares,
merchandise, or other property of Tenant, Tenant’s employees, invitees,
customers, or any other person in or about the Premises, nor shall Landlord be
liable for injury to the person of Tenant, Tenant’s employees, agents,
contractors, or invitees, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction, or other defect of pipes,

 

3

 

sprinklers, wires, appliances, plumbing, air-conditioning, or lighting
fixtures, or from any other cause, whether such damage results from conditions
arising upon the Premises or upon other portions of the building in which the
Premises are a part, or from any other sources or places.  Landlord shall not be liable to Tenant for
any damages arising from any act or neglect of any other tenant, if any, of the
building in which the Premises are located.

 

14.                                 DAMAGE OR DESTRUCTION.

 

(a)                                  Damage - Insured.  If, during the Term of this Lease, the
Premises and/or the building and other improvements in which the Premises are
located are totally or partially destroyed rendering the Premises totally or
partially inaccessible or unusable, and such damage or destruction was caused
by a casualty covered under and insurance policy required to be maintained
hereunder, Landlord shall restore the Premises and/or the building and other
improvements in which the Premises are located into substantially the same
condition as they were in immediately before such damage or destruction,
provided that the restoration can be made under the existing laws and can be
completed within one hundred eighty (180) working days after the date of such
destruction or damage.  Such destruction
or damage shall not terminate this Lease. 
If the restoration cannot be made in said 180 day period, then within
fifteen (15) days after the parties hereto determine that the restoration cannot
be made in the time stated in this paragraph, Tenant may terminate this
Lease and immediately by giving notice to Landlord and the Lease will be deemed
canceled as of the date of such damage or destruction.  If Tenant
fails to terminate this Lease and the restoration is permitted under the
existing laws, Landlord, at its option, may terminate this Lease or restore the
Premises and/or any other improvements in which the Premises are located within
a reasonable time and this Lease shall continue in full force and effect.  If the existing laws do not permit the
restoration, either party can terminate this Lease immediately by giving notice
to the other party.  Notwithstanding the
above, if the Tenant is the insuring party and if the insurance proceeds received
by Landlord are not sufficient to effect such repair, Landlord shall give
notice to Tenant of the amount required in addition to the insurance
proceeds to effect such repair. 
Tenant may, at Tenant’s option, contribute the required amount, but
upon failure to do so within forty-five (45) days following such notice,
Landlord’s sole remedy shall be, at Landlord’s option and with no
liability to Tenant, to cancel and terminate this Lease.  If Tenant shall contribute such amount to
Landlord within said forty-five (45) day period, Landlord shall make such
repairs as soon as reasonably possible and this Lease shall continue in full
force and effect.  Tenant shall in no
event have any right to reimbursement of any amount so contributed.

 

(b)                                 Damage – Uninsured.  In the event that the Premises are damaged or
destroyed by a casualty which is not covered by the fire and extended coverage
insurance which is required to be carried by Tenant pursuant to
Article 11(a) above, the Landlord shall restore the same; provided that if
the damage or destruction is to any extent greater than ten percent (10%) of
the then replacement cost of the improvements on the Premises (exclusive
of Tenant’s trade fixtures and equipment and exclusive of foundations and
footings), then Landlord may elect not to restore and to terminate this
Lease.  Landlord must give to Tenant
written notice of its intention not to restore within thirty (30) days from the
date of such damage or destruction and, if not given, Landlord shall be
deemed to have elected to restore and in such event shall repair any
damage as soon as reasonably possible. 
In the event that Landlord elects to give such notice of Landlord’s
intention to cancel and terminate this Lease

 

4

 

Tenant shall have the right, within ten (10) days after receipt of such
notice, to give written notice to Landlord of Tenant’s intention to repair such
damage at Tenant’s expense, without reimbursement from Landlord, in which event
the Lease shall continue in full force and effect and Tenant shall proceed to
make such repairs as soon as reasonably possible.  If Tenant does not give such notice
within such 10 day period, this Lease shall be canceled and be deemed
terminated as the date of the occurrence of such damage or destruction.

 

(c)                                  Damage Near the End of the Term.  If the Premises are totally or
partially destroyed or damaged during the last twelve (12) months of the Term
of this Lease, Landlord may, at Landlord’s option, cancel and terminate this Lease
as of the date of the cause of such damage by giving written notice to Tenant
of Landlord’s election to do so within 30 days after the date of the occurrence
of such damage; provided, however, that, if the damage or
destruction occurs within the last 12 months of the term and if within ten
(10) days after the date of such damage or destruction Tenant exercise any
option to extend the term provided herein, Landlord shall restore the Premises
if obligated to do so as provided in subparagraph (a) or (b) above.

 

(d)                                 Abatement of Rent.  If the Premises are partially or totally
destroyed or damaged and Landlord or Tenant repairs or restores them pursuant
to the provisions of this Article 14, the rent payable hereunder for the
period during which such damage, repair or restoration continues shall be
abated in proportion to the degree to which Tenant’s reasonable use of the
Premises is impaired.

 

(e)                                  Trade Fixtures and Equipment.  If Landlord is required or elects to
restore the Premises as provided in this Article, Landlord shall not be
required to restore Tenant’s improvements, trade fixtures, interior
improvements, or equipment except to the extent such is a part of the Premises
upon the commencement hereof, or to restore any alterations made by Tenant
and restoration of such excluded items shall be the sole responsibility of
Tenant.

 

15.                                 CONDEMNATION.  If the Premises or any portion thereof are
taken by the power of eminent domain, or sold by Landlord under the threat of
exercise of said power (all of which is herein referred to as “condemnation”), this Lease shall terminate
as to the part so taken as of the date the condemning authority takes title or
possession, whichever occurs first. 
If more than twenty percent (20%) of the floor area of any building
on the Premises, or more than twenty percent (20%) of the land area of the
Premises not covered with buildings is taken by condemnation, either Landlord
or Tenant may terminate this Lease as of the date the condemning authority
takes possession, by notice in writing of such election within twenty (20) days
after Landlord shall have notified Tenant of such taking or, in the absence of
such notice, then within twenty (20) days after the condemning authority shall
have taken possession.  If
this Lease is not terminated by either Landlord or Tenant as provided
hereinabove, then it shall remain in full force and effect as to the portion of
the Premises remaining, provided that the rental shall be reduced in proportion
to the floor area of the building taken within the Premises as bears to
the total floor area of all buildings located on the Premises to a complete
unit of like quality and character as existed prior to the
condemnation.  Rent shall be abated or
reduced during the period from the date of taking until the completion of
restoration by Landlord, but all other obligations of Tenant under this Lease
shall remain in full force and

 

5

 

effect.  The abatement or
reduction of the rent shall be based on the extent to which the restoration
interferes with Tenant’s use of the Premises.

 

16.                                 ASSIGNMENT AND SUBLETTING; FINANCING.  Tenant may on one or more occasion assign or
sublet all or any portion of the Premises to any party, without any consent of
Landlord being required in connection therewith; provided, however, that no
such assignment(s) or sublease(s) shall in any way relieve Tenant of any of its
obligations under this Lease.  In
addition, Tenant shall have the right to place such financing as it may elect
secured by its rights under this Lease and/or any of Tenant’s equipment,
fixtures, or other personalty located at the Premises and Landlord shall
cooperate with any such financing by Tenant and execute such reasonable
agreements of attornment, access, and/or consent as any such lender(s) to
Tenant may request.

 

17.                                 DEFAULT. 
The occurrence of any one or more of the following shall constitute a
default and breach of this Lease by Tenant: 
failure to pay rent within ten (1) days of the date due, or failure to
perform any other provision of this Lease if the failure to perform is not
cured within thirty (30) days after written notice thereof has been given to
Tenant by Landlord; provided, however that if the default cannot reasonably be
cured within said thirty (30) day period, Tenant shall not be in default under
this Lease if Tenant commences to cure the default within the thirty (30) day
period and diligently prosecutes the same to completion.

 

Landlord shall have the following remedies if Tenant commits a default
under this Lease.  These remedies
are not exclusive but are cumulative and in addition to any remedies now
or hereafter allowed by law.  During the
period that Tenant is in default, Landlord can enter the Premises and
relet them, or any part of them, to third parties for
Tenant’s account.  Tenant shall be
liable immediately to Landlord for all costs Landlord incurs in reletting
the Premises, including, without limitation, brokers’ commissions, expenses of
remodeling the Premises required by the reletting, and like costs.  Reletting can be for a period shorter or
longer than the remaining Term of this Lease. 
Tenant shall pay to Landlord the rent due under the Lease on the dates
the rent is due, less the rent Landlord received from any reletting.  No act by Landlord allowed by this paragraph
shall terminate this Lease unless Landlord notifies Tenant that Landlord elects
to terminate this Lease.  If Landlord
elects to relet the Premises as provided in this paragraph, any rent that
Landlord receives from such reletting shall apply first to the payment of any
indebtedness from Tenant to Landlord other than the rent due from Tenant
to Landlord; secondly, to all costs, including maintenance, incurred by
Landlord in such reletting; and third, to any rent due and unpaid under this
Lease.  After deducting the payments
referred to in this paragraph, any sum remaining from the rent Landlord
receives from such reletting shall be held by Landlord and applied in payment
of future rent as rent becomes due under this Lease.  In no event shall Tenant be entitled to any
excess rent received by Landlord.  If, on
the date rent is due under this Lease, the rent received from reletting is less
than the rent due on that date, Tenant shall pay to Landlord, in addition
to the remaining rent due, all costs, including maintenance, that Landlord
shall have incurred in reletting that remain after applying the rent
received from the reletting as provided in this paragraph.  No act by Landlord other than giving written
notice to Tenant shall terminate this Lease. 
In the event that Landlord suffers any damages for late fees or any
other costs or charges under indebtedness secured by the Premises as a
result of any late payment of rent by Tenant, Tenant shall pay to Landlord as
additional rent an amount equal to such late fees owed

 

6

 

by Landlord.  Acts of
maintenance, efforts t relet the Premises, or the appointment of a
receiver on Landlord’s initiative to protect Landlord’s interest in this
Lease shall not constitute a termination of Tenant’s right to
possession.  In the event of such
termination, Landlord has the right to recover from Tenant:  (i) the worth, at the time of the award, of
the unpaid rent that had been earned at the time of the termination of
this Lease; (ii)the worth, at the time of the award of the amount by which
the unpaid rent that would have been earned after the date of the
termination of this Lease until the time of the award exceeds the amount of the
loss of rent that Tenant proves could have been reasonably avoided; (iii)
the worth, at the time of the award of the amount by which the unpaid rent for
the balance of the term after the time of the award exceeds the amount of the
loss of rent that Tenant proves could have been reasonably avoided; and (iv)
any other amount, including court costs, necessary to compensate Landlord
for all detriment proximately caused by Tenant’s default.  “The worth
at the time of the award” as referred to in this paragraph is to be
computed by discounting the amount at the “prime
rate” of interest of First Interstate Bank of Nevada, N.A. in
effect from time to time plus four percent (4%).  If Landlord at any time, by reason of
Tenant’s default, pays any sum or does any act that requires the payment of
any sum, the sum paid by Landlord shall be due immediately from Tenant to
Landlord at the time the sum is paid, and if paid by a later date
shall bear interest at the “prime rate”
of interest of First Interstate bank of Nevada, N.A. in effect from time to
time plus four percent (4%) until Landlord is reimbursed by Tenant.  The sum, together with interest thereon,
shall be considered additional rent.

 

18.                                 SIGNS. 
Tenant shall have the right to place, construct, or maintain any sign,
advertisement, awning, banner, or other exterior decorations on the building or
other improvements that are a part of the Premises without Landlord’s consent.

 

19.                                 EFFECTIVE DATE.  This Lease is effective immediately upon and
shall commence upon the date of the consummation of the Sale.

 

20.                                 SUBORDINATION.  This Lease, at Landlord’s option from time to
time, shall be subordinated to any mortgage, deed of trust, ground lease or any
other hypothecation for security hereafter placed upon the real property of
which the Premises are a part or the lease therefor and to any and all advances
made on the security thereof and to all renewals, modifications, and extensions
thereof.  In connection with any such
subordination, upon Tenant’s request, Landlord shall obtain from the lender or
other secured party in question an agreement of non-disturbance providing, in
substance, that Tenant’s right to quiet possession of the Premises shall not be
disturbed if Tenant is not in default and so long as Tenant shall
pay the rent and observe and perform all the other provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms.

 

21.                                 SURRENDER. 
On the last day of the Term hereof, or on any sooner termination, Tenant
shall surrender the Premises to Landlord in good condition, broom clean,
ordinary wear and tear accepted.  Tenant
shall repair any damage to the Premises occasioned by its use thereof or
by the removal of Tenant’s trade fixtures, furnishings, and equipment
which repair shall include the patching and filling of holes and repair of
structural damage.  Tenant shall remove
all of its personal property and fixtures on the Premises prior to the
expiration of the term of this Lease and if required by Landlord pursuant to
Article 10 above, any alterations, improvements, or additions made by
Tenant to the Premises.  If Tenant fails

 

7

 

to surrender the Premises to Landlord on the expiration of the Lease as
required by this paragraph, Tenant shall hold Landlord harmless from all
damages resulting from Tenant’s failure to vacate the Premises, including,
without limitation, claims made by any succeeding tenant resulting from
Tenant’s failure to surrender the Premises.

 

22.                                 HOLDING OVER.  If Tenant, with Landlord’s consent, remains
in possession of the Premises after the expiration or termination of the
term of this Lease, such possession by Tenant shall be deemed to be a
tenancy from month-to-month at a rental in the amount of the last monthly
rental plus all other charges payable hereunder, upon all the provisions of
this Lease applicable to month-to-month tenancy.

 

23.                                 BINDING ON SUCCESSORS AND ASSIGNS.  The terms, conditions, and covenants of the
Lease shall be binding upon and shall inure to the benefit of each of the
parties hereto, their heirs, personal representatives, successors, and
assigns.

 

24.                                 NOTICES. 
Whenever under this Lease a provision is made for any demand, notice, or
declaration of any kind, it shall be in writing and served either personally or
sent by registered or certified United States mail, postage prepaid, addressed
at the address as set forth below:

 

	
  TO LANDLORD AT:

  	
   

  	
  THE 1993 SAMUEL JOSEPHSON REVOCABLE

  FAMILY TRUST under Declaration of Trust dated

  September 3, 1993

  
	
   

  	
   

  	
  C/o Mr. Charles L. Chrein, C.P.A.

  
	
   

  	
   

  	
  P.O. box 6967

  
	
   

  	
   

  	
  Yorkville Station

  
	
   

  	
   

  	
  New York, New York 
  10128

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  R. Gardner Jolley, Esq.

  
	
   

  	
   

  	
  Jolley, Urga, Wirth & Woodbury

  
	
   

  	
   

  	
  300 South Fourth Street, #800

  
	
   

  	
   

  	
  Las Vegas, Nevada 
  89101

  
	
   

  	
   

  	
   

  
	
  TO TENANT AT:

  	
   

  	
  Phoenix Associates, a Nevada limited partnership

  
	
   

  	
   

  	
  c/o Consolidated Management, Inc.

  
	
   

  	
   

  	
  4650 West Oakey, #2220

  
	
   

  	
   

  	
  Las Vegas, Nevada 
  89108

  
	
   

  	
   

  	
  Attn:  Mr. Eli
  Applebaum

  

 

Such notice shall
be deemed to be received within forty-eight (48) hours from the time
of mailing, if mailed as provided for in this paragraph.

 

25.                                 CHOICE OF LAW.  This Lease shall be governed by the laws of
the State of Nevada without regard to its principles of conflicts of laws.

 

8

 

26.                                 ATTORNEY FEES.  If litigation or arbitration concerning this
Lease, the Premises, or the building or other improvements in which the
Premises are located arises between Landlord and Tenant, the prevailing party
shall be liable to the other party hereto for reasonable attorney fees and costs
of suit.

 

27.                                 WAIVERS. 
No waiver by Landlord of any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by
Tenant of the same or any other provision. 
Landlord’s consent to or approval of any act shall not be deemed to
render unnecessary the obtaining of Landlord’s consent to or approval of
any subsequent act by Tenant.  The
acceptance of rent hereunder by Landlord shall not be a waiver of any
proceeding breach by Tenant of any provision hereof, other than the failure of
Tenant to pay the particular rent so accepted, regardless of Landlord’s
knowledge of such preceding breach at the time of its acceptance of such
rent.

 

28.                                 INCORPORATION OF PRIOR AGREEMENTS; CONSTRUCTION OF
THIS LEASE.  This Lease
contains all agreements of parties with respect to any matter mentioned
herein.  No prior agreement or
understanding pertaining to any such matter shall be effective.  This Lease may be modified only in writing,
and signed by the parties in interest at the time of such
modification.  Each party to this Lease
and its counsel have reviewed and revised this Lease.  The normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Lease or of any amendments
or exhibits to this Lease.

 

29.                                 SEVERABILITY.  The unenforceability, invalidity, or
illegality of any provision of this Lease shall not render the other
provisions hereof unenforceable, invalid, or illegal.

 

30.                                 ESTOPPEL CERTIFICATES.  Tenant, within ten (10) days after notice
from Landlord, shall execute and deliver to Landlord, addressed to any party
directed by Landlord and on form prescribed by Landlord, a certificate
stating that this Lease is unmodified and in full force and effect, or in
full force and effect as modified, and stating the modification(s).  The certificate shall further state the
amount of minimum monthly rent, the dates of which rent has been paid in advance,
the amount of any security deposit.  The certificate
shall also acknowledge that there are not, to Tenant’s knowledge, any uncured
defaults on the part of Landlord, or it shall specify such defaults, if any,
which are claimed, and shall state such further matters (and be from any
or all of the Guarantors if requested by Landlord) as Landlord may reasonably
request.

 

31.                                 COVENANTS AND CONDITIONS.  Each provision of this Lease performable by
Tenant shall be deemed both a covenant and a condition.

 

32.                                 SINGULAR AND PLURAL.  When required by the context of this Lease,
the singular shall include the plural.

 

33.                                 JOINT AND SEVERAL OBLIGATIONS.  “Party”
shall mean Landlord and Tenant and if more than one person or entity is the
Landlord or Tenant, the obligations imposed on that party shall be joint
and several.

 

9

 

34.                                 PURCHASE OPTION.  During the Term hereof (which for all
purposes is deemed terminated upon eviction of Tenant), as may be extended from
time to time, Tenant shall have the right to reacquire the fee simple
interest in and to the Premises, on such notice and on such
schedule as it may deem appropriate for a price equal to the greater of
(i) 120 times the amount of monthly Basic Rent in effect at the time of
notice of such reacquisition or (ii) during the first year of the Term
$3,050,000 and thereafter $3,100,000. 
Such reacquisition of the Premises shall be made with the Premises
to be subject only to such encumbrances as are in effect upon or in connection
with consummation of the Sale (with a credit to Tenant for the amount secured
by such encumbrances) and shall provide for Tenant to receive title
insurance substantially in the form as was provided to Landlord in connection
with the Sale and allocation of the expenses (e.g., escrow fees, title
insurance, etc.) of the reacquisition in the same manner as was provided for in
the Sale (i.e., with Landlord to pay the ”Seller’s”
costs thereunder and Tenant to pay the “Buyer’s”
costs thereunder).  Payments to the
Landlord under the purchase option shall be in cash or by certified funds.

 

35.                                 MEMORANDUM OF LEASE AND PURCHASE OPTION.  Concurrently with the effectiveness hereof
(i.e., the closing of the Sale), Landlord and Tenant shall execute, deliver,
acknowledge, and record with the Recorder of the County of Clark a Memorandum
substantially in the form attached as Appendix i attached hereto and
incorporated herein by this reference.

 

36.                                 CONFLICT OF INTEREST: 
DISCLOSURE AND WAIVER. 
Landlord understands, acknowledges, agrees, and does hereby represent
and warrant (which representation and warranty shall survive the Closing),
that:  (i) it has been disclosed to
Landlord that Alan C. Sklar, a partner in Tenant and a shareholder,
officer, and Director of Tenant’s general partner, is also a shareholder of Gordon
& Silver, Ltd., which has served as counsel to Landlord with respect to
certain matters; (ii) Gordon & Silver, Ltd., has not acted as counsel
to Landlord in connection herewith, the Sale, or any related or ancillary
instruments, other documents, or matters; (iii) Rule 158 of the Nevada Supreme
Court Rules prohibits a lawyer from entering into a business transaction with a
client except in accordance with the provisions thereof, which provisions are
embodied in this Section 36; (iv) the transaction and terms upon which
Landlord is acquiring and leasing back the Property are fair and reasonable
to Landlord, inasmuch as, among other matters, Tenant, upon advice of
experts, is satisfied that the purchase price to be paid for and terms of the
purchase of the Premises and the rates, terms, and purchase option price
of the Premises hereunder are fair and reasonable; (v) the transaction and
terms upon which Landlord is purchasing, financing, leasing, and conveying
to Tenant an option to repurchase the Premises have been fully disclosed
and transmitted in writing to Landlord in a manner which can be reasonably
understood by Landlord; (vi) Tenant has been given a reasonable opportunity to
seek the advice of independent counsel in the transaction and has in fact sought
and received the advice of such independent counsel in connection herewith; and
(vii) Landlord, by its execution of this Agreement, hereby consents to the
indirect entry into a business transaction with a shareholder of Gordon &
Silver, Ltd., and waives any actual, apparent, or purported conflict of
interest with respect thereto.

 

37.                                 OBLIGATION OF TENANT OT CAUSE REFINANCING OF DEBT
SECURED BY THE PREMISES; MODIFICATIONS TO RENT BASED UPON FLUCTUATIONS IN DEBT
SERVICE.  Landlord and Tenant
acknowledge that certain

 

10

 

indebtedness is secured by deeds of trust (the “Deeds of Trust”) upon the Premises.  Tenant covenants that, during the entire
Term, it shall cause such indebtedness to be extended or to be refinanced
at Tenant’s sold cost and expense (e.g., payment of all loan fees, other costs
of refinancing or loan extension costs, etc.) and Landlord shall cooperate
therewith.  Notwithstanding anything
provided to the contrary, including, without limitation, Paragraph 4
hereinabove, in the event that the sum due upon any new or extended financing
would cause the monthly income to Landlord after payment of all debt
service upon indebtedness secured by the Premises (“Landlord’s Net Income”) to be less than or
more than the sum of $9,166.67, plus all increases in effect above the initial
Basic Rent of $25,000 (the “Rent Increases”)
then the Basic Rent shall be increased (i.e., if the annual payments upon
such indebtedness are greater than 10% of the principal amount thereof) or
decreased (i.e., if the annual payments upon such indebtedness are less
than 10% of the principal amount thereof), as the case may be, such that
the Landlord’s Net Income shall be the sum of $9,166.67 plus the Rent Increases,
monthly; provided, however, that to the extent any such indebtedness is being
amortized, then the aggregate sum of all such amortized amounts shall be
credited for the benefit of Tenant upon its exercise of the purchase
option provided for herein.

 

The parties hereto
have executed this Lease on the date first above written.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  THE 1993 SAMUEL JOSEPHSON

  	
   

  	
  PHOENIX ASSOCIATES, a Nevada limited

  
	
  REVOCABLE FAMILY TRUST

  	
   

  	
  partnership

  
	
  under Declaration of Trust dated

  	
   

  	
   

  
	
  September 3, 1993

  	
   

  	
  By:

  	
  Consolidated Management, Inc., a

  
	
   

  	
   

  	
   

  	
  Nevada corporation, General Partner

  
	
  By:

  	
  T.D.C.R. Associates, Inc., a

  	
   

  	
   

  
	
   

  	
  Nevada corporation, Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Eli Applebaum

  	
   

  
	
   

  	
   

  	
   

  	
  Eli Applebaum, President

  
	
  By:

  	
  /s/

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  	
   

  	
   

  
										

 

GUARANTEE

 

The undersigned
hereby personally unconditionally guarantees the timely performance
of each of the obligations of Tenant hereinabove.

 

 

	
   

  	
   

  	
  /s/ Eli Applebaum

  	
   

  
	
   

  	
   

  	
  ELI APPLEBAUM

  

 

11

 

FIRST AMENDMENT LEASE

 

THIS FIRST AMENDMENT OF LEASE (this “Amendment”), dated and effective
as of January 18, 2002, by and between THE 1993 SAMUEL JOSEPHSON REVOCABLE
FAMILY TRUST, under Declaration of Trust dated September 3, 1993
(“Landlord”), and MARKET GAMING, INC., a Nevada corporation (“Tenant”), is made
with reference to the following recited facts:

 

A.              Landlord
is the Landlord under, and Tenant is the Tenant under, that certain Lease (the
“Lease”), dated as of February 9, 1994, of the building commonly described
as 642 South Boulder Highway, Henderson, Nevada, and currently known as
“Lucky Strike Casino & Bowl”(the ”Premises”). Capitalized terms used
in this Amendment and defined in the Lease, shall have the meaning as set forth
in the Lease.

 

B.                By
reason of mutual mistake, Tenant did not pay, and Landlord did not demand
collection of, increased Basic Rent that became due and owing for the month of
February 1999, through and including December 2001, in the amount of
$2,500.00 for each such calendar month, being a total of $87,500.00 (the “Rent
Underpayment”).

 

C.                Landlord
and Tenant desire to amend the Lease to provide for the payment of the Rent
Underpayment and otherwise as provided in this Amendment, and this Amendment
shall be, and be deemed to constitute, an amendment of the Lease.

 

NOW, THEREFORE,
for good, valuable and adequate consideration, the receipt and adequacy of
which is hereby acknowledged, Landlord and Tenant agree as follows:

 

1.                                       Payment
of Rent Underpayment.  The prior
failure to pay the Rent Underpayment shall not be, nor be deemed to be, a
default under the Lease.  Beginning with
the rent payment that is due on April 30, 2002, and on the last
calendar day of each of the months May, June, July, August and
September 2002, Tenant shall pay to Landlord, along with the Basic Rent that
is otherwise then due, the additional sum of $14,583.33 (1/6th of $87,500.00),
with the intent and effect that the Rent Underpayment shall be fully paid
by September 30, 2002.  Each such
additional payment shall be deemed to be in satisfaction of Tenant’s rent
obligations under the Lease, and failure to timely pay any such additional
payment shall be deemed to be a default in the payment of Basic Rent under the
Lease, giving Landlord the same rights and remedies as a non- payment of Basic
Rent under the Lease.

 

2.                                       Notices:  Section 24 of the Lease is amended to
read as follows:  All notices, requests,
demands, and other communications required or permitted to be given by either
party to the other under the Lease shall be in writing and shall be conclusively
deemed to have been duly given and received (a) when hand delivered to the
addressee, or (b) on the third business day after the same has been
deposited in the United States mail, first class or certified mail, return
receipt requested, postage prepaid, addressed to the party to whom the notice
is to be given at the address shown

 

1

 

below, or to such other address as either party may designate from time
to time to the other in writing, or (c) on the next business day after the same
has been deposited with a national overnight delivery service, postage or
delivery charge prepaid, addressed to the party to whom the notice, request,
demand or communication is to be given at the address shown below, or to such
other address as either party may designate from time to time to the other in
writing.  Until further
notice, notices, demands and other communications to the respective
parties shall be addressed as follows:

 

If to Landlord to:

 

Mr. Richard Josephson, Trustee

2118 Wilshire Boulevard, Suite 798

Santa Monica, CA 90403

 

With a copy to:

 

Lawrence T. Dougherty, Esq.

Turner, Lampel & Dougherty, LLP

2515 Camino Del Rio South, Suite 324

San Diego, CA 92108

 

If to Tenant to:

 

Market Gaming, Inc.

5195 Las Vegas Blvd. S.

Las Vegas, Nevada 89119

 

With a copy to:

 

Sean T. Higgins, Esq.

5195 Las Vegas Blvd. S.

Las Vegas, Nevada 89119

 

3.                                       Confirmation
of Lease.  The Lease, as amended by
this Amendment, is hereby confirmed.  The
Lease, as amended by this Amendment, shall be construed as one, integrated
document, enforceable as provided in the Lease as amended by this Amendment.

 

4.                                       Warranty
of Authority.  Tenant is a Nevada
corporation, and each individual executing this Amendment on behalf of
Tenant represents and warrants that such individual is duly authorized to
execute and deliver this Amendment on behalf of Tenant, in accordance with a
duly adopted corporate resolution or the general provisions of the bylaws of
Tenant.

 

5.                                       General
Provisions.  This Amendment contains
the entire agreement between Landlord and

 

2

 

Tenant relating to the terms and transactions contemplated hereby, and
all prior or contemporaneous agreements, understandings, representations
and statements, oral or written, are merged herein.  Captions of sections in this Amendment are
for convenience of reference only, and are not part of the terms of this
Amendment.

 

6.                                       Counterparts.  This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which,
when taken together, shall constitute one and the same document.  The signature of any party to any counterpart
shall be deemed a signature to, and may be appended to, any other counterpart.

 

IN WITNESS WHEREOF,
Landlord and Tenant have executed this Amendment as of the date first above set
forth.

 

	
  Landlord:

  	
  Tenant:

  
	
   

  	
   

  
	
  THE 1993 SAMUEL JOSEPHSON

  	
  MARKET GAMING INC.,

  
	
  REVOCABLE FAMILY TRUST a Nevada corporation

  	
   

  
	
  under Declaration of Trust dated

  	
   

  
	
  September 3, 1993

  	
  By:

  	
   /s/ Edward J. Herbst

  	
   

  
	
   

  	
   

  	
  Edward J. Herbst, President

  
	
  By:

  	
   /s/ Richard Josephson

  	
   

  	
   

  
	
   

  	
  Richard Josephson, Trustee

  	
  By:

  	
   /s/ Troy D. Herbst

  	
   

  
	
   

  	
   

  	
  Troy D. Herbst, Secretary

  
						

 

3

 

Assessor’s Parcel No.:       

 

	
   

  	
  When recorded mail to:

  
	
   

  	
   

  
	
   

  	
  Gary A. Kashar

  
	
   

  	
  Latham & Watkins

  
	
   

  	
  633 West Fifth Street

  
	
   

  	
  Suite 4000

  
	
   

  	
  Los Angeles, CA 90071

  

 

LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

 

SECURITY AGREEMENT AND FIXTURE FILING

 

Market Gaming, Inc., a Nevada corporation

Trustor

 

National Title Co., a Nevada corporation

Trustee

 

and

 

The Bank of New York, a New York banking corporation

Beneficiary

 

Dated August 24, 2001

 

Exhibit C

 

 

LEASE
AGREEMENT

 

THIS LEASE, made this 1st day of July, 2002, by and between Terrible
Herbst, Inc. (hereinafter “Lessor”), and E-T-T, Inc. (Hereinafter “Lessee”).

 

WHEREAS, Lessor leases the Property described below pursuant to that
certain Lease dated June 30, 2002 between Lessor and Centennial
Acquisitions, LLC (hereinafter “Property Owner”), a copy of which is attached
hereto as Exhibit “A” and incorporated 
herein by reference.

 

WITNESSETH: that the Lessor in consideration of the rent herein
specified to be paid by the Lessee, and the covenants and conditions herein
mentioned, does hereby lease, let and demise, unto Lessee, and the Lessee does
hereby rent from the Lessor that certain real 
property necessary for parking, along with improvements thereto, to wit,
approximately 4,000 square feet of building space to be used as and for a
casino, bar and related uses (Hereinafter the “Property”) situated in the
County of Clark, State of Nevada, whose street address is 670 US Highway 95,
Searchlight, Nevada 89046 and which is set forth in the floorplan and site
plan, both of which are attached hereto as Exhibit “A”.

 

TO HAVE AND TO HOLD the same unto the said Lessee, its successors and
assigns for the period and upon the terms and conditions hereinafter set forth.

 

THIS INDENTURE OF LEASE is made by the Lessor and accepted by the Lessee
upon each of the following terms and conditions, namely:

 

1.                                       TERM:  This Lease shall be a twenty (20) year lease
commencing on the first day of operations at the casino by the Lessee.

 

1

 

2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for the Property the sum of Fifteen Thousand Dollars ($15,000.00) per
month on the first of each month for  the
duration of said lease.

 

3.                                       RIGHTS
& TITLE:  Lessee agrees that
buildings and improvements hereafter located or erected on premises at any time
during the term of his Lease, or extension thereof, shall be and remain
property of Lessor and Lessee shall have no title, rights or interest in said
buildings and improvements other than such interest granted hereby.

 

4.                                       QUIET
POSSESSION:  Lessor hereby covenants,
warrants, and agrees that at all times during the term hereof, provided Lessee
is not in default hereunder, Lessee shall 
have the full, peaceful and quiet possession of the Property, and,
further that Lessor has full right and power to make and enter into this lease.

 

5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal 
property and trade fixtures located therein and will pay charges for
light, power and other public utilities used by it in connection with the use
of the Property.

 

6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on improvements
placed upon the Property that he will notify Lessor in order that a notice of
non-responsibility may be posted on the Property and recorded in accordance
with the provisions of the Mechanic’s Lien Law of the State of Nevada.

 

7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written

 

2

 

consent of the Lessor shall be obtained therefore; and provided that
such changes and alterations shall conform with building codes and zoning
regulations now or hereinafter  legally
effective, and promulgated by the State, County or Municipal authorities.

 

8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the service station and
all ancillary buildings or improvements to be constructed thereon by Lessee and
all fixtures and equipment, including visible plumbing and electrical fixtures.  The Lessee agrees to keep the Property clean
and to have no nuisance, unsightly rubbish, or to commit or cause to be
committed by its employees, and/or sub-tenants, any violation of the laws,
rules or regulations of the State, County or Municipal Board of Health or appropriate
sanitary agency.

 

9.                                       TITLE
TO FIXTURES:  All fixtures and other
property and materials  installed in the
building on the Property by the Lessee shall be and remain the property of the
Lessee, and at the expiration of the Lease, the Lessee may, within thirty (30)
days, remove from said premises all of such fixtures, property, and materials,
provided that all expenses connected with the removal thereof shall be at the
expense of the Lessee.  The Lessee
further agrees to repair at his sole expense all damage that may result from
the removal of such building, fixtures and other property and to restore the
Property to the condition in  which they
were prior to the start of construction and that no building or improvements
placed upon said premises by Lessee shall be removed during the term of this
Lease or extension thereof without the consent of Lessor first had and
obtained.

 

10.                                 LIABILITY
AND FIRE INSURANCE:  The Lessor shall
require the Lessee to carry, maintain and have in full force and effect fire,
workmen’s compensation, public

 

3

 

liability, and product liability insurance with a recognized insurance
company authorized to transact business in the State of Nevada for the benefit
of the Lessor and Lessee, and for the protection of all persons who may suffer
injury while in, on or about the Property. 
Said  policy shall carry an amount
of coverage for injury to one person in any one accident in the sum of One
Hundred Thousand Dollars ($100,000.00) and for more injury to more than one
person in any one accident in the sum of Three Hundred Thousand Dollars
($300,000.00).  Lessor shall be furnished
with copies of said policies and all endorsements thereto.

 

The Lessee shall carry insurance against loss by destruction of the
Property caused by fire, explosion or other action of the elements, except loss
caused by earthquake, equal to ninety per cent (90%) of the value of the
improvements.

 

11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of all
State, Federal, County and  Municipal
authorities, appertaining to the business conducted upon the Property, and
Lessee shall not permit the Property to be used for any unlawful purposes.

 

12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to 
be kept and performed by the Lessee, and such default continue for
thirty (30) days from and after service upon the Lessee of written notice of
such default, signed by the Lessor or their duly authorized agents, then and in
any such event, the Lessor may, at their option declare this Lease terminated
and repossess themselves of the Property and take such action  or pursue such remedy as may be permitted
under the law of the State of Nevada. 
However,  if Lessee commences the
necessary work to cure said default before the expiration of the

 

4

 

thirty (30) days, but the work takes in excess of thirty days, then
Lessor shall not be allowed  to declare
this Lease terminated.

 

13.                                 LIENS:  The Lessee agrees that he will, at all times,
save the Lessor and keep it blameless and the Property free and harmless of and
from any liability on account of or in respect to any mechanic’s liens or liens
in the nature thereof, for work and labor done, or materials furnished at the
instance and request of the Lessee, in, on or about the Property; provided,
however, that the Lessee shall have the right to contest the claim of such
lien, in which event the Lessee shall, at his expense, furnish to the Lessor a
sufficient surety bond executed by a reputable and responsible surety company,
in at least double the amount of  such
claim of such lien, conditioned upon the diligent prosecution of such defense,
and to  hold the Lessor from and clear of
all loss, costs, damages, and expenses of every kind and nature, arising either
directly or indirectly out of said contest, and to pay any judgment that may be
obtained forthwith upon the same being entered.

 

14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease by
either the Lessor or Lessee, the prevailing party in such litigation shall be
entitled to receive from the other party reasonable attorney fees and costs of
action incurred in connection with said litigation.  In the event that either Lessor or Lessee
shall by reason of acts of omission or commission in violation of the terms of
the Lease, be made a party to any litigation commenced by a person other than
the parties hereto, then such party performing the said act or suffering the
said omission shall  pay all costs, expenses
and reasonable attorney fees incurred by the other party which arise from or
are in connection with such litigation.

 

5

 

15.                                 INDEMNIFICATION:                            Lessee
shall indemnify and hold harmless Lessor 
and its agents, servants, employees and representatives from and against
all claims, damages, losses and expenses, including attorneys’ fees arising out
of or resulting from Lessee’s occupancy, provided however, that Lessor, its
agents, employees, representatives, successors, or assigns are not negligent with
regards to same.  This Paragraph shall
have full force and effect upon execution of this Lease Agreement.

 

16.                                 ASSIGNMENT:  The Lessee shall not have the right to assign
this Lease or hypothecate the same without first receiving the written consent
of the Lessor, which  consent shall not
unreasonably be withheld.  Lessee shall
have the right to sublet any portion  of
the Property, providing that the tenancy of such sub-tenant shall be subject to
all the  terms, covenants and conditions
of this Lease.

 

17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s right
to enforce the same or any other covenant contained herein.

 

18.                                 HOLDING
OVER:  If the Lessee shall hold over
the Property beyond the term herein specified, or any renewal thereof, with the
consent, express or implied of the Lessor such holding over shall be construed
to be a month-to-month tenancy, unless otherwise mutually agreed upon.

 

19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular,  if
necessary.  The term “Lessee” or the
phrase “the term hereof” shall include any renewal or renewal thereof where
permitted by the context hereof.

 

6

 

20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:

 

	
  Lessor:

  
	
   

  
	
   

  	
  Terrible Herbst, Inc.

  
	
   

  	
  Jerry Herbst

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  
	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn:  Timothy Herbst, Vice
  President

  

 

21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations nor
agreements to or with any other party in 
addition to, or in conflict with the terms, covenants and conditions
hereof, and this Lease contains all of the terms, covenants and conditions and
representations between the parties upon the subject matter hereof.

 

22.                                 TERMINATION OF
LEASE IF LEGAL PROCEEDINGS FILED: 
If, at any time during the term hereof, proceedings in bankruptcy shall
be instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10 or 11 of the
Bankruptcy Act of the United States of America as such act is now in force or
as same may be amended, and shall be judicially approved, or if a Receiver of
the business or assets of the Lessee shall be appointed and if such appointment
be not vacated within sixty (60) days after

 

7

 

notice thereof to Lessee, or if a general assignment is made by the
Lessee for the benefit of creditors, or any sheriff, Marshall, constable, or
other duly constituted public official take possession thereof by authority of
any attachment or execution proceedings, and offer same  for sale publicly, the Lessor may, at its
option, in either or any of such events, without notice  to Lessee or any other person or persons,
immediately recapture and take possession of the Property and terminate this
Lease with or without the process of law, such process being expressly waived
by Lessee.

 

23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs, plants or
lawn planted on the Property and will keep the 
parking areas and black top in a neat and clean condition and will use
for parking.

 

24.                                 OPTION
TO RENEW:  Lessee understands and
acknowledges that Lessor holds interest in the Property through that certain
lease, which is attached hereto as Exhibit 
“B” and that Lessee’s option to renew this Agreement is subject to and
conditioned upon Lessor renewing Exhibit “B”. 
So long as Lessor renews, then the Lessee upon giving written notice to
Lessor, at least sixty (60) days prior to the date of the expiration of the
term  aforesaid, provided he has
faithfully complied with the terms hereof, shall have the option of renewing
this Lease for up to five (5) additional ten (10) year terms, subject to the
same  terms, covenants and conditions and
agreements as contained herein other than this 
paragraph.  The monthly rental for
each renewal term shall be determined at the time of each renewal.

 

25.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each  and
every one of the provisions herein contained.

 

8

 

26.                                 BINDING
EFFECT:  The covenants and agreements
contained in this Lease shall be binding upon the parties hereto and upon their
respective heirs, executors, administrators, successors and assigns.

 

IN WITNESS WHEREOF, the parties have caused this Lease to be executed
by their duly authorized officers as of the day and year first herein written.

 

 

	
  LESSOR:

  
	
  TERRIBLE HERBST, INC.

  
	
   

  
	
   

  
	
   /s/ Jerry E. Herbst

  	
   

  
	
   JERRY E. HERBST

  
	
   President

  
	
   

  
	
   

  
	
  LESSEE:

  
	
  E-T-T, INC.

  
	
   

  
	
   

  
	
   /s/ Timothy P. Herbst

  	
   

  
	
   TIMOTHY P. HERBST

  
	
   Vice President

  

 

9

 

EXHIBIT A

 

LEGAL
DESCRIPTION

 

THAT PORTION OF
GOVERNMENT LOT 4 SITUATE IN THE SOUTHWEST QUARTER (SW 1⁄4) OF THE
SOUTHWEST QUARTER (SW 1/4) OF SECTION 19, TOWNSHIP 21 SOUTH,
RANGE 61 EAST, M.D.M., CLARK COUNTY, NEVADA, MORE PARTICULARLY
DESCRIBED AS FOLLOWS:

 

COMMENCING AT THE
SOUTHEAST CORNER OF THE SOUTHWEST QUARTER (SW 1⁄4) OF THE SOUTHWEST QUARTER (SW
1⁄4) OF SAID SECTION 19, SAID CORNER ALSO BEING THE CENTERLINE
INTERSECTION OF TROPICANA AVENUE (PRESENTLY 100 FEET IN WIDTH) AND CAMERON
STREET (PRESENTLY 60 FEET IN WIDTH);

THENCE ALONG THE
EAST LINE THEREOF AND THE CENTERLINE OF SAID CAMERON STREET NORTH 00
34’29” WEST, 216.25 FEET; THENCE DEPARTING SAID EAST LINE AND CENTERLINE SOUTH
89 25’31” WEST, 30.00 FEET TO THE POINT OF BEGINNING;

THENCE SOUTH 89
53’19” WEST, 241.80 FEET;

THENCE SOUTH 00 34’28”
EAST, 166.00 FEET TO A POINT ON THE NORTH RIGHT-OF-WAY LINE OF SAID TROPICANA
AVENUE;

THENCE ALONG SAID
NORTH RIGHT-OF-WAY LINE, NORTH 89 53’20” EAST, 216.59 FEET TO THE
BEGINNING OF A CURVE CONCAVE NORTHWESTERLY, HAVING A RADIUS OF 25.00 FEET;
THENCE NORTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGEL OF 90 27’49”, AN
ARC DISTANCE OF 39.47 FEET TO A POINT ON THE WEST RIGHT OF WAY LINE OF SAID
CAMERON STREET;

THENCE ALONG SAID
WEST RIGHT-OF-WAY LINE NORTH 00 34’29” WEST, 141.00 FEET TO THE POINT OF BEGINNING.

 

 

LEASE Searchlight Truck Stop.

 

THIS LEASE (the
“Lease” is entered into as of the
          day of June, 2002,
between Centennial Acquisitions, LLC, a Nevada limited liability company
(“Landlord”), and Terrible Herbst, Inc., a Nevada corporation (“Tenant”).

 

WITNESSETH:

 

FOR AND IN
CONSIDERATION of the mutual covenants contained in this Lease, Landlord and
Tenant hereby agree as follows:

 

1.                                       Definitions.  The following words and phrases shall have
the meanings set forth below:

 

1.1                                 “Commencement
Date” means the later of the date as of which this Lease is entered into
and the date Landlord acquires the Premises.

 

1.2                                 “Expiration
Date” means twenty (20) years after the Commencement Date.

 

1.3                                 “Term”
means the period commencing on 12:01 a.m. of the Commencement Date and expiring
on midnight of the Expiration Date, together with the period of any extension
or renewal of this Lease to which Landlord and Tenant agree in writing.

 

1.4                                 “Basic
Monthly Rent” means $48,333.33 per calendar month, as the same may be
increased from time to time pursuant to the provisions of Paragraph 4.2.

 

1.5                                 “Additional
Rent” means all amounts payable as rent by Tenant to the
Landlord pursuant to this Lease (other than Basic Monthly Rent),
regardless of the manner of computation or timing of the payment.

 

1.6                                 “Permitted
Use” means use of the Premises for an automotive fuel and service station,
convenience store, fast food restaurant and casino (provided that Landlord
makes no representation or warranty that such uses are permitted under
applicable law).

 

1.7                                 “Premises”
means the approximately 7.43 acres of land (the “Land”), together with the
Building (the “Building”) and all other improvements located on the Land,
situated at City of Searchlight, County of Clark, State of Nevada, more
particularly described on the attached Exhibit A.  (The Building and all other improvements
located on the Land are hereinafter collectively referred to as the
“Improvements.”)  The Building consists
of approximately              
square feet and includes, without limitation, all heating, air conditioning,
mechanical, electrical, elevator and plumbing systems, the roof and all walls,
foundations, fixtures and equipment above the suspended ceiling or beneath the
level of the foundation which serve the Premises, constituting a part
thereof.  The Land includes all easements
and rights-of-way appurtenant thereto. 
Landlord’s reservation includes the right to install, inspect, maintain,
use, repair and replace those areas and items and to enter the Premises in
order to do so.

 

1

 

1.8                                 “Tenant”
means each person executing this document as a Tenant under this Lease.  If there is more than one person set forth on
the signature line as Tenant, their liability under this Lease shall be
joint and several.  If there is more than
one Tenant, any notice required or permitted by the terms of this Lease
may be given by or to any one Tenant, and shall have the same force and
effect as if given by or to all persons comprising Tenant.

 

2.                                       Agreement
of Lease; Improvement.  Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for
the Term, in accordance with the provisions set forth in this Lease, and
subject to all matters now or hereafter of record or enforceable at law or in
equity.  The Tenant acknowledges that the
Premises are ready for occupancy as-is. 
Landlord shall not be obligated to make any improvements or repairs
thereto.  Tenant has had an opportunity
to, and to have its architects, engineers and other consultants, inspect the
Premises and Tenant has found the Premises fit for Tenant’s use.  Tenant accepts the Premises with all systems
(roof, walls, foundation, heating, ventilating, air conditioning, telephone,
sewer, electrical, mechanical, elevator, utility and plumbing) in good working
order and repair.

 

3.                                       Term;
Commencement Date; Option to Extend Term. 
Tenant’s obligation to pay rent under this Lease shall commence on the
Commencement Date and shall be for the Term. 
Upon Landlord’s request, Landlord and Tenant shall execute a written
acknowledgment of the Commencement Date, which acknowledgment shall be deemed
to be a part of this Lease.

 

Tenant (but not a
successor, assignee or subtenant of Tenant) shall have the option to extend
the Term for four (4) periods of five (5) additional years (the “Option
Term”) by delivering written notice of exercise of such option not later than
180 days prior to the expiration of the original Term; provided, Tenant shall
not be in default when the Option is exercised or as of the date the Option
Term commences or the right to extend the term shall be null and
void.  In the event Tenant timely
exercises the option granted by this Paragraph 3 and extends the Term, this
Lease shall continue on the same terms and conditions as set forth in this
Lease except that the Base Rent for each Lease Year during the Option Term
shall escalate annually as provided in Paragraph 4.2 below.

 

4.                                       Rent;
Consumer Escalation; Net Lease.

 

4.1                                 Basic
Monthly Rent.  Tenant covenants to
pay to Landlord without abatement, deduction, offset, prior notice or demand
the Basic Monthly Rent in lawful money of the United States in equal
consecutive monthly installments at such place as Landlord may designate, in
advance on or before the first day of each calendar month during the Term,
commencing on the Commencement Date.  If the Commencement Date occurs
on a day other than the first day of a calendar month, on the Commencement Date
the Basic Monthly Rent shall be paid for the initial fractional calendar month
prorated on a per-diem basis and for the first full calendar month occurring
after the Commencement Date.

 

4.2                                 Basic
Monthly Rent Escalation.  The Basic
Monthly Rent shall be increased on each anniversary of the Commencement Date
to the product obtained by multiplying the Basic Monthly Rent then in effect by
1.02.  Landlord shall invoice Tenant
retroactively for the increased portion of the Basic Monthly Rent due for the
period between each such anniversary and the date of such invoice.  The 
delay  or failure  of 
Landlord  to  compute or to bill Tenant for the adjustments
to be

 

2

 

made pursuant to this Paragraph 4.2 shall not impair
the continuing obligation of Tenant to pay the increased portion of the Basic
Monthly Rent resulting from such adjustments. 
In no event shall the Basic Monthly Rent be decreased as a result of
this Paragraph 4.2.

 

4.3                                 Net
Rent.  It is the intent of Landlord
and Tenant that the Basic Monthly Rent and all other rent and sums payable by
Tenant to Landlord under this Lease be absolutely net to Landlord and that
Tenant shall, except as expressly hereinafter provided, pay (either directly or
by payment to Landlord of Tenant’s share of any expenses or costs pursuant to
any provision of this Lease) for all insurance, taxes, utilities, repairs,
operating expenses, maintenance and all other services and costs relating to
the Premises and to Tenant’s use thereof.

 

4.4                                 Place
of Payment.  All payments made by
Tenant under this Lease shall be made at Landlord’s place of business
designated on the signature page of this Lease, or at such other places as
Landlord may designate from time to time by written notice to Tenant.

 

4.5                                 Late
Charges.  Any payment of Basic Monthly
Rent or Additional Rent not made when due, shall at Landlord’s sole
option, bear late charges thereon calculated at the rate of one
and one-half percent (11⁄2%) per month, but in no event greater than the
highest rate permitted by applicable law.

 

4.6                                 Retention
of payments by Landlord.  Any payment
of Basic Monthly Rent or Additional Rent then accrued shall be fully earned by
Landlord when due under terms of this Lease.

 

4.7                                 Prepaid
Rent.  Concurrent with the execution
of this Agreement, Tenant shall pay Landlord the sum of $145,000
representing the first three months rent due hereunder.  On the first day of the fourth month of
the term of this Lease, Tenant shall commence making monthly rental payments in
the amount set forth in Paragraph 1.4 above.

 

5.                                       Property
Taxes.  Tenant shall pay all real
property taxes applicable to the Premises during the Term.  All such payments shall be made at least ten
(10) days prior to the delinquency date of such payment.  Upon payment thereof, Tenant shall promptly
furnish Landlord with satisfactory evidence that such taxes have been
paid.  Notwithstanding the foregoing
provisions of this Paragraph 5, if the holder of any mortgage then
affecting Landlord’s interest in the Premises requires that Landlord make
monthly or other periodic payments to an escrow or reserve for use in paying
real property taxes as they fall due, Tenant shall, upon being so advised
by Landlord and at the time of its making the monthly payments of Basic Monthly
Rent required under Paragraph 4, remit to Landlord the monthly or other
periodic payments required to be paid by Landlord to such holder, and Landlord
shall in turn remit such amount to such holder. 
As used herein, the term “real property taxes” shall include any form of
general or special assessment, license fee, commercial rental or gross receipts
tax, levy, penalty, duty, charge or tax (other than inheritance or estates
taxes) imposed by an authority having the direct or indirect power to tax,
including any city, county, state or federal government, or any school,
agricultural, lighting, drainage, sewer or other improvement district against
any legal or equitable interest of Landlord in the Premises or in the real
property of which the Premises are a part, against Landlord’s right to rent or other
income therefrom, against the use, occupancy or possession of the Premises by
Landlord or Tenant or against Landlord’s business of leasing the Premises or
any tax imposed in substitution, partially or totally, of any tax previously
included within the definition of real property taxes, or any  additional tax the  nature of 
which was  previously included
within the definition

 

3

 

of real property taxes.  All
expenses, including attorney’s fees and disbursements, experts’ and other
witnesses’ fees, incurred in contesting the validity or amount of any taxes or
in obtaining a refund of taxes will be considered as part of the taxes for the
tax year in which such expenses are incurred. 
If the Premises are not separately assessed, Tenant’s liability shall be
an equitable proportion of the real property taxes for all of the land and
improvements included within the tax parcel assessed, such proportion to be
determined by Landlord from the respective valuations assigned in the
assessor’s work sheets or such other information as may be reasonably
available.  Landlord’s reasonable
determination thereof, in good faith, shall be conclusive.  Tenant shall pay prior to delinquency all
taxes assessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Tenant contained in the Premises or
elsewhere.  When possible, Tenant shall
cause said trade fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of
Landlord.

 

6.                                       Use
and Operation.

 

6.1                                 Use;
Suitability.  Tenant shall not use or
occupy or permit the Premises to be used or occupied for any purpose other than
for the Permitted Use, and shall not do or permit anything to be done by its
employees, agents, licensees or invitees (collectively, “Occupants”) which may
(a) increase the existing rate or violate the provisions of any insurance
carried with respect to the Premises; (b) create a public or private nuisance, commit
waste or interfere with, annoy or disturb any other tenant or occupant of the
Building or Landlord in its operation of the Building; (c) overload the floors
or otherwise damage the structure of the Building; (c) constitute an improper,
immoral or objectionable purpose; (e) subject Landlord to any liability to any
third party; or (f) lower the first-class character of the Building.  Tenant shall, at its sole cost, (t) operate
its business on the Premises; (u) use the Premises in a careful, safe and proper
manner; (v) comply with all present and future governmental or
quasi-governmental laws, ordinances, regulations and requirements and any
covenants, conditions and restrictions existing with respect to the Premises
and the use thereof; (w) comply with the requirements of any board of fire
underwriters or other similar body relating to the Premises; (x) keep the
Premises free of objectionable noises and odors; (y) not store, use or dispose
of any hazardous, toxic or radioactive materials on the Premises except those
necessary to the operation of its business and in full compliance with all
applicable present and future governmental or quasi-governmental laws,
ordinances, regulations and requirements regarding the same; and (z) not place
any signs on the Premises, except as provided in Paragraph 18 of this Lease,
unless Landlord consents thereto in advance in writing.  The judgment of any court of competent
jurisdiction or the admission of Tenant in any action against Tenant, whether
or not Landlord is a party thereto, that Tenant has violated any governmental
or quasi-governmental law, ordinance, regulation or requirement or any
covenant, condition or restriction existing with respect to the Premises or
with respect to any hazardous, toxic or radioactive substance on the Premises
shall be conclusive of that fact as between Landlord and Tenant.  (The foregoing sentence shall not create or
confer upon Tenant or any other person any rights with respect to Landlord.)  Except as expressly set forth in this Lease,
no representation or warranty has been made to or relied upon by Tenant
concerning the Premises, including, without limitation, the fitness or
suitability of the Premises for the conduct of Tenant’s business, nor has
Landlord agreed to undertake any modification, alteration or improvement of the
Premises.

 

6.2                                 Covenant
of Continuous Operation.  Tenant
shall carry on its business diligently and continuously at the Premises
throughout the Term and shall keep the Premises open for

 

4

 

business on all business days in accordance with the
schedule of minimum hours specified from time to time by Landlord.

 

7.                                       Utilities
and Services.  Tenant shall pay all
costs, expenses, charges and amounts, or whatever kind or character, for all
water, gars, heat light, power, air conditioning, telephone, sewer service,
protective service, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. 
If any such services are not billed to Tenant, but rather are billed to
and paid by Landlord, Tenant shall pay to Landlord the cost of such
services.  If any utility service to
the Premises is interrupted for any reason whatsoever, Landlord shall not
be liable therefore to Tenant, such interruption shall not be deemed to be an
eviction or interference with Tenant’s use and occupancy of the Premises, the
rents required to be paid hereunder shall not be abated as a result thereof,
and Tenant hereby expressly waives any claims Tenant might otherwise have
against Landlord as a result of any such interruption.

 

8.                                       Maintenance
and Repairs; Alterations; Access.

 

8.1                                 Maintenance
and Repairs.  Tenant, at its sole
cost and expense, shall maintain the Premises and every part thereof in good
order, condition and repair, and in a clean and sanitary condition, including
both structural and nonstructural portions, including, without limitation, all
plumbing, sewage, heating, air conditioning, ventilating, electrical, and
lighting facilities equipment, fixtures, floor, walls and ceilings and their
coverings (interior and exterior), foundations, roofs (interior and
exterior), columns, beams, floors, windows, window sashes and frames, doors and
door frames, locks, glass and plate glass, furnishings, trade fixtures,
leasehold improvements, equipments, landscaping, driveways, parking lots,
fences, signs and other personal property from time to time situated in, on or
upon the Premises.  Tenant expressly and
irrevocably waives the benefit or applicability of any statute in effect on or
after the date of this Lease which affords Tenant the right to make repairs at
Landlord’s expense or to terminate this Lease because of Landlord’s failure to
keep the Premises in good order, condition and repair.

 

8.2                                 Alterations.  Tenant shall not make any change, addition or
improvement to the Premises, unless such change, addition or improvement:
(a) equals or exceeds the then-current standard for the building and utilizes
only new and first-grade materials; (b) is in conformity with all applicable
governmental and quasi-governmental laws, ordinances, regulations and
requirements, and is made after obtaining any required permits and
licenses; (c) is made with the prior written consent of Landlord; (d) is made
pursuant to plans and specifications approved in writing in advance by
Landlord, which approval shall not be unreasonably withheld; (e) is made
after Tenant has provided to Landlord such indemnification or bonds, including,
without limitation, a performance and completion bond, in such form and amount
as may be satisfactory to Landlord, to protect against claims and liens for
labor performed and materials furnished, and to insure the completion of any
change, addition or improvement; (f) is carried out by persons approved in
writing by Landlord, who, if required by Landlord, deliver to Landlord before
commencement of their work proof of such insurance coverage as Landlord
may require, with Landlord named as an additional insured; and (g) immediately
becomes the property of Landlord.  Any
such change, addition or improvement shall be done only at such time and in
such manner as Landlord may reasonably specify. 
Tenant shall promptly pay the entire cost of any such change, addition
or improvement.  Tenant shall indemnify,
defend and hold harmless Landlord from and against all liens, claims,
damages, losses, liabilities and expenses, including attorneys’ fees, which may
arise out of or be connected in any way with any such change, addition or

 

5

 

improvement. 
Within ten (10) days following the imposition of any such lien Tenant
shall cause such lien to be released of record by payment of money or posting
of a proper bond.  Any increase in
property taxes on or insurance cost for the Premises attributable to such
change, addition or improvement shall be borne by Tenant and shall be paid by
Tenant to Landlord within thirty (30) days after receipt by Tenant of
Landlord’s invoice(s) therefore.

 

8.3                                 Access
to Premises.  Landlord may enter the
Premises at reasonable times for the purpose of inspecting, altering and
repairing the Premises and ascertaining compliance with the provisions of this
Lease by Tenant.  Landlord shall have
free access to the Premises in the event of an emergency.  Landlord may also show the Premises to
prospective purchasers, tenants or mortgages at reasonable times.  Tenant hereby waives any claim for damages or
for injury to inconvenience to or interference with Tenant’s business, any loss
of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby.  Landlord shall at
all times have a key with which to unlock all of the doors in the Premises
(excluding Tenant’s vaults, safes and similar areas designated in writing by
Tenant in advance).  During the six (6)
months prior to the expiration of the Term or other termination of this Lease,
Landlord may place upon the Premises “To Let,” “For Sale” or other similar
signs.

 

9.                                       Assignment.

 

9.1                                 Prohibition.  Tenant shall not, either voluntarily or by
operation of law, assign, transfer, mortgage, encumber, pledge or hypothecate
this Lease or Tenant’s interest in this Lease, in whole or in part, permit the
use of the Premises by any persons other than Tenant or its Occupants, or
sublease the Premises or any part of the Premises, without the prior written
consent of Landlord, which may be withheld in Landlord’s sole discretion
for any reason or for no reason.  Any
transfer of this Lease from Tenant by merger, consolidation, liquidation or
transfer of assets shall constitute an assignment for the purposes of this
Lease.  If Tenant is a corporation, an
unincorporated association or a partnership, the assignment, transfer,
encumbrance or hypothecation of any stock or interest in such corporation,
association or partnership in the aggregate in excess of forty-nine percent
(49%) shall be deemed an assignment within the meaning of this Paragraph 9.1
unless such transfer is to the immediate family of such majority equity
holder.  Consent to any assignment or
subleasing shall not operate as a waiver of the necessity for consent to any
subsequent assignment or subleasing and the terms of such consent shall be
binding upon any person holding by, under or through Tenant.  At Landlord’s option, any assignment or
sublease without Landlord’s prior written consent shall be void.  Notwithstanding the foregoing, Landlord
expressly consents to subleases to McDonalds and EFT [hand written notation
changing EFT to ETT, initialed by Phyllis Schwartz], Inc.  Tenant hereby pledges its interest in said
leases to Landlord to secure Tenant’s obligations to Landlord hereunder.

 

9.2                                 Termination.  If Tenant requests Landlord’s consent to an
assignment of this Lease or to a subleasing of the whole or any part of the
Premises (other than the approved subleases referred to in Paragraph 9.1
above), Tenant shall submit to Landlord the terms of such assignment or
subleasing, the name and address of the proposed assignee or subtenant, such
information relating to the nature of its business and finances as Landlord
may be reasonably require, and the proposed effective date (the “Effective
Date”) of the proposed assignment or subleasing, which Effective Date shall be
neither less than thirty (30) nor more than ninety (90) days following the date
of Tenant’s submission of such information. 
Upon receipt of such request and all such information from Tenant,
Landlord shall have the right, exercisable by notice within fifteen (15) days
after such receipt, to terminate this Lease if the request is to assign this Lease
or to sublease all of the Premises or, if the request is to

 

6

 

sublease  a
portion of the Premises only, to terminate this Lease with respect to such
portion, in each case as of the Effective Date, unless within five (5) business
days after notice from Landlord to Tenant of such termination, Tenant withdraws
such request.  Such right to terminate
shall be for any reason whatsoever in the sole discretion of Landlord,
including but not limited to the right to retain all profits of such
assignment or sublease.  If Landlord
shall exercise such termination right, Tenant shall surrender possession
of the entire Premises or the portion which is the subject of the right, as the
case may be, on the Effective Date in accordance with the provisions of
Paragraph 17.  If this Lease is
terminated as to a portion of the Premises only, the rent payable by Tenant
under this Lease shall be abated proportionately commencing as of the Effective
Date, based upon the percentage of the Premises as to which this Lease has
been terminated.

 

9.3                                 Landlord’s
Rights.  If this Lease is assigned or
if all or any portion of the Premises is subleased or occupied by any person
other than Tenant without obtaining Landlord’s consent, Landlord may collect
rent and other charges from such assignee or other party, and apply the amount
collected to the rent and other charges reserved under this Lease, but such
collection shall not constitute consent or waiver of the necessity of consent
to such assignment or subleasing, nor shall such collection constitute the
recognition of such assignee or subtenant as Tenant under this Lease or a
release of Tenant from the further performance of all of the covenants and
obligations of Tenant contained in this Lease. 
No consent by Landlord to any assignment or subleasing by Tenant shall
relieve Tenant of any obligation to be paid or performed by tenant under this
Lease, whether occurring before or after such consent, assignment or
subleasing, but rather Tenant and it assignee or subtenant, as the case may be,
shall b jointly and severally primarily liable for such payment and
performance.  Tenant shall reimburse
Landlord for its attorneys’ and other 
fees and costs incurred in connection with both determining whether to
give its consent and giving its consent. 
O assignment or subleasing under this Lease shall be effective
unless and until Tenant provides to Landlord an executed counterpart of the
assignment or sublease agreement, which shall specifically state that (a) such
agreement is subject to all of the provisions of this Lease; (b) in the case of
an assignment, the assignee assumes and agrees to perform all of Tenant’s
obligations under the Lease; (c) the assignee or subtenant, as the case may be,
does not have the right to a further assignment of such agreement, or to allow
the Premises to be used by others, without the prior written consent of
Landlord in each instance; (d) a consent by Landlord thereto shall not be
deemed or construed to modify, amend or affect the provisions of this
Lease or Tenant’s obligations under this Lease, which shall continue to apply
to the Premises and the occupants of the Premises as if the assignment or
sublease had not been made; (e) if Tenant defaults in the payment of any amounts
due under this Lease, Landlord is authorized to collect any rents or other
amounts due from any assignee, subtenant or other occupant of the Premises and
to apply the net amounts collected to the sums reserved in this Lease; and (f)
the receipt by Landlord of any amounts from an assignee, subtenant or other
occupant of any part of the Premises shall not be deemed or construed as
releasing Tenant from Tenant’s obligations under this Lease or the acceptance
of that party as a direct tenant.

 

10.                                 Indemnity;
Waiver and Release.

 

10.1                           Indemnity.  Tenant shall indemnify, defend and hold
harmless Landlord from, against and with respect to all demands, claims, causes
of action, judgments, losses, damages (including consequential damages),
liabilities, obligations, fines, penalties, costs and expenses,
including but not limited to attorneys’ fees, arising from the occupancy
or use by Tenant or its invitees on the Premises, the conduct of Tenant’s
business on the Premises, and act or omission done, permitted

 

7

 

or suffered by Tenant or any of its invitees, any default or
nonperformance by Tenant under this Lease, any injury or damage to the
person, property or business of Tenant or its invitees, any litigation commenced
by or against Tenant to which Landlord is made a party without fault on the
part of Landlord, or any change or liability brought by any local, state or
federal governmental agency regarding Tenant’s retail fuel operations,
including, without limitation, claims brought by the Environmental Protection
Agency due to a violation of any law.  If
any action or proceeding is brought against Landlord, its employees or its
agents by reason of any such claim, Tenant, upon notice from Landlord, shall
defend the claim at Tenant’s expense with counsel reasonably satisfactory to
Landlord.

 

10.2                           Waiver
and Release.  Tenant waives and
releases all claims against Landlord, its employees and agents with
respect to all matters for which Landlord has disclaimed liability pursuant to
the provisions of this Lease.  In
addition, Landlord, its employees and agents shall not be liable for any loss,
injury, death or damage (including any consequential damage) to persons,
property or Tenant’s business resulting from any theft, act of God, public
enemy, injunction, riot, strike, insurrection, war, court order, requisition,
order of governmental body or authority, fire, explosion, falling object,
steam, water, rain, snow, breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, construction, repair or alteration of the Premises or other cause
beyond Landlord’s control.  Tenant
acknowledges that it constructed all improvements comprising the Premises and that
it is now leasing the property pursuant to a sale/leaseback transaction with
Landlord.  Consequently, Tenant waives
all claims against Landlord relating to the current or future condition of
the improvements or the Premises and acknowledges that any it is responsible
for any deficiency of the improvements or the Premises.  Tenant shall timely pursue all
meritorious claims against contractors, subcontractors, materialmen and/or
architects contributing to any substandard condition relating to the improvements
or the Premises and shall advise Landlord of any such claim.

 

11.                                 Insurance.  Tenant shall, at Tenant’s dole cost, procure
and continue in force the following insurance coverage: (a) bodily injury and
property damage liability insurance with a combined single limit for bodily
injury and property damage of not less tan $2,000,000 per occurrence; (b)
fire and extended coverage insurance, including vandalism, malicious mischief,
special extended peril (all-risk), boiler, and sprinkler leakage coverage, in
an amount equal to the full replacement value (without deduction for
depreciation) of the Premises and of all furnishings, trade fixtures, leasehold
improvements, equipment, merchandise and other personal property from time to
time situated in, on or upon the Premises; and (c) worker’s compensation
insurance satisfying Tenant’s obligations under the worker’s compensation laws
of the State of Nevada.  Such minimum
limits shall in no event limit the liability of Tenant under this
Lease.  Such liability insurance shall
name Landlord and any other person specified from time to time by Landlord as
an additional insured, such property insurance shall name Landlord as a loss
payee as its interests may appear, and both such liability and property
insurance shall be with companies acceptable to Landlord having a rating of not
less than A:XI in the most recent issue of Best’s Key Rating Guide,
Property-Casualty.  All liability
policies maintained by Tenant shall contain a provision that Landlord and any
other additional insured, although named as an insured, shall nevertheless
be entitled to recover under such policies for any loss sustained by it, its
agents and its employees as a result of the acts or omissions of Tenant.  Tenant shall furnish Landlord certificates of
coverage.  No such policy shall be
cancelable or subject to reduction of coverage or other modification except
after thirty (30) days’ prior written notice to Landlord by the insurer.  All such policies shall be written as primary
policies, not contributing with and not in excess

 

8

 

of any coverage Landlord may carry, and shall only be subject to such
deductibles as may be approved in writing in advance by Landlord.  Tenant shall, at least ten (10) days prior to
the expiration of such policies, furnish Landlord with renewals or binders
therefore.  Landlord and Tenant hereby
mutually waive their respective rights of subrogation against each other for
any loss insured by insurance policies existing for the benefit of the
respective parties.  Landlord and Tenant
shall cause their respective insurance carriers to issue appropriate waivers of
subrogation rights endorsements to all policies of insurance carried in
connection with the Premises or the contents of the Premises.  Tenant shall cause all other occupants of the
Premises claiming by, through or under Tenant to execute and deliver to
Landlord a waiver of claims similar to the waiver contained in this Paragraph
and to obtain such waiver of subrogation rights endorsements.  Any mortgage lender interested in any part of
the Premises may, at Landlord’s option, be afforded coverage under any policy
required to be secured by Tenant under this Lease, by use of a mortgagee’s endorsement
to the policy concerned.

 

12.                                 Damage
or Destruction.

 

12.1                           General
Provisions.  If the Premises are
partially damaged or destroyed by any casualty insured against under any
insurance policy maintained by Tenant or Landlord, they shall,
upon receipt of any insurance proceeds, use such proceeds to effect repair
of the Premises to substantially the condition in which the Premises were
immediately prior to such destruction. 
Landlord’s obligation under the preceding sentence shall not exceed the
lesser of the cost of the standard improvements installed by Landlord in
the Premises, or the proceeds received by Landlord from any insurance policy
maintained by Tenant.  If (a) by reason
of such occurrence the Premises are rendered wholly untenantable; (b) the
Premises are damaged as a result of a risk not covered by insurance; (c) the
Premises are damaged in whole or in part during the last twelve (12) months of
the Term; (d) the Premises or the Building (whether or not the Premises are
damaged) is damaged to the extent of ten percent (10%) or more of the
then-replacement value of either or to the extent that it would take, in
Landlord’s opinion, in excess of ninety (90) days to complete the requisite
repairs; or (e) insurance proceeds adequate to repair the Premises are not
available to Landlord for any reason, Landlord may either elect to repair the
damage or cancel this Lease by notice of cancellation within sixty (60) days
after such event and thereupon this Lease shall expire as of the date such
notice is given, and Tenant shall vacate and surrender the Premises to
Landlord.  There shall be no abatement
of any payment due from Tenant to Landlord under this Lease.  Tenant expressly waives any claim Tenant
might  have against Landlord for any loss
suffered by reason of any such damage, destruction, repair or restoration, and
Tenant shall have no right to terminate this Lease as the result of any
statutory provision in effect on or after the date of this Lease
pertaining to the damage and destruction of the Premises or the Building.

 

12.2                           Damage
to Tenant’s Trade Fixtures and other Personal Property.  The proceeds of all insurance carried by
Tenant on Tenant’s furnishings, trade fixtures, leasehold improvements,
equipment, merchandise and other personal property shall be held in trust by
Tenant for the purpose of the repair and replacement of the same, and shall not
be subject to any claim by Landlord for repair or replacement of any part of
the Premises.  Landlord shall not be
required to repair any damage or to make any restoration or replacement of
any furnishings, trade fixtures, leasehold improvements, equipment, merchandise
and other personal property installed in the Premises by Tenant or at the
direct or indirect expense of Tenant. 
Unless this Lease is terminated by Landlord pursuant to this Paragraph,
Tenant shall be require to restore or replace such furnishings, trade fixtures,
leasehold

 

9

 

improvements, equipment, merchandise and other personal property in the
event of damage or destruction in at least a condition equal to that existing
prior to such event.

 

13.                                 Condemnation.  As used in this Paragraph 13, “Condemnation
Proceedings” means any actions or proceedings in which any interest in the
Premises is taken for any public or quasi-public purpose by any lawful
authority through exercise of the poser of eminent domain or by purchase or
otherwise in lieu of such exercise.  If
the whole of the Premises is taken through Condemnation Proceedings, this Lease
shall automatically terminate as of the date of such taking.  The phrase “as of the date of the taking”
means the date of taking actual physical possession by the condemning authority
or such earlier date as the condemning authority gives notice that it is deemed
to have taken possession.  Landlord may
terminate this Lease if more than twenty-five percent (25%) of the Premises is
taken or any portion of the Premises is taken that, in Landlord’s judgment,
substantially interferes with Landlord’s ability to operate or use the Premises
for the purposes for which it was intended. 
Any such termination must be accomplished through written notice to
Tenant given no later than sixty (60) days after, and shall be effective as of,
the date of such taking.  In all other
cases, or if Landlord does not exercise its right to terminate, this Lease
shall remain in effect.  If a portion of
the Premises is taken and this Lease is not terminated, the Basic Monthly Rent
shall be reduced in the proportion that the floor area of buildings taken bears
to the total floor area of the Premises immediately prior to the taking.  Whether or not this Lease is terminated as a
consequence of Condemnation Proceedings, all damages or compensation
awarded for a partial or total taking, including any award for severance damage
and any sums compensating for diminution in the value of or deprivation of the
leasehold estate under this Lease, shall be the sloe and exclusive property of
Landlord.  Tenant shall be entitled to
any award for the loss of or damage to Tenant’s trade fixtures or loss of
business, provided that a separate award is actually made therefore to Tenant
and that the same will not reduce Landlord’s award. Tenant shall have no claim
against Landlord for the occurrence of any Condemnation Proceedings, or for the
termination of this Lease or a reduction in the Premises as a result of any
Condemnation Proceedings.

 

14.                                 Landlord’s
Financing.  This lease shall be
subordinate to any existing or future first mortgage, first deed of trust and
all renewals, modifications, amendments, consolidations, replacements and
extensions of any such instruments.  No
documentation other than this Lease shall be required to evidence such
subordination.  If any holder of a
mortgage or deed of trust shall elect to have this Lease superior to the lien
of its mortgage or deed of trust and shall give written notice of such election
to Tenant, this Lease shall be deemed prior to such mortgage or deed of
trust.  Tenant shall execute such
documents as may be required by Landlord to confirm such subordination or
priority within ten (10) days after request therefore.  Tenant shall from time to time if so
requested by Landlord and if doing so will not materially and adversely affect
Tenant’s economic interests under this Lease, join with Landlord in amending
this Lease so as to meet the needs or requirements of any lender that is
considering making or that has made a loan secured by the Premises or any
portion thereof.  Any sale, assignment or
transfer of Landlord’s interest under this Lease or in the Premises, including
any such disposition resulting from Landlord’s default under a debt obligation,
shall be subject to this Lease and Tenant shall attorn to Landlord’s successors
and assigns and shall recognize such successors or assigns as Landlord under this
Lease, regardless of any rule of law to the contrary or absence of privity of
contract.

 

10

 

15.                                 Default.

 

15.1                           Default
by Tenant.  The occurrence of any of
the following events shall constitute a default by Tenant under this Lease:

 

15.1.1                  Tenant
fails to pay timely any installment of Basic Monthly Rent or any other
payment due under this Lease.

 

15.1.2                  Tenant
fails to observe or perform timely any other term, covenant or condition to be
observed or performed by Tenant under this Lease.

 

15.1.3                  Tenant
fails to provide fuel services for a period of five (5) consecutive days,
unless Tenant is prevented from doing so by Force Majeure.  For purposes of this provision, Force Majeure
shall mean any act or event that occurs as a consequence of fire, theft, water,
wind, flood, hurricane, and that could not have been avoided by reasonable
diligence, prevention or control.

 

15.1.4                  Tenant
becomes insolvent or ceases to transact business as a going concern.

 

15.1.5                  Tenant
sells or otherwise transfers its business and the purchaser does not
expressly assume all of Tenant’s obligations hereunder.

 

15.1.6                  Tenant
or any guarantor of this Lease dies (if an individual), files a petition
in bankruptcy, becomes insolvent, has taken against such party in any court,
pursuant to state or federal statute, a petition in bankruptcy or insolvency or
for reorganization or appointment of a receiver or trustee, petitions for or
enters into an arrangement for the benefit of creditors or suffers this Lease
to become subject to a writ of execution.

 

15.1.7                                                                  Tenant
vacates or abandons the Premises.

 

15.1.8                  Any
guarantor, surety or endorser of this Lease for Tenant attempts to rescind or
to terminate its guaranty, or defaults in or breaches any obligation or
liability to Landlord.

 

15.2                           Remedies.  In the event Tenant fails to timely and fully
carry out any of the provisions or obligations under this Lease or is in
default under any of the provisions of Paragraph 15.1 above, Landlord
shall have the right to, at any time and at Landlord’s option, without waiving
or limiting any other right or remedy available to it, (a) perform in Tenant’s
stead any obligation that Tenant has failed to perform, and Landlord shall be
reimbursed promptly for any cost incurred by Landlord in connection therewith
with interest thereon from the date of such expenditure until paid in full at
the greater of the prime rate then charged by Bank of America (or any other
bank or savings and loan association designated by Landlord), plus four percent
(4%), or eighteen percent (18%) per annum (the “Interest Rate”); (b)
terminate Tenant’s rights under this Lease by written notice; (c)
reenter and take possession of the Premises by any lawful means (with or
without terminating this Lease); or (d) pursue any other remedy allowed by
law.  Tenant shall pay to Landlord the
cost of recovering possession of the Premises, all costs of reletting,
including reasonable renovation, remodeling and alteration of the Premises, the
amount of any commissions paid by Landlord in

 

11

 

connection with such reletting, and all other costs and damages arising
out of Tenant’s default, including attorneys’ fees and costs.  Notwithstanding any termination or reentry,
the liability of Tenant for the rents and other sums reserved in this Lease
shall not be extinguished for the balance of the Term, and Tenant agrees
to compensate Landlord upon demand for any deficiency arising from
reletting the Premises at a lesser rent than applies under this Lease.

 

15.3                           Past
Due Amounts; Tenant’s Obligations Independent.  If Tenant fails to pay when due any amounts
required to be paid by Tenant under this Lease, such unpaid amounts shall bear
interest at the Interest Rate from the due date of such amounts to the date of
payment in full, with interest.  In
addition, Landlord may also charge a sum of five percent (5%) of such unpaid
amounts as a late charge.  The
actual cost in each instance is extremely difficult, if not impossible, to
determine.  The  payment (and acceptance) of this late payment
charge shall not constitute a waiver by Landlord of any default by Tenant under
this Lease.  All amounts due under this
Lease are and shall be deemed to be rent or additional, rent, and shall be
paid by without abatement, deduction, offset, prior notice or demand (unless
expressly provided by the terms of this Lease). 
The obligations of Tenant to pay Basic Monthly Rent and all other
amounts due and to perform all of its obligations under this Lease
are severable from and independent of any obligations of Landlord under
this Lease.

 

15.4                           Default
by Landlord.  Landlord shall not be
in default under this Lease unless Landlord or the holder of any mortgage or
deed of trust covering the Premises whose name and address have been
furnished to Tenant in writing fails to perform an obligation required of
Landlord under this Lease within thirty (30) days after written notice by
Tenant to Landlord and to such holder, specifying the respects in which Landlord
has failed to perform such obligation. 
If the nature of Landlord’s obligation is such that more than thirty
(30) days are reasonably required for performance or cure, Landlord shall
not be in default if Landlord or such holder commences performance within
such thirty (30) day period and after such commencement diligently
prosecutes the same to completion.  In no event shall Tenant have the
right to terminate this Lease or to withhold the payment of rent or other
charges provided for in this Lease as a result of Landlord’s default.

 

16.                                 Expiration
or Termination.

 

16.1                           Surrender
of Premises.  Upon the expiration of
the Term or other termination of this Lease, Tenant shall, at its own
cost, (a) promptly and peaceably surrender the Premises to Landlord “broom
clean,” in good order and condition, ordinary wear and tear excepted; (b)
repair any damage to the Premises caused by or in connection with the removal
of any property from the Premises by or at the direction of Tenant; (c)
repair, patch and pain in a good and workmanlike manner satisfactory to
Landlord all holes and other marks in the floors, walls and ceilings of the
Premises to Landlord’s reasonable satisfaction; and (d) deliver all keys to the
Premises to Landlord.  Before
surrendering the Premises, Tenant shall, at its sole cost, remove its movable
personal property only, and all other property shall, unless otherwise directed
by Landlord, remain in the Premises and become the property of Landlord without
payment therefore; however, Tenant shall not remove any personal property,
trade fixtures or other property fro the Premises without Landlord’s prior
written consent if such personal property, trade fixtures or other property is
used in the operation of the Premises, the removal of such personal property,
trade fixtures or other property will impair the structure of the Building, or
Tenant is in default under this Lease. 
If Tenant is in default under this Lease, Landlord shall have a lien on
such personal property, trade fixtures and other property.  Landlord may require Tenant to remove
any personal property, trade fixtures, other property,

 

12

 

alterations, additions and improvements made to the Premises by Tenant
or by Landlord for Tenant, and to restore the Premises to their condition
on the date of this Lease.  All personal
property, trade fixtures and other property of Tenant not removed from the
Premises upon the abandonment of the Premises or upon the expiration of the
Term or other termination of this Lease for any cause shall conclusively be
deemed to have been abandoned and may be appropriated, sold, stored, destroyed
or otherwise disposed of by Landlord without notice to Tenant or any other
person and without any obligation to account therefore.  Tenant shall pay to Landlord all expenses
incurred in connection with the disposition of such property in excess of any
amount received by Landlord from any such disposition.  No surrender of the Premises shall be
effected by Landlord’s acceptance of the keys or of the rent or by any other
means whatsoever without Landlord’s written acknowledgement of such acceptance
as a surrender.  Tenant shall not be
released from Tenant’s obligations under this Lease in connection with
surrender of the Premises until Landlord has inspected the Premises and
delivered to Tenant a written release.

 

16.2                           Holding
Over.  Tenant shall indemnify, defend
and hold harmless Landlord from and against all claims, liabilities and
expenses, including attorneys’ fees, resulting from delay by Tenant in
surrendering the Premises in accordance with the provisions of this Lease.  If Tenant remains in possession of the
Premises or any part of the Premises after the expiration of the Term or other
termination of this Lease with the express written consent of landlord, such
occupancy shall be a tenancy from month to month at a rental (and not as a
penalty) in the amount of one hundred fifty percent (150%) of the last monthly
rental, plus all other charges payable under this Lease, and upon all of the
terms of this Lease applicable to a month to month tenancy.  The provisions of this Paragraph
16 shall survive the expiration of the Term or other termination of this
Lease.

 

17.                                 Estoppel
Certificate.  Tenant shall, within
five (5) days after Landlord’s request therefor, execute and deliver to
Landlord an estoppel certificate in favor of Landlord and such other persons as
Landlord shall request setting forth the following: (a) a ratification of this
Lease; (b) the Commencement Date and Expiration Date; (c) that this Lease is in
full force and effect and has not been assigned, modified, supplemented or
amended (except by such writing as shall be stated); (d) that all conditions
under this Lease to be performed by Landlord have been satisfied, or, in the
alternative, those claimed by Tenant to be unsatisfied; (e) that there are no
defenses or offsets against the enforcement of this Lease by Landlord, or, in
the alternative, those claimed by Tenant; (f) the amount of advance rent,
if any (or none if such is the case), paid by Tenant; (g) the date to which
rent has been paid; and (h) such other information as Landlord may
request.  Landlord’s mortgage lenders and
purchasers shall be entitled to rely upon any estoppel certificate executed by
Tenant.  If Tenant fails to execute such
estoppel certificate within such five (5) day period, Landlord may execute the
same on behalf of Tenant as Tenant’s duly authorized attorney-in-fact.  For such purpose, Tenant hereby makes,
constitutes and appoints Landlord as Tenant’s true and lawful attorney to act
for Tenant and in Tenant’s name, place and stead and for Tenant’s use and
benefit.  Such power of attorney shall be
irrevocable and shall be deemed to be coupled with an interest.

 

18.                                 Signage.  Tenant may purchase and erect such signage on
the Building and on the lot as may be necessary to advertise its business,
in conformity with all applicable governmental and quasi-governmental laws,
ordinances, regulations and requirements, and after obtaining any required permits,
licenses, variances and approvals.  All
signs or letterings on doors shall be printed, painted and affixed at the
sole cost of Tenant by a person approved by Landlord, and shall comply with the
requirements of the governmental authorities having jurisdiction over the
Premises.  At its sole

 

13

 

expense, Tenant shall maintain all permitted signs and shall, upon the
expiration of the Term or other termination of this Lease, remove all such
permitted signs and repair any damage caused by such removal.

 

19.                                 Additional
Authorizations and Consents.  Tenant
and Landlord shall execute and file or join in the execution and filing of
any applications or other documents which may be necessary in order to obtain the
authorization, approval or consent of any governmental body, local, state or
federal or any other third party, which may be required, or which Tenant may
reasonably request, in connection with the consummation of the
transactions contemplated hereby.  Each
party shall use its best efforts to obtain all such authorizations, approvals
and consents.

 

20.                                 Purchase
Option.  At any time during the term
of this lease following the end of the 5th Lease Year and continuing for a
period of two months following the end of the term of this Lease (as
the same may be extended from time to time), Tenant shall have an option
to purchase the Premises for a sum equal to $6,090,000, increased by one
percent (1%) per year compounded from the end of the 5th Lease Year until
the date of exercise of the option.

 

21.                                 General
Provisions.

 

21.1                           No
Partnership.  Landlord does not by
this Lease, in any way or for any purpose, become a partner or joint
venturer of Tenant in the conduct of Tenant’s business or otherwise.

 

21.2                           Force
Majeure.  If either Landlord or
Tenant is delayed or hindered in or prevented from the performance of any act
required under this Lease by reason of acts of God, strikes, lockouts, other
labor troubles, inability to procure labor or materials, fire, accident,
failure of power, restrictive governmental laws, ordinances, regulations or
requirements of general applicability, riots, civil commotion, insurrection,
war or other reason not the fault of the party delayed and beyond the control
of such party (financial inability excepted), performance of the action in
question shall be excused for the period of delay and the period for the
performance of such act shall be extended for a period equivalent to the period
of such delay.  The provisions of this
Paragraph shall not, however, operate to excuse Tenant from the prompt payment
of rent or any other amounts required to be paid under this Lease.

 

21.3                           Notices.  Any notice, demand, request or other
instrument which may be or is required to be given under this Lease shall be
delivered in person or sent by United States certified or registered mail,
postage prepaid, shall be addressed as set forth below or as otherwise
designated in writing by Landlord or Tenant to the other, and shall be
effective upon delivery to the then effective notice address for the party
concerned.

 

Landlord:

 

Centennial Acquisitions, LLC

c/o Phyllis Schwartz

2877 Paradise Road, TH3402

Las Vegas, NV 
89109

 

14

 

with a copy to:

 

John R. Erickson, Esq.

Woods Erickson Whitaker & Miles, LLP

1349 Galleria Drive, Suite 300

Henderson, NV 
89014

 

Tenant:

 

Terrible Herbst, Inc.

Attn: Sean Higgins

5195 South Las Vegas Blvd.

Las Vegas, NV 
89119

 

21.4                           Severablilty.  If any provision of this Lease or the application
of any provision of this Lease to any person or circumstance shall to any
extent be invalid, the remainder of this Lease or the application of such
provision to persons or circumstances other than those as to which it is held
invalid shall not be affected thereby. 
Each provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.

 

21.5                           Notification
of Changes.  Tenant shall promptly
notify Landlord in writing of the existence or happening of any fact,
event or occurrence that may tend to alter, in any material respect, the
accuracy or completeness of any representation or warranty contained in this
Lease, or affect the ability of Tenant to perform its obligations hereunder.

 

21.6                           Brokerage
Commissions.  Except as agreed upon
in writing by Landlord, Tenant represents and warrants that there are no
claims for brokerage commission or finder’s fees in connection herewith and
agrees to indemnify, defend and hold harmless Landlord from and against all
claims, liabilities and expenses, including attorneys’ fees, arising from any
such brokerage commissions or finder’s fees.

 

21.7                           Use
of Pronouns.  The use of the neuter
singular pronoun to refer to Landlord or Tenant shall be deemed a proper
reference even though Landlord or Tenant may be an individual, partnership,
association, corporation or a group of two or more individuals, partnerships,
associations or corporations.  The
necessity grammatical changes required to make the provisions of this Lease
apply in the plural sense where there is more that one Landlord or Tenant
and to corporations, associations, partnerships, individuals, males or females,
shall in all instances be assumed as though in each case fully expressed.

 

21.8                           Successors.  Except as otherwise provided in this Lease,
all provisions contained in this Lease shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
devisees, successors, assigns and legal representatives.  In the event of any sale or assignment
(except for purposes of security or collateral) by Landlord of the Premises or
this Lease, Landlord shall, from and after the Commencement Date (irrespective
of when such sale or assignment occurs), be relieved entirely of all its
obligations under this Lease and such obligations shall, as of the time of
such sale or assignment or on the Commencement Date, whichever is later,
automatically pass to the Landlord’s successor in interest.

 

15

 

21.9                           Recourse
by Tenant.  Anything in this Lease to
the contrary notwithstanding, Tenant shall look solely to the equity of
Landlord in the Premises, subject to prior rights of the holder of any
mortgage or deed of trust, for the collection of any judgment (or other
judicial process) requiring the payment of money by Landlord in the event
of any default or breach by Landlord with respect to any of the terms,
covenants and conditions of this Lease to be observed or performed by Landlord,
and no other assets of Landlord shall be subject to levy, execution or other
procedures for the satisfaction of Tenant’s remedies.

 

21.10                     Quiet
Enjoyment.  Upon Tenant paying the
rents reserved under this Lease and observing and performing all of the
terms, covenants and conditions on Tenant’s part to be observed and
performed under this Lease, Tenant shall have quiet enjoyment of the Premises
for the Term without interference from Landlord, subject to all of the
provisions of this Lease.

 

21.11                     Waiver.  No failure by any party to insist upon the
strict performance of any covenant, duty or condition of this Lease or to
exercise any right or remedy consequent upon a breach of this Lease shall
constitute a waiver of any such breach or of such or any other covenant, duty
or condition.  Any party may, by notice
delivered in the manner provided in this Lease, but shall be under no
obligation to, waive any of its rights or any conditions to its obligations
under this Lease, or any covenant or duty of any other party hereto.  No waiver shall affect or alter the remainder
of this Lease but each other covenant, duty and condition of this Lease shall
continue in full force and effect with respect to any other then existing or
subsequently occurring breach.

 

21.12                     Rights
and Remedies.  The rights and
remedies of the parties hereto shall not be mutually exclusive and the
exercise of one or more of the provisions of this Lease shall not
preclude the exercise of any other provisions.  The parties confirm that damages at law may
be an inadequate remedy for a breach or threatened breach by any party of any
of the provisions of this Lease.  The parties’ respective rights and
obligations under this Lease shall be enforceable by specific performance,
injunction or any other equitable remedy.

 

21.13                     Authorization.  Each individual executing this Lease does
thereby represent and warrant to each other so signing (and each other
entity for which another person may be signing) that he has been duly
authorized to deliver this Lease in the capacity and for the entity set forth
where he signs.

 

21.14                     Litigation
Expenses.  If any action, suit or
proceeding is brought by a party hereto to recover any rent or other amount due
under this Lease because of any default under this Lease, to enforce or
interpret any of the provisions of this Lease, or for recovery of possession of
the Premises, the prevailing party in such action or proceeding shall be
entitled to recover from the other all of its reasonable costs and
expenses incurred therein (including those incurred in connection with any appeal),
including attorney’s fees, the amounts of which shall be fixed by the court and
made a part of any judgment rendered. 
Tenant shall be responsible for all expenses incurred by Landlord,
including, without limitation, attorneys’ fees, that Landlord incurs in any
case or proceeding involving Tenant under or related to  any bankruptcy or insolvency law.

 

21.15                     Miscellaneous.  The captions to the Paragraphs of this Lease
are for convenience of reference only and shall not be deemed relevant in
resolving questions of construction or interpretation under this
Lease.  Exhibits referred to in this
Lease and any

 

16

 

addendums, riders and schedules attached to this Lease shall be deemed
to be incorporated I this Lease as though a part of this Lease.  Tenant shall not record this Lease or a
memorandum or notice of this Lease without the prior written consent of
Landlord.  This Lease and the exhibits,
riders and addenda, if any, attached hereto, constitute the entire agreement
between the parties.  Any guaranty
attached hereto is an integral part of this Lease and constitutes consideration
given to Landlord to enter into this Lease.  No amendment to this Lease shall be binding
upon Landlord or Tenant unless reduced to writing and signed.  Unless otherwise expressly set forth in this
Lease, all references to Paragraphs are to Paragraphs in this Lease.  Each provision to be performed by Tenant shall
be constructed to be both a covenant and a condition.  This Lease shall be governed by and construed
and interpreted in accordance with the laws of the State of Nevada.  Venue on any action arising out of this
Lease shall be proper only in the Eighth Judicial District Court in and for
Clark County, State of Nevada. 
Landlord and Tenant waive trial by jury in any action, proceeding or
counterclaim brought by either of them against the other on all matters
arising out of this Lease or the use and occupancy of the Premises.  Time is of the essence of this Lease and each
and every provision hereof.  The
submission of this Lease to Tenant is not an offer to lese the Premises or an
agreement by Landlord to reserve the Premises for Tenant.  Landlord shall not be bound to Tenant
until Tenant has duly executed and delivered duplicate original copies of
this Lease to Landlord, and Landlord has duly executed and delivered one
of those duplicate original copies to Tenant.

 

IN WITNESS
WHEREOF, Landlord and Tenant have executed this Lease as of the date first set
forth above.

 

	
  “Landlord”

  	
  CENTENNIAL ACQUISITIONS, LLC, a Nevada

  limited liability company,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Phyllis Schwartz

  	
   

  
	
   

  	
   

  	
    Phyllis Schwartz, Manager

  

 

 

	
  “Tenant”

  	
  TERRIBLE HERBST, INC., a Nevada corporation,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jerry Herbst

  	
   

  
	
   

  	
   

  	
    Jerry Herbst, President

  

 

17

 

GUARANTY

 

FOR GOOD AND
VALUABLE CONSIDERATION the receipt and sufficiency of which are hereby
acknowledged, and for the purpose of inducing Centennial Acquisitions, LLC, a
Nevada limited liability company (“Landlord”), to enter into the foregoing
Lease with Terrible Herbst, Inc., a Nevada corporation (“Tenant”), the
undersigned unconditionally guarantee to Landlord the full, prompt, and
complete payment and performance by Tenant of all of the terms, obligations,  covenants, and conditions of said Lease to be
paid, kept, or performed by Tenant, including the payment of all rent and other
charges thereunder.  The undersigned
shall pay all of Landlord’s expenses, including attorneys’ fees, incurred in
enforcing the obligations of Tenant under said Lease or in enforcing this
Guaranty.

 

The undersigned
hereby waive all requirements of notice of acceptance of this Guaranty and all
requirements of notice of default or non-performance by Tenant.  The obligations of the undersigned under this
Guaranty shall remain fully binding although Landlord may have waived
one or more defaults by Tenant, extended the time of performance by
Tenant, modified or amended said Lease, released, returned, or misapplied other
collateral given as additional security (including other guaranties), or
released Tenant from the performance of its obligations under said Lease.  In the event any right of action accrues
to Landlord under said Lease, Landlord may, at its option, proceed directly
against the undersigned without first having commenced any action, first having
pursued any remedy, or first having obtained any judgment, against Tenant.

 

If this Guaranty
is signed by more than one person, their obligations shall be joint and
several, and the release of one guarantor shall not release any other
guarantor.  This Guaranty shall be
binding upon the undersigned and their respective heirs, personal
representatives, successors, and assigns.

 

EXECUTED by the
undersigned guarantor(s) on or as of the
                         
day of
                         ,
2002.

 

 

	
    /s/ Jerry Herbst

  	
   

  
	
    Jerry Herbst

  

 

18

 

EXHIBIT A

 

to

 

BUILDING LEASE

 

DESCRIPTION OF PREMISES

 

The Premises referred to in the foregoing instrument are more
particularly described as follows:

 

A parcel of land situated in the southeast Quarter (SE 1/4) of
Section 34 and the Southwest Quarter (SW 1/4) of Section 35, Township
28 South, Range 63 East, M.D.M., Search light of the Piute Lode Claim, U.S.M.S.
2366 lying Easterly of U.S. Highway No. 95, and begin more specifically
described as follows:

 

COMMENCING at the Southwest corner (SW –Cor.) of said Section 25
as shown by a map recorded December 12, 1975 as File 30, Page 61, Record
of Survey Maps, Clark County, Nevada:

 

THENCE North 0°23’28” West along the Westerly line of said
Section 35, a distance of 131616 feet to the Northeasterly line of the
aforesaid Piute Load Claim, said point being the TRUE POINT OF BEGINNING;

 

THENCE South 64°21’32” East along said Northeasterly line, 801.18 feet;

 

THENCE South 25°26’26” West, 467.58 feet;

 

THENCE North 64°28’26” West, 499.42 feet to the Easterly line of U.S.
Highway No. 95, (150.00 feet wide) being concaved to the East, and having a
radius of 2925.00 feet;

 

THENCE from radial line which bears south 71°18’52” West, along said
Easterly line (curving right), through a central angle of 10°20’20”, an arc
length of 527.81 feet;

 

THENCE North 08°f20’48” West, 72.20 feet to the aforementioned
Northeasterly line of the Piute Lode Claim;

 

THENCE departing Easterly line of U.S. Highway No. 95, south 64°21’32”
East, 69.80 feet to the TRUE POINT OF BEGINNING.

 

INCLUDING that portion of the Piute Lode Claim which extends into the
Right of Way of U.S. Highway No. 95, (150.00 feet wide), being more
specifically described as follows:

 

COMMENCING at the Point of Intersection of the Easterly line of
U.S. Highway No. 95 with the Northeasterly line of the Piute Load Claim, U.S.
M.S. No. 2366;

 

THENCE along said Easterly line of U.S. Highway No. 95 as follows:
South 08°20’48” East, 72.20 feet to a curve, concave to the East having a
radius of 2925.00 feet;

 

19

 

THENCE Southerly (curving right) along said curve, through a central
angle of 4°03’40”, an arc length of 207.32 feet to the TRUE POINT OF BEGINNING;

 

THENCE South 77°35’32” West, along a radial line 43.00 feet to a curve,
concave to the East, having a radius of 2958.00 feet;

 

THENCE Southerly (curving left) along said curve, through a central
angle of 01°54’30” an arc length of 98.85 feet.

 

THENCE North 75°41’02” East along a radial line 43.00 feet to a curve,
concave to the East, having a radius of 2925.00 feet;

 

THENCE Northerly (curving right) along said curve, through a central
angle of 1°54’30”, an arch length of 97.42 feet to the TRUE POINT OF BEGINNING.

 

RESERVING to the grantor herein the right to all oil, petroleum, gas,
asphaltum and other minerals, gaseous, liquid and solid, in and under the
property without any right of surface entry for exploration, development or
extraction.

 

EXCEPTING THEREFROM that portion of said land as conveyed to the State
of Nevada by deed recorded June 24, 1988 in Book 88064 as Document No.
00262, Official Records, Clark County, Nevada.

 

20

 

AMENDMENT TO LEASE

Searchlight Truck Stop.

 

THIS AMENDMENT TO
LEASE (this “Amendment”) is entered into as of the 30th day of
July 2002, between Centennial Acquisitions, LLC, a Nevada limited
liability company (“Landlord”), and Terrible Herbst, Inc., a Nevada
corporation (“Tenant”).

 

RECITALS:

 

A.                                   On
June 30, Landlord and Tenant entered into a certain Lease (the “Lease”)
of the Property described in Exhibit “A” hereto (the “Property”).

 

B.                                     In
consideration of Tenant’s agreeing to provide interim financing for
Landlord’s acquisition of the Property, Landlord agrees to modify the
Lease as set forth herein.

 

WITNESSETH:

 

FOR GOOD AND
VALUABLE CONSIDERATION, Landlord and Tenant hereby agree as follows:

 

Amendments to
Lease.  The Lease is
hereby amended as follows:

 

(a)                                  The
first paragraph of Section 3 of the Lease is hereby amended to read as
follows: “Tenant’s obligation to pay rent under this Lease shall commence
September 1, 2002.  Land and Tenant
acknowledge that the Commencement Date of the Lease shall be September 1,
2002 except that Tenant shall be entitled to occupy the Premises rent-free from
August 1, 2002 until the Commencement Date and Tenant’s obligation to pay
obligations described in Section 4.3 shall commence as of August 1,
2002.”

 

(b)                                 The
prepaid rent provided for in Section 4.7 of the Lease shall be paid on the
later of September 1, 2002 or the date Landlord pays off the
promissory note due to Tenant by Landlord secured by a first position
trust deed on the Property.

 

IN WITNESS
WHEREOF, Landlord and Tenant have executed this Amendment to Lease as of the
date first set forth above.

 

	
   

  	
  “Landlord”

  
	
   

  	
   

  
	
   

  	
  CENTENNIAL
  ACQUISITIONS, LLC, a

  Nevada limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Phyllis R. Schwartz

  
	
   

  	
   

  	
    Phyllis
  R. Schwartz, Manager

  

 

 

 

	
   

  	
  “Tenant”

  
	
   

  	
   

  
	
   

  	
  TERRIBLE HERBST,
  INC., a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Jerry Herbst

  
	
   

  	
   

  	
    Jerry
  Herbst, President

  

 

The undersigned
Jerry Herbst hereby consents to the foregoing amendment and acknowledges that
his guaranty of the Lease is not affected by this Amendment to the Lease.

 

 

 

THENCE Southerly (curving right) along said curve, through a central
angle of 4°03’40”, an arc length of 207.32 feet to the TRUE POINT OF
BEGINNING;

 

THENCE South 77°35’32” West, along a radial line 43.00 feet to a curve,
concave to the East, having a radius of 2958.00 feet;

 

THENCE Southerly (curving left) along said curve, through a central
angle of 01°54’30” an arc length of 98.85 feet.

 

TEHNCE North 75°41’02” East along a radial line 43.00 feet to a curve,
concave to the East, having a radius of 2925.00 feet;

 

THENCE Northerly (curving right) along said curve, through a central
angle of 1°54’30”, an arch length of 97.42 feet to the TRUE POINT OF BEGINNING.

 

RESERVING to the grantor herein the right to all oil, petroleum, gas,
asphaltum and other minerals, gaseous, liquid and solid, in and under the
property without any right of surface entry for
exploration, development or extraction.

 

EXCEPTING THEREFROM that portion of said land as conveyed to the State
of Nevada by deed recorded June 24, 1988 in Book 88064 as Document No.
00262, Official Records, Clark County, Nevada.

 

 

 

July 1, 2001

 

The Herbst Fmily Limited Partnership

1595 Las Vegas Blvd. So.

Las Vegas, Nevada 89119

 

Dear Mr, Herbst,

 

Please let this letter serve as notification of our
intention to extend the lease between ETT Inc. and The Herbst Family Limited
Partnership for an additional five year term pursuant to the lease dated
July 1, 1996.

 

Per the terms of this extension the lease payment on
the property will increase by $2,500 to $12,500.00 per month.

 

	
  Sincerely,

  
	
   

  
	
  /s/ Edward J. Herbst

  	
   

  
	
  Edward J. Herbst

  
	
  President

  
	
  ETT Inc.

  
	
   

  
	
  Accepted by:

  
	
   

  
	
  Jerry Herbst, General Partner

  

 

 

 

LEASE AGREEMENT

 

THIS LEASE, made
this 1st day of July, 1996, by and between The Herbst Family Limited
Partnership, hereinafter referred to as “Lessor”, and E-T-T, INC., hereinafter
referred to as “Lessee”.

 

WITNESSETH: that
the Lessor in consideration of the rent herein specified to be
paid by the Lessee, and the covenants and conditions herein
mentioned, does hereby lease, let and demise, unto Lessee, and the Lessee
does hereby rent from the Lessor those certain premises in the County of Nye,
State of Nevada, more particularly described in Exhibit A, attached hereto and
incorporated herein by reference.

 

TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.

 

THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terns and conditions, namely:

 

1.                                       TERM:  The term of this Lease shall be for a period
of five (5) years, commencing on July 1, 1996.

 

2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as rental
for said demised premises the sum of Ten Thousand Dollars ($10,000.00) per
month on the first of each month for the duration of said lease.

 

3.                                       SECURITY:                                  Lessee
agrees that buildings and improvements located or erected on premises at
any time during the term of this Lease, or extension thereof, shall

 

 

 

be and remain charged with the lien in favor of Lessor as security
for the enforcement of all agreements of this lease by Lessee to be kept
and performed.  Such lien shall be prior
to all other contracts, liens and other encumbrances whatsoever
effecting the demised premises provided however that Lessor agrees that it
will subordinate such lien for the actual cost of financing the erection
of any improvements required by the Lessee for the operation of a casino, in
order to finance same.

 

4.                                       QUIET
POSSESSION:  Lessor hereby covenants,
warrants, and agrees that at all times during the term hereof,
provided Lessee is not in default hereunder, Lessee shall have the
full, peaceful and quiet possession of the demised premises, and, further that
Lessor has full right and power to make and enter into this lease.

 

5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities
used by it in connection with the use of the demised premises.

 

6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on
improvements placed upon said premises by him that he will notify
Lessor in order that a notice of non-responsibility may be posted on said
premises and recorded in accordance with the provisions of the Mechanic’s
Lien Law of the State of Nevada.

 

7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and

 

21

 

alterations shall conform with building codes and zoning
regulations now or hereinafter legally effective, and promulgated by the
State, County or Municipal authorities.

 

8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the casino and all
ancillary buildings or improvements to be constructed thereon by Lessee
and all fixtures and equipment, including visible plumbing and electrical
fixtures.  The Lessee agrees to keep the
premises clean and to have no nuisance, unsightly rubbish, or to commit or
cause to be committed by its employees, and/or sub-tenants, any violation
of the laws, rules or regulations of the State, County or Municipal Board of
Health or appropriate sanitary agency.

 

9.                                       TITLE
OF FIXTURES:  All buildings, fixtures
and other property and materials installed in the demised premises by the
Lessee shall be and remain the property of the Lessee, and at the
expiration of the Lease, the Lessee may, within thirty (30) days,
remove from said premises all of such fixtures, property, and materials,
provided that all expenses connected with the removal thereof shall be at the
expense of the Lessee.  The
Lessee further agrees to repair at his sole expense all damage that may
result from the removal of such building, fixtures and other property
and to restore said premises to the condition in which they were prior to the
start of construction and that no building or improvements placed upon said
premises by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.

 

10.                                 LIABILITY
AND FIRE  INSURANCE:  The Lessor shall require the Lessee
to carry, maintain and have in full force and effect fire, workmens
compensation, public liability, and product liability insurance with a
recognized insurance company authorized

 

22

 

to transact business in the State of Nevada for the benefit of the
Lessor and Lessee, and for the protection of all persons who may suffer
injury while in, on or about said premises. 
The amount of said policy must be approved by Lessor in its sole
discretion, within normal and customary limits for an operation of this
type.  Lessor shall be furnished with
copies of said policies and all endorsements thereto.

 

The Lessee shall
carry insurance against loss by destruction of the demised premises caused by
fire, explosion or other action of the elements, except loss caused by
earthquake, equal to ninety per cent (90%) of the value of the
improvements.

 

11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of
State, Federal, County and Municipal authorities, appertaining to the
business conducted upon the demised premises, and Lessee shall not permit
the demised premises to be used for any unlawful purposes.

 

12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the
Lessee, and such default shall continue for thirty (30) days from and
after service upon the Lessee of written notice of such default, signed by the
Lessor or their duly authorized agents, then and in any such event,
the Lessor may, at their option declare this Lease terminated and
repossess themselves of said premises and take such action or pursue such
remedy as may be permitted under the law of the State of
Nevada.  However, if Lessee commences the necessary work to cure said
default before the expiration of the thirty (30) days, but the work takes in
excess of thirty days, then Lessor shall not be allowed to declare this
Lease terminated.

 

23

 

13.                                 LIENS:  The Lessee agrees that he will, at all times,
save the Lessor and keep it blameless and the demised premises free and
harmless of and from any liability on account of or in respect to any
mechanic’s liens or liens in the nature thereof, for work and labor done,
or materials furnished at the instance and request of the Lessee, in, on or
about the demised premises; provided, however, that the Lessee shall have
the right to contest the claim of such lien, which event the Lessee shall, at
his expense, furnish to the Lessor a sufficient surety bond executed by a
reputable and responsible surety company, in at least double the amount of
such claim of such lien, conditioned upon the diligent prosecution of
such defense, and to hold the Lessor from and clear of all loss, costs,
damages, and expenses of every kind and nature, arising either
directly or indirectly out of said contest, and to pay any judgment
that may be obtained forthwith upon the same being entered.

 

14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease
by either the Lessor or Lessee, the prevailing party in such litigation
shall be entitled to receive from the other party reasonable attorney fees
and costs of action incurred in connection with said litigation.  In the event that either Lessor or
Lessee shall by reason of acts of omission or commission in violation of the
terms of the Lease, be made a party to any litigation commenced by a
person other than the parties hereto, then such party performing the said
act or suffering the said omission shall pay all costs, expenses and
reasonable attorney fees incurred by the other party which arise from or
are in connection with such litigation.

 

15.                                 INDEMNIFICATION:                            Lessee
shall indemnify and hold harmless Lessor and its agents, servants, employees
and representatives from and against all claims,

 

24

 

damages, losses and expenses, including attorneys’ fees arising out of
or resulting from Lessee’s occupancy, provided however, that Lessor, its
agents, employees, representatives, successors, or assigns are not negligent
with regards to same.  This Paragraph
shall have full force and effect upon execution of this Lease Agreement.

 

16.                                 ASSIGNMENT:  The Lessee shall not have the right to assign
this Lease or hypothecate the same without first receiving the written consent
of the Lessor, which consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
department and concession, providing that the tenancy of such sub-tenant
shall be subject to all the terms, covenants and conditions of this
Lease.

 

17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s
right to enforce the same or any other covenant contained herein.

 

18.                                 HOLDING
OVER:  If the Lessee shall hold over
the premises beyond the term herein specified, or any renewal thereof,
with the consent, express or implied of the Lessor such holding over shall
be construed to be a month-to-month tenancy, unless otherwise mutually
agreed upon.

 

19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.

 

25

 

20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:

 

	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Edward J. Herbst

  
	
   

  
	
  Lessor:

  
	
   

  
	
   

  	
  Jerry Herbst

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  

 

21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations nor
agreements to or with any other party in addition to, or in conflict with
the terms, covenants and conditions hereof, and this Lease contains all of the
terms, covenants and conditions and representations between the parties
upon the subject matter hereof.

 

22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED:      If,
at any time during the term hereof, proceedings in bankruptcy shall be
instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10
or 11 of the Bankruptcy Act of the United States of America as
such act is now in force or as same may be amended, and shall by
judicially approved, or if a Receiver of the business or assets of the
Lessee shall be appointed and if such appointment be not vacated within
sixty (60) days after notice thereof to Lessee, or if a general assignment
is made by the Lessee for the benefit of creditors, or any sheriff,
marshall, constable, or other duly

 

26

 

constituted public official take possession thereof by authority of any
attachment or execution proceedings, and offer same for sale publicly, the
Lessor may, at its option, in either or any of such events, without
notice to Lessee or any other person or persons, immediately recapture and take
possession of the demised premises and terminate this Lease with or
without the process of law, such process being expressly waiver by Lessee.

 

23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs,
plants or lawn planted on said premises and will keep the parking areas
and black top in a neat and clean condition and will use for parking.

 

24.                                 OPTION
TO RENEW:  The Lessee upon giving
written notice to Lessor, at least sixty (60) days prior to the date of
the expiration of the term aforesaid, provided it has faithfully complied
with the terms hereof, shall have the option of renewing this Lease
for five additional consecutive five (5) year terms subject to the same
terms, covenants and conditions and agreements as contained herein other than
this paragraph.  The monthly
rental for each renewal term shall be determined by increasing the
monthly rental payment for the preceding term by the greater of $2,500.00
or the amount by which one percent (1%) of the appraised value of the
property exceeds the current monthly rental amount.  For purposes of determining the appraised
value of the property at each renewal date the parties shall have an
ALTA-certified appraiser appraise the property no more than ninety
(90) days prior to the end of the preceding term.  If the parties are unable to agree on an
appraiser, then each party may hire its own ALTA-certified appraiser and the
average of the two appraisals shall be used to determine the
appraised value for purposes of determining the monthly rental
amount.

 

27

 

25.                                 RIGHT
OF FIRST REFUSAL:  In the event of a
contemplated sale of the premises during the demised term, the Lessor agrees to
give Lessee a notice in writing at least ten (10) days before the
contemplated sale of substance of terms on which it is proposed to be
made, which notice shall be registered mail directed to Lessee at his
principal place of business for notices; and thereupon within ten (10)
days from the date of mailing of notice the Lessee shall have the right
exercise its option to purchase upon the proposed terms and conditions.  If the Lessee fails to exercise said option
within the foregoing time, said option shall be and stand cancelled.

 

26.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.

 

27.                                 BINDING
EFFECT:  The covenants and agreements
contained in this Lease shall be binding upon the parties hereto and
upon their respective heirs, executors, administrators, successors and assigns.

 

IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.

 

	
  THE HERBST FAMILY LIMITED PARTNERSHIP

  Lessor

  
	
   

  
	
   

  
	
    /s/ Jerry Herbst

  	
   

  	
    /s/ Maryanna Herbst

  	
   

  
	
    Jerry Herbst, General Partner

  	
    Maryanna Herbst, General Partner

  
	
   

  
	
   

  
	
  E-T-T, Inc.

  
	
  Lessee

  
	
   

  
	
   

  
	
    /s/ Edward J. Herbst

  	
   

  
	
    Edward J. Herbst, President

  

 

28

 

July 1, 2001

 

The Herbst Family Limited Partnership

1595 Las Vegas Blvd. So.

Las Vegas, Nevada 89119

 

Dear Mr, Herbst,

 

Please let this letter serve as notification of our intention to extend
the lease between ETT Inc. and The Herbst Family Limited Partnership for an
additional five year term pursuant to the lease dated July 1, 1996.

 

Per the terms of this extension the lease payment will increase by
$2,500 to $12,500.00 per month.

 

	
  Sincerely,

  
	
   

  
	
  /s/ Edward J. Herbst

  	
   

  
	
  Edward J. Herbst

  
	
  President

  
	
  ETT Inc.

  
	
   

  
	
  Accepted by:

  
	
   

  
	
  Jerry Herbst, General Partner

  

 

1

 

LEASE AGREEMENT

 

THIS LEASE, made
this 1st day of July, 1996, by and between The Herbst Family Limited
Partnership, hereinafter referred to as “Lessor”, and E-T-T, INC., hereinafter
referred to as “Lessee”.

 

WITNESSETH: that
the Lessor in consideration of the rent herein specified to be
paid by the Lessee, and the covenants and conditions herein
mentioned, does hereby lease, let and demise, unto Lessee, and the Lessee
does hereby rent from the Lessor those certain premises in the County of Nye,
State of Nevada, more particularly described in Exhibit A, attached hereto and
incorporated herein by reference.

 

TO HAVE AND TO
HOLD the same unto the said Lessee, its successors and assigns for the
period and upon the terms and conditions hereinafter set forth.

 

THIS INDENTURE OF
LEASE is made by the Lessor and accepted by the Lessee upon each of the
following terns and conditions, namely:

 

1.                                       TERM:  The term of this Lease shall be for a period
of five (5) years, commencing on July 1, 1996.

 

2.                                       RENTAL:  The Lessee agrees to pay to the Lessor as
rental for said demised premises the sum of Ten Thousand Dollars ($10,000.00)
per month on the first of each month for the duration of said lease.

 

3.                                       SECURITY:                                  Lessee
agrees that buildings and improvements located or erected on premises at
any time during the term of this Lease, or extension thereof, shall

 

1

 

be and remain charged with the lien in favor of Lessor as security
for the enforcement of all agreements of this lease by Lessee to be kept
and performed.  Such lien shall be prior
to all other contracts, liens and other encumbrances whatsoever
effecting the demised premises provided however that Lessor agrees that it
will subordinate such lien for the actual cost of financing the erection
of any improvements required by the Lessee for the operation of a casino, in
order to finance same.

 

4.                                       QUIET
POSSESSION:  Lessor hereby covenants,
warrants, and agrees that at all times during the term hereof,
provided Lessee is not in default hereunder, Lessee shall have the
full, peaceful and quiet possession of the demised premises, and, further that
Lessor has full right and power to make and enter into this lease.

 

5.                                       TAXES
AND UTILITY CHARGES:  Lessee agrees
to pay all real taxes, and assessments which may be levied against the
improvements thereon and any personal property and trade fixtures located
therein and will pay charges for light, power and other public utilities
used by it in connection with the use of the demised premises.

 

6.                                       ALTERATIONS:  The Lessee agrees that before commencing any
construction work on said premises or making any alterations on
improvements placed upon said premises by him that he will notify Lessor
in order that a notice of non-responsibility may be posted on said
premises and recorded in accordance with the provisions of the
Mechanic’s Lien Law of the State of Nevada.

 

7.                                       REQUIREMENTS
FOR ALTERATIONS:  Lessee covenants
and agrees that such alterations and/or changes shall be at his sole cost and
expense and that prior written consent of the Lessor shall be obtained
therefore; and provided that such changes and

 

2

 

alterations shall conform with building codes and zoning
regulations now or hereinafter legally effective, and promulgated by the
State, County or Municipal authorities.

 

8.                                       REPAIRS:  Lessee agrees, at his cost and expense, to
maintain and keep in good order, condition and repair the casino and all
ancillary buildings or improvements to be constructed thereon by Lessee
and all fixtures and equipment, including visible plumbing and electrical
fixtures.  The Lessee agrees to keep the
premises clean and to have no nuisance, unsightly rubbish, or to commit or
cause to be committed by its employees, and/or sub-tenants, any violation
of the laws, rules or regulations of the State, County or Municipal Board of
Health or appropriate sanitary agency.

 

9.                                       TITLE
OF FIXTURES:  All buildings, fixtures
and other property and materials installed in the demised premises by the
Lessee shall be and remain the property of the Lessee, and at the
expiration of the Lease, the Lessee may, within thirty (30) days,
remove from said premises all of such fixtures, property, and materials,
provided that all expenses connected with the removal thereof shall be at the
expense of the Lessee.  The
Lessee further agrees to repair at his sole expense all damage that may
result from the removal of such building, fixtures and other property
and to restore said premises to the condition in which they were prior to the
start of construction and that no building or improvements placed upon said
premises by Lessee shall be removed during the term of this Lease or
extension thereof without the consent of Lessor first had and obtained.

 

10.                                 LIABILITY
AND FIRE  INSURANCE:  The Lessor shall require the Lessee
to carry, maintain and have in full force and effect fire, workmens
compensation, public liability, and product liability insurance with a
recognized insurance company authorized

 

3

 

to transact business in the State of Nevada for the benefit of the
Lessor and Lessee, and for the protection of all persons who may suffer
injury while in, on or about said premises. 
The amount of said policy must be approved by Lessor in its sole
discretion, within normal and customary limits for an operation of this
type.  Lessor shall be furnished with
copies of said policies and all endorsements thereto.

 

The Lessee shall
carry insurance against loss by destruction of the demised premises caused by
fire, explosion or other action of the elements, except loss caused by
earthquake, equal to ninety per cent (90%) of the value of the
improvements.

 

11.                                 COMPLIANCE
WITH THE LAW:  The Lessee shall
conduct his business in such manner as will comply with all requirements of
State, Federal, County and Municipal authorities, appertaining to the
business conducted upon the demised premises, and Lessee shall not permit
the demised premises to be used for any unlawful purposes.

 

12.                                 DEFAULT:  In the event Lessee shall be in default in
the payment of any rent herein reserved, or in the performance of any of the
covenants or conditions of this Lease to be kept and performed by the
Lessee, and such default shall continue for thirty (30) days from and
after service upon the Lessee of written notice of such default, signed by the
Lessor or their duly authorized agents, then and in any such event,
the Lessor may, at their option declare this Lease terminated and
repossess themselves of said premises and take such action or pursue such
remedy as may be permitted under the law of the State of
Nevada.  However, if Lessee commences the necessary work to cure said
default before the expiration of the thirty (30) days, but the work takes in
excess of thirty days, then Lessor shall not be allowed to declare this
Lease terminated.

 

4

 

13.                                 LIENS:  The Lessee agrees that he will, at all times,
save the Lessor and keep it blameless and the demised premises free and
harmless of and from any liability on account of or in respect to any
mechanic’s liens or liens in the nature thereof, for work and labor done,
or materials furnished at the instance and request of the Lessee, in, on or
about the demised premises; provided, however, that the Lessee shall have
the right to contest the claim of such lien, which event the Lessee shall, at
his expense, furnish to the Lessor a sufficient surety bond executed by a
reputable and responsible surety company, in at least double the amount of
such claim of such lien, conditioned upon the diligent prosecution of
such defense, and to hold the Lessor from and clear of all loss, costs,
damages, and expenses of every kind and nature, arising either
directly or indirectly out of said contest, and to pay any judgment
that may be obtained forthwith upon the same being entered.

 

14.                                 ATTORNEY
FEE:  In the event of litigation
arising from default in performance of any of the provisions of this Lease
by either the Lessor or Lessee, the prevailing party in such litigation
shall be entitled to receive from the other party reasonable attorney fees
and costs of action incurred in connection with said litigation.  In the event that either Lessor or
Lessee shall by reason of acts of omission or commission in violation of the
terms of the Lease, be made a party to any litigation commenced by a
person other than the parties hereto, then such party performing the said
act or suffering the said omission shall pay all costs, expenses and
reasonable attorney fees incurred by the other party which arise from or
are in connection with such litigation.

 

15.                                 INDEMNIFICATION:                            Lessee
shall indemnify and hold harmless Lessor and its agents, servants, employees
and representatives from and against all claims,

 

5

 

damages, losses and expenses, including attorneys’ fees arising out of
or resulting from Lessee’s occupancy, provided however, that Lessor, its
agents, employees, representatives, successors, or assigns are not negligent
with regards to same.  This Paragraph
shall have full force and effect upon execution of this Lease Agreement.

 

16.                                 ASSIGNMENT:  The Lessee shall not have the right to assign
this Lease or hypothecate the same without first receiving the written consent
of the Lessor, which consent shall not unreasonably be withheld.  Lessee shall have the right to sublet any
department and concession, providing that the tenancy of such sub-tenant
shall be subject to all the terms, covenants and conditions of this
Lease.

 

17.                                 WAIVER:  The waiver of either party of any of the
covenants herein contained shall not be deemed a waiver of such party’s
right to enforce the same or any other covenant contained herein.

 

18.                                 HOLDING
OVER:  If the Lessee shall hold over
the premises beyond the term herein specified, or any renewal thereof,
with the consent, express or implied of the Lessor such holding over shall
be construed to be a month-to-month tenancy, unless otherwise mutually
agreed upon.

 

19.                                 PHRASE
INTERPRETATION:  The term “Lessor”
shall include the singular, if necessary. 
The term “Lessee” or the phrase “the term hereof” shall include any
renewal or renewal thereof where permitted by the context hereof.

 

6

 

20.                                 PRINCIPAL
PLACE OF BUSINESS FOR NOTICES:  Any
and all notices shall be forwarded to the following addresses:

 

	
  Lessee:

  
	
   

  
	
   

  	
  E-T-T, Inc.

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Attn: Edward J. Herbst

  
	
   

  
	
  Lessor:

  
	
   

  
	
   

  	
  Jerry Herbst

  
	
   

  	
  5195 Las Vegas Blvd. South

  
	
   

  	
  Las Vegas, Nevada 89119

  

 

21.                                 NO
OTHER AGREEMENTS:  Both parties
hereby certify and declare that neither party has made any representations nor
agreements to or with any other party in addition to, or in conflict with
the terms, covenants and conditions hereof, and this Lease contains all of the
terms, covenants and conditions and representations between the parties
upon the subject matter hereof.

 

22.                                 TERMINATION
OF LEASE IF LEGAL PROCEEDINGS FILED:      If,
at any time during the term hereof, proceedings in bankruptcy shall be
instituted by or against the Lessee and result in an adjudication of
bankruptcy, or if the Lessee shall file or any creditor shall file, or any
person shall file any Petition in Bankruptcy under Chapters 10
or 11 of the Bankruptcy Act of the United States of America as
such act is now in force or as same may be amended, and shall by
judicially approved, or if a Receiver of the business or assets of the Lessee
shall be appointed and if such appointment be not vacated within
sixty (60) days after notice thereof to Lessee, or if a general assignment
is made by the Lessee for the benefit of creditors, or any sheriff,
marshall, constable, or other duly

 

7

 

constituted public official take possession thereof by authority of any
attachment or execution proceedings, and offer same for sale publicly, the
Lessor may, at its option, in either or any of such events, without
notice to Lessee or any other person or persons, immediately recapture and take
possession of the demised premises and terminate this Lease with or
without the process of law, such process being expressly waiver by Lessee.

 

23.                                 CARE
OF PREMISES:  Lessee agrees that it
will water, cultivate, trim and keep in a neat condition any shrubs,
plants or lawn planted on said premises and will keep the parking areas
and black top in a neat and clean condition and will use for parking.

 

24.                                 OPTION
TO RENEW:  The Lessee upon giving
written notice to Lessor, at least sixty (60) days prior to the date of
the expiration of the term aforesaid, provided it has faithfully complied
with the terms hereof, shall have the option of renewing this Lease
for five additional consecutive five (5) year terms subject to the same
terms, covenants and conditions and agreements as contained herein other than
this paragraph.  The monthly
rental for each renewal term shall be determined by increasing the
monthly rental payment for the preceding term by the greater of $2,500.00
or the amount by which one percent (1%) of the appraised value of the
property exceeds the current monthly rental amount.  For purposes of determining the appraised value
of the property at each renewal date the parties shall have an
ALTA-certified appraiser appraise the property no more than ninety
(90) days prior to the end of the preceding term.  If the parties are unable to agree on an
appraiser, then each party may hire its own ALTA-certified appraiser and the
average of the two appraisals shall be used to determine the
appraised value for purposes of determining the monthly rental
amount.

 

8

 

25.                                 RIGHT
OF FIRST REFUSAL:  In the event of a
contemplated sale of the premises during the demised term, the Lessor agrees to
give Lessee a notice in writing at least ten (10) days before the
contemplated sale of substance of terms on which it is proposed to be
made, which notice shall be registered mail directed to Lessee at his
principal place of business for notices; and thereupon within ten (10)
days from the date of mailing of notice the Lessee shall have the right
exercise its option to purchase upon the proposed terms and conditions.  If the Lessee fails to exercise said option
within the foregoing time, said option shall be and stand cancelled.

 

26.                                 TIME
IS OF ESSENCE:  Time is of the
essence in this Lease and of each and every one of the provisions herein
contained.

 

27.                                 BINDING
EFFECT:  The covenants and agreements
contained in this Lease shall be binding upon the parties hereto and
upon their respective heirs, executors, administrators, successors and assigns.

 

IN WITNESS
WHEREOF, the parties have caused this Lease to be executed by their duly
authorized officers as of the day and year first herein written.

 

	
  THE HERBST FAMILY LIMITED PARTNERSHIP

  Lessor

  
	
   

  
	
   

  
	
    /s/ Jerry Herbst

  	
   

  	
    /s/ Maryanna Herbst

  	
   

  
	
    Jerry Herbst, General Partner

  	
    Maryanna Herbst, General Partner

  
	
   

  
	
   

  
	
  E-T-T, Inc.

  
	
  Lessee

  
	
   

  
	
   

  
	
    /s/ Edward J. Herbst

  	
   

  
	
    Edward J. Herbst, President

  

 

9

 

SCHEDULE 2.01

 

INITIAL
COMMITMENTS

AND PRO RATA SHARES

 

	
  Lender

  	
   

  	
  Revolving Commitment

  	
   

  	
  Revolving

  Percentage

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  21,000,000

  	
   

  	
  23.333333333

  	
  %

  
	
  U.S. Bank National Association

  	
   

  	
  $

  	
  18,000,000

  	
   

  	
  20.000000000

  	
  %

  
	
  Wells Fargo Bank, N.A.

  	
   

  	
  $

  	
  18,000,000

  	
   

  	
  20.000000000

  	
  %

  
	
  The CIT Group/Equipment Financing, Inc.

  	
   

  	
  $

  	
  12,000,000

  	
   

  	
  13.333333333

  	
  %

  
	
  Comerica West Incorporation

  	
   

  	
  $

  	
  9,000,000

  	
   

  	
  10.000000000

  	
  %

  
	
  Lehman Commercial Paper Inc.

  	
   

  	
  $

  	
  6,000,000

  	
   

  	
  6.666666666

  	
  %

  
	
  Nevada State Bank

  	
   

  	
  $

  	
  6,000,000

  	
   

  	
  6.666666666

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  90,000,000

  	
   

  	
  100.000000000

  	
  %

  

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  	
  Term Percentage

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  14,000,000

  	
   

  	
  23.333333333

  	
  %

  
	
  U.S. Bank National Association

  	
   

  	
  $

  	
  12,000,000

  	
   

  	
  20.000000000

  	
  %

  
	
  Wells Fargo Bank, N.A.

  	
   

  	
  $

  	
  12,000,000

  	
   

  	
  20.000000000

  	
  %

  
	
  The CIT Group/Equipment Financing, Inc.

  	
   

  	
  $

  	
  8,000,000

  	
   

  	
  13.333333333

  	
  %

  
	
  Comerica West Incorporated

  	
   

  	
  $

  	
  6,000,000

  	
   

  	
  10.000000000

  	
  %

  
	
  Lehman Commercial Paper Inc.

  	
   

  	
  $

  	
  4,000,000

  	
   

  	
  6.666666666

  	
  %

  
	
  Nevada State Bank

  	
   

  	
  $

  	
  4,000,000

  	
   

  	
  6.666666666

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  60,000,000

  	
   

  	
  99.999999998

  	
  %

  

 

11

 

SCHEDULE 5.05

 

SUPPLEMENT
TO INTERIM FINANCIAL STATEMENTS

 

NONE

 

1

 

SCHEDULE 5.06

 

LITIGATION

 

NONE

 

1

 

SCHEDULE 5.09

 

ENVIRONMENTAL
MATTERS

 

NONE

 

1

 

SCHEDULE 5.13

 

SUBSIDIARIES
AND

OTHER EQUITY INVESTMENTS

 

Wholly owned subsidiaries of Herbst Gaming, Inc.

1.               Market Gaming, Inc., a Nevada
corporation

2.               Flamingo Paradise Gaming, LLC, a Nevada
limited liability company

3.               E-T-T Enterprises L.L.C., a Nevada
limited liability company

4.               E-T-T, Inc., a Nevada corporation

 

Wholly owned subsidiaries of E-T-T, Inc.

1.               Cardivan Company, a Nevada corporation

2.               Corral Coin, Inc., a Nevada corporation

3.               Corral Country Coin, Inc., a Nevada
corporation

 

1

 

SCHEDULE 5.17

 

INTELLECTUAL
PROPERTY MATTERS

 

NONE

 

1

 

SCHEDULE 7.01

 

EXISTING
LIENS

 

The
security interest described in the following UCC-1 Financing Statements filed
with the Nevada Secretary of State reflecting the Borrower or Borrower’s
subsidiary as indicated, as Debtor, shall constitute Existing Liens under this
Agreement.  In addition to the following
security interests, all liens securing the Existing Senior Notes in an
aggregate principal amount not to exceed $8,571,000 shall remain outstanding on
the Closing Date.

 

HERBST GAMING, INC.

 

	
  File
  No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  0104786

  04/04/2001

  	
   

  	
  The CIT Group/Equipment Financing, Inc.

  	
   

  	
  Master Security Agreement between Flamingo Paradise Gaming LLC and
  Herbst Gaming LLC

  
	
  2001003729-1

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  
	
  2003003769-9

  02/07/2003

  	
   

  	
  The Bank of New York, as Trustee

  	
   

  	
  Escrow Account with Bank of New York. 
  Termination by Debtor on file.

  
	
  2003007876-0

  03/19/2003

  	
   

  	
  CIT Technology Financing Services Inc.

  	
   

  	
  Specific equipment lease.

  

 

CARDIVAN COMPANY

 

	
  File
  No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  20010033732-8

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  

 

CORRAL COIN, INC.

 

	
  File
  No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  2001003735-4

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  

 

CORRAL COUNTRY COIN, INC.

 

	
  File
  No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  2001003733-0

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  

 

1

 

E-T-T ENTERPRISES L.L.C.

 

	
  File
  No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  2001003734-2

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  

 

E-T-T, INC.

 

	
  File
  No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  9914926

  09/27/1999

  	
   

  	
  WMS Gaming Inc.

  	
   

  	
  Specific equipment lease.

  
	
  991972

  12/16/1999

  	
   

  	
  Computer Sales International Inc.

  	
   

  	
  Specific equipment lease.

  
	
  9919570

  12/23/1999

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0000370

  01/06/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0000725

  01/13/2000

  	
   

  	
  United Capital (division of Hudson United Bank)

  	
   

  	
  Specific equipment lease.

  
	
  0001908

  02/03/2000

  	
   

  	
  Heller Financial Inc.

  	
   

  	
  Specific equipment lease.

  
	
  0003124

  02/28/200

  	
   

  	
  Wells Fargo Financial Leasing Inc.

  	
   

  	
  Specific equipment lease.

  
	
  0011529

  08/01/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0012751

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0012752

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0012753

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor Market Gaming.

  
	
  0015729

  10/20/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment.

  
	
  0018301

  12/11/2000

  	
   

  	
  Conseco Finance Vendor Services Corp.

  	
   

  	
  Specific equipment lease. 
  Additional debtor Flaming Paradise Gaming.

  
	
  0100442

  01/08/2001

  	
   

  	
  Sun West Bank

  	
   

  	
  Specific equipment lease. 
  Additional debtors:  Market
  Gaming, E. Herbst, Tim Herbst and Troy Herbst.

  
	
  0106497

  05/02/2001

  	
   

  	
  IGT

  	
   

  	
  Specific equipment lease.

  
	
  0108124

  06/04/2001

  	
   

  	
  Computer Sales International Inc.

  	
   

  	
  Specific equipment lease.

  
	
  0108977

  06/19/2001

  	
   

  	
  IGT

  	
   

  	
  Specific equipment lease.

  

 

2

 

	
  2001003180-7

  08/20/2001

  	
   

  	
  IGT

  	
   

  	
  Specific equipment lease.

  
	
  2001003731-6

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets

  
	
  2003029442-7

  11/04/2003

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2003031951-0

  12/02/2003

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2004001647-1

  01/16/2004

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2004006337-9

  03/02/2004

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2004006434-5

  03/02/2004

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  
	
  2004006437-1

  03/02/2004

  	
   

  	
  Bally Gaming and Systems

  	
   

  	
  Specific equipment.

  

 

FLAMINGO PARADISE GAMING, LLC

 

	
  File
  No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  0018301

  12/11/2000

  	
   

  	
  Conseco Finance Vendor Services Corp.

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T Inc.

  
	
  0106291

  04/30/2001

  	
   

  	
  GreatAmerica Leasing Corp.

  	
   

  	
  Specific equipment lease.

  
	
  2001003730-4

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing excluding accounts receivable, furniture,
  fixtures and equipment of Terrible Hotel & Casino.

  
	
  2003007669-1

  03/18/2003

  	
   

  	
  CIT Technology Financing Services Inc.

  	
   

  	
  Specific equipment lease.

  

 

MARKET GAMING, INC.

 

	
  File No.
  and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  9919173

  12/16/1999

  	
   

  	
  Computer Sales International Inc.

  	
   

  	
  Specific equipment lease.

  
	
  9919570

  12/23/1999

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0000370

  01/06/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0000724

  01/13/2000

  	
   

  	
  United Capital (division of Hudson United Bank)

  	
   

  	
  Specific equipment lease.

  
	
  0001909

  02/03/2000

  	
   

  	
  Heller Financial Inc.

  	
   

  	
  Specific equipment lease.

  
	
  0011529

  08/01/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  

 

3

 

	
  File
  No. and Date

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  
	
  0012751

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0012752

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0012753

  08/25/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment lease. 
  Additional debtor E-T-T, Inc.

  
	
  0015730

  10/20/2000

  	
   

  	
  Banc of America Leasing & Capital LLC

  	
   

  	
  Specific equipment.

  
	
  0100442

  01/08/2001

  	
   

  	
  Sun West Bank

  	
   

  	
  Specific equipment lease.

  
	
  0108123

  06/04/2001

  	
   

  	
  Computer Sales International Inc.

  	
   

  	
  Specific equipment lease.

  
	
  2001003728-9

  08/24/2001

  	
   

  	
  The Bank of New York

  	
   

  	
  Blanket filing on all assets.

  

 

4

 

SCHEDULE 7.03

 

EXISTING
INDEBTEDNESS

 

Existing
Indebtedness in respect of Existing Senior Notes in an aggregate principal
amount not to exceed $8,571,000.

 

1

 

SCHEDULE 10.02

 

ADMINISTRATIVE
AGENT’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES

 

BORROWER:

 

Herbst
Gaming, Inc.

5195
Las Vegas Boulevard

Las
Vegas, NV 89119

702/798-6400

702/798-8079
FAX

Attn:

mhiggins@herbstgaming.com

 

ADMINISTRATIVE
AGENT:

 

Administrative Agent’s Office

(for payments and Requests for
Credit Extensions):

Bank of America, N.A.

1850 Gateway Blvd.

Mail Code: CA4-706-05-09

Concord, CA 94520-3282

Attention:
Curtis Laney

Telephone:
925-675-8398

Telecopier:
888-969-9252

Electronic
Mail:  curtis.laney@bankofamerica.com

Account
No.:  3750836479

Ref:  Herbst Gaming, Inc.

ABA# 111000012

 

Other Notices as Administrative
Agent:

Bank of America, N.A.

Agency Management

901 Main St., 14th Floor

Mail Code: TX1-492-14-11

Dallas, TX 75202-3714

Attention:  Chris M. Levine

Telephone:  214-209-4129

Telecopier:  214-290-9432

Electronic
Mail:  chris.m.levine@bankofamerica.com

 

1

 

L/C ISSUER:

Bank of America, N.A.

Trade Operations-Los Angeles #22621

333 S. Beaudry Avenue, 19th Floor

Mail Code: 
CA9-703-19-23

Los Angeles, CA 90017-1466

	
  Attention:

  	
  Sandra Leon

  
	
   

  	
  Vice President

  

Telephone:  213.345.5231

Telecopier:  213.345.6694

Electronic Mail: 
Sandra.Leon@bankofamerica.com

 

SWING LINE LENDER:

Bank of America, N.A.

1850 Gateway Blvd.

Mail Code: CA4-706-05-09

Concord, CA 94520-3282

Attention:
Curtis Laney

Telephone:
925-675-8398

Telecopier:
888-969-9252

Electronic
Mail:  curtis.laney@bankofamerica.com

Account
No.:  3750836479

Ref:  Herbst Gaming, Inc.

ABA# 111000012

 

2

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