Document:

Exhibit 10.24

 

Published CUSIP Number: 69368JAA7

 

SECOND LIEN CREDIT AGREEMENT

Dated as of November 14, 2006

among

PA Meadows, LLC,

as the Borrower,

BANK OF AMERICA, N.A.,

as Administrative Agent and Collateral Agent,

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC and

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

as Joint Lead Arrangers and
Joint Book Managers

 

 

TABLE OF CONTENTS

 

	
  Section

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
   

  
	
  DEFINITIONS
  AND ACCOUNTING TERMS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.01.

  	
  Defined Terms

  	
   

  	
  1

  	
   

  
	
  1.02.

  	
  Other Interpretive Provisions

  	
   

  	
  28

  	
   

  
	
  1.03.

  	
  Accounting Terms

  	
   

  	
  29

  	
   

  
	
  1.04.

  	
  Rounding

  	
   

  	
  29

  	
   

  
	
  1.05.

  	
  Times of Day

  	
   

  	
  29

  	
   

  
	
  1.06.

  	
  [Reserved]

  	
   

  	
  30

  	
   

  
	
  1.07.

  	
  Currency Equivalents Generally

  	
   

  	
  30

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
   

  	
   

  	
   

  
	
  THE
  COMMITMENTS AND CREDIT EXTENSIONS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.01.

  	
  The Loans

  	
   

  	
  30

  	
   

  
	
  2.02.

  	
  Borrowings, Conversions and Continuations
  of Loans

  	
   

  	
  30

  	
   

  
	
  2.03.

  	
  [Reserved]

  	
   

  	
  31

  	
   

  
	
  2.04.

  	
  [Reserved]

  	
   

  	
  31

  	
   

  
	
  2.05.

  	
  Prepayments

  	
   

  	
  32

  	
   

  
	
  2.06.

  	
  Termination or Reduction of Commitments

  	
   

  	
  33

  	
   

  
	
  2.07.

  	
  Repayment of Loans

  	
   

  	
  34

  	
   

  
	
  2.08.

  	
  Interest

  	
   

  	
  34

  	
   

  
	
  2.09.

  	
  Fees

  	
   

  	
  34

  	
   

  
	
  2.10.

  	
  Computation of Interest and Fees

  	
   

  	
  35

  	
   

  
	
  2.11.

  	
  Evidence of Debt

  	
   

  	
  35

  	
   

  
	
  2.12.

  	
  Payments Generally; Administrative Agent’s
  Clawback

  	
   

  	
  35

  	
   

  
	
  2.13.

  	
  Sharing of Payments by Lenders

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  	
   

  	
   

  	
   

  
	
  TAXES,
  YIELD PROTECTION AND ILLEGALITY

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.01.

  	
  Taxes

  	
   

  	
  38

  	
   

  
	
  3.02.

  	
  Illegality

  	
   

  	
  40

  	
   

  
	
  3.03.

  	
  Inability to Determine Rates

  	
   

  	
  40

  	
   

  
	
  3.04.

  	
  Increased Costs; Reserves on Eurodollar
  Rate Loans

  	
   

  	
  41

  	
   

  
	
  3.05.

  	
  Compensation for Losses

  	
   

  	
  42

  	
   

  
	
  3.06.

  	
  Mitigation Obligations; Replacement of
  Lenders

  	
   

  	
  43

  	
   

  
	
  3.07.

  	
  Survival

  	
   

  	
  43

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  	
   

  	
   

  	
   

  
	
  CONDITIONS
  PRECEDENT TO CREDIT EXTENSION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.01.

  	
  Conditions of Initial Credit Extension

  	
   

  	
  43

  	
   

  

 

i

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.02.

  	
  Conditions to All Credit Extensions

  	
   

  	
  51

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
   

  	
   

  
	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.01.

  	
  Existence, Qualification and Power

  	
   

  	
  51

  	
   

  
	
  5.02.

  	
  Authorization; No Contravention

  	
   

  	
  51

  	
   

  
	
  5.03.

  	
  Governmental Authorization; Other Consents

  	
   

  	
  52

  	
   

  
	
  5.04.

  	
  Binding Effect

  	
   

  	
  52

  	
   

  
	
  5.05.

  	
  Financial Statements; No Material Adverse
  Effect; No Internal Control Event

  	
   

  	
  52

  	
   

  
	
  5.06.

  	
  Litigation

  	
   

  	
  53

  	
   

  
	
  5.07.

  	
  No Default

  	
   

  	
  53

  	
   

  
	
  5.08.

  	
  Liens; Investments

  	
   

  	
  53

  	
   

  
	
  5.09.

  	
  Environmental Compliance

  	
   

  	
  54

  	
   

  
	
  5.10.

  	
  Insurance

  	
   

  	
  55

  	
   

  
	
  5.11.

  	
  Taxes

  	
   

  	
  55

  	
   

  
	
  5.12.

  	
  ERISA Compliance

  	
   

  	
  56

  	
   

  
	
  5.13.

  	
  Subsidiaries; Equity Interests; Loan
  Parties

  	
   

  	
  56

  	
   

  
	
  5.14.

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

  	
   

  	
  57

  	
   

  
	
  5.15.

  	
  Disclosure

  	
   

  	
  57

  	
   

  
	
  5.16.

  	
  Compliance with Laws

  	
   

  	
  57

  	
   

  
	
  5.17.

  	
  Intellectual Property; Licenses, Etc.

  	
   

  	
  57

  	
   

  
	
  5.18.

  	
  Solvency

  	
   

  	
  58

  	
   

  
	
  5.19.

  	
  [Intentionally Omitted]

  	
   

  	
  58

  	
   

  
	
  5.20.

  	
  Labor Matters

  	
   

  	
  58

  	
   

  
	
  5.21.

  	
  Collateral Documents

  	
   

  	
  58

  	
   

  
	
  5.22.

  	
  Gaming Matters

  	
   

  	
  58

  	
   

  
	
  5.23.

  	
  Project; Construction Contracts

  	
   

  	
  58

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
   

  	
   

  	
   

  
	
  AFFIRMATIVE
  COVENANTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.01.

  	
  Financial Statements

  	
   

  	
  58

  	
   

  
	
  6.02.

  	
  Certificates; Other Information

  	
   

  	
  60

  	
   

  
	
  6.03.

  	
  Notices

  	
   

  	
  62

  	
   

  
	
  6.04.

  	
  Payment of Obligations

  	
   

  	
  63

  	
   

  
	
  6.05.

  	
  Preservation of Existence, Etc.

  	
   

  	
  64

  	
   

  
	
  6.06.

  	
  Maintenance of Properties

  	
   

  	
  64

  	
   

  
	
  6.07.

  	
  Maintenance of Insurance

  	
   

  	
  64

  	
   

  
	
  6.08.

  	
  Compliance with Laws

  	
   

  	
  64

  	
   

  
	
  6.09.

  	
  Books and Records

  	
   

  	
  64

  	
   

  
	
  6.10.

  	
  Inspection Rights

  	
   

  	
  64

  	
   

  
	
  6.11.

  	
  Use of Proceeds

  	
   

  	
  65

  	
   

  
	
  6.12.

  	
  Covenant to Guarantee Obligations and Give
  Security

  	
   

  	
  65

  	
   

  

 

ii

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.13.

  	
  Environmental Covenant

  	
   

  	
  68

  	
   

  
	
  6.14.

  	
  Preparation of Environmental Reports

  	
   

  	
  68

  	
   

  
	
  6.15.

  	
  Further Assurances

  	
   

  	
  69

  	
   

  
	
  6.16.

  	
  Compliance with Terms of Leaseholds

  	
   

  	
  69

  	
   

  
	
  6.17.

  	
  Interest Rate Hedging

  	
   

  	
  69

  	
   

  
	
  6.18.

  	
  Lien Searches

  	
   

  	
  69

  	
   

  
	
  6.19.

  	
  Material Contracts

  	
   

  	
  70

  	
   

  
	
  6.20.

  	
  Gaming Licenses

  	
   

  	
  70

  	
   

  
	
  6.21.

  	
  Cash Collateral Accounts

  	
   

  	
  70

  	
   

  
	
  6.22.

  	
  Holdback Agreement

  	
   

  	
  70

  	
   

  
	
  6.23.

  	
  Compliance with the Temporary Casino
  Construction Plans; Operating

  	
   

  	
  70

  	
   

  
	
  6.24.

  	
  Construction Covenants

  	
   

  	
  70

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
   

  	
   

  	
   

  
	
  NEGATIVE
  COVENANTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.01.

  	
  Liens

  	
   

  	
  71

  	
   

  
	
  7.02.

  	
  Indebtedness

  	
   

  	
  73

  	
   

  
	
  7.03.

  	
  Investments

  	
   

  	
  74

  	
   

  
	
  7.04.

  	
  Fundamental Changes

  	
   

  	
  75

  	
   

  
	
  7.05.

  	
  Dispositions

  	
   

  	
  76

  	
   

  
	
  7.06.

  	
  Restricted Payments

  	
   

  	
  76

  	
   

  
	
  7.07.

  	
  Change in Nature of Business

  	
   

  	
  77

  	
   

  
	
  7.08.

  	
  Transactions with Affiliates

  	
   

  	
  77

  	
   

  
	
  7.09.

  	
  Burdensome Agreements

  	
   

  	
  77

  	
   

  
	
  7.10.

  	
  Use of Proceeds

  	
   

  	
  78

  	
   

  
	
  7.11.

  	
  Financial Covenants

  	
   

  	
  78

  	
   

  
	
  7.12.

  	
  Capital Expenditures

  	
   

  	
  79

  	
   

  
	
  7.13.

  	
  Amendments of Organization Documents

  	
   

  	
  79

  	
   

  
	
  7.14.

  	
  Accounting Changes

  	
   

  	
  79

  	
   

  
	
  7.15.

  	
  Prepayments, Etc. of Indebtedness

  	
   

  	
  80

  	
   

  
	
  7.16.

  	
  Amendment, Etc. of Related Documents and
  Indebtedness

  	
   

  	
  80

  	
   

  
	
  7.17.

  	
  Construction of the Project

  	
   

  	
  80

  	
   

  
	
  7.18.

  	
  Seller Holdback Amount

  	
   

  	
  81

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
   

  	
   

  	
   

  
	
  EVENTS OF
  DEFAULT AND REMEDIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.01.

  	
  Events of Default

  	
   

  	
  81

  	
   

  
	
  8.02.

  	
  Remedies upon Event of Default

  	
   

  	
  84

  	
   

  
	
  8.03.

  	
  Application of Funds

  	
   

  	
  84

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
   

  	
   

  	
   

  
	
  ADMINISTRATIVE
  AGENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.01.

  	
  Appointment and Authority

  	
   

  	
  85

  	
   

  

 

iii

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.02.

  	
  Rights as a Lender

  	
   

  	
  86

  	
   

  
	
  9.03.

  	
  Exculpatory Provisions

  	
   

  	
  86

  	
   

  
	
  9.04.

  	
  Reliance by Administrative Agent

  	
   

  	
  87

  	
   

  
	
  9.05.

  	
  Delegation of Duties

  	
   

  	
  87

  	
   

  
	
  9.06.

  	
  Resignation of Administrative Agent

  	
   

  	
  87

  	
   

  
	
  9.07.

  	
  Non-Reliance on Administrative Agent and
  Other Lenders

  	
   

  	
  88

  	
   

  
	
  9.08.

  	
  No Other Duties, Etc.

  	
   

  	
  88

  	
   

  
	
  9.09.

  	
  Administrative Agent May File Proofs of
  Claim

  	
   

  	
  88

  	
   

  
	
  9.10.

  	
  Collateral and Guaranty Matters

  	
   

  	
  89

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
   

  	
   

  
	
  [RESERVED]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XI

  	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.01.

  	
  Amendments, Etc.

  	
   

  	
  90

  	
   

  
	
  11.02.

  	
  Notices; Effectiveness; Electronic
  Communications

  	
   

  	
  91

  	
   

  
	
  11.03.

  	
  No Waiver; Cumulative Remedies

  	
   

  	
  93

  	
   

  
	
  11.04.

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  93

  	
   

  
	
  11.05.

  	
  Payments Set Aside

  	
   

  	
  95

  	
   

  
	
  11.06.

  	
  Successors and Assigns

  	
   

  	
  95

  	
   

  
	
  11.07.

  	
  Treatment of Certain Information;
  Confidentiality

  	
   

  	
  99

  	
   

  
	
  11.08.

  	
  Right of Setoff

  	
   

  	
  100

  	
   

  
	
  11.09.

  	
  Interest Rate Limitation

  	
   

  	
  100

  	
   

  
	
  11.10.

  	
  Counterparts; Integration; Effectiveness

  	
   

  	
  100

  	
   

  
	
  11.11.

  	
  Survival of Representations and Warranties

  	
   

  	
  101

  	
   

  
	
  11.12.

  	
  Severability

  	
   

  	
  101

  	
   

  
	
  11.13.

  	
  Replacement of Lenders

  	
   

  	
  101

  	
   

  
	
  11.14.

  	
  Governing Law; Jurisdiction; Etc.

  	
   

  	
  102

  	
   

  
	
  11.15.

  	
  Waiver of Jury Trial

  	
   

  	
  103

  	
   

  
	
  11.16.

  	
  No Advisory or Fiduciary Responsibility

  	
   

  	
  103

  	
   

  
	
  11.17.

  	
  USA PATRIOT Act Notice

  	
   

  	
  104

  	
   

  
	
  11.18.

  	
  Gaming Authorities

  	
   

  	
  104

  	
   

  
	
  11.19.

  	
  Removal of a Lender

  	
   

  	
  104

  	
   

  
	
  11.20.

  	
  Time of the Essence

  	
   

  	
  104

  	
   

  
	
  11.21.

  	
  ENTIRE AGREEMENT

  	
   

  	
  104

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  	
  S-1

  	
   

  

 

iv

 

	
  SCHEDULES

  
	
   

  	
   

  
	
  1.01

  	
  Guarantors

  
	
  2.01

  	
  Commitments and Applicable
  Percentages

  
	
  4.01(a)(iv)

  	
  Mortgaged Properties

  
	
  5.01

  	
  Governmental Licenses

  
	
  5.03

  	
  Certain
  Authorizations

  
	
  5.05

  	
  Supplement to Interim
  Financial Statements

  
	
  5.08(c)

  	
  Existing Liens

  
	
  5.08(d)

  	
  Owned Real Property

  
	
  5.08(e)(i)

  	
  Leased Real Property (Lessee)

  
	
  5.08(e)(ii)

  	
  Leased Real Property (Lessor)

  
	
  5.08(f)

  	
  Existing Investments

  
	
  5.09

  	
  Environmental
  Matters

  
	
  5.11

  	
  Tax
  Assessments

  
	
  5.12

  	
  Unfunded
  Pension Liability

  
	
  5.13

  	
  Subsidiaries and Other Equity
  Investments; Loan Parties

  
	
  5.17

  	
  Intellectual Property Matters

  
	
  5.20

  	
  Labor Matters

  
	
  5.22

  	
  Gaming Matters

  
	
  5.23

  	
  Construction Contracts

  
	
  7.02

  	
  Existing Indebtedness

  
	
  7.08

  	
  Transactions with Affiliates

  
	
  7.09

  	
  Burdensome Agreements

  
	
  11.02

  	
  Administrative Agent’s
  Office, Certain Addresses for Notices

  
	
  11.06

  	
  Processing and Recordation
  Fees

  
	
   

  	
   

  
	
  EXHIBITS

  
	
   

  	
   

  
	
  Form of

  	
   

  
	
   

  	
   

  
	
  A

  	
  Committed Loan Notice

  
	
  B

  	
  Cash Collateral and
  Disbursement Agreement

  
	
  C

  	
  Term Note

  
	
  D

  	
  Compliance Certificate

  
	
  E

  	
  Assignment and Assumption

  
	
  F

  	
  Guaranty

  
	
  G

  	
  Security Agreement

  
	
  H

  	
  Mortgage

  
	
  J-1

  	
  Opinion Matters – Counsel to
  Loan Parties

  
	
  J-2

  	
  Opinion Matters – Local
  Counsel to Loan Parties

  
	
  K

  	
  Intercreditor
  Agreement

  
	
  L

  	
  Equity
  Guarantee

  
	
  M

  	
  Management Fee Subordination Agreement

  

 

v

 

CREDIT AGREEMENT

 

This SECOND
LIEN CREDIT AGREEMENT (“Agreement”) is entered into as of November 14, 2006, among PA MEADOWS, LLC, a Delaware limited liability company (the
“Borrower”),
each lender from time to time party hereto (collectively, the “Lenders”
and individually, a “Lender”) and BANK OF AMERICA, N.A., as Administrative Agent
and Collateral Agent. MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED will act as Syndication Agent (the “Syndication Agent”)
under the Agreement.

 

PRELIMINARY
STATEMENTS:

 

The Borrower
has requested that the Lenders provide a loan on the terms and subject to the
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:

 

“Acquired
Companies” means MEC Pennsylvania Racing, Inc., a Pennsylvania corporation,
Mountain Laurel Racing, Inc., a Delaware corporation, Washington Trotting
Association, Inc., a Delaware corporation, MEC Pennsylvania Food Service, Inc.,
a Pennsylvania corporation, and MEC Racing Management, a Pennsylvania partnership.

 

“Administrative
Agent” means Bank of America in its capacity as administrative agent
under any of the Loan Documents, or any successor administrative agent; provided,
however, that for purposes of Section 9.03 the term “Administrative
Agent” shall include the Syndication Agent, as such term is defined in the
introductory paragraph hereto.

 

“Administrative
Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 11.02, 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
Commitments” means the Commitments of all the Lenders.

 

“Aggregate Credit Exposures”
means, at any time, the aggregate amount of the Loans outstanding at such time.

 

“Agreement”
means this Credit Agreement.

 

 

“Applicable
Percentage” means, with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Loan represented by (i) on or prior to the Closing Date, such
Lender’s Commitment at such time and (ii) thereafter, the principal amount
of such Lender’s Loans at such time. The
initial Applicable Percentage of each Lender in respect of each Loan is set
forth opposite the name of such Lender on Schedule 2.01 or in the Assignment
and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Applicable Rate” means 5.00% per
annum for Base Rate Loans and 6.00% per annum for Eurodollar Rate Loans.

 

“Approved
Fund” means (i) 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 and (ii) any swap, special purpose vehicles
purchasing or acquiring security interests in collateralized loan obligations
or any other vehicle through which a Lender may leverage its investments from
time to time.

 

“Arrangers”
means Banc of America Securities LLC and Merrill Lynch, Pierce Fenner &
Smith Incorporated, in their capacities as joint lead arrangers and joint book
managers.

 

“Assignee
Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

 

“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 11.06(b)), and accepted by the Administrative Agent,
in substantially the form of Exhibit E or any other form approved
by the Administrative Agent.

 

“Attributable
Indebtedness” means, on any date, (a) in respect of any Capitalized
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 or similar payments under the relevant lease or other
applicable agreement or instrument that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease or other
agreement or instrument were accounted for as a Capitalized Lease.

 

“Audited
Financial Statements” means the audited consolidated balance sheet of the
Acquired Companies for the fiscal year ended December 31, 2005, and the related
combined statements of income or operations, shareholders’ equity and cash
flows for such fiscal year of the Acquired Companies, including the notes
thereto.

 

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

 

“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 desired return, general economic conditions and other factors, and is used
as a reference

 

2

 

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 Base Rate.

 

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

 

“Borrower
Materials” has the meaning specified in Section 6.02.

 

“Borrowing”
means a borrowing consisting of Loans of the same Type and, in the case of the
Eurodollar Rate Loans, having the same Interest Period made by each of the
Lenders pursuant to Section 2.01.

 

“Budget”
means the budget for the design and construction of the Project as a whole from
the commencement of construction thereof through the Completion Date that is prepared
by the Borrowers and approved by the Construction Consultant.

 

“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 Commonwealth
of Pennsylvania or 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.

 

“Capital
Expenditures” means, with respect to any Person for any period, any
expenditure in respect of the purchase or other acquisition of any fixed or
capital asset (excluding normal replacements and maintenance which are properly
charged to current operations). For
purposes of this definition, the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment or with insurance
proceeds shall be included in Capital Expenditures only to the extent of the
gross amount by which such purchase price exceeds the credit granted by the
seller of such equipment for the equipment being traded in at such time or the
amount of such insurance proceeds, as the case may be.

 

“Capitalized
Leases” means all leases that have been or should be, in accordance with
GAAP, recorded as capitalized leases.

 

“Cash Collateral
Account” means a blocked, non-interest bearing deposit account of
one or more of the Loan Parties at Bank of America (or another commercial bank
selected by the Administrative Agent) in the name of the Administrative Agent
and under the sole dominion and control of the Administrative Agent, established
as provided in Section 6.21 and otherwise established in a manner
satisfactory to the Administrative Agent.

 

“Cash Collateral and Disbursement Agreement” means
the Cash Collateral and Disbursement Agreement between Borrower and the Control
Agent in the form attached hereto as Exhibit B.

 

3

 

“Cash Equivalents” means any
of the following types of Investments, to the extent owned by the Borrower or
any of its Subsidiaries free and clear of all Liens (other than Liens created
under the Collateral Documents):

 

(a)           readily marketable
obligations issued or directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof; provided that the full faith and
credit of the United States of America is pledged in support thereof;

 

(b)           time deposits with, or
insured certificates of deposit or bankers’ acceptances of, any commercial bank
that (i) (A) is a Lender or (B) is organized under the laws of the United
States of America, any state thereof or the District of Columbia or is the
principal banking subsidiary of a bank holding company organized under the laws
of the United States of America, any state thereof or the District of Columbia,
and is a member of the Federal Reserve System, (ii) issues (or the parent of
which issues) commercial paper rated as described in clause (c) of this
definition and (iii) has combined capital and surplus of at least
$1,000,000,000, in each case with maturities of not more than 180 days from the date of acquisition
thereof;

 

(c)           commercial paper issued
by any Person organized under the laws of any state of the United States of
America and rated at least “Prime-1” (or the then equivalent grade) by Moody’s
or at least “A-1” (or the then equivalent grade) by S&P, in each case with
maturities of not more than 180 days from the date of acquisition thereof; and

 

(d)           Investments, classified
in accordance with GAAP as current assets of the Borrower or any of its
Subsidiaries, in money market investment programs registered under the
Investment Company Act of 1940, which are administered by financial
institutions that have the highest rating obtainable from either Moody’s or
S&P, and the portfolios of which are limited solely to Investments of the
character, quality and maturity described in clauses (a), (b) and
(c) of this definition.

 

“Cash
Management Agreement” means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
electronic funds transfer and other cash management arrangements.

 

“Cash
Management
Bank”
means any Person that, at the time it enters into a Cash Management Agreement,
is a Lender, an Affiliate of a Lender, in its capacity as a party to such Cash
Management Agreement or a financial institution reasonably acceptable to the
Administrative Agent; provided that such financial institution enters
into a control agreement with the Control Agent on terms reasonably acceptable
to the Collateral Agent.

 

“Casualty
Event” means any involuntary loss of title, any involuntary loss of, damage
to or any destruction of, or any condemnation or other taking (including by any
Governmental Authority) of, the Meadows Property and any other material property
of the Loan Parties and any of their Subsidiaries, taken as a whole. “Casualty
Event” shall include but not be limited to any taking of all or any part of any
real property of any person or any part thereof, in or by condemnation or other
eminent domain proceedings pursuant to any requirement of Law,

 

4

 

or by reason
of they temporary requisition of the use or occupancy of all or any part or any
real property of any person or any part thereof by any Governmental Authority,
civil or military, or any settlement in lieu thereof.

 

“CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980.

 

“CERCLIS” means the
Comprehensive Environmental Response, Compensation and Liability Information
System maintained by the U.S. Environmental Protection Agency.

 

“Certificate
of Occupancy” means a temporary or permanent certificate of occupancy, in
either case, for the Project issued by the appropriate building department
pursuant to applicable Laws which permanent or temporary certificate of
occupancy shall permit the Project to be used for its intended purposes and
shall be in full force and effect and, in the case of a temporary certificate
of occupancy, if such temporary certificate of occupancy shall provide for an
expiration date, any items which must be completed in order for such temporary
certificate of occupancy to be renewed or extended shall be completed no later
than 15 days prior to the applicable expiration date.

 

“CFC”
means a Person that is a controlled foreign corporation under Section 957 of
the Code.

 

“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 an event or series of events by which:

 

(a)           at any time Cannery
Casino Resorts, LLC (“CCR”) shall, directly or indirectly, cease to hold
100% of the voting equity securities of the Borrower (and taking into account
all such securities that such person or group has the right to acquire pursuant
to any option right);

 

(b)           (i) Mr. William Paulos
and Mr. William Wortman collectively shall, directly or indirectly, cease to
hold 35% or more of the equity securities of CCR entitled to vote for members
of the board of directors or equivalent governing body of CCR on a fully diluted
basis (and taking into account all such securities that such person or group
has the right to acquire pursuant to any option right) or (ii) OCM shall,
directly or indirectly, cease to hold 33% or more of the equity securities of CCR
entitled to vote for members of the board of directors or equivalent governing
body of CCR on a fully diluted basis (and taking into account all such
securities that such person or group has the right to acquire pursuant to any
option right);

 

(c)           either of Mr. William
Paulos or Mr. William Wortman shall at any time cease to be a member of the
board of directors or other equivalent governing body of the

 

5

 

Borrower; provided that so long as Borrower is a sole member
managed limited liability company, no Change of Control shall be deemed to
occur to the extent that both Mr. William Paulos and Mr. William Wortman are
members of the board of directors or the equivalent governing body of CCR;

 

(d)           OCM shall at any time
cease to have at least two members of the board of directors or other
equivalent governing body of the Borrower; provided that so long as
Borrower is a sole member managed limited liability company, no Change of
Control shall be deemed to occur to the extent that OCM has at least two
members of the board of directors or the equivalent governing body of CCR;

 

(e)           Mr. William Paulos, Mr.
William Wortman and OCM shall at any time cease to hold the power to appoint a
majority of the members of the board of directors of the Borrower; provided
that so long as Borrower is a sole member managed limited liability company, no
Change of Control shall be deemed to occur to the extent that Mr. William
Paulos, Mr. William Wortman and OCM have the power to appoint a majority of the
board of directors or the equivalent governing body of CCR; or

 

(f)            any Person or two or
more Persons acting in concert (other than Mr. William Paulos, Mr. William
Wortman, OCM and its Affiliates) shall have acquired by contract or otherwise,
or shall have entered into a contract or arrangement that, upon consummation
thereof, will result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence over the management or policies
of CCR, or control over the equity securities of CCR entitled to vote for
members of the board of directors or equivalent governing body of CCR on a
fully diluted basis (and taking into account all such securities that such
Person or group has the right to acquire pursuant to any option right)
representing 15% or more of the combined voting power of such securities.

 

“Closing Date”
means the first date all the conditions precedent in Section 4.01 are
satisfied or waived in accordance with Section 11.01.

 

“Code”
means the Internal Revenue Code of 1986.

 

“Collateral”
means all of the “Collateral”, “Mortgaged
Property” and “Trust Property” referred to in the Collateral Documents and all
of the other property that is or is intended under the terms of the Collateral
Documents to be subject to Liens in favor of the Administrative Agent for the
benefit of the Secured Parties. Notwithstanding any other provision hereof, no
lien, claim or encumbrance extends to, and “Collateral” does not include, (i) amounts
held in an account for the Commonwealth of Pennsylvania as specified by Chapter
14 of the Pennsylvania Race Horse Development and Gaming Act (Act 71) (4 Pa. C.S.A.
§ 1401, et seq.) and (ii) Excluded
Property.

 

“Collateral
Agent” has the meaning specified in Section 9.01(b).

 

“Collateral
Documents” means, collectively, the Security Agreement, the
Mortgages, each assignment of Construction Contracts, each of the mortgages,
collateral assignments, security agreements, pledge agreements or other similar
agreements delivered to the Administrative

 

6

 

Agent pursuant
to Sections 6.12 and 6.15, and each of the other agreements,
instruments or documents that creates or purports to create a Lien in favor of
the Administrative Agent for the benefit of the Secured Parties.

 

“Commitment”
means, as to each Lender, its obligation to make a Loan to the Borrower
pursuant to Section 2.01 in an aggregate amount not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01 under the caption
“Commitment” or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto.

 

“Committed Loan
Notice” means a notice of (a) a Loan, (b) a conversion of Loans from
one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant
to Section 2.02(a), which, if in writing, shall be substantially in the
form of Exhibit A.

 

“Completion
Certificate” means a certificate executed by the Borrower, the applicable
Loan Party, General Contractor and Construction Consultant stating that (i) the
Project is completed and (ii) a Certificate of Occupancy will be issued and the
facility affected by the work is completely operational.

 

“Completion
Date” means the earlier of the date upon which the Construction Contract contemplates
completion of the Project, or the date a Completion Certificate is issued for
the Project executed by the Borrower, the applicable Loan Party, General
Contractor and Construction Consultant, whichever shall first occur.

 

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

 

“Consolidated
Current Assets” means, with respect to any Person at any date of
determination, all assets of such Person and its Subsidiaries at such date that
should be classified as current assets on a consolidated balance sheet of such
Person, but excluding cash and Cash Equivalents.

 

“Consolidated
Current Liabilities” means, with respect to any Person at any date of
determination, all liabilities of such Person and its Subsidiaries at such date
that should be classified as current liabilities on a consolidated balance
sheet of such Person, but excluding the sum of (a) the principal amount of
any current portion of long-term debt of such Person and (b) (without duplication
of clause (a) above) the then outstanding principal amount of the Loans.

 

“Consolidated EBITDAM”
means, at any date of determination, an amount equal to Consolidated Net Income
of the Borrower and its Subsidiaries on a consolidated basis for the most
recently completed Measurement Period plus (a) the following to the extent
deducted in calculating such Consolidated Net Income:  (i) pre-opening expenses relating to the
Project, (ii) Consolidated Interest Charges, (iii) depreciation and
amortization expense, (iv) other expenses reducing such Consolidated Net Income
which do not represent a cash item in such period or any future period,
(v) the Management Compensation, (vi) the provision for Federal, state,
local and foreign income taxes payable, and (vii) other extraordinary non-cash
charges (paid or accruing) (in each case of or by the Borrower and its
Subsidiaries for such Measurement Period) and minus (b) the following to
the extent included in calculating such Consolidated Net Income:  (i) all non-cash

 

7

 

items increasing Consolidated Net Income, (ii) interest income and
(iii) extraordinary gains (in each case of or by the Borrower and its
Subsidiaries for such Measurement Period).

 

“Consolidated Funded
Indebtedness” means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the sum of (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, (b) all purchase money Indebtedness, (c) all direct obligations
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments, (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 and the
Holdback Amount), (e) all Attributable Indebtedness, (f) without duplication,
all Guarantees with respect to outstanding Indebtedness of the types specified
in clauses (a) through (e) above of Persons other than the Borrower or any
Subsidiary, and (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 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.

 

“Consolidated Interest
Charges” means, for any Measurement Period, the sum of (a) all
interest, premium payments, debt discount, fees, charges and related expenses
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, (b) all interest paid or
payable with respect to discontinued operations and (c) the portion of rent expense under
Capitalized Leases that is treated as interest in accordance with GAAP, in each
case, of or by the Borrower and its Subsidiaries on a consolidated basis for
the most recently completed Measurement Period; provided that
Consolidated Interest Charges shall not include any Transaction fees or
expenses paid on the Closing Date regardless of the accounting treatment of
such fees or expenses.

 

“Consolidated Interest
Coverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated EBITDAM to (b)
Consolidated Interest Charges, in each case, of or by the Borrower and its
Subsidiaries on a consolidated basis for the most recently completed
Measurement Period; provided that with respect to (i) the
first Measurement Period after the Closing Date, Consolidated EBITDAM and
Consolidated Interest Charges for such Measurement Period shall be multiplied
by four (4), (ii) the second Measurement Period after the Closing Date, Consolidated
EBITDAM and Consolidated Interest Charges for such Measurement Period shall be
multiplied by two (2); (iii) the third Measurement Period after the Closing
Date, Consolidated EBITDAM and Consolidated Interest Charges for such
Measurement Period shall be multiplied by one and one-third (11/3)
and (iv) the Measurement Period thereafter, Consolidated EBITDAM and
Consolidated Interest Charges for such Measurement Period shall be such amounts
as otherwise set forth in accordance with the definition of Measurement Period.

 

“Consolidated Leverage
Ratio” means, as of any date of determination, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDAM of the
Borrower and its Subsidiaries on a consolidated basis for the most recently
completed Measurement

 

8

 

Period; provided that with respect to (i) the
first Measurement Period after the Closing Date, Consolidated Funded
Indebtedness and Consolidated EBITDAM for such Measurement Period shall be
multiplied by four (4), (ii) the second Measurement Period after the Closing
Date, Consolidated Funded Indebtedness and Consolidated EBITDAM for such
Measurement Period shall be multiplied by two (2), (iii) the third Measurement
Period after the Closing Date, Consolidated Funded Indebtedness and
Consolidated EBITDAM for such Measurement Period shall be multiplied by one and
one-third (11/3) and (iv) the Measurement Period
thereafter, Consolidated Funded Indebtedness and Consolidated EBITDAM for such
Measurement Period shall be such amounts as otherwise set forth in accordance
with the definition of Measurement Period.

 

“Consolidated Net Income”
means, at any date of determination, the net income (or loss) of the Borrower
and its Subsidiaries on a consolidated basis for the most recently completed
Measurement Period; provided that Consolidated Net Income shall exclude
(a) extraordinary gains and extraordinary losses for such Measurement Period,
(b) the net income of any Subsidiary during such Measurement Period to the
extent that the declaration or payment of dividends or similar distributions by
such Subsidiary of such income is not permitted by operation of the terms of
its Organization Documents or any agreement, instrument or Law applicable to
such Subsidiary during such Measurement Period, except that the Borrower’s
equity in any net loss of any such Subsidiary for such Measurement Period shall
be included in determining Consolidated Net Income, and (c) any income (or
loss) for such Period of any Person if such Person is not a Subsidiary, except
that the Borrower’s equity in the net income of any such Person for such Measurement
Period shall be included in Consolidated Net Income up to the aggregate amount
of cash actually distributed by such Person during such Period to the Borrower
or a Subsidiary as a dividend or other distribution (and in the case of a
dividend or other distribution to a Subsidiary, such Subsidiary is not
precluded from further distributing such amount to the Borrower as described in
clause (b) of this proviso).

 

“Construction
Consultant” means any Person designated from time to time by the
Administrative Agent to serve as the Construction Consultant hereunder.

 

“Construction Contracts” means any and all
contracts, written or oral, between the Borrower, any applicable Loan Party and
any Contractor and any subcontractor and between any of the foregoing and any
other person (including, without limitation, any architect or engineer)
relating in any way to the construction of the Project, including the
performing of labor or the furnishing of standard or specially fabricated
materials in connection therewith or the preparation or furnishing of any
drawings, renderings, plans, design documents or other related items for the
design, architecture or construction of the Project.

 

“Construction
Plans” has the meaning specified in Section 4.01(q).

 

“Contractor” means and includes any person or
entity, including any General Contractor, engaged to work on or furnish
materials or supplies for the Project.

 

“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.

 

9

 

“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.

 

“Control
Agent” has the meaning specified in the Intercreditor Agreement.

 

“Credit Extension”
means the making of a Loan by a Lender.

 

“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.

 

“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 an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% 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
2% per annum.

 

“Defaulting
Lender” means any Lender that (a) has failed to fund any portion of the
Loan required to be funded by it hereunder within one Business Day of the date
required to be funded by it 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.

 

“Discharge
of First Lien Obligations” has the meaning specified in the Intercreditor
Agreement.

 

“Disposition”
or “Dispose”
means the sale, transfer, license, lease or other disposition (including any
sale and leaseback transaction) of any property (exclusive of ordinary course
gaming payout) by any Person (or the granting of any option or other right to
do any of the foregoing), 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.

 

“Disqualification”
means, with respect to any Lender:

 

(a)           the failure of that
Lender timely to file pursuant to applicable Gaming Laws (i) any application
requested of that Lender by any Gaming Authority in connection with any
licensing required of that Lender as a lender to the Loan Parties or (ii) any required
application or other papers in connection with determination of the suitability
of that Lender as a lender to the Loan Parties;

 

10

 

(b)           the withdrawal of that
Lender (except where requested or permitted by the Gaming Board) of any
such application or other required papers; or

 

(c)           any final determination
by a Gaming Authority pursuant to applicable Gaming Laws (i) that such Lender
is “unsuitable” as a lender to the Loan Parties, (ii) that such Lender shall be
“disqualified” as a lender to the Loan Parties or (iii) denying the issuance to
that Lender of any license required under applicable Gaming Laws to be held by
all lenders to the Loan Parties.

 

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

 

“Eligible Assignee”
means any Person that meets the requirements to be an assignee under Section
11.06(b)(iii), (v) and (vi) (subject to such consents, if
any, as may be required under Section 11.06(b)(iii)).

 

“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 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.

 

“Environmental Permit”
means any permit, approval, identification number, license or other
authorization required under any Environmental Law.

 

“Equity
Guarantee” means the Equity Guarantee to be dated the Closing Date in the
form attached hereto as Exhibit L.

 

“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.

 

11

 

“Equity Investors” means OCM, entities directly or
indirectly Controlled by OCM, entities directly or indirectly Controlled by
Oaktree Capital Management, LLC, Mr. William Paulos, Mr. William Wortman and
entities directly or indirectly Controlled by Mr. William Paulos and/or Mr.
William Wortman.

 

“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 Section 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.

 

“Eurodollar Rate”
means, for any Interest Period with respect to a Eurodollar Rate Loan, the rate
per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”),
as published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as designated by the Administrative Agent from time to
time) at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period. If such rate is not available at such time for any reason, then the “Eurodollar
Rate” for such Interest Period shall be the rate per annum determined by the
Administrative Agent to be the rate 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 11:00 a.m. (London time)
two Business Days prior to the commencement 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.

 

12

 

“Excess
Cash Flow” means, for any fiscal year of the Borrower, the excess (if any)
of (a) the sum (for such fiscal year) of (i) Consolidated EBITDAM and (ii) the
excess, if any, of the Working Capital of the Borrower at the beginning of such
fiscal year over the Working Capital of the Borrower at the end of such fiscal
year over (b) the sum (for such fiscal year) of (i) Consolidated Interest
Charges actually paid in cash by the Borrower and its Subsidiaries (less
interest income and any prepaid interest expense), (ii) scheduled principal
repayments, to the extent actually made, of (x) Loans pursuant to Section
2.07(b) and (y) Indebtedness to the extent incurred pursuant to the FF&E
Financing, (iii) all income taxes actually paid in cash by the Borrower and its
Subsidiaries, (iv) Restricted Payments made in accordance with Section 7.06(d),
(v) Capital Expenditures (which includes Maintenance Capital Expenditures and
Expansion Capital Expenditures) actually made by the Borrower and its
Subsidiaries, (vi) the Management Compensation paid by the Borrower and its
Subsidiaries and (vii) the excess, if any, of the Working Capital of the Borrower
at the end of such fiscal year over the Working Capital of the Borrower at the
beginning of such fiscal year.

 

“Excluded
Issuance” by the Borrower means an issuance and sale of an Equity Interest in
the Borrower to its sole member or the Equity Investors, a capital contribution
to the Borrower from its sole member or its Equity Investors or an issuance of
shares of capital stock of (or other ownership or profit interests in) the
Borrower upon the exercise of warrants, options or other rights for the
purchase of such capital stock (or other ownership or profit interest).

 

“Excluded
Property” has the meaning specified in Section 1.1(a) of the Security
Agreement.

 

“Excluded
Taxes” means, with respect to the Administrative Agent, any Lender or any
other recipient of any payment to be made by or on account of any obligation of
the 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 11.13), any U.S.
federal 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.

 

“Expansion
Capital Expenditure” means any Capital Expenditure by the Borrower or any
of its Restricted Subsidiaries that is not properly characterized as a
Maintenance Capital Expenditure, including, without limitation, expenditures
with respect to the buy-out of real property leases.

 

13

 

“Extraordinary
Receipt” means any cash received by or paid to or for the account of
any Person not in the ordinary course of business, including tax refunds,
pension plan reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute compensation for
lost earnings) and condemnation awards (and payments in lieu thereof); provided,
however, that an Extraordinary Receipt shall not include cash receipts
from proceeds of insurance or condemnation awards (or payments in lieu thereof)
to the extent that such proceeds, awards or payments are applied (or in respect
of which expenditures were previously incurred) to replace or repair property
in respect of which such proceeds were received and shall not include
indemnity payments and purchase price adjustments from Seller.

 

“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 July 20, 2006, among the Borrower, the
Administrative Agent, Merrill Lynch Capital Corporation and the Arrangers.

 

“FF&E”
means furniture, furnishings or equipment used in the ordinary course of the
business of the Borrower or a Guarantor.

 

“FF&E
Financing” means Indebtedness the proceeds of which are used solely to
finance the acquisition by the Borrower or a Guarantor of, or the entry into a
Capitalized Lease by the Borrower or a Guarantor with respect to, FF&E, in
each case as amended, restated, modified, renewed, refunded, replaced (whether
upon or after termination or otherwise) or refinanced in whole or in part from
time to time.

 

“FIRREA”
means the Financial Institutions Reform, Recovery and Enforcement Act of 1989,
as amended.

 

“First Lien
Administrative Agent” means Bank of America, N.A., in its capacity as
administrative agent under the First Lien Credit Agreement, and its successors
and assigns.

 

“First Lien
Collateral Agent” means Bank of America, N.A. in its capacity as collateral
agent under the First Lien Loan Documents, and its sucessors and assigns.

 

“First Lien
Credit Agreement” means (i) that certain credit agreement dated as of the
date hereof among Borrower, the lenders party thereto and Bank of America,
N.A., as administrative agent and collateral agent, as amended, restated,
supplemented or modified from time to time to the extent permitted by this
Agreement and the Intercreditor Agreement, and (ii) any other credit agreement,
loan agreement, note agreement, promissory note, indenture or other

 

14

 

agreement or
instrument evidencing or governing the terms of any indebtedness or other
financial accommodation that has been incurred to extend (subject to the
limitations set forth herein and in the Intercreditor Agreement) or refinance
in whole or in part the indebtedness and other obligations outstanding under
the (x) credit agreement referred to in clause (i) or (y) any
subsequent First Lien Credit Agreement, unless such agreement or instrument expressly
provides that it is not intended to be and is not a First Lien Credit Agreement
hereunder. Any reference to the First Lien Credit Agreement hereunder shall be
deemed a reference to any First Lien Credit Agreement then in existence.

 

“First Lien
Loan Documents” means the First Lien Credit Agreement and the other Loan
Documents as defined in the First Lien Credit Agreement, including each
mortgage and other security documents, guaranties and the notes issued thereunder.

 

“First Lien
Loans” means the loan extended under the First Lien Credit Agreement.

 

“First Lien
Secured Parties” means the First Lien Administrative Agent, the First Lien
Collateral Agent and each Person that is a lender under the First Lien Credit
Agreement.

 

“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.

 

“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
Authority” means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the federal
government or any state, city or other political subdivision, whether now or
hereafter in existence, or any officer or official thereof, but only to the
extent that such agency, authority, board, bureau, commission, department,
office or instrumentality possesses authority to regulate any gaming operation
owned, managed or operated, or proposed to be owned, managed or operated, by
the Borrower or any of its Subsidiaries.

 

15

 

“Gaming
Laws” means all applicable federal, state and local laws, rules and regulations
pursuant to which Gaming Authorities possess regulatory, licensing or permit
authority over the ownership or operation of gaming facilities.

 

“Gaming
License” means any finding of suitability, registration, license, franchise
or other approval or authorization issued by or from any Gaming Authority under
Gaming Laws that is required to own, lease, operate or otherwise conduct or
manage the gaming activities of the Borrower and its Subsidiaries in any state
or jurisdiction in which any Borrower or any of its Subsidiaries conduct business.

 

“General
Contractor” means (i) Borrower with respect to the Project or (ii) any
other Person who contracts for the construction of the entire Project, rather
than for a portion of the work relating thereto and otherwise has the
obligation to retain and pay subcontractors and coordinates the work to be
performed.

 

“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).

 

“Governmental
Real Property Disclosure Requirements” means any requirement of Law of any
Governmental Authority requiring notification of the buyer, lessee, mortgagee,
assignee or other transferee of any real property, facility, establishment or
business, or notification, registration or filing to or with any Governmental
Authority, in connection with the sale, lease, mortgage, assignment or other
transfer (including any transfer or control) of any real property, facility,
establishment or business, of the actual or threatened presence or release in
or into the Environment, or the use, disposal or handling of Hazardous Material
on, at, under or near the real property, facility, establishment or business to
be sold, leased, mortgaged, assigned or transferred.

 

“Guarantee”
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 financial 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 financial
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

 

16

 

any right,
contingent or otherwise, of any holder of such Indebtedness to obtain any such
Lien). The amount of any Guarantee 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 Guarantee is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined
by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding
meaning.

 

“Guarantors”
means, collectively, the Subsidiaries of the Borrower listed on Schedule 1.01 and each other
Subsidiary of the Borrower that
shall be required to execute and deliver a guaranty or guaranty supplement
pursuant to Section 6.12.

 

“Guaranty”
means, collectively, the Guaranty made by the Guarantors in favor of the Secured Parties, substantially in the form of Exhibit F,
together with each other guaranty and guaranty supplement delivered pursuant to
Section 6.12.

 

“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.

 

“Hedge Bank” means any
Person that, at the time it enters into a Secured Hedge Agreement, is a Lender
or an Affiliate of a Lender, in its capacity as a party to such Secured Hedge
Agreement.

 

“Holdback
Agreement” means the Holdback Agreement by and between Seller and the
Borrower dated November 14, 2006.

 

“Holdback
Amount” has the meaning specified in the Holdback Agreement.

 

“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)           the maximum amount of
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 the Holdback
Amount);

 

17

 

(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)            all Attributable
Indebtedness in respect of Capitalized Leases and Synthetic Lease Obligations
of such Person;

 

(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 to purchase or exercise any
warrant, right or option to acquire such Equity Interest, 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 Guarantees 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.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitees”
has the meaning specified in Section 11.04(b).

 

“Information”
has the meaning specified in Section 11.07.

 

“Intercreditor
Agreement” means the Intercreditor Agreement to be dated the Closing Date
in the form attached hereto as Exhibit K.

 

“Interest Payment
Date” means, (a) as to any Eurodollar Rate Loan, the last day of
each Interest Period applicable to such Loan and the Maturity Date of the Loan;
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, the last Business Day of each March, June, September and December
and the Maturity Date of the Loan.

 

“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 Committed 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

 

18

 

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 of the Loan.

 

“Internal
Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Borrower’s internal controls over
financial reporting, in each case as described in the Securities Laws.

 

“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
Equity Interests of another Person, (b) a loan, advance or capital contribution
to, Guarantee or assumption of debt of, or purchase or other acquisition of any
other debt or interest in, another 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 or
all or a substantial part of the business of, such Person. 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.

 

“IRS”
means the United States Internal Revenue Service.

 

“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.

 

“Leases”
means any and all leases, subleases, tenancies, options, concession agreements,
rental agreements, occupancy agreements, franchise agreements, access
agreements and any other agreements (including all amendments, extensions,
replacements, renewals, modifications and/or guarantees thereof), whether or
not of record and whether now in existence or hereafter entered into, affecting
the use or occupancy of all or any portion of any Real Property.

 

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

 

“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.

 

19

 

“Licensing
Fee L/C” means the $50.0 million letter of credit dated December 19,
2005, delivered to the PGBC on behalf of Washington Trotting Association, Inc. in
support of the licensing fee for the Pennsylvania Gaming License.

 

“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.

 

“Loan Documents”
means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty,
(d) the Collateral Documents, (e) the Fee Letter, (f) each Issuer Document,
(g) each Secured Hedge Agreement, (h) each Secured Cash Management
Agreement, (i) the Cash Collateral and Disbursement Agreement, and (j) the
Intercreditor Agreement; provided that for purposes of the definition of
“Material Adverse Effect” and Articles IV through IX, “Loan Documents”
shall not include Secured Hedge Agreements or Secured Cash Management
Agreements.

 

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

 

“Maintenance
Capital Expenditures” means any Capital Expenditures by the Borrower or any
of its Restricted Subsidiaries that are made to maintain, restore, refurbish or
replace in the ordinary course of business the condition or usefulness of property
of the Borrower or any of its Restricted Subsidiaries, or otherwise to support
the continuation of such person’s day-to-day operations as then conducted, but
that are not properly chargeable to repairs and maintenance in accordance with
GAAP.

 

“Management
Compensation” means any and all fees, expenses and other monies due and
payable, from time to time, by the Borrower to Millennium, which shall not, in
the aggregate, exceed 4% of Consolidated EBITDAM per fiscal year.

 

“Managers”
means collectively William Wortman and William Paulos.

 

“Material Adverse
Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent) or condition (financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole; (b) a material impairment of the rights and
remedies of the Administrative Agent or any Lender under any Loan Document, or
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.

 

“Material
Contract” means, with respect to any Person, each contract to which such
Person is a party involving aggregate consideration payable to or by such
Person of $4.0 million or more in any
year or otherwise material to the business, condition (financial or otherwise),
operations, performance, properties or prospects of such Person.

 

20

 

“Maturity Date”
means November 14, 2012; provided, however, that, in each case,
if such date is not a Business Day, the Maturity Date shall be the next
preceding Business Day.

 

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

 

“Measurement
Period” means, at any date of determination, the most recently completed
four fiscal quarters of the Borrower
or, if fewer than four consecutive fiscal quarters of the Borrower have been completed since the Closing Date, the
fiscal quarters of the Borrower
that have been completed since the Closing Date.

 

“Millennium”
means Millennium Gaming, Inc. or an affiliate thereof.

 

“Moody’s”
means Moody’s Investors Service, Inc. and any successor thereto.

 

“Mortgage” has the
meaning specified in Section 4.01(a)(iv).

 

“Mortgage Policy” has the
meaning specified in Section 4.01(a)(iv)(B).

 

“Mortgaged
Property” shall mean (a) each Real Property identified as a Mortgaged
Property on Schedule 4.01(a)(iv) and (b) each Real Property,
if any, which shall be subject to a Mortgage delivered after the Closing Date
pursuant to Section 6.12

 

“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.

 

“Net Cash Proceeds”
means, to the extent remaining after any mandatory prepayments pursuant to
Section 2.05(b) of the First Lien Credit Agreement:

 

(a)           with respect to any
Disposition by the Borrower or
any of its Subsidiaries, or any Extraordinary Receipt received or paid to the
account of the Borrower or any
of its Subsidiaries, the excess, if any, of (i) the sum of cash and Cash
Equivalents received in connection with such transaction (including any cash or
Cash Equivalents received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) over (ii) the sum of (A) the principal amount of any Indebtedness
that is secured by the applicable asset and that is required to be repaid in
connection with such transaction (other than Indebtedness under the Loan
Documents), (B) the reasonable and customary out-of-pocket expenses incurred by
the Borrower or such Subsidiary
in connection with such transaction and (C) income taxes reasonably estimated
to be actually payable within two years of the date of the relevant transaction
as a result of any gain recognized in connection therewith; and

 

21

 

(b)           with respect to the
sale or issuance of any Equity Interest by the Borrower or any of its Subsidiaries, or the incurrence or
issuance of any Indebtedness by the
Borrower or any of its Subsidiaries, the excess of (i) the sum of the
cash and Cash Equivalents received in connection with such transaction over
(ii) the underwriting discounts and commissions, and other reasonable and
customary out-of-pocket expenses, incurred by the Borrower or such Subsidiary in connection therewith.

 

“Note”
means a promissory note made by the Borrower in favor of a Lender or its
registered assigns, evidencing Loans made by such Lender to the Borrower, in substantially
the form of Exhibit C hereto.

 

“NPL” means the
National Priorities List under CERCLA.

 

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Loan Document or otherwise with
respect to any Loan, 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.

 

“OCM” means
OCM Acquisition Co., LLC, a limited liability company organized under the laws
of Nevada.

 

“Operating”
means that:

 

(1)           the Pennsylvania Gaming
Licenses shall have been granted and not been revoked or suspended; and

 

(2)           the Temporary Casino is
open to the general public and operating in accordance with applicable law in
all material respects.

 

“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 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.

 

22

 

“Outstanding Amount”
means on any date, the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of such Loans
occurring on such date.

 

“Participant”
has the meaning specified in Section 11.06(d).

 

“PBGC”
means the Pension Benefit Guaranty Corporation.

 

“PCAOB”
means the Public Company Accounting Oversight Board.

 

“Pennsylvania
Gaming License” means a Conditional Category 1 license (a “Conditional
Gaming License”) or a Category 1 license (a “Category 1 Gaming License”)
in Pennsylvania for the operation of a slot machine facility at the Meadows
Property.

 

“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.

 

“Permitted Encumbrances” has the meaning specified in the
Mortgages.

 

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

 

“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.

 

“Plans and
Specifications” means all specifications, designs, documents, schematic
drawings and related items for the design, architecture and construction of the
Project, that are prepared by the Borrowers’ architect , and approved by the Construction
Consultant, and, in each case, all amendments and modifications thereof approved
by the Administrative Agent.

 

“Platform”
has the meaning specified in Section 6.02.

 

“Pledged Debt” means “Intercompany
Debt” as defined in the Security Agreement.

 

“Pledged Equity” means “Pledged
Securities” as defined in the Security Agreement.

 

“Post-Closing
Agreement” means the Post-Closing and Note Issuance Agreement dated as of July
26, 2006, by and among the Borrower, Seller and other parties thereto and any
amendments thereto as of the date hereof.

 

“Project”
means the construction of the Temporary Casino.

 

23

 

“Racing
Services Agreement” means the Racing Services Agreement dated as of July
26, 2006, by and among Racing Services Operator and the Guarantors.

 

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

 

“Real
Property” means, collectively, all right, title and interest (including any
leasehold, mineral or other estate) in and to any and all parcels of or
interests in real property owned, leased or operated by any Person, whether by
lease, license or other means, together with, in each case, all easements,
hereditaments and appurtenances relating thereto, all improvements and
appurtenant fixtures and equipment, all general intangibles and contract rights
and other property and rights incidental to the ownership, lease or operation
thereof.

 

“Reduction Amount”
has the meaning set forth in Section 2.05(b)(ix).

 

“Register”
has the meaning specified in Section 11.06(c).

 

“Registered
Public Accounting Firm” has the meaning specified by the Securities Laws
and shall be independent of the
Borrower as prescribed by the Securities Laws.

 

“Related Documents” means the Racing Services
Agreement, the Post-Closing Agreement and the First Amendment dated
July 26, 2006 to the Stock Purchase Agreement dated November 8, 2005,
between Magna Entertainment Corp. and the Borrower, and each other agreement
contemplated thereby.

 

“Related
Parties” means, with respect to any Person, such Person’s Affiliates and
the partners, directors, officers, employees, agents, trustees 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 submission of a Borrowing or conversion notice
under Section 2.02.

 

“Required Lenders”
means, as of any date of determination, Lenders holding more than 50% of the sum of all Loans outstanding.

 

“Responsible
Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer, controller, manager or
managing member of a Loan Party and any
other officer of the applicable Loan Party so designated by any of the
foregoing officers in a notice to the Administrative Agent. 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.

 

24

 

“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 any
Person or any of its Subsidiaries, or any payment (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account
of the purchase, redemption, retirement, defeasance, acquisition, cancellation
or termination of any such capital stock or other Equity Interest, or on
account of any return of capital to any Person’s stockholders, partners or
members (or the equivalent of any thereof).

 

“S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.

 

“Sarbanes-Oxley”
means the Sarbanes-Oxley Act of 2002.

 

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

 

“Secured Cash Management Agreement” means any Cash Management Agreement
that is entered into by and between the Borrower and any Cash Management Bank.

 

“Secured Hedge Agreement” means any interest rate Swap
Contract required or permitted
under Article VI or VII that is entered into by and between the
Borrower and any Hedge Bank.

 

“Secured Parties” means,
collectively, the Administrative Agent, the Collateral Agent, the Control
Agent, the Lenders, the Hedge Banks, the Cash Management Banks, each co-agent
or sub-agent appointed by the Administrative Agent from time to time pursuant
to Section 9.05, and the other Persons the Obligations owing to
which are or are purported to be secured by the Collateral under the terms of
the Collateral Documents.

 

“Securities
Laws” means the Securities Act of 1933, the Securities Exchange Act of
1934, Sarbanes-Oxley, and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the PCAOB.

 

“Security Agreement” has the
meaning specified in Section 4.01(a)(iii).

 

“Seller”
means Magna Entertainment Corp.

 

“Solvent”
and “Solvency” mean,
with respect to any Person on any date of determination, that on such date
(a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay such debts and liabilities as
they mature, (d) such Person is not engaged in business or a transaction,
and is not about to engage in business or a transaction, for which such Person’s
property would constitute an unreasonably small capital, and (e) such Person is
able to pay its debts and liabilities, contingent obligations and other
commitments as they mature in the

 

25

 

ordinary
course of business. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

 

“Stock
Purchase Agreement” means the Stock Purchase Agreement dated November 8,
2005, between Seller and the Borrower, as amended by the First Amendment to the
Stock Purchase Agreement dated July 26, 2006.

 

“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 securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned 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).

 

“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 (including sale and leaseback
transactions), in each case, creating obligations that do not appear on the
balance sheet of such Person but which, upon the application of any Debtor
Relief Laws to such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

 

26

 

“Tax Amount”
means (a) with respect to any period ending prior to the Closing Date, an
amount equal to the estimated federal income taxes attributable to the Tax
Recipients’ indirect distributive share of the Borrower’s taxable income
(taking into account both items separately stated under Code §702(a)(1) through
(7) and non-separately stated items under Code §702(a)(8)) applying a forty
percent (40%) marginal tax rate, and (b) relative to any period ending on or
after the Closing Date, an amount equal to (i) the lowest aggregate amount of
distributions to the Tax Recipients (based on pro rata distributions to such
Tax Recipients in proportion to their percentage interests under the CCR
operating agreement) such that each Tax Recipient receives an amount sufficient
to equal (x) the amount of taxable income of the Borrower directly or
indirectly allocated to and reported by such Tax Recipient in respect of such
period (taking into account any Code §704(c) items and annualizing the
estimated taxable income (excluding extraordinary items, which shall be taken
into account separately) for distributions with respect to periods of less than
a fiscal year), multiplied by (y) the highest maximum combined marginal
federal, state and local income tax rates to which any Tax Recipient may be
subject (taking into account the deductibility of state income tax for federal
income tax purposes), plus (ii) an additional amount (distributed to the Tax
Recipients pro rata in the proportion to their percentage interests under the CCR
operating agreement) such that, after giving effect to distributions of such
additional amount, each Tax Recipient will satisfy the safe harbor for
estimated tax payments based on prior year tax liability under Code §§6654 or
6655 (and analogous state or local provisions) assuming that each Tax Recipient’s
only income was from the Borrower.

 

“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.

 

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

 

“Temporary
Casino” means the casino constructed in accordance with the Construction
Plans on the Meadows Property, which shall include at least 1,800 slot machines.

 

“Threshold Amount” means
$4.0 million.

 

“Timetable”
means the schedule for construction and completion of the Project which has
been prepared by the Borrowers and approved by the Construction Consultant.

 

“Title
Company” shall mean First American Title Company or any other title insurance
company as shall be retained by the Borrower and reasonably acceptable to the
Administrative Agent.

 

“Total Outstandings”
means the aggregate Outstanding Amount of all Loans.

 

“Transaction”
means, collectively, (a) the entering into by the Loan Parties and their
applicable Subsidiaries of the Loan Documents and the Related Documents to
which they are or are intended to be a party, (b) the repayment of the Tranche
A Junior Note (as defined in

 

27

 

the Post-Closing Agreement), (c) the consummation of the transactions contemplated
by the Loan Documents and the Related Documents and (d) the payment of the fees
and expenses incurred in connection with the consummation of the foregoing.

 

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

 

“UCC”
means the Uniform Commercial Code as in effect in the State of New York; provided
that, if perfection or the effect of perfection or non-perfection or the
priority of any security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York,
“UCC” means the Uniform Commercial Code as in effect from time to time in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection, effect of perfection or non-perfection or priority.

 

“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.

 

“U.S. Loan
Party” means any Loan Party that is organized under the laws of one of the
states of the United States of America and that is not a CFC.

 

“Working
Capital” means for any Person, at any date of determination, the amount, if
any, by which the Consolidated Current Assets of such Person at such date of
determination exceeds the Consolidated Current Liabilities of such Person at
such date.

 

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, Preliminary Statements, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Preliminary

 

28

 

Statements, 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,
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 and
customary for gaming operations substantially similar to the Project, 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 Required 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 Required 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 Eastern time (daylight or
standard, as applicable).

 

29

 

1.06.        [Reserved].

 

1.07.        Currency Equivalents Generally. Any amount specified in this
Agreement (other than in Articles II, IX and X) or any of
the other Loan Documents to be in Dollars shall also include the equivalent of
such amount in any currency other than Dollars, such equivalent amount thereof
in the applicable currency to be determined by the Administrative Agent at such
time on the basis of the Spot Rate (as defined below) for the purchase of such
currency with Dollars. For purposes of this Section 1.07, the “Spot
Rate” for a currency means the rate determined by the Administrative Agent
to be the rate quoted by the Person acting in such capacity as the spot rate
for the purchase by such Person of such currency with another currency through
its principal foreign exchange trading office at approximately 11:00 a.m. on
the date two Business Days prior to the date of such determination; provided
that the Administrative Agent may obtain such spot rate from another financial
institution designated by the Administrative Agent if the Person acting in such
capacity does not have as of the date of determination a spot buying rate for
any such currency.

 

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01.        The
Loans.

 

(a)           [Reserved].

 

(b)           The Borrowing. Subject
to the terms and conditions set forth herein, each Lender severally agrees to
make a Loan to the Borrower on the Closing
Date in an amount not to exceed such Lender’s Commitment. The Borrowing shall consist of Loans
made simultaneously by the Lenders in accordance with their respective
Commitments. Amounts borrowed under this Section 2.01(b) and repaid
or prepaid may not be reborrowed. Loans may be Base Rate Loans or Eurodollar
Rate Loans as further provided herein.

 

(c)           [Reserved].

 

2.02.        Borrowings,
Conversions and Continuations of Loans.

 

(a)           Each Loan, each
conversion from one Type to the other, and each continuation of Eurodollar Rate
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 2.02(a)
must be confirmed promptly by delivery to the Administrative Agent of a written
Committed 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. Each Borrowing of or conversion to
Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple
of $100,000 in excess thereof. Each Committed Loan Notice (whether telephonic

 

30

 

or written) shall specify (i)
whether the Borrower is requesting a conversion of Loans from one Type to the
other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of
the Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Loans to be borrowed, converted or
continued, (iv) the Type of Loans to be borrowed or to which Loans are to be
converted, and (v) if applicable, the duration of the Interest Period with
respect thereto. If the Borrower fails to specify a Type of Loan in a Committed
Loan Notice or if the Borrower fails to give a timely notice requesting a
conversion or continuation, then new borrowings of the Loans shall be made as, Base
Rate Loans and previously outstanding Loans will continue as the same Type with
an Interest Period of one month unless notice otherwise is given timely to the
Administrative Agent. If the Borrower requests a Borrowing of, conversion to,
or continuation of Eurodollar Rate Loans in any such Committed 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
Committed Loan Notice, the Administrative Agent shall promptly notify each
Lender of the amount of its Applicable Percentage of the Loan, 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 Section 2.02(a). Each
Appropriate Lender 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
Committed Loan Notice. Upon satisfaction of the applicable conditions set forth
in 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 the
Administrative Agent 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.

 

(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 Required Lenders.

 

(d)           The Administrative
Agent shall promptly notify the Borrower and the Lenders funding such Loans 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.

 

(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 5
Interest Periods in effect in respect of the Loans.

 

2.03.        [Reserved].

 

2.04.        [Reserved].

 

31

 

2.05.        Prepayments.

 

(a)           Optional. Upon
and after Discharge of First Lien Obligations or as allowed by the First Lien
Credit Agreement, the Borrower may, upon notice to the Administrative Agent, at
any time prepay the Loans, in whole or in part without premium or penalty; provided
that (A) such notice must be received by the Administrative Agent not later than
11:00 a.m. (1) three Business Days prior to any date of prepayment of
Eurodollar Rate Loans and (2) on the date of prepayment of Base Rate Loans;
(B) any prepayment of Eurodollar Rate Loans shall be in a principal amount
of $1,000,000 or a whole multiple of $1,000,000 in excess thereof; and (C) any
prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a
whole multiple of $100,000 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 and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s)
of such Loans. The Administrative Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender’s ratable portion
of such prepayment (based on such Lender’s Applicable Percentage in respect of
the Loan). 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
prepayment of the outstanding Loans pursuant to this Section 2.05(a)
shall be paid to the Lenders in accordance with their respective Applicable
Percentages.

 

(b)           Mandatory. Upon
and after Discharge of First Lien Obligations:

 

(i)            Within five Business Days after financial
statements have been delivered pursuant to Section 6.01(a) and the
related Compliance Certificate has been delivered pursuant to Section
6.02(b), the Borrower shall prepay an aggregate principal amount of Loans equal
to the excess (if any) of (A) 50% of Excess Cash Flow for the fiscal year
covered by such financial statements over (B) the aggregate principal
amount of Loans prepaid pursuant to Section 2.05(a) (such mandatory prepayments
to be applied as set forth in clauses (vi) and (ix) below).

 

(ii)           If the Borrower or any of its Subsidiaries
Disposes of any property (other than any Disposition of any property permitted
by Sections 7.05(a) - (f)) which results in the realization by
such Person of Net Cash Proceeds, the Borrower shall prepay an aggregate
principal amount of Loans equal to 100% of such Net Cash Proceeds immediately
upon receipt thereof by such Person (such prepayments to be applied as set
forth in clauses (vi) and (ix) below).

 

(iii)          Upon the sale or issuance by the Borrower or any of its
Subsidiaries of any of its Equity Interests (other than Excluded Issuances and
any sales or issuances of Equity Interests to another Loan Party), the Borrower
shall prepay an aggregate principal amount of Loans equal to 100% of all Net
Cash Proceeds received therefrom immediately upon receipt thereof by the Borrower or such Subsidiary (such
prepayments to be applied as set forth in clauses (vi) and (ix) below).

 

32

 

(iv)          Upon the incurrence or issuance by the Borrower or any of its
Subsidiaries of any Indebtedness (other than Indebtedness permitted to be
incurred or issued pursuant to Section 7.02), the Borrower shall prepay
an aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds
received therefrom immediately upon receipt thereof by the Borrower or such Subsidiary (such prepayments to be applied as
set forth in clauses (vi) and (ix) below).

 

(v)           Upon any Extraordinary Receipt received by
or paid to or for the account of the
Borrower or any of its Subsidiaries, and not otherwise included in
clause (ii), (iii) or (iv) of this Section 2.05(b), the Borrower shall
prepay an aggregate principal amount of Loans equal to 100% of all Net Cash
Proceeds received therefrom immediately upon receipt thereof by the Borrower or such Subsidiary (such
prepayments to be applied as set forth in clauses (vi) and (ix) below).

 

(vi)          Each prepayment of Loans pursuant to the
foregoing provisions of this Section 2.05(b) shall be applied to the
type of Loan or Borrowing as designated by the Borrower.

 

(vii)         Notwithstanding any of the other provisions of clause (ii), (iii), (iv) or (v) of
this Section 2.05(b), so long as no Default shall have occurred and be
continuing, if, on any date on which a prepayment would otherwise be required
to be made pursuant to clause (ii), (iii), (iv) or (v) of this Section 2.05(b),
the aggregate amount of Net Cash Proceeds required by such clause to be applied
to prepay Loans on such date is less than or equal to $2,000,000, the Borrower
may defer such prepayment until the first date on which the aggregate amount of
Net Cash Proceeds or other amounts otherwise required under clause (ii), (iii),
(iv) or (v) of this Section 2.05(b) to be applied to prepay Loans
exceeds $1,000,000. Upon the occurrence of a Default during any such deferral
period, the Borrower shall immediately prepay the Loans in the amount of all
Net Cash Proceeds received by the Borrower and other amounts, as applicable,
that are required to be applied to prepay Loans under this Section 2.05(b)
(without giving effect to the first and second sentences of this
clause (vii)) but which have not previously been so applied.

 

(viii)        [Reserved].

 

(ix)           [Reserved].

 

2.06.        Termination
or Reduction of Commitments.

 

(a)           [Reserved].

 

(b)           Mandatory. The aggregate Commitments shall be automatically and permanently
reduced to zero on the date of the Borrowing.

 

(c)           Prepayment Premium.
Each prepayment pursuant to Section 2.05(a) and any refinancings in whole
or in part of the Loans made (i) prior to the first anniversary of the Closing
Date shall be accompanied by a premium equal to 2% of the aggregate principal
amount of the Loans being prepaid and (ii) on or after the first anniversary of
the Closing Date and prior

 

33

 

to the second anniversary of
the Closing Date shall be accompanied by a premium equal to 1% of the aggregate
principal amount of the Loans being prepaid.

 

2.07.        Repayment of Loans.
The Borrower shall repay to the Lenders the aggregate principal amount of all
Loans outstanding on the Maturity Date.

 

2.08.        Interest.

 

(a)           Subject to the
provisions of Section 2.08(b), (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; and (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.

 

(b)           (i)  If any amount of principal of any Loan is not
paid when due, 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, whether
at stated maturity, by acceleration or otherwise, then upon the request of the
Required 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 Required 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.

 

2.09.        Fees.

 

(a)           The Borrower shall pay
the amounts required to be paid under the Fee Letter in the amounts and at the
times specified therein. Such fees shall be fully earned when paid and shall
not be refundable for any reason whatsoever.

 

(b)           The Borrower shall pay
to the Lenders such fees as shall have been separately agreed upon in writing
in the amounts and at the times so specified. Such fees shall be fully earned
when paid and shall not be refundable for any reason whatsoever.

 

34

 

2.10.        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 2.12(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.

 

2.11.        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 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)           [Reserved].

 

2.12.        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
Applicable Percentage in respect of the Loan (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 on computing interest or fees, as the case may be.

 

35

 

(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 of Eurodollar
Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00
noon on the date of such 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 2.02 (or, in the case of a Borrowing of Base
Rate Loans, that such Lender has made such share available in accordance with
and at the time required by Section 2.02) 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 Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the Administrative
Agent in connection with the foregoing, 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 time at which any payment is due to the
Administrative Agent for the account of the Lenders 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 Appropriate Lenders, 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 Appropriate Lenders, as the case may be, severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender, 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

 

36

 

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 and
to make payments pursuant to Section 11.04(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 11.04(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 responsible for the failure of any
other Lender to so make its Loan, to purchase its participation or to make its
payment under Section 11.04(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.

 

(f)            Insufficient Funds.
If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (i) first, toward
payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due
to such parties, and (ii) second, toward payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.

 

2.13.        Sharing of Payments by
Lenders. If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of (a) Obligations due and
payable to such Lender hereunder and under the other Loan Documents at such
time in excess of its ratable share (according to the proportion of (i) the
amount of such Obligations due and payable to such Lender at such time to (ii)
the aggregate amount of the Obligations due and payable to all Lenders
hereunder and under the other Loan Documents at such time) of payments on account
of the Obligations due and payable to all Lenders hereunder and under the other
Loan Documents at such time obtained by all the Lenders at such time or (b)
Obligations owing (but not due and payable) to such Lender hereunder and under
the other Loan Documents at such time in excess of its ratable share (according
to the proportion of (i) the amount of such Obligations owing (but not due and
payable) to such Lender at such time to (ii) the aggregate amount of the
Obligations owing (but not due and payable) to all Lenders hereunder and under
the other Loan Parties at such time) of payment on account of the Obligations
owing (but not due and payable) to all Lenders hereunder and under the other
Loan Documents at such time obtained by all of the Lenders at such time 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 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

 

37

 

amount of
Obligations then due and payable to the Lenders or owing (but not due and
payable) to the Lenders, as the case may be, 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 (A) any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or (B) any payment obtained
by a Lender as consideration for the assignment of or sale of a participation
in any of its 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).

 

The Borrower 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 the Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower
in the amount of such participation.

 

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 a Loan
Party 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 or any Lender, as the case
may be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the applicable Loan Party shall make such deductions
and (iii) the applicable Loan Party 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 Loan Parties shall indemnify the Administrative Agent and
each Lender, within 30 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 or such Lender, as the case may be, and any
penalties, interest and reasonable expenses

 

38

 

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;
provided, however, that the Loan Parties shall have no liability
hereunder in respect of penalties, interest and other liabilities attributable
to any Indemnified Taxes or Other Taxes if such penalties, interest or other liabilities
are attributable to the gross negligence or willful misconduct of an Administrative
Agent or Lender. A certificate as to the amount of such payment or liability
delivered to the Borrower (or applicable Loan Party) by a Lender (with a copy
to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender, shall be conclusive absent manifest error.

 

(d)           Evidence of Payments.
As soon as practicable after any payment of Indemnified Taxes or Other Taxes by
a Loan Party to a Governmental Authority, the Loan Party 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
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, if 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, (A) a certificate to the effect that such Foreign Lender is not (1) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (2) a “10 percent
shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the
Code, or (3) a “controlled foreign corporation” described in section

 

39

 

881(c)(3)(C) of the Code and (B) 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 or any Lender determines, in
its sole discretion, that it has received a refund of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by a Loan Party or with respect
to which a Loan Party has paid additional amounts pursuant to this Section, it
shall pay to the Loan Party an amount equal to such refund (but only to the
extent of indemnity payments made, or additional amounts paid, by the Loan
Party under this Section with respect to the Indemnified Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of the Administrative
Agent or such Lender, as 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 Loan Party, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to
the Loan Party (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Administrative Agent or such Lender
if the Administrative Agent or such Lender is required to repay such refund to
such Governmental Authority. This subsection shall not be construed to require
the Administrative Agent or any Lender to make available its tax returns (or
any other information relating to its taxes that it deems confidential) to the Loan
Parties 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 Required 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,

 

40

 

(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 such 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 Required 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 Committed Borrowing of Base Rate Loans in the amount specified
therein.

 

3.04.        Increased
Costs; Reserves on Eurodollar Rate Loans.

 

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

 

(i)            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));

 

(ii)           subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Loan made by it hereunder, or
change the basis of taxation of payments to such Lender 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
such Lender); or

 

(iii)          impose on any Lender or the London interbank
market any other condition, cost or expense affecting this Agreement or Eurodollar
Rate Loans made hereunder by such Lender;

 

and the result
of any of the foregoing shall be to increase the cost to such Lender of making
or maintaining any Loan (or of maintaining its obligation to make any such
Loan),  or to reduce the amount of any
sum received or receivable by such Lender hereunder (whether of principal,
interest or any other amount) then, upon written request of such Lender, the Borrower
will pay to such Lender, as the case may be, such additional amount or amounts
as will compensate such Lender, as the case may be, for such additional costs
incurred or reduction suffered following the receipt of such request.

 

(b)           Capital Requirements.
If any Lender determines that any Change in Law affecting such Lender or any
Lending Office of such Lender or such Lender’s holding company, if any, regarding
capital requirements has or would have the effect of reducing the rate of
return on such Lender’s or on the capital of such Lender’s holding company, if
any, as a consequence of this Agreement, the Commitments of such Lender or the
Loans made by such Lender, to a level below that which such Lender or such
Lender’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s policies and the policies of such Lender’s
holding company with respect to capital adequacy), then from time to time the

 

41

 

Borrower will pay to such
Lender, as the case may be, upon the written request of such Lender, such
additional amount or amounts as will compensate such Lender or such Lender’s
holding company for any such reduction suffered.

 

(c)           Certificates for
Reimbursement. A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender 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
such Lender, 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 to demand compensation pursuant to the
foregoing provisions of this Section shall not constitute a waiver of such
Lender’s right to demand such compensation, provided that the Borrower
shall not be required to compensate a Lender pursuant to the foregoing
provisions of this Section for any increased costs incurred or reductions suffered
more than six months prior to the date that such Lender, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’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 six-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 such 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 such Lender (as determined by such
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 such 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 such Lender for and hold such
Lender harmless from any loss, cost or expense incurred by it as a result of:

 

(a)           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);

 

(b)           any failure by the Borrower (for a reason
other than the failure of such 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

 

42

 

(c)           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 11.13;

 

including any
loss of anticipated profits and any loss or expense arising directly, in each
case, 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 such 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.

 

(a)           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 such 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 such 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 such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

 

(b)           Replacement of
Lenders. If any Lender requests compensation under Section 3.04, 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 or if any Lender ceases to make available Eurodollar Rate Loans
pursuant to Section 3.02, the Borrower may replace such Lender in
accordance with Section 11.13.

 

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

 

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSION

 

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

 

43

 

(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 and
each Guaranty, sufficient in number for distribution to the Administrative
Agent, each Lender and the Borrower;

 

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

 

(iii)          a pledge
and security agreement, in substantially the form of Exhibit G
(together with each other pledge and
security agreement delivered pursuant to Sections 6.12 and 6.15,
in each case as amended, the “Security Agreement”), duly executed by
each Loan Party, together with:

 

(A)          certificates
representing the Pledged Equity referred to therein accompanied by undated
stock powers executed in blank and instruments evidencing the Pledged Debt indorsed
in blank,

 

(B)           proper Financing
Statements in form appropriate for filing under the Uniform Commercial Code of
all jurisdictions that the Administrative Agent may deem necessary or desirable
in order to perfect the Liens created under the Security Agreement, covering
the Collateral described in the Security Agreement,

 

(C)           completed requests for
information, dated on or before the date of the initial Credit Extension,
listing all effective financing statements and other evidence of liens filed in
the jurisdictions referred to in clause (B) above and in each other
jurisdiction requested by the Administrative Agent that name any Loan Party as
debtor, together with copies of such other financing statements,

 

(D)          evidence of the
completion of all other actions, recordings and filings of or with respect to
the Security Agreement that the Administrative Agent may deem necessary or
desirable in order to perfect the Liens created thereby,

 

(E)           the Account Control
Agreements and the Securities Account Control Agreement, in each case as
referred to in the Security Agreement and duly executed by the appropriate
parties, and

 

(F)           evidence that all other
action that the Administrative Agent may deem necessary or desirable in order
to perfect the Liens created under

 

44

 

the Security Agreement has been taken
(including receipt of duly executed payoff letters, UCC-3 termination
statements and landlords’ and bailees’ waiver and consent agreements);

 

(iv)          deeds of trust, trust deeds, deeds to secure
debt, mortgages, or any other document, creating and evidencing a Lien on any
Mortgaged Property (as defined in the Collateral Documents), in substantially
the form of Exhibit H (with such changes as may be satisfactory to
the Administrative Agent and its counsel to account for local law matters) and
covering the properties listed on Schedule
4.01(a)(iv) (together with the Assignments of Leases and Rents
referred to therein and each other mortgage delivered pursuant to Section
6.12 or Section 6.15, in each case as amended, the “Mortgages”), duly executed by the appropriate
Loan Party, together with:

 

(A)          evidence that
counterparts of the Mortgages have been duly executed, acknowledged and
delivered and are in form suitable for filing or recording in all filing or
recording offices that the Administrative Agent may deem necessary or desirable
in order to create a valid first and subsisting Lien on the property described
therein in favor of the Administrative Agent for the benefit of the Secured
Parties and that all filing, documentary, stamp, intangible and recording taxes
and fees have been paid,

 

(B)           fully paid American
Land Title Association Lender’s Extended Coverage title insurance policies (the
“Mortgage
Policies”) in form and substance, with endorsements and in amounts not
less than $6.5 million, issued, coinsured and reinsured by a Title Company acceptable
to the Administrative Agent, insuring the Mortgages to be valid first and
subsisting Liens on the property and described therein, free and clear of all defects
(including, but not limited to, mechanics’ and materialmen’s Liens) and
encumbrances, excepting only Permitted Encumbrances and other Liens permitted
under the Loan Documents, and providing for such other affirmative insurance
(including endorsements for future advances under the Loan Documents, for
mechanics’ and materialmen’s Liens and for zoning of the applicable property) and
on matters relating to first loss dollar, contiguity, revolving credit,
non-imputation, public road access, survey, variable rate, environmental lien,
mortgage recording tax, separate tax lot, so-called comprehensive coverage over
covenants and restrictions, and a “tie-in” or “cluster” endorsement, if
available under applicable Law (i.e. policies which insure against losses
regardless of location on allocated value of the insured property up to a
stated maximum coverage amount) and such coinsurance and direct access
reinsurance as the Administrative Agent may deem necessary or desirable,

 

(C)           American Land Title
Association form surveys, for which all necessary fees (where applicable) have
been paid, and dated as of a date acceptable to the Administrative Agent,
certified to the Administrative

 

45

 

Agent and the issuer of the Mortgage Policies
in a manner satisfactory to the Administrative Agent by a land surveyor duly
registered and licensed in the State in which the property described in such
surveys is located and acceptable to the Administrative Agent, showing all
buildings and other improvements, any off-site improvements, the location of
any easements, parking spaces, rights of way, building set-back lines and other
dimensional regulations and the absence of encroachments, either by such improvements
or on to such property, and other defects, other than encroachments and other
defects acceptable to the Administrative Agent,

 

(D)          [Reserved],

 

(E)           with respect to each
property to be subject to a Mortgage, such affidavits, certificates,
information (including financial data) and instruments of identification
(including a so-called “gap” indemnification) as shall be required to induce
the Title Company to issue the title insurance policy/ies and endorsements
contemplated above,

 

(F)           evidence reasonably
acceptable to the Administrative Agent of payment by Borrower of all required
title insurance policy premiums, search and examination charges, escrow charges
and related charges, mortgage recording taxes, fees, charges, costs and
expenses required for the recording of the Mortgages and issuance of title
insurance policies referred to above,

 

(G)           with respect to the Real
Property, copies of all Leases or other agreements relating to possessory
interests, if any. To the extent any of the foregoing affect any property to be
subject to a Mortgage with respect to which the Borrower or any Subsidiary
holds the lessor’s interest, such agreement shall be subordinate to the Lien of
the Mortgage to be recorded against such property, either expressly by its
terms or pursuant to a subordination, non-disturbance and attornment agreement,
and shall otherwise be acceptable to the Administrative Agent,

 

(H)          with respect to each
property to be subject to a Mortgage, each Loan Party and each of their
Subsidiaries shall have made all notifications, registrations and filings, to
the extent required by, and in accordance with, all Governmental Real Property
Disclosure Requirements applicable to such property,

 

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

 

(J)            evidence that all
other action that the Administrative Agent may deem necessary or desirable in
order to create valid first and subsisting Liens on the property described in
the Mortgages has been taken,

 

46

 

(K)          a competed Federal
Emergency Management Agency Standard Flood Hazard Determination with respect to
each property to be subject to a Mortgage, and

 

(L)           with respect to each
Real Property subject to a Mortgage, appraisals that satisfy the applicable
requirements of the Real Estate Appraisal Reform Amendments of FIRREA and are
otherwise in form and substance satisfactory to the Administrative Agent;

 

(v)           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 or is to be a
party;

 

(vi)          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 Guarantors 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;

 

(vii)         a favorable opinion of Munger, Tolles &
Olson LLP, counsel to the Loan Parties, addressed to the Administrative Agent
and each Lender, as to the matters set forth in Exhibit J-1 and
such other matters concerning the Loan Parties and the Loan Documents as the
Required Lenders may reasonably request;

 

(viii)        a favorable opinion of Fox Rothschild LLP,
local counsel to the Loan Parties in Pennsylvania, addressed to the Administrative
Agent and each Lender, as to the matters set forth in Exhibit J-2
and such other matters concerning the Loan Parties and the Loan Documents as
the Required Lenders may reasonably request;

 

(ix)           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, 2004 that has had or could be
reasonably expected to have, either individually or in the aggregate, a
Material Adverse Effect;

 

(x)            certificates attesting to the Solvency of
each Loan Party before and after giving effect to the Transaction, from its
chief financial officer;

 

(xi)           an environmental assessment report, in form
and substance satisfactory to the Lenders from an environmental consulting firm
acceptable to the Lenders, which report shall identify existing and potential
environmental concerns

 

47

 

and shall quantify related costs and
liabilities, associated with any facilities of the Borrower, the Company or any
of their respective Subsidiaries, and the Lenders shall be satisfied with the
nature and amount of any such matters and with the Borrower’s plans with respect thereto;

 

(xii)          certified copies of each employment agreement
and other compensation arrangement with each executive officer of any Loan Party or any of its Subsidiaries as
the Administrative Agent shall request;

 

(xiii)         evidence
that all insurance required to be maintained pursuant to the Loan Documents has
been obtained and is in effect, together with the certificates of
insurance, naming the Collateral Agent, on behalf of the Secured Parties, as an
additional insured or loss payee, as the case may be, under all insurance
policies maintained with respect to the assets and properties of the Loan
Parties that constitutes Collateral;

 

(xiv)        certified copies of the Related Documents (including,
without limitation, the Holdback Agreement), duly executed by the parties
thereto and in form and substance satisfactory to the Lenders, together with
all agreements, instruments and other documents delivered in connection
therewith as the Administrative Agent shall request;

 

(xv)         such other assurances, certificates,
documents, consents or opinions as the Administrative Agent or any Lender
reasonably may require;

 

(xvi)        the Intercreditor Agreement, duly executed by
the parties thereto; and

 

(xvii)       a management fee subordination agreement, duly
executed by Millennium, in substantially the form of Exhibit M.

 

(b)           (i) All fees required to be paid to the
Administrative Agent and the Arrangers on or before the Closing Date shall have
been paid and (ii) all fees required to be paid to the Lenders on or before the
Closing Date shall have been paid.

 

(c)           Unless waived by the Administrative Agent,
the Borrower shall have paid all fees, charges and disbursements of counsel to
the Administrative Agent (directly to such counsel if requested by 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).

 

(d)           The Closing Date shall have occurred on or
before December 31, 2006.

 

48

 

(e)           All of the information made available to the
Administrative Agent prior to July 20, 2006 shall be complete and correct in
all material respects; and no changes or developments shall have occurred, and
no new or additional information shall have been received or discovered by the
Administrative Agent or the Lenders regarding the Borrower, the Acquired
Companies or the Transaction after July 20, 2006 that either individually
or in the aggregate could reasonably be expected to have a “Material Adverse
Effect” (as defined in the Related Documents).

 

(f)            Each of the Holdback Agreement (as defined
in the Post-Closing Agreement) and the Equity Guarantee shall be in full force
and effect.

 

(g)           The “Second Closing” under the Post-Closing
Agreement shall have been consummated (or shall be concurrently consummated)
strictly in accordance with the terms thereof, without any waiver or amendment
not consented to by the Lenders of any term, provision or condition set forth
therein, and in compliance with all applicable requirements of Law.

 

(h)           From November 1, 2006 to the Closing Date, the
Borrower shall have received not less than $50.0 million in cash proceeds from
capital contributions to its equity from funds invested by OCM in CCR and
contributed to Borrower.

 

(i)            The Lenders shall be satisfied as to all
intercompany indebtedness and all indebtedness and other liabilities of the
Acquired Companies to third parties that are to remain outstanding following
the Closing Date.

 

(j)            The expiration or termination of the requisite
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
shall have occurred and no Governmental Authority (as defined in the Related
Documents) shall have enacted, promulgated, enforced or entered any
Governmental Order (as defined in the Related Documents) which is in effect and
has the effect of making the transactions contemplated by the Related Documents
illegal, otherwise restraining or prohibiting consummation of such transactions
or causing any of such transactions to be rescinded following completion,
thereof. Borrower shall have received final approval (excluding any appeal
period, if applicable) from the “Commission” (as defined in the Stock Purchase
Agreement) of (x) the purchase of the Acquired Companies by Borrower and
(y) the management of the racing operations of the “Meadows Facility” (as
defined in the Stock Purchase Agreement) under the Racing Services Agreement. Either
(i) the “Gaming Board” (as defined in the Stock Purchase Agreement) shall have
issued a Pennsylvania Gaming License to any of the Acquired Companies or (ii) the
Gaming Board shall have approved the issuance of a Pennsylvania Gaming License
to any of the Acquired Companies, and the Arrangers  shall be reasonably satisfied with the
conditions contained in such approval. Since July 20, 2006, there shall not
have been any gaming law, rule or regulation enacted, or any interpretation of
an existing gaming law, rule or regulation announced, that restricts in any
material respect (or requires a license with respect to) the ability of a
lender to assign or participate in interest in the Loan.

 

49

 

(k)           The Lenders shall have received:  (A) an audited combined balance sheet of the
Acquired Companies and their subsidiaries (excluding the “Excluded Subsidiaries”
as defined in the Stock Purchase Agreement) as of December 31, 2005 and
audited statements of income, cash flows and equity for the year then ended at
least 15 days prior to the Closing Date; and (B) an unaudited combined balance
sheet of the Acquired Companies and their subsidiaries (excluding the “Excluded
Subsidiaries” as defined in the Stock Purchase Agreement) as of each quarter
ending at least 45 days prior to the Closing Date, together with the related
unaudited statements of income, cash flows and equity; and (C) and pro forma
combined financial statements of the Borrower and its Subsidiaries after giving
Effect to the Transaction as of the dates, and for the periods, set forth in
clause (B) above; and (D) forecasts prepared by management of the Borrower,
each in form satisfactory to the Lenders, of balance sheets, income statements
and cash flow statements for (i) each fiscal quarter for the first year
following the Closing Date and (ii) for each year thereafter.

 

(l)            The Loan shall have received ratings from
Moody’s Investors Service, Inc. and Standard & Poor’s, a division of The
McGraw-Hill Companies, Inc., at least 20 days prior to the Closing Date.

 

(m)          The Borrower shall have deposited $50.0
million in a cash collateral account for the purpose of cash collateralizing
the Licensing Fee L/C.

 

(n)           The Borrower shall have received not less
than $180.0 million cash proceeds from the advance of the First Lien Loans.

 

(o)           A complete information memorandum shall have
been provided for use in syndicating the Loan at least 30 days prior to the
Closing Date.

 

(p)           All contracts, subcontracts and lease
agreements related to (x) road improvement cost related to the Temporary Casino
and (y) a “sprung structure” to house the Temporary Casino (the “Construction
Contracts”), shall not collectively exceed an aggregate amount of $39.6
million, and in each case shall be on terms reasonably satisfactory to the
Arrangers and the Administrative Agent.

 

(q)           The terms of the construction reserve, the
Budget, the Timetable and the Plans and Specifications (the collectively, “Construction
Plans”) with respect to the Temporary Casino and related road improvements shall
be reasonably satisfactory to the Construction Consultant, the Arrangers and
the Administrative Agent.

 

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.

 

50

 

4.02.        Conditions to All
Credit Extensions. The obligation of each Lender to honor any Request for
Credit Extension (other than a Committed 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 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 Sections 5.05(a)
and (b) shall be deemed to refer to the most recent statements furnished
pursuant to Sections 6.01(a) and (b), respectively.

 

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

 

(c)           [Reserved].

 

(d)           The Administrative Agent shall have received
such other approvals, opinions or documents as any Lender through the
Administrative Agent may reasonably request.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

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

 

5.01.        Existence,
Qualification and Power. Each Loan Party and each of its Subsidiaries (a)
is duly organized or formed, validly existing and, as applicable, 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 or lease its assets
and carry on its business and (ii) execute, deliver and perform its obligations
under the Loan Documents and Related Documents to which it is a party and
consummate the Transaction, and (c) is duly qualified and is licensed and, as
applicable, 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; except as set forth on Schedule 5.01
or in each case referred to in clause (b)(i) or (c), 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 and Related Document to which such Person is or is to be
a 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

 

51

 

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.

 

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 (a) the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document or Related
Document, or for the consummation of the Transaction, (b) the grant by any
Loan Party of the Liens granted by it pursuant to the Collateral Documents,
(c) the perfection or maintenance of the Liens created under the
Collateral Documents (including the first priority nature thereof) or
(d) the exercise by the Administrative Agent or any Lender of its rights
under the Loan Documents or the remedies in respect of the Collateral pursuant
to the Collateral Documents, except for
the authorizations, approvals, actions, notices and filings listed on Schedule 5.03,
all of which have been duly obtained, taken, given or made and are in full
force and effect except as provided thereon. Except as set forth on Schedule
5.03, all applicable waiting periods in connection with the Transaction
have expired without any action having been taken by any Governmental Authority
restraining, preventing or imposing materially adverse conditions upon the
Transaction or the rights of the Loan Parties or their Subsidiaries freely to
transfer or otherwise dispose of, or to create any Lien on, any properties now
owned or hereafter acquired by any of them.

 

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; No Internal Control Event.

 

(a)           To the knowledge of the
Borrower, the Audited Financial Statements (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 Acquired Companies 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.

 

(b)           To the knowledge of the
Borrower, the unaudited combined balance sheet of the Acquired Companies dated September
30, 2006, and the related combined statements of income or operations,
shareholders’ equity and cash flows for the fiscal quarter ended on that date as
set forth on Schedule 5.05(b) (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
Acquired Companies 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.

 

52

 

(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)           To the best knowledge
of the Borrower, no Internal Control Event exists or has occurred since the
date of the Audited Financial Statements that has resulted in or could
reasonably be expected to result in a misstatement in any material respect, in
any financial information delivered or to be delivered to the Administrative
Agent or the Lenders, of (i) covenant compliance calculations provided hereunder
or (ii) the assets, liabilities, financial condition or results of operations
of the Borrower and its Subsidiaries on a consolidated basis.

 

(e)           The consolidated pro
forma balance sheet of the Borrower
and its Subsidiaries as at September 30, 2006, and the related
consolidated pro forma statements of income and cash flows of the Borrower
and its Subsidiaries for the twelve months then ended as set forth on Schedule
5.05(e), certified by the chief financial officer or treasurer of the
Borrower, copies of which have been furnished to each Lender, fairly present
the consolidated pro forma financial condition of the Borrower and its Subsidiaries as at such date and the
consolidated pro forma results of operations of the Borrower and its Subsidiaries for the period ended on such
date, in each case giving effect to the Transaction, all in accordance with
GAAP.

 

(f)            The consolidated
forecasted balance sheets,
statements of income and cash flows of the
Borrower and its Subsidiaries delivered pursuant to Section 4.01
or Section 6.01(d) 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
condition and performance.

 

5.06.        Litigation. There
are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Borrower, threatened, 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, any other Loan Document, any Related
Document or the consummation of the Transaction, or (b) either individually or
in the aggregate, if determined adversely, could reasonably be expected to have
a Material Adverse Effect.

 

5.07.        No Default. Neither
any Loan Party nor any Subsidiary thereof is in default under or with respect to
any Contractual Obligation 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.

 

5.08.        Liens; Investments.

 

(a)           Each Loan Party and
each of its Subsidiaries 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.

 

53

 

(b)           Neither the businesses
nor the properties of any Loan Party or any of its Subsidiaries are affected by
any Casualty Event. No Loan Party or any of its Subsidiaries has received any
notice of, not has any knowledge of, the occurrence or pendency or
contemplation of any Casualty Event affecting all or any portion of its
property. No Mortgage encumbers improved Real Property that is located in an
area that has been identified by the Secretary of Housing and Urban
Developments as an area having special flood hazards within the meaning of the
National Flood Insurance Act of 1968 unless flood insurance available under
such Act has been obtained in accordance with Section 6.07.

 

(c)           Schedule 5.08(c)
sets forth a complete and accurate list of all Liens on the property or assets
of each Loan Party and each of its Subsidiaries, showing as of the date hereof
the lienholder thereof and the property or assets of such Loan Party or such
Subsidiary subject thereto. The property of each Loan Party and each of its
Subsidiaries is subject to no Liens, other than Liens set forth on Schedule 5.08(c),
and as otherwise permitted by Section 7.01.

 

(d)           Schedule 5.08(d)
sets forth a complete and accurate list of all Real Property owned by each Loan
Party and each of its Subsidiaries, showing as of the date hereof the street
address, county or other relevant jurisdiction, state, record owner and book
value thereof. Each Loan Party and each of its Subsidiaries has good,
marketable and insurable fee simple title to the Real Property owned by such
Loan Party or such Subsidiary, free and clear of all Liens, other than Liens
created or permitted by the Loan Documents.

 

(e)           (i)  Schedule 5.08(e)(i) sets forth a
complete and accurate list of all leases of Real Property under which any Loan
Party or any Subsidiary of a Loan Party is the Lessee or guarantee, showing as
of the date hereof the street address, county or other relevant jurisdiction,
state, lessor, lessee, expiration date and annual rental cost thereof. Each
such lease is the legal, valid and binding obligation of the lessor thereof,
enforceable in accordance with its terms, except where the failure thereof
could not reasonably be expected to have a Material Adverse Effect.

 

(ii)           Schedule 5.08(e)(ii) sets forth a
complete and accurate list of all Leases of Real Property under which any Loan
Party or any Subsidiary of a Loan Party is the lessor or guarantor, showing as
of the date hereof the street address, county or other relevant jurisdiction,
state, lessor, lessee, expiration date and annual rental cost thereof. Each
such lease is the legal, valid and binding obligation of the lessee or
guarantee thereof, enforceable in accordance with its terms, except where the
failure thereof could not reasonably be expected to have a Material Adverse Effect.

 

(f)            Schedule 5.08(f)
sets forth a complete and accurate list of all Investments held by any Loan
Party or any Subsidiary of a Loan Party on the date hereof, showing as of the
date hereof the amount, obligor or issuer and maturity, if any, thereof.

 

5.09.        Environmental Compliance.

 

(a)           Based upon a review of
the effect of existing Environmental Laws and claims alleging potential
liability or responsibility for violation of any Environmental Law on the
businesses, operations and properties of the Loan Parties and their respective
Subsidiaries, the

 

54

 

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.

 

(b)           Except as otherwise set
forth in Schedule 5.09, to the best knowledge of the Borrower (i) none
of the properties currently or formerly owned or operated by any Loan Party or
any of its Subsidiaries is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or is adjacent to any
such property; (ii) there are no and never have been any underground or
above-ground storage tanks or any surface impoundments, septic tanks, pits,
sumps or lagoons in which Hazardous Materials are being or have been treated,
stored or disposed on any property currently owned or operated by any Loan
Party or any of its Subsidiaries or, to the best of the knowledge of the Loan
Parties, on any property formerly owned or operated by any Loan Party or any of
its Subsidiaries; (iii) there is no asbestos or asbestos-containing material on
any property currently owned or operated by any Loan Party or any of its
Subsidiaries; and (iv) Hazardous Materials have not been released, discharged
or disposed of on any property currently or formerly owned or operated by any
Loan Party or any of its Subsidiaries.

 

(c)           Except as otherwise set
forth on Schedule 5.09, to the best knowledge of the Borrower (i) neither
any Loan Party nor any of its Subsidiaries is undertaking, and has not
completed, either individually or together with other potentially responsible
parties, any investigation or assessment or remedial or response action
relating to any actual or threatened release, discharge or disposal of
Hazardous Materials at any site, location or operation, either voluntarily or
pursuant to the order of any Governmental Authority or the requirements of any
Environmental Law; and (ii) all Hazardous Materials generated, used, treated,
handled or stored at, or transported to or from, any property currently or
formerly owned or operated by any Loan Party or any of its Subsidiaries have
been disposed of in a manner not reasonably expected to result in material liability
to any Loan Party or any of its Subsidiaries.

 

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 (after giving effect to any self-insurance compatible with the
following standards), 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. Except as
set forth on Schedule 5.11, the Borrower and its Subsidiaries have filed
all Federal, state and other tax returns and reports required to be filed, and
have paid all Federal, state and other taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets or otherwise due and payable, except those which are being contested in
good faith by appropriate actions diligently conducted and for which adequate
reserves have been provided in accordance with GAAP and except those which
would not have a Material Adverse Effect. There is no proposed tax assessment
against the Borrower or any Subsidiary that would, if made, have a Material
Adverse Effect. Neither any Loan Party nor any Subsidiary thereof is party to
any tax sharing agreement pursuant to which it would be required to make any payments.

 

55

 

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,
nothing has occurred which would prevent, or cause the loss of, such
qualification. Except as set forth on Schedule 5.12, 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, 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 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)           Except as set forth on Schedule
5.12, (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
Section 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 Section 4069 or 4212(c) of ERISA.

 

5.13.        Subsidiaries; Equity
Interests; Loan Parties. As of the
Closing Date, the Borrower has no Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 5.13, and all of the
outstanding Equity Interests in such Subsidiaries have been validly issued, are
fully paid and non-assessable and are owned by a Loan Party in the amounts
specified on Part (a) of Schedule 5.13 free and clear of all Liens
except those created under the Collateral Documents. The Borrower has no equity investments in any other corporation or
entity other than those specifically disclosed in Part (b) of Schedule 5.13.
All of the outstanding Equity Interests in the Borrower have been validly issued,
are fully paid and non-assessable and are owned by PA MezzCo, LLC in the
amounts specified on Part (c) of Schedule 5.13 free and clear of
all Liens except those created under the Collateral Documents. Set forth on
Part (d) of Schedule 5.13 is a complete and accurate list of all Loan
Parties, showing as of the Closing Date (as to each Loan Party) the
jurisdiction of its incorporation, the address of its principal place of
business and its U.S. taxpayer identification number or, in the case of any
non-U.S. Loan Party that does not have a U.S. taxpayer identification number,
its unique identification number issued to it by the jurisdiction of its
incorporation. The copy of the charter of each Loan Party and each amendment
thereto provided pursuant to Section 4.01(a)(vii)
is a true and correct copy of each such document, each of which is valid and in
full force and effect.

 

56

 

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. The
Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. 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 information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

 

5.16.        Compliance with Laws.
Each Loan Party and each Subsidiary thereof 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 each of 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,
and Schedule 5.17 sets forth a complete and accurate list of all such IP
Rights owned or used by the Borrower and each of its Subsidiaries. To the best
knowledge of the Borrower, 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 of its Subsidiaries
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, threatened, which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

57

 

5.18.        Solvency. Each Loan
Party is, individually and together with its Subsidiaries on a consolidated
basis, Solvent.

 

5.19.        [Intentionally Omitted].

 

5.20.        Labor Matters. Except
as set forth on Schedule 5.20 there are no collective bargaining
agreements or Multiemployer Plans covering the employees of the Borrower or any
of its Subsidiaries as of the Closing Date and neither the Borrower nor any
Subsidiary has suffered any strikes, walkouts, work stoppages or other material
labor difficulty within the last five years.

 

5.21.        Collateral Documents.
The provisions of the Collateral Documents are effective to create in favor of
the Administrative Agent for the benefit of the Secured Parties a legal, valid
and enforceable first priority Lien (subject to Liens permitted by clauses (a)
through (m) of Section 7.01) on all right, title and interest of the
respective Loan Parties in the Collateral described therein. Except for filings
completed prior to the Closing Date and as contemplated hereby and by the
Collateral Documents, no filing or other action will be necessary to perfect or
protect such Liens.

 

5.22.        Gaming Matters. Except
as set forth on Schedule 5.22, each Borrower, and their Subsidiaries,
have obtained (i) approval for all Gaming Licenses necessary or appropriate to
conduct their businesses and operations conducted or as contemplated to be
conducted, and (ii) as of the Closing Date, all required approvals from Gaming
Authorities of the transactions contemplated hereby and by the other Loan
Documents, subject to the provisions of such approvals or conditions in respect
of the Gaming License as are satisfactory to the Administrative Agent.

 

5.23.        Project; Construction
Contracts. As of the date hereof, except as set forth on Schedule 5.23,
(i) no Construction Contracts have been entered into or otherwise exist and
(ii) no demolition or construction has commenced relating to the Project.

 

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, the Borrower shall, and shall
(except in the case of the covenants set forth in Sections 6.01, 6.02,
6.03 and 6.11) 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 Required Lenders:

 

(a)           as soon as available, but in any event
within 120 days after the end of each fiscal year of the Borrower (commencing with the fiscal year ended December 31, 2006),
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

 

58

 

the figures for the previous fiscal year, all
in reasonable detail and prepared in accordance with GAAP, audited and
accompanied by (i) a report and opinion of Piercy Bowler Taylor & Kern or
another nationally recognized Registered Public Accounting Firm reasonably
acceptable to the Required Lenders, which report and opinion shall be prepared
in accordance with standards established by the Public Company Accounting
Oversight Board (United States) 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 or with respect to the absence of any material misstatement
and (ii) an opinion of such Registered Public Accounting Firm independently
assessing the Borrower’s internal controls over financial reporting in
accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 2,
and Section 404 of Sarbanes-Oxley expressing a conclusion that contains no
statement that there is a material weakness in such internal controls, except
for such material weaknesses as to which the Required Lenders do not object;

 

(b)           as soon as available, but in any event
within 60 days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower (commencing with the fiscal quarter ended
March 31, 2007), 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, certified by the
chief executive officer, chief financial officer, treasurer or controller 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
within 30 days after the end of the first 18 months commencing with the month
ended March 31, 2007, monthly operating statements in form satisfactory to the
Administrative Agent; and

 

(d)           as soon as available, but in any event at
least 30 days after the end of each fiscal year of the Borrower, an annual
business plan and budget of the Borrower and its Subsidiaries on a consolidated
basis, including forecasts prepared by management of the Borrower, in form
satisfactory to the Administrative Agent and the Required Lenders, of
consolidated balance sheets and statements of income or operations and cash
flows of the Borrower and its Subsidiaries on a quarterly basis for the
immediately following fiscal year and annually for each fiscal year thereafter
(including the fiscal year in which the Maturity Date for the Loans occurs).

 

As to any
information contained in materials furnished pursuant to Section 6.02(d),
the Borrower shall not be separately required to furnish such information under
Section 6.01(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 Sections 6.01(a) and (b) above at the
times specified therein.

 

59

 

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

 

(a)           concurrently with the delivery of the
financial statements referred to in Section 6.01(a), a letter from the
Borrower’s Registered Public Accounting Firm indicating that during the
performance of the financial statement audit, no knowledge was obtained of any
Default under the financial covenants set forth in Section 7.11 or, if
any such Default shall be known to exist, stating the nature and status of such
event;

 

(b)           (i) concurrently with the delivery of the
financial statements referred to in Sections 6.01(a) and (b)
(commencing with the delivery of the financial statements for the earlier of (x) the
first “full” three-month fiscal quarter during which the Temporary Casino is
Operating and (y) the fiscal quarter ended September 30, 2007), a
duly completed Compliance Certificate signed by the chief executive officer,
chief financial officer, treasurer or controller of the Borrower and in the
event of any change in generally accepted accounting principles used in the
preparation of such financial statements, the Borrower shall also provide, if
necessary for the determination of compliance with Section 7.11, a
statement of reconciliation conforming such financial statements to GAAP and
(ii) concurrently with the delivery of the financial statements referred to in Section
6.01(a), a copy of management’s discussion and analysis with respect to
such financial statements;

 

(c)           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 any Loan Party by independent
accountants in connection with the accounts or books of any Loan Party or any
of its Subsidiaries, or any audit of any of them;

 

(d)           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 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, or with any national
securities exchange, and in any case not otherwise required to be delivered to
the Administrative Agent pursuant hereto;

 

(e)           as soon as available, but in any event
within 30 days after the end of each fiscal year of the Borrower, a report summarizing the insurance coverage
(specifying type, amount and carrier) in effect for each Loan Party and its
Subsidiaries and containing such additional information as the Administrative
Agent, or any Lender through the Administrative Agent, may reasonably specify;

 

(f)            not later than five Business Days after
receipt thereof by any Loan Party or any Subsidiary thereof, copies of all
notices, requests and other documents (including amendments, waivers and other
modifications) so received under or pursuant to any Related Document or
instrument, indenture, loan or credit or similar agreement regarding or

 

60

 

related to any
breach or default by any party thereto or any other event that could materially
impair the value of the interests or the rights of any Loan Party or otherwise
have a Material Adverse Effect and, from time to time upon
request by the Administrative Agent, such information and reports regarding the
Related Documents and such instruments, indentures and loan and credit and
similar agreements as the Administrative Agent may reasonably request;

 

(g)           promptly after the assertion or occurrence
thereof, notice of any action or proceeding against or of any noncompliance by
any Loan Party or any of its Subsidiaries with any Environmental Law or
Environmental Permit that could (i) reasonably be expected to have a
Material Adverse Effect or (ii) cause any property described in the
Mortgages to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law;

 

(h)           as soon as available, but in any event
within 30 days after the end of each fiscal year of the Borrower, (i) a
report supplementing Schedules 5.08(d), 5.08(e)(i) and 5.08(e)(ii),
including an identification of all owned and leased real property disposed of
by the Borrower or any
Subsidiary thereof during such fiscal year, a list and description (including
the street address, county or other relevant jurisdiction, state, record owner,
book value thereof and, in the case of leases of property, lessor, lessee,
expiration date and annual rental cost thereof) of all real property acquired
or leased during such fiscal year and a description of such other changes in
the information included in such Schedules as may be necessary for such
Schedules to be accurate and complete; (ii) a report supplementing Schedule 5.17,
setting forth (A) a list of registration numbers for all patents, trademarks,
service marks, trade names and copyrights awarded to the Borrower or any
Subsidiary thereof during such fiscal year and (B) a list of all patent
applications, trademark applications, service mark applications, trade name
applications and copyright applications submitted by the Borrower or any
Subsidiary thereof during such fiscal year and the status of each such
application; and (iii) a report
supplementing Schedules 5.08(f) and 5.13 containing a description
of all changes in the information included in such Schedules as may be
necessary for such Schedules to be accurate and complete, each such report to be signed by a
Responsible Officer of the Borrower and to be in a form reasonably satisfactory
to the Administrative Agent;

 

(i)            promptly, such additional information
regarding the business, financial, legal or corporate affairs of any Loan Party
or any Subsidiary thereof, or compliance with the terms of the Loan Documents,
as the Administrative Agent or any Lender may from time to time reasonably
request; and

 

(j)            promptly following the Completion Date, the
Borrower shall or shall cause the applicable Loan Party to deliver notice to
the Administrative Agent of the occurrence of the Completion Date, together
with a copy of a Completion Certificate, if any, relating thereto.

 

Documents
required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(d)
(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

 

61

 

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
11.02; 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.

 

The Borrower
hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will
make available to the Lenders materials and/or information provided by or on
behalf of the Borrower hereunder (collectively, “Borrower Materials”) by
posting the Borrower Materials on IntraLinks or another similar electronic
system (the “Platform”) and (b) certain of the Lenders may be “public-side”
Lenders (i.e., Lenders that do not wish to receive material non-public
information with respect to the Borrower or its securities) (each, a “Public
Lender”). The Borrower hereby agrees that (w) all Borrower Materials
that are to be made available to the Public Lenders shall be clearly and
conspicuously marked “PUBLIC,” which, at a minimum, shall mean that the word “PUBLIC”
shall appear prominently on the first page thereof; (x) by marking Borrower
Materials “PUBLIC,” the Borrower shall be deemed to have authorized the
Administrative Agent, the Arrangers and the Lenders to treat such Borrower
Materials as not containing any material non-public information (although it
may be sensitive and proprietary) with respect to the Borrower or its
securities for purposes of United States Federal and state securities laws (provided,
however, that to the extent such Borrower Materials constitute
Information, they shall be treated as set forth in Section 11.07); (y)
all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Investor”; and (z) the
Administrative Agent and the Arrangers shall be entitled to treat any Borrower
Materials that are not marked “PUBLIC” as being suitable only for posting on a
portion of the Platform not designated “Public Investor.”  Notwithstanding
the foregoing, the Borrower shall be under no obligation to mark any Borrower
Materials “PUBLIC.”

 

6.03.        Notices. Promptly
notify the Administrative Agent and each Lender as soon as becoming aware of
the same:

 

(a)           of the occurrence of any Default;

 

62

 

(b)           of any matter that has resulted or could
reasonably be expected to result in a Material Adverse Effect, including (i)
breach or non-performance of, or any default under, a Contractual Obligation of
any Loan Party or any Subsidiary thereof; (ii) any dispute, litigation,
investigation, proceeding or suspension between any Loan Party or any
Subsidiary thereof and any Governmental Authority; or (iii) the commencement
of, or any material development in, any litigation or proceeding affecting any
Loan Party or any Subsidiary thereof, including pursuant to any applicable
Environmental Laws;

 

(c)           of the occurrence of any ERISA Event;

 

(d)           of any material change in accounting
policies or financial reporting practices by any Loan Party or any Subsidiary
thereof;

 

(e)           of the determination by the Registered
Public Accounting Firm providing the opinion required under Section
6.01(a)(ii) (in connection with its preparation of such  opinion) or the Borrower’s determination at any time of the occurrence or
existence of any Internal Control Event;

 

(f)            of the (i) occurrence of any Disposition of
property or assets for which the Borrower is required to make a mandatory
prepayment pursuant to Section 2.05(b)(ii), (ii) occurrence of any
sale of capital stock or other Equity Interests for which the Borrower is
required to make a mandatory prepayment pursuant to Section 2.05(b)(iii),
(iii) incurrence or issuance of any Indebtedness for which the Borrower is
required to make a mandatory prepayment pursuant to Section 2.05(b)(iv),
and (iv) receipt of any Extraordinary Receipt for which the Borrower is required
to make a mandatory prepayment pursuant to Section 2.0(b)(v); and

 

(g)           of any announcement by Moody’s or S&P of
any change or possible change in a Debt Rating.

 

Each notice
pursuant to Section 6.03 (other than Section 6.03(f) or (g))
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 actions 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.

 

63

 

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; provided,
however, that the Borrower and
its Subsidiaries may consummate any
other merger or consolidation permitted under Section 7.04;
(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 (and cause the Racing
Service Operator to 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; and (b) make all necessary repairs
thereto and renewals and replacements thereof except, in the case of (a) and
(b), where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

6.07.        Maintenance of
Insurance. 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. With respect to each of the properties to be subject to a
Mortgage, obtain flood insurance in such total amount as the Administrative
Agent or the Required Lenders may from time to time require, if at any time the
areas in which any improvements located on any property to be subject to a “flood
hazard area” in any Flood Insurance Rate Map published by the Federal Emergency
Management Agency (or any successor agency), and otherwise comply with the National
Flood Insurance Program as set forth in the Flood Disaster Protection Act of
1973, as amended from time to time. The Collateral Agent shall be named as additional
insured and as loss payee under any insurance policies maintained from time to
time by any Loan Party.

 

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 actions 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. (a) 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; and (b) maintain such books of record and
account in material conformity with all applicable requirements of any
Governmental Authority having regulatory jurisdiction over 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

 

64

 

its corporate,
financial and operating records, and 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.

 

6.11.        Use of Proceeds. Use
the proceeds of the initial Credit Extension (along with the proceeds from the First
Lien Credit Agreement and cash on hand) to finance, in part, the Transactions
(including, without limitation, on the Closing Date (i) refinancing the
Tranche A Junior Note (as defined in the Post-Closing Agreement), (ii) depositing
$50.0 million into a cash collateral account with the issuing bank under the
License Fee L/C as cash collateral for the Licensing Fee L/C, (iii) depositing
$18.5 million into a cash collateral account with the Disbursement Agent as
contemplated by the Cash Collateral and Disbursement Agreement to fund interest
payments on the Loans through the Interest Periods ending immediately after nine
months after the Closing Date, (iv) depositing $39.6 million into a cash
collateral account with the Disbursement Agent as contemplated by the Cash
Collateral and Disbursement Agreement, (v) depositing $5.0 million into a
government restricted cash account and (vi) paying related fees and
expenses. Use the other proceeds of the Credit Extensions for general corporate
purposes not in contravention of any Law or of any Loan Document.

 

6.12.        Covenant to Guarantee Obligations and Give
Security.

 

(a)           Upon the formation or
acquisition of any new direct or indirect Subsidiary (other than any CFC or a
Subsidiary that is held directly or indirectly by a CFC) by any Loan Party,
then the Borrower shall, at the Borrower’s expense:

 

(i)            within 10 Business Days after such
formation or acquisition, cause such Subsidiary, and cause each direct and
indirect parent of such Subsidiary (if it has not already done so), to duly
execute and deliver to the Administrative Agent a guaranty or guaranty
supplement, in form and substance satisfactory to the Administrative Agent,
guaranteeing the other Loan Parties’ obligations under the Loan Documents,

 

(ii)           within 10 Business Days after such formation
or acquisition, furnish to the Administrative Agent a description of the real
and personal properties of such Subsidiary, in detail satisfactory to the
Administrative Agent,

 

(iii)          within 15 Business Days after such formation
or acquisition, cause such Subsidiary and each direct and indirect parent of
such Subsidiary (if it has not already done so) to duly execute and deliver to
the Administrative Agent deeds of trust, trust deeds, deeds to secure debt,
mortgages and other security and pledge agreements, as specified by and in form
and substance satisfactory to the Administrative Agent (including delivery of
all Pledged Interests in and of such Subsidiary, and other instruments of the
type specified in Section 4.01(a)(iii)), securing payment of all the
Obligations of such

 

65

 

Subsidiary or such parent, as the case may be, under the Loan Documents
and constituting Liens on all such real and personal properties,

 

(iv)          within 30 days after such formation or
acquisition, cause such Subsidiary and each direct and indirect parent of such
Subsidiary (if it has not already done so) to take whatever action (including
the recording of mortgages, the filing of Uniform Commercial Code financing
statements, the giving of notices and the endorsement of notices on title
documents) may be necessary or advisable in the opinion of the Administrative
Agent to vest in the Administrative Agent (or in any representative of the
Administrative Agent designated by it) valid and subsisting Liens on the
properties purported to be subject to the deeds of trust, trust deeds, deeds to
secure debt, mortgages and security and pledge agreements delivered pursuant to
this Section 6.12, enforceable against all third parties in accordance
with their terms,

 

(v)           within 60 days after such formation or
acquisition, deliver to the Administrative Agent, upon the request of the
Administrative Agent in its sole discretion, a signed copy of a favorable
opinion, addressed to the Administrative Agent and the other Secured Parties,
of counsel for the Loan Parties acceptable to the Administrative Agent as to
the matters contained in clauses (i), (iii) and (iv) above, and as to such
other matters as the Administrative Agent may reasonably request, and

 

(vi)          as promptly as practicable after such
formation or acquisition, deliver, upon the request of the Administrative Agent
in its sole discretion, to the Administrative Agent with respect to each parcel
of real property owned or held by the entity that is the subject of such
formation or acquisition title reports, surveys and engineering, soils and
other reports, and environmental assessment reports, each in scope, form and
substance satisfactory to the Administrative Agent, provided, however, that to the extent that any Loan Party
or any of its Subsidiaries shall have otherwise received any of the foregoing
items with respect to such real property, such items shall, promptly after the
receipt thereof, be delivered to the Administrative Agent.

 

(b)           Upon the acquisition of
any property by any Loan Party, if such property, in the judgment of the
Administrative Agent, shall not already be subject to a perfected first priority
security interest in favor of the Administrative Agent for the benefit of the
Secured Parties, then the Borrower shall, at the Borrower’s expense:

 

(i)            within 10 Business Days after such
acquisition, furnish to the Administrative Agent a description of the property
so acquired in detail satisfactory to the Administrative Agent,

 

(ii)           within 15 Business Days after such
acquisition, cause the applicable Loan Party to duly execute and deliver to the
Administrative Agent deeds of trust, trust deeds, deeds to secure debt,
mortgages and other security and pledge agreements, as specified by and in form
and substance satisfactory to the Administrative Agent, securing payment of all
the Obligations of the applicable Loan Party under the Loan Documents and
constituting Liens on all such properties,

 

66

 

(iii)          within 30 days after such acquisition, cause
the applicable Loan Party to take whatever action (including the recording of
mortgages, the filing of Uniform Commercial Code financing statements, the
giving of notices and the endorsement of notices on title documents) may be
necessary or advisable in the opinion of the Administrative Agent to vest in
the Administrative Agent (or in any representative of the Administrative Agent
designated by it) valid and subsisting Liens on such property, enforceable
against all third parties,

 

(iv)          within 60 days after such acquisition,
deliver to the Administrative Agent, upon the request of the Administrative
Agent in its sole discretion, a signed copy of a favorable opinion, addressed
to the Administrative Agent and the other Secured Parties, of counsel for the
Loan Parties acceptable to the Administrative Agent as to the matters contained
in clauses (ii) and (iii) above and as to such other matters as the Administrative
Agent may reasonably request,

 

(v)           as promptly as practicable after any
acquisition of a real property, deliver, upon the request of the Administrative
Agent in its sole discretion, to the Administrative Agent with respect to such
real property title reports, surveys and engineering, soils and other reports,
and environmental assessment reports, each in scope, form and substance
satisfactory to the Administrative Agent, provided, however, that
to the extent that any Loan Party or any of its Subsidiaries shall have
otherwise received any of the foregoing items with respect to such real
property, such items shall, promptly after the receipt thereof, be delivered to
the Administrative Agent, and

 

(vi)          use commercially reasonable efforts,
excluding litigation or eviction of the tenant thereunder, to cause the
applicable Loan Parties to deliver subordination, non-disturbance and
attornment agreements with respect to all leases affecting such mortgaged property.

 

(c)           Upon the request of the
Administrative Agent following the occurrence and during the continuance of a
Default, the Borrower shall, at the Borrower’s expense:

 

(i)            within 10 Business Days after such request,
furnish to the Administrative Agent a description of the real and personal
properties of the Loan Parties and their respective Subsidiaries in detail
satisfactory to the Administrative Agent,

 

(ii)           within 15 Business Days after such request,
duly execute and deliver, and cause each Subsidiary (other than any CFC or a Subsidiary that is held directly or
indirectly by a CFC) of the Borrower (if it has not already done so) to
duly execute and deliver, to the Administrative Agent deeds of trust, trust
deeds, deeds to secure debt, mortgages and other security and pledge
agreements, as specified by and in form and substance satisfactory to the
Administrative Agent (including delivery of all Pledged Equity and Pledged Debt
in and of such Subsidiary, and other instruments of the type specified in Section
4.01(a)(iii)), securing payment of all the Obligations of under the Loan
Documents and constituting Liens on all such properties,

 

67

 

(iii)          within 30 days after such request, take, and
cause each Subsidiary (other than any
CFC or a Subsidiary that is held directly or indirectly by a CFC) of the
Borrower to take, whatever action (including the recording of mortgages,
the filing of Uniform Commercial Code financing statements, the giving of
notices and the endorsement of notices on title documents) may be necessary or
advisable in the opinion of the Administrative Agent to vest in the
Administrative Agent (or in any representative of the Administrative Agent
designated by it) valid and subsisting Liens on the properties purported to be
subject to the deeds of trust, trust deeds, deeds to secure debt, mortgages and
security and pledge agreements delivered pursuant to this Section 6.12,
enforceable against all third parties in accordance with their terms,

 

(iv)          within 60 days after such request, deliver to
the Administrative Agent, upon the request of the Administrative Agent in its
sole discretion, a signed copy of a favorable opinion, addressed to the
Administrative Agent and the other Secured Parties, of counsel for the Loan
Parties acceptable to the Administrative Agent as to the matters contained in
clauses (ii) and (iii) above, and as to such other matters as the
Administrative Agent may reasonably request, and

 

(v)           as promptly as practicable after such
request, deliver, upon the request of the Administrative Agent in its sole
discretion, to the Administrative Agent with respect to each parcel of real
property owned or held by the Borrower and its Subsidiaries, title reports,
surveys and engineering, soils and other reports, and environmental assessment
reports, each in scope, form and substance satisfactory to the Administrative
Agent, provided, however,
that to the extent that any Loan Party or any of its Subsidiaries shall have
otherwise received any of the foregoing items with respect to such real
property, such items shall, promptly after the receipt thereof, be delivered to
the Administrative Agent.

 

6.13.        Environmental Covenant.
Use and operate all of its facilities and properties in material compliance
with all applicable Environmental Laws, keep all material permits, approvals,
certificates, licenses and other authorizations required pursuant to applicable
Environmental Laws in effect and remain in material compliance therewith, and
handle all Hazardous Materials in material compliance with all applicable
Environmental Laws; promptly notify the Administrative Agent and provide copies
upon receipt of all written claims, complaints, notices or inquiries relating
to the condition of its facilities and properties under, or compliance of its
facilities and properties with, applicable Environmental Laws, and shall
promptly commence and diligently proceed to cure, to the reasonable
satisfaction of the Administrative Agent any actions and proceedings relating
to violations of compliance with applicable Environmental Laws; and provide
such information and certifications which the Administrative Agent may
reasonably request from time to time.

 

6.14.        Preparation of
Environmental Reports. At the request of the Required Lenders from time to
time, provide to the Lenders within 60 days after such request, at the
expense of the Borrower, an environmental site assessment report for any of its
properties described in such request, prepared by an environmental consulting
firm acceptable to the Administrative Agent, indicating the presence or absence
of Hazardous Materials and the estimated cost of any compliance, removal or
remedial action in connection with any Hazardous Materials on

 

68

 

such
properties; without limiting the generality of the foregoing, if the
Administrative Agent determines at any time that a material risk exists that
any such report will not be provided within the time referred to above, the
Administrative Agent may retain an environmental consulting firm to prepare
such report at the expense of the Borrower, and the Borrower hereby grants and
agrees to cause any Subsidiary that owns any property described in such request
to grant at the time of such request to the Administrative Agent, the Lenders,
such firm and any agents or representatives thereof an irrevocable
non-exclusive license, subject to the rights of tenants, to enter onto their respective
properties to undertake such an assessment.

 

6.15.        Further Assurances.
Promptly upon request by the Administrative Agent, or any Lender through the
Administrative Agent, (a) correct any material defect or error that may be
discovered in any Loan Document or in the execution, acknowledgment, filing or
recordation thereof, and (b) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register any and all such further
acts, deeds, certificates, assurances and other instruments as the
Administrative Agent, or any Lender through the Administrative Agent, may
reasonably require from time to time in order to (i) carry out more effectively
the purposes of the Loan Documents, (ii) to the fullest extent permitted by
applicable law, subject any Loan Party’s or any of its Subsidiaries’
properties, assets, rights or interests to the Liens now or hereafter intended
to be covered by any of the Collateral Documents, (iii) perfect and maintain
the validity, effectiveness and priority of any of the Collateral Documents and
any of the Liens intended to be created thereunder and (iv) assure, convey,
grant, assign, transfer, preserve, protect and confirm more effectively unto
the Secured Parties the rights granted or now or hereafter intended to be
granted to the Secured Parties under any Loan Document or under any other
instrument executed in connection with any Loan Document to which any Loan
Party or any of its Subsidiaries is or is to be a party, and cause each of its
Subsidiaries to do so.

 

6.16.        Compliance with Terms
of Leaseholds. Make all payments and otherwise perform all obligations in
respect of all Leases of Real Property to which the Borrower or any of its
Subsidiaries is a party, keep such Leases in full force and effect and not
allow such Leases to lapse or be terminated or any rights to renew such leases
to be forfeited or cancelled, notify the Administrative Agent of any default by
any party with respect to such leases and cooperate with the Administrative
Agent in all respects to cure any such default, and cause each of its
Subsidiaries to do so, except, in any case, where the failure to do so, either
individually or in the aggregate, could not be reasonably likely to have a
Material Adverse Effect.

 

6.17.        Interest Rate Hedging.
Enter into prior to December 31, 2006, and maintain at all times thereafter,
interest rate Swap Contracts with Persons acceptable to the Administrative
Agent, covering a notional amount of not less than 50% of the aggregate outstanding Term B Loans and Second Lien Loans and
providing for such other terms reasonably acceptable to the Administrative
Agent.

 

6.18.        Lien Searches. Promptly
following receipt of the acknowledgment copy of any financing statements filed
under the Uniform Commercial Code in any jurisdiction by or on behalf of the
Secured Parties, deliver to the Administrative Agent completed requests for
information listing such financing statement and all other effective financing
statements filed in

 

69

 

such
jurisdiction that name any Loan Party as debtor, together with copies of such
other financing statements.

 

6.19.        Material Contracts.
Perform and observe all the terms and provisions of each Material Contract to
be performed or observed by it, maintain each such Material Contract in full
force and effect, enforce each such Material Contract in accordance with its
terms, take all such action to such end as may be from time to time requested
by the Administrative Agent and, upon request of the Administrative Agent, make
to each other party to each such Material Contract such demands and requests
for information and reports or for action as any Loan Party or any of its
Subsidiaries is entitled to make under such Material Contract, and cause each
of its Subsidiaries to do so, except,
in any case, where the failure to do so, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

6.20.        Gaming Licenses. (a)
Ensure that all necessary Gaming Licenses from any Gaming Authority for the
ownership, use, or operation of the businesses or properties owned or operated
by each Borrower and its Subsidiaries are in full force and effect, and (b)
comply, in all material respects, with all of the provisions thereof applicable
to them.

 

6.21.        Cash Collateral
Accounts. Maintain, and cause each of the other Loan Parties to maintain,
all Cash Collateral Accounts with the Administrative Agent or another
commercial bank located in the United States which has accepted the assignment
of such accounts to the Administrative Agent for the benefit of the Secured
Parties pursuant to the terms of the Security Agreement.

 

6.22.        Holdback Agreement.
Comply in all material respects with the terms of the Holdback Agreement, which
shall not be waived or amended in manner materially less favorable to the
Lenders without such Lenders’ prior consent.

 

6.23.        Compliance with the
Temporary Casino Construction Plans; Operating. Ensure that the Temporary
Casino is

 

(i)            built in all material respects in
accordance with the Construction Plans, and

 

(ii)           Operating as soon as practicable and in any
event not later than the first anniversary of the Closing Date.

 

6.24.        Construction Covenants.
Prior to the commencement of development and construction of the Project
(either by way of construction of the Project or the commencement of
substantial demolition activities in respect of the existing Real Property):

 

(i)            the Borrowers shall agree to reimburse the
Administrative Agent for the reasonable costs of the Construction Consultant,
who shall be allowed full access to the Project site (and all plans, budgets,
timetables, permits, licenses, approvals and other all other documents relating
to the Project) and prepare a monthly construction progress report;

 

70

 

(ii)           the Construction Consultant shall have
reviewed the Construction Plans (and any geotechnical and other reports and
assessments as they reasonably shall require) and shall have concurred that the
Construction Plans are reasonable and feasible; and

 

(iii)          collateral assignments of the each
Construction Contract for the Project in each case in form and substance
acceptable to the Administrative Agent shall have been made by the Borrower or
the applicable Loan Party to the Administrative Agent.

 

6.25.        FF&E Financing.
Promptly after the Closing Date and in any event no later than December 31,
2006, the Borrower shall have consummated the FF&E Financing on terms
reasonably acceptable to the Administrative Agent.

 

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, 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 upon any of its property, assets or
revenues, whether now owned or hereafter acquired, or sign or file or suffer to
exist under the Uniform Commercial Code of any jurisdiction a financing statement
that names the Borrower or any of its Subsidiaries as debtor, or assign any
accounts or other right to receive income, other than the following:

 

(a)           Liens pursuant to any Loan Document;

 

(b)           Liens existing on the date hereof and listed
on Schedule 5.08(c) 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 except as contemplated by Section
7.02(g), (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 7.02(g);

 

(c)           Liens for taxes, assessments or other
governmental charges or levies not yet delinquent or thereafter payable without
penalty or which are being contested in good faith and by appropriate actions,
if adequate reserves with respect thereto are maintained on the books of the
applicable Person in accordance with, and to the extent required by, GAAP;

 

(d)           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 60 days or which
are being contested in good faith and by appropriate actions diligently
conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person to the extent required by GAAP;

 

71

 

(e)           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;

 

(f)            deposits to secure the performance of bids,
trade contracts and leases (other than Indebtedness), statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;

 

(g)           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;

 

(h)           Liens securing writs of attachment or
similar instruments or judgments for the payment of money not constituting an
Event of Default under Section 8.01(h);

 

(i)            present or future zoning laws and
ordinances or other laws and ordinances restricting the occupancy, use or
enjoyment of real property;

 

(j)            Liens securing Indebtedness permitted under
Section 7.02(i); 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;

 

(k)           Liens securing Indebtedness under FF&E Financings
in an aggregate principal amount not to exceed $30.0 million acquired with the
proceeds of such Indebtedness; provided that such Liens only extend to
FF&E;

 

(l)            other Liens securing Indebtedness outstanding in an aggregate principal amount
not to exceed $5.0 million, provided that no such Lien shall extend to
or cover any Collateral;

 

(m)          Permitted Encumbrances;

 

(n)           Liens securing Indebtedness under the First
Lien Credit Agreement in an aggregate principal amount not to exceed $220.0
million;

 

(o)           inchoate
Liens incident to construction or maintenance of Real Property; or Liens incident
to construction or maintenance of Real Property now or hereafter filed of
record for which adequate reserves have been set aside and which are being
contested in good faith by appropriate actions and have not proceeded to
judgment or which the Title Company has agreed to insure over, provided
that, by reason of nonpayment of the obligations secured by such Liens, no
material property is subject to a material risk of loss or forfeiture;

 

72

 

(p)           Liens on accounts
or amounts held in accounts for the Commonwealth of Pennsylvania as specified
in Section 1316 or Chapter 14 of the Pennsylvania Race Horse Development and
Gaming Act (Act 71 of 2004) (4 Pa. C.S.A. § 1401, et seq.); and

 

(q)           Liens on
the account cash collateralizing the Licensing Fee L/C;

 

provided,
however, that no Lien other than Permitted Encumbrances shall be
permitted with respect to any property to be subject to a Mortgage.

 

7.02.        Indebtedness. Create,
incur, assume or suffer to exist any Indebtedness, except:

 

(a)           obligations (contingent or otherwise)
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
fluctuations in interest rates or foreign exchange rates 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;

 

(b)           Indebtedness incurred pursuant to the First
Lien Credit Agreement; provided that, in
the case of any replacement or refinancing after the date hereof, (i) the First
Lien Collateral Agent shall enter into the Intercreditor Agreement with the Collateral
Agent, (ii) the aggregate principal amount of the replacement or refinancing
Indebtedness shall equal the aggregate principal amount of the Indebtedness
being replaced or refinanced, and the yield on the replaced or refinanced Indebtedness
shall not be greater than the yield on the Indebtedness being replaced or
refinanced and (iii) the First Lien Loan Documents shall not include any
provisions, terms or conditions that would not be permitted, under the
Intercreditor Agreement, in any amendment of the First Lien Loan Documents;

 

(c)           Indebtedness under FF&E Financings in an
aggregate principal amount not to exceed $30.0 million;

 

(d)           [Reserved];

 

(e)           Indebtedness of a Subsidiary of the Borrower
owed to the Borrower or a Subsidiary of the Borrower, which Indebtedness shall
(i) in the case of Indebtedness owed to a Loan Party, constitute “Pledged Debt”
under the Security Agreement, (ii) be on terms (including subordination terms)
acceptable to the Administrative Agent and (iii) be otherwise permitted under
the provisions of Section 7.03;

 

(f)            Indebtedness under the Loan Documents;

 

(g)           Indebtedness outstanding on the date hereof
and listed on Schedule 7.02 and any refinancings, refundings,
renewals or extensions thereof; provided that 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

 

73

 

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 the direct or any contingent
obligor with respect thereto is not changed, as a result of or in connection
with such refinancing, refunding, renewal or extension and such Indebtedness is
on terms 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;

 

(h)           Guarantees of the Borrower or any Guarantor
in respect of Indebtedness otherwise permitted hereunder of the Borrower or any
other Guarantor;

 

(i)            Indebtedness in respect of Capitalized
Leases, Synthetic Lease Obligations and purchase money obligations for fixed or
capital assets within the limitations set forth in Section 7.01(j); provided,
however, that the aggregate amount of all such Indebtedness at any one
time outstanding shall not exceed $5.0 million; and

 

(j)            unsecured Indebtedness in an aggregate
principal amount not to exceed $5.0 million at any time outstanding.

 

7.03.        Investments. Make
or hold any Investments, except:

 

(a)           Investments held by the Borrower and its
Subsidiaries in the form of Cash Equivalents;

 

(b)           U.S. Corporate Bonds, rated at least Baa by
S&P;

 

(c)           Common stocks rated at least B by S&P
and listed on the New York Stock Exchange, American Stock Exchange, or National
Association of Securities Dealers Automated Quotation;

 

(d)           Investments, classified in accordance with
GAAP as current assets of the Borrower or any of its Subsidiaries, in money
market funds that comply with all provisions of Rule 2A-7 of the Investment
Company Act of 1940;

 

(e)           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;

 

(f)            (i) Investments by the Borrower and its
Subsidiaries in their respective Subsidiaries outstanding on the date hereof,
(ii) additional Investments by the Borrower and its Subsidiaries in Loan
Parties, and (iii) additional Investments by Subsidiaries of the Borrower that
are not Loan Parties in other Subsidiaries that are not Loan Parties;

 

(g)           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

 

74

 

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;

 

(h)           Guarantees permitted by Section 7.02;

 

(i)            Investments existing on the date hereof
(other than those referred to in Section 7.03(c)(i)) and set forth on Schedule
5.08(f); and

 

(j)            Investments by the Borrower in Swap
Contracts permitted under Section 7.02(a).

 

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 (i) the
Borrower, provided that the Borrower shall be the continuing or
surviving Person, or (ii) any one or more other Subsidiaries, provided
that when any Loan Party is
merging with another Subsidiary, such Loan
Party shall be the continuing or surviving Person;

 

(b)           any Loan Party may Dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
the Borrower or to another Loan Party, provided that the Lien on and
security interest in any property so Disposed of or to be Disposed of shall be
maintained or created in favor of the Collateral Agent;

 

(c)           any Subsidiary that is not a Loan Party may
dispose of all or substantially all its assets (including any Disposition that
is in the nature of a liquidation) to (i) another Subsidiary that is not a Loan
Party or (ii) to a Loan Party;

 

(d)           [Reserved];

 

(e)           in connection with any acquisition permitted
under Section 7.03, any Subsidiary of the Borrower may merge into or
consolidate with any other Person or permit any other Person to merge into or
consolidate with it; provided that (i) the
Person surviving such merger shall be a wholly-owned Subsidiary of the Borrower
and (ii) in the case of any such merger to which any Loan Party (other than the
Borrower) is a party, such Loan Party is the surviving Person; and

 

(f)            so long as no Default has occurred and is
continuing or would result therefrom, each of the Borrower and any of its Subsidiaries
may merge into or consolidate with any other Person or permit any other
Person to merge into or consolidate with it; provided, however,
that in each case, immediately after giving effect thereto (i) in the case of
any such merger to which the Borrower is a party, the Borrower is the surviving
corporation and (ii) in the case of any such merger to which any Loan Party is
a party, such Loan Party is the surviving corporation.

 

75

 

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 and, in the event that any real
property disposed of is property subject to a Mortgage, all such replacement
property shall be made subject to the Liens created by the Collateral
Documents, or (ii) the proceeds of such Disposition are reasonably promptly
applied to the purchase price of such replacement property;

 

(d)           Dispositions of property by any Subsidiary
to the Borrower or to a wholly-owned Subsidiary; provided that the Lien
on and security interest in any property so Disposed of or to be Disposed of
shall be maintained or created in favor of the Collateral Agent; and provided that
if the transferor of such property is a Guarantor, the transferee thereof must
either be the Borrower or a Guarantor;

 

(e)           Dispositions permitted by Section 7.04; and

 

(f)            Dispositions by the Racing Services
Operator permitted under the RSA;

 

provided,
however, that any Disposition pursuant to Section 7.05(a) through
Section 7.05(c) 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 (and solely with respect to Section 7.06(e) immediately below,
so long as no Default under Section 8.01(a) or Event of 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, any Subsidiaries of the Borrower that are Guarantors and any
other Person that owns a direct 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)           except to the extent the Net Cash Proceeds
thereof are required to be applied to the prepayment of the Loans pursuant to Section 2.05(b)(iii),
the Borrower and each Subsidiary may purchase, redeem or otherwise acquire its
common Equity Interests

 

76

 

with the proceeds received from the
substantially concurrent issue of new common Equity Interests;

 

(d)           for so long as the Borrower is treated as a
partnership or other substantially similarly treated pass-through entity for
United States federal income tax purposes, the Borrower shall be permitted to
make Restricted Payments to the Tax Recipients (which shall be deemed for any
Tax purposes to be a distribution with respect to equity from Borrower to its direct
equity owner, and from such equity owner to each successive direct equity owner
until such amounts are distributed to the Tax Recipients), in an amount not to
exceed the Tax Amount for the related period; provided, however,
that (i) prior to any distributions of Tax Amounts the Borrower shall deliver
an officers’ certificate to the Administrative Agent to the effect that the
Borrower is a partnership or other substantially similarly treated pass-through
entity, for United States federal income tax purposes and (ii) at the time of
such distributions, the most recent audited financial statements of the
Borrower required to have been furnished pursuant to Section 6.01(a) reflect
that the Borrower is treated as a partnership or other substantially similarly
treated pass-through entity for United States federal income tax purposes for
the period covered by such financial statements; and provided, further,
that no such Restricted Payment shall be made if the Administrative Agent shall
have given the Borrower notice of the existence and continuance of an Event of
Default; and

 

(e)           subject to the Management Fee Subordination
Agreement, the Borrower may pay the Management Compensation.

 

7.07.        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 (the development, construction or operation of casinos) or any
business substantially related or incidental thereto.

 

7.08.        Transactions with
Affiliates. Except as set forth on Schedule 7.08, 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; provided that the
foregoing restriction shall not apply to transactions between or among the Loan
Parties.

 

7.09.        Burdensome Agreements.
Except as required by Gaming Authorities, enter into or permit to exist any
Contractual Obligation (other than this Agreement, any other Loan Document or
Related Documents) that (a) limits the ability (i) of any Subsidiary to make
Restricted Payments to the Borrower or any Guarantor or to otherwise transfer
property to or invest in the Borrower or any Guarantor, except for any
agreement in effect (A) on the date hereof and set forth on Schedule 7.09
or (B) at the time any Subsidiary becomes a Subsidiary of the Borrower, so long
as such agreement was not entered into solely in contemplation of such Person
becoming a Subsidiary of the Borrower, (ii) of any Subsidiary to Guarantee the
Indebtedness of the Borrower or (iii) of the Borrower or any Subsidiary to
create, incur, assume or suffer to exist Liens on property of such Person; provided,
however, that this clause (iii) shall not prohibit any negative pledge
incurred or provided in favor of any holder of Indebtedness permitted under

 

77

 

Section 7.02(i) solely to the extent any such
negative pledge relates to the property financed by or the subject of such
Indebtedness; or (b) requires the grant of a Lien to secure an obligation of
such Person if a Lien is granted to secure another obligation of such Person.

 

7.10.        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.

 

7.11.        Financial Covenants.

 

(a)           [Reserved].

 

(b)           Consolidated
Interest Coverage Ratio. Permit the Consolidated Interest Coverage Ratio as
of the end of any fiscal quarter of the Borrower to be less than the ratio set
forth below opposite such fiscal quarter:

 

	
  Date

  	
   

  	
  Ratio

  	
   

  
	
  June 30, 2007(1)

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  September 30, 2007

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  December 31, 2007

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  March 31, 2008

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  June 30, 2008

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  September 30, 2008

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  December 31, 2008

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  March 31, 2009

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  June 30, 2009

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  September 30, 2009

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  December 31, 2009

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  March 31, 2010

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  June 30, 2010

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  September 30, 2010

  	
   

  	
  1.5 to 1.0

  	
   

  
	
  December 31, 2010

  	
   

  	
  1.75 to 1.0

  	
   

  
	
  March 31, 2011

  	
   

  	
  1.75 to 1.0

  	
   

  
	
  June 30, 2011 and thereafter

  	
   

  	
  1.75 to 1.0

  	
   

  

 

(c)           Consolidated
Leverage Ratio. Permit the Consolidated Leverage Ratio at any time during
any period of four fiscal quarters of the Borrower set forth below to be
greater than the ratio set forth below opposite such period:

 

(1)          Applicable
only to the extent the Temporary Casino has been Operating for the “full” three
months for the fiscal period ended June 20, 2007.

 

78

 

	
  Date

  	
   

  	
  Ratio

  	
   

  
	
  June 30, 2007(2)

  	
   

  	
  6.0 to 1.0

  	
   

  
	
  September 30, 2007

  	
   

  	
  6.0 to 1.0

  	
   

  
	
  December 31, 2007

  	
   

  	
  5.75 to 1.0

  	
   

  
	
  March 31, 2008

  	
   

  	
  5.5 to 1.0

  	
   

  
	
  June 30, 2008

  	
   

  	
  5.5 to 1.0

  	
   

  
	
  September 30, 2008

  	
   

  	
  5.25 to 1.0

  	
   

  
	
  December 31, 2008

  	
   

  	
  5.25 to 1.0

  	
   

  
	
  March 31, 2009

  	
   

  	
  5.25 to 1.0

  	
   

  
	
  June 30, 2009

  	
   

  	
  5.25 to 1.0

  	
   

  
	
  September 30, 2009

  	
   

  	
  5.25 to 1.0

  	
   

  
	
  December 31, 2009

  	
   

  	
  5.25 to 1.0

  	
   

  
	
  March 31, 2010

  	
   

  	
  5.25 to 1.0

  	
   

  
	
  June 30, 2010

  	
   

  	
  5.0 to 1.0

  	
   

  
	
  September 30, 2010

  	
   

  	
  5.0 to 1.0

  	
   

  
	
  December 31, 2010

  	
   

  	
  5.0 to 1.0

  	
   

  
	
  March 31, 2011

  	
   

  	
  5.0 to 1.0

  	
   

  
	
  June 30, 2011 and thereafter

  	
   

  	
  4.75 to 1.0

  	
   

  

 

7.12.        Capital Expenditures.
Make or become legally obligated to make any Capital Expenditure (except for
(A) $39.6 million for the first fiscal year following the Closing Date pursuant
to the Cash Collateral and Disbursement Agreement, (B) (i) Maintenance Capital
Expenditures during any fiscal year in an aggregate amount not to exceed $1.0
million for fiscal years ended 2007 and 2008, $2.5 million for fiscal year
ended 2009, $3.0 million for fiscal years ended 2010 and 2011 and $3.5 million
for fiscal year ended 2012 and (ii) Expansion Capital Expenditures in an
aggregate amount not to exceed $5.0 million) and (C) Capital Expenditures
funded with the net proceeds from any Excluded Issuance.

 

7.13.        Amendments of
Organization Documents. Amend any of its Organization Documents.

 

7.14.        Accounting Changes.
Make any change in (a) accounting policies or reporting practices, except
as required by GAAP or approved by the Administrative Agent, or (b) fiscal
year.

 

(2)          Applicable
only to the extent the Temporary Casino has been Operating for the “full” three
months for the fiscal period ended June 20, 2007.

 

79

 

7.15.        Prepayments, Etc. of
Indebtedness. Prepay, redeem, purchase, defease or otherwise satisfy prior
to the scheduled maturity thereof in any manner, or make any payment in
violation of any subordination terms of, any Indebtedness, except (a) the
prepayment of the Credit Extensions in accordance with the terms of this
Agreement and (b) regularly scheduled or required repayments or
redemptions of Indebtedness set forth in Schedule 7.02 and refinancings
and refundings of such Indebtedness in compliance with Section 7.02(g).

 

7.16.        Amendment, Etc. of
Related Documents and Indebtedness. (a) Cancel or terminate any Related
Document or consent to or accept any cancellation or termination thereof, (b)
amend, modify or change in any manner any term or condition of any Related
Document or give any consent, waiver or approval thereunder, (c) waive any
default under or any breach of any term or condition of any Related Document,
(d) take any other action in connection with any Related Document that would
impair the value of the interest or rights of any Loan Party thereunder or that
would impair the rights or interests of the Administrative Agent or any Lender or
(e) amend, modify or change in any manner any term or condition of any
Indebtedness set forth in Schedule 7.02, except for any refinancing,
refunding, renewal or extension thereof permitted by Section 7.02(g); provided,
however, that nothing in this Section 7.16 shall prevent the Borrower
from terminating or amending the Racing Services Agreement so long as such
termination or amendment does not impair the rights or interests of the
Administrative Agent or the Lenders.

 

7.17.        Construction of the
Project. Do any of the following in connection with the construction of the
Project:

 

(a)           Fail to diligently pursue the Project to the
Completion Date in accordance with the Construction Plans;

 

(b)           Fail on or before the opening for business
of the Project, to provide the Administrative Agent with a written certificate
executed by the prime architect, prime contractor and the Construction
Consultant (and any other relevant contracting parties reasonably requested by
the Construction Consultant) certifying that the Project has been completed in
all material respects in accordance with the Construction Plans and that the Project
has been or is ready to be opened for business together with a Certificate of Occupancy
executed by a Responsible Officer to that effect;

 

(c)           Fail, as soon as practicable after the
substantial completion of the physical improvements associated with the
Project, to provide the Administrative Agent with an “as built” ALTA survey of
the Project as of the Completion Date that (i) sets forth all recorded
easements and licenses burdening the Project site as of the Completion Date,
(ii) reflects no unpermitted encroachments onto the affected Real Property
or onto adjoining Real Property, and (iii) certifies the legal description
of the Real Property subject to the related Mortgage in favor of the
Administrative Agent to be the same as that set forth in the related title
insurance policies, together with (A) an endorsement to its ALTA policy of
title insurance covering the Project that reflects the elements contained in
this clause (n) and the Lien-free completion of the Project and (B) evidence
that all insurance policies required pursuant to the Loan Documents have been
obtained relating to the Project together with the certificates of insurance,
naming the Collateral Agent, on behalf of

 

80

 

the Lenders, as an additional insured or loss
payee, as the case may be, under all such insurance policies; or

 

(d)           Fail, as soon as practicable after the
substantial completion of the physical improvements associated with the
Project, to provide the Administrative Agent with an “as built” ALTA survey of
the Project as of the Completion Date that (i) sets forth all recorded
easements and licenses burdening the Project site as of the Completion Date,
(ii) reflects no unpermitted encroachments onto that property or onto adjoining
Real Property and (iii) certifies the legal description of the Real Property
subject to the related Mortgage in favor of the Administrative Agent to be the
same as that set forth in the related title insurance policies, together with
an (A) endorsement to its ALTA policy of title insurance covering such Project
that reflects the elements contained in this clause (n) and the Lien-free
completion of the Project and (B) evidence that all insurance policies required
pursuant to the Loan Documents have been obtained relating to the Project
together with the certificates of insurance, naming the Administrative Agent,
on behalf of the Lenders, as an additional insured or loss payee, as the case
may be, under all such insurance policies.

 

7.18.        Seller Holdback Amount.
Make any payment in respect of the Seller Holdback Amount (as defined in
the Holdback Agreement) prior to the completion of the permanent facility which
shall replace the Temporary Casino and the first date on which such permanent
facility opens for operation and accepts customers following the receipt by
Borrower and its subsidiaries of all gaming approvals necessary to open such
permanent facility for operation and to accept customers.

 

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 (i) pay when and as required to be paid herein, any
amount of principal of any Loan, or (ii) pay within three Business Days after
the same becomes due, any interest on any Loan, or any fee due hereunder, or
(iii) pay 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,
6.12, 6.20, or Article VII; or

 

(c)           Other Defaults. Any Loan Party fails
to perform or observe any other covenant or agreement (not specified in Section
8.01(a) or (b) above) contained in any Loan Document on its part to
be performed or observed and such failure continues for 30 days after such Loan
Party obtains knowledge of such failure; or

 

81

 

(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 in any material respect when made or
deemed made; or

 

(e)           Cross-Default. (i) Any Loan Party or
any Subsidiary thereof (A) fails to make any payment when due after giving
effect to any applicable notice and cure periods (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) in respect
of any Indebtedness or Guarantee (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 the Threshold Amount, or (B) fails to observe or perform any other
agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, in each case after giving effect to any
applicable notice and cure periods, 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 Guarantee (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 Guarantee to
become payable or cash collateral in respect thereof to be demanded; or (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 a Loan Party or any Subsidiary thereof 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 a Loan Party or any Subsidiary
thereof is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by such Loan Party or such Subsidiary as a result
thereof is greater than the Threshold Amount; provided that, with
respect to any such failure under the First Lien Credit Agreement, such failure
shall only constitute an Event of Default under this Section 8.01(e), if
(x) the First Lien Obligations have been accelerated due to such failure or (y)
there is a payment default under the First Lien Credit Agreement and such default
has not been cured within 10 days; or

 

(f)            Insolvency Proceedings, Etc. Any
Loan Party or any Subsidiary thereof 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

 

82

 

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)
Any Loan Party or any Subsidiary thereof 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 60 days after its issue or
levy; or

 

(h)           Judgments. There is entered against
any Loan Party or any Subsidiary thereof (i) one or more final judgments or
orders for the payment of money in an aggregate amount (as to all such
judgments and orders) exceeding the Threshold Amount (to the extent not covered
by independent third-party insurance as to which the insurer is rated at least “A”
by A.M. Best Company, has been notified of the potential claim and 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 20 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 the Threshold Amount, 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 the Threshold Amount; or

 

(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
provision of any Loan Document, or purports to revoke, terminate or rescind any
provision of any Loan Document; or

 

(k)           Change of Control. There occurs any
Change of Control; or

 

(l)            Collateral Documents. Any Collateral
Document after delivery thereof pursuant to Section 4.01 or 6.12
shall for any reason (other than pursuant to the terms thereof) cease to create
a valid and perfected first priority Lien (subject to Liens permitted by Section
7.01) on the Collateral purported to be covered thereby or shall be so asserted
by the Borrower or any Loan Party; or

 

83

 

(m)          Gaming Matters. (i)  If the Borrower or any of its Subsidiaries
fails to keep in full force and effect, suffers the termination, revocation,
forfeiture, nonrenewal or suspension of, or suffers a material adverse
amendment, condition or limitation to, any Gaming License, finding of
suitability or other approval or authorization required to enable Borrower or
Subsidiary to own, operate, or otherwise conduct or manage any gaming
activities where Borrower or any of its Subsidiaries conduct such business for
seven consecutive calendar days; or

 

(ii)           if any Governmental Authority terminates,
suspends, revokes, repeals, fails to issue or fails to renew any Gaming License
held by William Wortman, William Paulos or OCM or finding of suitability or
other approvals or authorization required to enable William Wortman, William
Paulos or OCM to own, operate, participate or associate in the business of
Borrower and its Subsidiaries; or

 

(iii)          if the Temporary Casino is not Operating
within one year of the Closing Date; or

 

(n)           Other Matters. If a party to the
Equity Guarantee fails to perform or observe any covenant or agreement
contained in the Equity Guarantee on its part to be performed or observed.

 

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
Required Lenders, take any or all of the following actions:

 

(a)           declare the commitment of each Lender to
make Loans 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)           [Reserved]; 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 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 without
further act of the Administrative Agent or any Lender.

 

8.03.        Application of Funds. Subject to the Intercreditor
Agreement, after the exercise of remedies provided for in Section 8.02
(or after the Loans have automatically become

 

84

 

immediately
due and payable), 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 (other than principal and interest but 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 payable to the Lenders (including fees, charges and
disbursements of counsel to the respective Lenders (including fees and time
charges for attorneys who may be employees of any Lender) and amounts payable under Article III,
ratably among them in proportion to the respective 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 and other Obligations, ratably among the Lenders 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 amounts owing under Secured Hedge Agreements and Secured Cash
Management Agreements, ratably among the Lenders, the Hedge Banks and the Cash
Management Banks in proportion to the respective amounts described in this
clause Fourth held by them; 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.

 

ARTICLE IX

ADMINISTRATIVE AGENT

 

9.01.        Appointment and Authority.

 

(a)           Each of the Lenders
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 Borrower shall not have rights as a third party beneficiary of
any of such provisions.

 

(b)           The Administrative
Agent shall also act as the “collateral
agent” under the Loan Documents, and each of the Lenders (in its
capacities as a Lender, potential Hedge Bank and potential Cash Management
Bank) hereby irrevocably appoints and authorizes the Administrative Agent to
act as the agent of such Lender for purposes of acquiring, holding and
enforcing any and all Liens on Collateral granted by any of the Loan Parties to
secure any of the Obligations, together with such powers and discretion as are
reasonably incidental thereto. In this connection,

 

85

 

the Administrative Agent, as “collateral
agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the
Administrative Agent pursuant to Section 9.05 for purposes of holding or
enforcing any Lien on the Collateral (or any portion thereof) granted under the
Collateral Documents, or for exercising any rights and remedies thereunder at
the direction of the Administrative Agent), shall be entitled to the benefits
of all provisions of this Article IX and Article XI (including Section 11.04(c),
as though such co-agents, sub-agents and attorneys-in-fact were the “collateral
agent” under the Loan Documents) as if set forth in full herein with respect
thereto.

 

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 Required 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.

 

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 Required 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 11.01 and 8.02) or (ii) in
the absence of its own gross negligence or willful misconduct. The
Administrative Agent

 

86

 

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 or a Lender.

 

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 the creation,
perfection or priority of any Lien purported to be created by the Collateral
Documents, (v) the value or the sufficiency of any Collateral, 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, that by its terms must be fulfilled to the satisfaction
of a Lender, the Administrative Agent may presume that such condition is
satisfactory to such Lender unless the Administrative Agent shall have received
notice to the contrary from such Lender prior to the making of such Loan. 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 (including, without limitation, the Control Agent) 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.

 

9.06.        Resignation of
Administrative Agent. The Administrative Agent may at any time give notice
of its resignation to the Lenders and the Borrower. Upon receipt of any such
notice of resignation, the Required 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
Required Lenders and shall have accepted such appointment within

 

87

 

30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may on behalf of the Lenders, 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 (a) 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 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 (b) 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 directly, until such time as the Required 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 11.04
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.

 

9.07.        Non-Reliance on
Administrative Agent and Other Lenders. Each Lender 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 documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender 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 Bookrunners, Arrangers or
other titles as necessary 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 or a Lender.

 

9.09.        Administrative Agent
May File Proofs of Claim. In case of the pendency of any proceeding under
any Debtor Relief Law or any other judicial proceeding relative to any Loan
Party, the Administrative Agent (irrespective of whether the principal of any
Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made
any demand on the Borrower) shall be entitled and empowered, by intervention in
such proceeding or otherwise:

 

88

 

(a)           to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans
and all other Obligations that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders and the Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative
Agent and their respective agents and counsel and all other amounts due the
Lenders and the Administrative Agent under Sections 2.09 and 10.04)
allowed in such judicial proceeding; and

 

(b)           to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same;

 

and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, if the
Administrative Agent shall consent to the making of such payments directly to
the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the Administrative
Agent and its agents and counsel, and any other amounts due the Administrative
Agent under Sections 2.09 and 10.04. Nothing contained
herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender authorize the Administrative Agent to
vote in respect of the claim of any Lender or in any such proceeding.

 

9.10.        Collateral and Guaranty
Matters. The Lenders 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 Aggregate Commitments and payment in full of all Obligations
(other than contingent indemnification obligations), (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) if approved, authorized or ratified in
writing in accordance with Section 11.01;

 

(b)           to release any Guarantor from its
obligations under the Guaranty if such Person ceases to be a Subsidiary as a
result of a transaction permitted hereunder; and

 

(c)           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(i).

 

Upon request
by the Administrative Agent at any time, the Required 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 Guarantor
from its obligations under the Guaranty pursuant to this Section 9.10. In
each case as specified in this Section 9.10, the Administrative Agent
will, at the Borrower’s expense, execute and deliver to the applicable Loan
Party such documents as such Loan Party may reasonably request to evidence the
release of such

 

89

 

item of
Collateral from the assignment and security interest granted under the
Collateral Documents or to subordinate its interest in such item, or to release
such Guarantor from its obligations under the Guaranty, in each case in
accordance with the terms of the Loan Documents and this Section 9.10.

 

ARTICLE X
[RESERVED]

 

ARTICLE XI

MISCELLANEOUS

 

11.01.      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 Required 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 (other than Section 4.01(b)(i) or (c)), or, in the case
of the initial Credit Extension, Section 4.02, without the written
consent of each Lender;

 

(b)           without limiting the generality of clause
(a) above, waive any condition set forth in Section 4.02 as to any
Credit Extension without the written consent of the Required Lenders, as the
case may be;

 

(c)           extend or increase the Commitment of any
Lender (or reinstate any Commitment terminated pursuant to Section 8.02)
without the written consent of such Lender;

 

(d)           postpone any date fixed by this Agreement or
any other Loan Document for any payment (excluding mandatory prepayments) of
principal, interest, fees or other amounts due to the Lenders (or any of them)
hereunder or under such other Loan Document without the written consent of each
Lender entitled to such payment;

 

(e)           reduce or forgive the principal of, or the
rate of interest specified herein on, any Loan, or (subject to clause (v) of the second proviso to this Section
11.01) any fees or other amounts payable hereunder (including, without
limitation, amounts under Section 2.06(c)) or under any other Loan
Document without the written consent of each Lender entitled to such amount; provided,
however, that only the consent of the Required Lenders shall be
necessary to amend the definition of “Default Rate” or to waive any obligation
of the Borrower to pay interest at the Default Rate;

 

(f)            change (i) (A) Section 8.03 in a
manner that would alter the order of or pro rata sharing of payments required
thereby without the written consent of each Lender or (B) the third sentence of
Sections 2.12(a), (f) and 2.13 or the definition of “Applicable
Percentage” without the written consent of each Lender or (ii) the order of
application of

 

90

 

any reduction in the Commitments or any
prepayment of Loans from the application thereof set forth in the applicable
provisions of Section 2.05(b) or 2.06(b), respectively, in
any manner that materially and adversely affects the Lenders without the
written consent of the Required Lenders;

 

(g)           change (i) any provision of this Section
11.01 or the definition of “Required 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 (other than the definitions specified in clause (ii) of this Section
11.01(g)), without the written consent of each Lender or (ii) the
definition of “Required Lenders” without the written consent of each Lender;

 

(h)           release all or substantially all of the
Collateral in any transaction or series of related transactions, without the
written consent of each Lender (except as expressly specified in the Collateral
Documents);

 

(i)            release all or substantially all of the
value of the Guaranty, without the written consent of each Lender (except as
expressly specified in the Guaranty);

 

(j)            impose any greater restriction on the
ability of any Lender to assign any of its rights or obligations hereunder
without the written consent of the Required Lenders;

 

and provided,
further, that (i) 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 (ii) 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 Commitment of such Lender may not be
increased or extended without the consent of such Lender.

 

If any Lender
does not consent to a proposed amendment, waiver, consent or release with
respect to any Loan Document that requires the consent of each Lender and that
has been approved by the Required Lenders, the Borrower may replace such
non-consenting Lender in accordance with Section 11.13; provided
that such amendment, waiver, consent or release can be effected as a result of
the assignment contemplated by such Section (together with all other such
assignments required by the Borrower to be made pursuant to this paragraph).

 

11.02.      Notices; Effectiveness; Electronic
Communications.

 

(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:

 

91

 

(i)            if to the Borrower, the Administrative
Agent, to the address, telecopier number, electronic mail address or telephone
number specified for such Person on Schedule 11.02; and

 

(ii)           if to any other Lender, to the address,
telecopier number, electronic mail address or telephone number specified in its
Administrative Questionnaire.

 

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 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 pursuant to Article II if such Lender, 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)           The Platform. THE
PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT
WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY
OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS
FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR
OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER
MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of
its Related Parties (collectively, the “Agent Parties”) have any liability
to the Borrower, any Lender or any other Person for losses, claims, damages,
liabilities or expenses of any kind (whether in tort, contract

 

92

 

or otherwise) arising out of
the Borrower’s or the Administrative Agent’s transmission of Borrower Materials
through the Internet, except to the extent that such losses, claims, damages,
liabilities or expenses are determined by a court of competent jurisdiction by
a final and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of such Agent Party; provided, however,
that in no event shall any Agent Party have any liability to the Borrower, any
Lender or any other Person for indirect, special, incidental, consequential or
punitive damages (as opposed to direct or actual damages).

 

(d)           Change of Address,
Etc. Each of the Borrower and the Administrative Agent 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 and the Administrative Agent.
In addition, each Lender agrees to notify the Administrative Agent from time to
time to ensure that the Administrative Agent has on record (i) an effective
address, contact name, telephone number, telecopier number and electronic mail
address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Lender.

 

(e)           Reliance by
Administrative Agent and Lenders. The Administrative Agent and the Lenders
shall be entitled to rely and act upon any notices (including telephonic
Committed 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,
each Lender and the Related Parties of each of them from all losses, costs,
expenses and liabilities resulting from the reliance by such 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.

 

11.03.      No Waiver; Cumulative
Remedies. No failure by any Lender or the Administrative Agent to exercise,
and no delay by any such Person in exercising, any right, remedy, power or
privilege hereunder or under any other Loan Document 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, and provided under each other Loan
Document, are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.

 

11.04.      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

 

93

 

transactions contemplated
hereby or thereby shall be consummated) and (ii) all out-of-pocket
expenses incurred by the Administrative Agent or any Lender (including the fees,
charges and disbursements of any counsel for the Administrative Agent or any
Lender), and shall pay all fees and time charges for attorneys who may be
employees of the Administrative Agent or any Lender, 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 Loans made, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans.

 

(b)           Indemnification by
the Borrower. The Borrower shall indemnify the Administrative Agent (and
any sub-agent thereof), each Lender, 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 reasonable 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 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, or, in
the case of the Administrative Agent (and any sub-agent thereof) and its
Related Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or the use or proposed use of the proceeds therefrom,
(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 or any of the Borrower’s or such Loan Party’s directors, shareholders,
trustees or creditors, 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 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) or any
Related Party of any of the foregoing (and without limiting its obligation to
do so), each Lender severally agrees to pay to the Administrative Agent (or any
such sub-agent) or such Related Party, as the case may be, such Lender’s
Applicable 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

 

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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 against
any Related Party of any of the foregoing acting for the Administrative Agent
(or any such sub-agent) in connection with such capacity. The obligations of
the Lenders under this subsection (c) are subject to the provisions of Section 2.12(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 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 to such unintended recipients by such Indemnitee through
telecommunications, electronic or other information transmission systems in connection
with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby other than for direct or actual damages
resulting from the gross negligence or willful misconduct of such Indemnitee as
determined by a final and nonappealable judgment of a court of competent
jurisdiction.

 

(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, the replacement of any
Lender, the termination of the Aggregate Commitments and the repayment,
satisfaction or discharge of all the other Obligations.

 

11.05.      Payments Set Aside. To
the extent that any payment by or on behalf of the Borrower is made to the
Administrative Agent or any Lender, or the Administrative Agent 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 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
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 under clause
(b) of the preceding sentence shall survive the payment in full of the
Obligations and the termination of this Agreement.

 

11.06.      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

 

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and assigns permitted hereby,
except that the Borrower may not
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 assignee in accordance with the provisions of Section
11.06(b), (ii) by way of participation in accordance with the provisions of
Section 11.06(d), or (iii)
by way of pledge or assignment of a security interest subject to the
restrictions of Section 11.06(f) (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 and the 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 assignees all or
a portion of its rights and obligations under this Agreement (including all or
a portion of its Commitment(s) and the Loans at the time owing to it); provided
that any such assignment shall be subject to the following conditions:

 

(i)            Minimum Amounts. (A)  In the case of an assignment of the entire
remaining amount of the assigning Lender’s Commitment and the Loans at the time
owing to it or in the case of an assignment to a Lender, an Affiliate of a
Lender or an Approved Fund, no minimum amount need be assigned; and

 

(B)           In any case not
described in subsection (b)(i)(A) of this Section, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or,
if the Commitment is 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 $1,000,000, in the case of any assignment in
respect of the Loans, 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); provided,
however, that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single Eligible
Assignee (or to an Eligible Assignee and members of its Assignee Group) will be
treated as a single assignment for purposes of determining whether such minimum
amount has been met;

 

(ii)           Proportionate Amounts. 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 Commitment assigned, except that this clause (ii) shall not
prohibit any Lender from assigning all or a portion of its rights and
obligations among separate Loans on a non-pro rata basis;

 

(iii)          Required Consents. No consent shall be
required for any assignment except to the extent required by subsection
(b)(i)(B) of this Section and, in addition:

 

96

 

(A)          the consent of the Borrower (such consent not
to be unreasonably withheld or delayed) shall be required unless (1) an Event
of Default has occurred and is continuing at the time of such assignment or (2)
such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;

 

(B)           the consent of the Administrative Agent
(such consent not to be unreasonably withheld or delayed) shall be required for
assignments if such assignment is to a Person that is not a Lender with a
Commitment in respect of the Loan, an Affiliate of such Lender or an Approved Fund
with respect to such Lender; and

 

(C)           [Reserved].

 

(iv)          Assignment and Assumption. The parties
to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee in
the amount, if any, required as set forth in Schedule 11.06; provided,
however, that the Administrative Agent may, in its sole discretion,
elect to waive such processing and recordation fee in the case of any
assignment. The assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

 

(v)           No Assignment to Borrower. No such
assignment shall be made to the Borrower or any of the Borrower’s Affiliates or
Subsidiaries.

 

(vi)          No Assignment to Natural Persons. No
such assignment shall be made to a natural person.

 

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 assignee thereunder shall be a party to this Agreement and,
to the 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 11.04 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 Section
11.06(d).

 

(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 owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). The entries in the

 

97

 

Register shall be conclusive,
and the Borrower, the Administrative Agent and the Lenders shall 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 the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

 

(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 such Lender’s rights
and/or obligations under this Agreement (including all or a portion of its
Commitment and/or the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged,
(ii) such 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 shall continue to deal solely and directly
with such Lender in connection with such 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 to Section 11.01 that affects such Participant. Each
Lender that sells a Participation shall, acting solely for this purpose as a
non-fiduciary agent of the Borrower, maintain a register on which it enters the
name and address of each Participant and the principal amounts of each
Participant’s interest in the Loans held by it (the “Participant Register”).
The entries in the Participant Register shall be conclusive, absent manifest
error, and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such Loan or other obligation hereunder as
the owner thereof for all purposes of this Agreement notwithstanding any notice
to the contrary. Any such Participant Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time
to time upon reasonable prior notice. 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, provided
that any such payment shall subject the Lender granting such participation to
replacement pursuant to the terms of Section 11.13. To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.13 as though it were a
Lender. Section 11.19 shall apply to any Lender that has a Participant
that is Disqualified, unless such Lender replaces such Participant or
repurchases such Participant’s interest in the Commitment and/or the Loans.

 

(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

 

98

 

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, without the consent of the Borrower or Administrative Agent, 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)           [Reserved].

 

11.07.      Treatment of Certain Information;
Confidentiality. Each of the Administrative Agent and the Lenders 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 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 (i) becomes
publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Administrative Agent, any Lender or any of
their respective Affiliates on a nonconfidential basis from a source other than
the Borrower and not known to them to be under any duty of confidentiality to
the Borrower.

 

For purposes
of this Section, “Information” means all information received from any
Loan Party or any Subsidiary thereof relating to any Loan Party or any
Subsidiary thereof or their respective businesses, other than any such
information that is available to the Administrative Agent, any Lender on a
nonconfidential basis prior to disclosure by any Loan Party or any

 

99

 

Subsidiary
thereof, provided that, in the case of information received from a Loan
Party or any such 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.

 

Each of the
Administrative Agent, the Lenders acknowledges that (a) the Information may
include material non-public information concerning the Borrower or a
Subsidiary, as the case may be, (b) it has developed compliance procedures
regarding the use of material non-public information and (c) it will handle
such material non-public information in accordance with applicable Law,
including Federal and state securities Laws.

 

11.08.      Right of Setoff. If
an Event of Default shall have occurred and be continuing, each Lender and each
of their respective Affiliates is hereby authorized at any time and from time
to time, 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 or any such Affiliate to or
for the credit or the account of the Borrower 
against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement or any other Loan Document to such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement or any other Loan Document and although such obligations of the
Borrower may be contingent or
unmatured or are owed to a branch or office of such Lender or different from
the branch or office holding such deposit or obligated on such indebtedness. The
rights of each Lender and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender or their respective Affiliates may have. Each Lender 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.

 

11.09.      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; provided that in each case the Loan Parties are not thereby
required to make any greater payment hereunder than would otherwise be required.

 

11.10.      Counterparts;
Integration; Effectiveness. This Agreement may be executed in counterparts
(and by different parties hereto in different counterparts), each of which

 

100

 

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.

 

11.11.      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.

 

11.12.      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.

 

11.13.      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, or if any Lender
ceases to make Eurodollar Rate Loans pursuant to Section 5.02, or if any
Lender is a Defaulting Lender, or if any other circumstances exist hereunder
that give the Borrower the right hereunder to replace such 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 11.06), 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 11.06(b);

 

(b)           such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under
the other Loan Documents (including any

 

101

 

amounts under Section 2.06(c) or 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 an
avoidance of or 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.

 

11.14.      Governing Law; Jurisdiction; Etc.

 

(a)           GOVERNING LAW. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.

 

(b)           SUBMISSION TO
JURISDICTION. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK SITTING IN BOROUGH OF MANHATTAN AND OF THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, 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 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 NEW YORK 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 OR ANY LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.

 

(c)           WAIVER OF VENUE.
THE BORROWER 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

 

102

 

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 PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 11.02. NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW

 

11.15.      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 BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

11.16.      No Advisory or Fiduciary
Responsibility. In connection with all aspects of each transaction
contemplated hereby, the Borrower each acknowledge and agree, and acknowledge their respective Affiliates’
understanding, that: (i) the credit facilities provided for hereunder and any related arranging or
other services in connection therewith (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document)
are an arm’s-length commercial transaction between the Borrower and its Affiliates, on the one hand, and
the Administrative Agent and the
Arrangers, on the other hand, and the Borrower is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of
the transactions contemplated hereby and by the other Loan Documents (including
any amendment, waiver or other modification hereof or thereof); (ii) in
connection with the process leading to such transaction, the Administrative
Agent and the Arrangers each is
and has been acting solely as a principal and is not the financial advisor,
agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other
Person; (iii) neither the Administrative Agent nor the Arrangers has assumed or will assume an advisory, agency
or fiduciary responsibility in favor of the Borrower with respect to any of the
transactions contemplated hereby or the process leading thereto, including with
respect to any amendment, waiver or other modification hereof or of any other
Loan Document (irrespective of whether the Administrative Agent or the Arrangers has advised or is
currently advising the Borrower or any of its Affiliates on other matters) and neither the Administrative
Agent nor the Arrangers has any
obligation to the Borrower or any of its
Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; (iv)
the Administrative

 

103

 

Agent and the Arrangers and their respective
Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor the Arrangers has any obligation
to disclose any of such interests by virtue of any advisory, agency or
fiduciary relationship; and (v) the Administrative Agent and the Arranger have not provided and
will not provide any legal, accounting, regulatory or tax advice with respect
to any of the transactions contemplated hereby (including any amendment, waiver
or other modification hereof or of any other Loan Document) and the Borrower
has consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate. The
Borrower hereby waives and releases, to the fullest extent permitted by law,
any claims that it may have against the Administrative Agent and the Arrangers with respect to any
breach or alleged breach of agency or fiduciary duty.

 

11.17.      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 each
Loan Party, which information includes the name and address of each Loan Party
and other information that will allow such Lender or the Administrative Agent,
as applicable, to identify each Loan Party in accordance with the Act.

 

11.18.      Gaming Authorities. The
Administrative Agent and each of the Lenders agree to cooperate with all Gaming
Authorities in connection with the administration of their regulatory
jurisdiction over the Administrative Agent, each of the Lenders, and the
Borrower and its Subsidiaries, including the provision of such documents or
other information as may be requested by any such Gaming Authority relating to
Borrower or any of its Subsidiaries or to the Loan Documents.

 

11.19.      Removal of a Lender. Borrower
shall have the right to remove a Lender as a party to this Agreement in
accordance with this Section if such Lender is the subject of a
Disqualification. If Borrower is entitled to remove a Lender pursuant to this
section, upon notice from Borrower, the Lender being removed shall execute and
deliver an Assignment and Assumption Agreement covering the Lender’s Commitment
under any Facility and the Loans at any time owing to it under such Facility in
favor of one or more Eligible Assignees designated by Borrower (and acceptable
to the Administrative Agent, which acceptance shall not be unreasonably delayed
or withheld), subject to the payment of a purchase price by such Eligible
Assignee equal to all principal and accrued interest, fees and other amounts
payable to such Lender under this Agreement through the date of assignment.

 

11.20.      Time of
the Essence. Time is of the essence of the Loan Documents.

 

11.21.      ENTIRE
AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

104

 

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

 

	
   

  	
  PA MEADOWS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William J. Paulos

  
	
   

  	
  Name:

  	
  William J. Paulos

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
					

 

S-1

 

	
   

  	
  BANK OF
  AMERICA, N.A., as 

  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Chris M. Levine

  
	
   

  	
  Name:

  	
  Chris M. Levine

  
	
   

  	
  Title:

  	
  Assistant Vice President

  
					

 

S-2

 

	
   

  	
  BANK OF
  AMERICA, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Justin Lien

  
	
   

  	
  Name:

  	
  Justin Lien

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

S-3

 

	
   

  	
  Wells Fargo
  Bank, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Tracie D. Plummer

  
	
   

  	
  Name:

  	
  Tracie D. Plummer

  
	
   

  	
  Title:

  	
  Assistant Vice President

  
					

 

S-4Exhibit 10.25

 

FIRST AMENDMENT TO NOTE AGREEMENT

 

This FIRST AMENDMENT TO POST-CLOSING AND NOTE
ISSUANCE AGREEMENT (this “First Amendment”)
is dated as of November 14, 2006 and entered into by and between MAGNA
ENTERTAINMENT CORP., a Delaware corporation (“Agent”),
and PA MEADOWS, LLC, a Delaware limited liability company (“Borrower”), and is made with reference to that certain
Post-Closing and Note Issuance Agreement, dated as of July 26, 2006 (the “Note Agreement”), by and among Agent, Borrower, the Holders
from time to time party thereto and, solely for purposes of Section 10.15
thereof, the Parent Entities. Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Amended Note Agreement
(as defined below).

 

RECITALS

 

WHEREAS, as a result
of further negotiations between Agent and Borrower since the signing of the
Note Agreement, Agent and Borrower have decided to amend the terms of the Note
Agreement by entering into this First Amendment in order to (i) change the
Holdback Agreement to be delivered upon the Tranche B Junior Notes maturing to
defer payment until the opening of a permanent casino and eliminate the equity
guarantee and security and (ii) amend other provisions of the Note Agreement as
set forth in the Amended Note Agreement.

 

NOW, THEREFORE, in
consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:

 

SECTION
1

 

AMENDMENT
OF NOTE AGREEMENT

 

As of the date hereof, (i) the Note Agreement
shall be and is hereby amended and modified to read in its entirety as set
forth in Annex A hereto and (ii) Exhibit H to the Note Agreement shall
be and is hereby amended and modified to read in its entirety as set forth in Annex
B hereto (as set forth in such Annexes A and B, the “Amended Note Agreement”) and as so amended are hereby
ratified, approved and confirmed in each and every respect. The parties hereto
agree and acknowledge that the schedules and other exhibits to the Note
Agreement delivered on July 26, 2006 shall be the schedules and such other
exhibits to the Amended Note Agreement.

 

SECTION
2

 

MISCELLANEOUS

 

2.1          Fees and
Expenses. Except as otherwise expressly provided
in the Amended Note Agreement, all costs and expenses, including, without
limitation, fees and 

 

 

disbursements
of counsel, financial advisors and accountants, incurred in connection with
this First Amendment and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.

 

2.2          Notices.
All notices, requests, claims, demands and other communications hereunder shall
be made as set forth in Section 10.6 of the Amended Note Agreement.

 

2.3          Headings.
The headings contained in this First Amendment are for reference purposes only
and shall not affect in any way the meaning or interpretation of this First
Amendment.

 

2.4          Severability.
If any term or other provision of this First Amendment is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this First Amendment shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this First Amendment so as to effect the original intent
of the parties as closely as possible in a mutually acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.

 

2.5          Amendment.
This First Amendment may not be amended or modified except by an instrument in
writing signed by Agent and Borrower.

 

2.6          Governing Law;
Jurisdiction; Service of Process. This First
Amendment shall be governed by, and construed in accordance with, the laws of
the State of New York. Agent and Borrower hereby agree and consent to the
exclusive jurisdiction of, and service of process and venue in, the United
States District Court for the Southern District of New York and the courts of
the State of New York located in the County of New York, State of New York and
waives any objection with respect thereto, for the purpose of any action, suit
or proceeding arising out of or relating to this First Amendment.

 

2.7          WAIVER OF JURY
TRIAL. EACH OF BORROWER AND AGENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS FIRST AMENDMENT OR THE ACTIONS OF BORROWER OR AGENT IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

 

2.8          Counterparts.
This First Amendment may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.

 

 

[Signature Page Follows]

 

 

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

 

 

	
   

  	
  PA
  MEADOWS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William J. Paulos

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William J. Paulos

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAGNA
  ENTERTAINMENT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Blake Tohana

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Blake Tohana

  
	
   

  	
   

  	
  Title: 

  	
  EVP & CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ William Ford

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William Ford

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  
					

 

 

 

 

 

POST-CLOSING
AND NOTE ISSUANCE AGREEMENT

 

 

by and among

 

PA
MEADOWS, LLC,

AS
PURCHASER AND BORROWER,

and

 

MAGNA
ENTERTAINMENT CORP.,

AS SELLER
AND AGENT,

 

and

 

THE
HOLDERS FROM TIME TO TIME PARTY HERETO

and

 

SOLELY
WITH RESPECT TO SECTION 10.15 HEREOF, THE PARENT ENTITIES PARTY HERETO

 

July 26,
2006

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
  DEFINITIONS

  	
  2

  
	
  1.1

  	
  Certain Definitions

  	
  2

  
	
  1.2

  	
  Accounting Principles

  	
  16

  
	
  1.3

  	
  Other Definitional
  Provisions; Construction

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  ISSUE AND SALE OF NOTES

  	
  16

  
	
  2.1

  	
  Authorization and
  Issuance of the Notes

  	
  16

  
	
  2.2

  	
  Sale and Purchase

  	
  16

  
	
  2.3

  	
  The Closing

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  REPAYMENT OF THE NOTES

  	
  17

  
	
  3.1

  	
  Interest

  	
  17

  
	
  3.2

  	
  Repayment of the Notes;
  Exchange of Tranche B Junior Notes

  	
  17

  
	
  3.3

  	
  Optional Prepayment of
  Notes

  	
  18

  
	
  3.4

  	
  Notice of Optional
  Prepayment

  	
  18

  
	
  3.5

  	
  Intentionally Left
  Blank

  	
  18

  
	
  3.6

  	
  Payment

  	
  18

  
	
  3.7

  	
  Risk of Loss

  	
  18

  
	
  3.8

  	
  Maximum Lawful Rate

  	
  19

  
	
  3.9

  	
  Certain Waivers

  	
  19

  
	
  3.10

  	
  Stock Transfer

  	
  20

  
	
  3.11

  	
  Termination of Note

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  CONDITIONS

  	
  21

  
	
  4.1

  	
  Conditions to
  Obligations of Purchaser and Seller

  	
  21

  
	
  4.2

  	
  Conditions to
  Acceptance of Notes by Seller

  	
  23

  
	
  4.3

  	
  Conditions to Issuance
  of Notes by Borrower

  	
  24

  
	
  4.4

  	
  Conditions to the
  Second Closing

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  REPRESENTATIONS AND WARRANTIES

  	
  27

  
	
  5.1

  	
  Representations and
  Warranties of Borrower

  	
  27

  
	
  5.2

  	
  Representations and
  Warranties of Magna

  	
  29

  
	
  5.3

  	
  Effect of
  Representations and Warranties

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  TRANSFER OF NOTES

  	
  31

  

 

i

 

	
  6.1

  	
  Restricted Notes

  	
  31

  
	
  6.2

  	
  Legends; Holder’s Representations

  	
  31

  
	
  6.3

  	
  Transfer of Notes

  	
  31

  
	
  6.4

  	
  Registration of Notes

  	
  32

  
	
  6.5

  	
  Replacement of Lost
  Notes

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  COVENANTS

  	
  33

  
	
  7.1

  	
  Affirmative Covenants

  	
  33

  
	
  7.2

  	
  Negative Covenants

  	
  36

  
	
  7.3

  	
  Covenant Performance

  	
  43

  
	
  7.4

  	
  Magna Covenants

  	
  43

  
	
  7.5

  	
  Covenant Performance

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  EVENTS OF DEFAULT

  	
  44

  
	
  8.1

  	
  Specified Events of
  Default by Borrower

  	
  44

  
	
  8.2

  	
  Consequences of
  Specified Event of Default

  	
  46

  
	
  8.3

  	
  Security

  	
  47

  
	
  8.4

  	
  Application of Proceeds
  of Collateral and Payments after Specified Event of Default

  	
  47

  
	
  8.5

  	
  Event of Default by
  Seller

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  AGENT

  	
  48

  
	
  9.1

  	
  Authorization and
  Action

  	
  48

  
	
  9.2

  	
  Delegation of Duties

  	
  49

  
	
  9.3

  	
  Exculpatory Provisions

  	
  49

  
	
  9.4

  	
  Reliance

  	
  49

  
	
  9.5

  	
  Non-Reliance on Agent
  and Other Holders

  	
  50

  
	
  9.6

  	
  Agent in its Individual
  Capacity

  	
  50

  
	
  9.7

  	
  Successor Agent

  	
  50

  
	
  9.8

  	
  Collections and
  Disbursements

  	
  50

  
	
  9.9

  	
  Reporting

  	
  51

  
	
  9.10

  	
  Consent of Holders

  	
  51

  
	
  9.11

  	
  This Article Not
  Applicable to Loan Parties

  	
  52

  

 

ii

 

	
  ARTICLE 10

  	
  MISCELLANEOUS

  	
  52

  
	
  10.1

  	
  Successors and Assigns

  	
  52

  
	
  10.2

  	
  Modifications and
  Amendments

  	
  53

  
	
  10.3

  	
  No Implied Waivers;
  Cumulative Remedies; Writing Required

  	
  53

  
	
  10.4

  	
  Reimbursement of
  Expenses

  	
  53

  
	
  10.5

  	
  Holidays

  	
  53

  
	
  10.6

  	
  Notices

  	
  53

  
	
  10.7

  	
  Survival

  	
  54

  
	
  10.8

  	
  Governing Law;
  Jurisdiction; Service of Process

  	
  54

  
	
  10.9

  	
  WAIVER OF JURY TRIAL

  	
  55

  
	
  10.10

  	
  Severability

  	
  55

  
	
  10.11

  	
  Headings

  	
  55

  
	
  10.12

  	
  Indemnity

  	
  55

  
	
  10.13

  	
  Counterparts

  	
  60

  
	
  10.14

  	
  Confidentiality

  	
  60

  
	
  10.15

  	
  Provisions Applicable
  to Parent Entities

  	
  61

  
	
  10.16

  	
  Pennsylvania Accounts

  	
  63

  

 

iii

 

	
  ANNEX

  
	
   

  	
   

  	
   

  
	
  Annex A

  	
  Holder and Payment Information

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  
	
   

  	
   

  	
   

  
	
  Schedule 4.1(a)

  	
  Jurisdictions

  	
   

  
	
  Schedule 5.1(d)

  	
  Borrower Ownership Chart

  	
   

  
	
  Schedule 5.1(f)

  	
  Borrower Activities

  	
   

  
	
  Schedule 5.2(d)

  	
  Deposit Accounts Schedule

  	
   

  
	
  Schedule 7.2(g)

  	
  Affiliate Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A-1

  	
  Form of Tranche A Junior Notes

  	
   

  
	
  EXHIBIT A-2

  	
  Form of Tranche B Junior Notes

  	
   

  
	
  EXHIBIT B

  	
  Form of Subsidiary Guaranty

  	
   

  
	
  EXHIBIT C

  	
  Form of Security Agreement

  	
   

  
	
  EXHIBIT D

  	
  Form of Mortgage

  	
   

  
	
  EXHIBIT E

  	
  Form of MID Forbearance and Release
  Agreement

  	
   

  
	
  EXHIBIT F

  	
  Intentionally Left Blank

  	
   

  
	
  EXHIBIT G

  	
  Form of Equity Commitment Agreement

  	
   

  
	
  EXHIBIT H

  	
  Form of Holdback Agreement

  	
   

  
	
  EXHIBIT I-1

  	
  Form of Closing Date Legal Opinion of
  MT&O

  	
   

  
	
  EXHIBIT I-2

  	
  Form of Closing Date Opinion of
  Pennsylvania Counsel

  	
   

  
	
  EXHIBIT J

  	
  Form of Legal Opinion re Holdback
  Agreement

  	
   

  
	
  EXHIBIT K

  	
  Intentionally Left Blank

  	
   

  
	
  EXHIBIT L

  	
  Form of Closing Date Legal Opinion of
  Magna In-house Counsel

  	
   

  
	
  EXHIBIT M

  	
  Form of MID Pledge Agreement

  	
   

  

 

iv

 

POST-CLOSING
AND NOTE ISSUANCE AGREEMENT

 

THIS POST-CLOSING AND NOTE ISSUANCE AGREEMENT
(this “Agreement”), dated as of July 26, 2006, is by and among PA MEADOWS,
LLC, a Delaware limited liability company (“Borrower” or “Purchaser”), MAGNA
ENTERTAINMENT CORP., a Delaware corporation (“Magna”), in its capacity as
Seller under the Acquisition Agreement (Magna, in such capacity, is sometimes
referred to herein as “Seller”) and in its capacity as administrative and
collateral agent for Holders (in such capacity “Agent”), the Holders from time
to time party hereto, and, solely for purposes of Section 10.15 of this
Agreement, PA MezzCo, LLC, a Delaware limited liability company (“MezzCo”), and
Cannery Casino Resorts, LLC, a Nevada limited liability company (“CCR” and,
together with MezzCo, the “Parent Entities”). Capitalized terms used and not
defined elsewhere in this Agreement are defined in Article 1 hereof.

 

RECITALS

 

Purchaser and Seller are parties to the
Acquisition Agreement which provides for, among other things, the purchase by
Purchaser and the sale by Seller of all of the outstanding shares of Capital
Stock of the Acquired Companies (the “Acquired Shares”), and the payment of the
purchase price therefor, each in accordance with the terms of the Acquisition
Agreement. In connection with the entry by Purchaser and Seller into a First
Amendment to Stock Purchase Agreement, Purchaser and Seller have agreed that (A) Purchaser
will issue and Seller will accept, for the purpose of paying the consideration
for the acquisition of all of the Acquired Shares by Purchaser in accordance
with the terms and upon satisfaction of the conditions of the Acquisition
Agreement (i) Tranche A Junior Notes in the aggregate principal amount of
$175,000,000 representing the part of such consideration required to be
paid in cash thereunder and (ii) Tranche B Junior Notes in the aggregate
principal amount of $25,000,000 representing the Holdback Amount (as defined in
the Holdback Agreement); (B) if the Notes are not satisfied at a Second
Closing as set forth herein, the Acquired Shares will be transferred back to
Seller (subject to the Prior Liens) in full satisfaction of the Notes and the
acquisition of the Acquired Shares by Purchaser shall be rescinded, including
for all tax purposes; and (C) this Agreement shall define certain of the
rights and obligations of Purchaser and Seller as they relate to the Notes and
the Acquired Companies and the other matters set forth herein.

 

NOW, THEREFORE, the parties hereto, in
consideration of the premises and their mutual covenants and agreements herein
set forth and intending to be legally bound hereby, covenant and agree as
follows:

 

1

 

ARTICLE 1

 

DEFINITIONS

 

1.1                                 Certain
Definitions. In addition to other words and terms defined elsewhere in this
Agreement, the following words and terms shall have the meanings set forth
below:

 

“Acquired Companies” shall mean MECPenn, MLR
and WTA.

 

“Acquired Shares” shall have the meaning
assigned to such term in the recitals

 

“Acquisition Agreement” shall mean the Stock
Purchase Agreement dated as of November 8, 2005 between Seller and
Purchaser, as amended by the First Amendment to Stock Purchase Agreement dated
as of July 26, 2006 between Seller and Purchaser.

 

“Affiliate” shall mean with respect to any
Person, a Person that, directly or indirectly, through one or more
intermediaries, Controls, is Controlled By or is Under Common Control With,
such specified Person, including such specified Person’s Subsidiaries. Without
limiting the foregoing, the direct or indirect ownership of ten percent (10%)
or more of the equity securities of a Person shall be deemed to constitute
control, except for purposes of Section  10.14. Notwithstanding anything
to the contrary herein, neither Agent, Holders nor any of their respective
Affiliates shall be deemed to be Affiliates of any Loan Party by virtue of the
transactions contemplated in this Agreement, the Racing Services Agreement or
the Acquisition Agreement and OCM HoldCo, Millennium Gaming and their
respective Affiliates shall be deemed to be Affiliates of the Loan Parties.

 

“Agent” shall have the meaning assigned to
such term in the preamble hereto and any successor agent provided for
hereunder.

 

“Agreement” shall have the meaning assigned
to such term in the preamble hereto.

 

“Borrower” shall have the meaning assigned to
such term in the preamble hereto.

 

“Borrower LLC Agreement” shall mean the
Limited Liability Company Agreement of Borrower dated as of November 8,
2005.

 

“Borrower Ownership Chart” shall have the
meaning assigned to such term in Section 5.1(d).

 

“Business” shall mean the business of the
Meadows Companies as of the date hereof, including all Racing Operations (as
defined in the Racing Services Agreement) and the gaming business contemplated
by the Transaction Documents, including the development thereof and the
obtaining of all required or useful licenses, permits or approvals of any
Governmental Authority.

 

“Business Day” shall mean any day that is not
a Saturday, a Sunday or other day on which banks are required or authorized by
law to be closed in the City of New York.

 

2

 

“By-laws” shall mean the by-laws, partnership
agreement, operating agreement or analogous instrument of any Person, as
applicable.

 

“Capital Stock” means the capital stock of or
membership or other equity interests in a Person.

 

“Capitalized Leases” shall mean, with respect
to any Person, leases of (or other agreements conveying the right to use) any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as capital leases on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet.

 

“Cash Equivalents” means, as at any date of
determination, Investments meeting the requirements of any of Section 7.2(i)(i) through
(v) with a maturity of not more than six months from the date of
acquisition.

 

“CCR” shall have the meaning assigned to such
term in the preamble hereto.

 

“CCR Transaction” means the exchange by
OCM AcquisitionCo of exchangeable notes for not less than thirty-three and
one-third percent (331/3%) and no more than fifty percent
(50%) of the issued and outstanding shares of CCR.

 

“CERCLA” shall mean the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. § 9604, et
seq.).

 

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

 

(a)                                  the
failure at any time of Bill Paulos and Bill Wortman (or their heirs) to legally
and beneficially own and control 100% of the issued and outstanding Capital
Stock of Millennium Gaming or to have the ability to elect all of the Governing
Body of Millennium Gaming; or the failure at any time of Millennium Gaming to
legally and beneficially control at least fifty percent (50%) of the issued and
outstanding shares of CCR or, together with the Persons described in clause (b) or
(c) of this definition, to have the ability to elect all of the Governing
Body of each Parent Entity;

 

(b)                                 prior
to the occurrence of the CCR Transaction, the failure at any time of OCM HoldCo
to legally and beneficially own and control exchangeable notes convertible into
at least thirty-three and one-third percent (33-1/3%) and no more than fifty
percent (50%) of the issued and outstanding shares of CCR;

 

(c)                                  following
the occurrence of the CCR Transaction, the failure at any time of OCM HoldCo to
legally and beneficially own and control at least thirty-three and one-third
percent (33-1/3%) and no more than fifty percent (50%) of the issued and
outstanding shares of CCR;

 

(d)                                 the
failure at any time of PA MezzCo to legally and beneficially own and control
100% of the issued and outstanding shares of Capital Stock of Borrower or the 

 

3

 

failure at any time of PA MezzCo to have the ability
to elect all of the Governing Body of Borrower;

 

(e)                                  the
failure at any time of CCR to legally and beneficially own and control 100% of
the issued and outstanding voting shares of Capital Stock of PA MezzCo or the
failure at any time of CCR to have the ability to elect all of the Governing
Body of PA MezzCo;

 

(f)                                    the
failure at any time of the persons listed on the Borrower Ownership Chart as
direct or indirect owners of OCM HoldCo or such other persons designated by
Oaktree Capital Management to legally and beneficially own and control 100% of
the issued and outstanding Capital Stock of OCM HoldCo or have the ability to
elect all the Governing Body of OCM HoldCo; or

 

(g)                                 the
failure at any time of Borrower to legally and beneficially own and control
100% of the issued and outstanding shares of Capital Stock of each of the
Meadows Companies or the failure at any time of Borrower to have the ability to
elect all of the Governing Body of each of the Meadows Companies;

 

provided, however, notwithstanding the foregoing, a Change of
Control hereunder shall not be deemed to occur, to the extent that changes are
made in the ownership of Borrower as reflected on the Borrower Ownership Chart
in order (i) to facilitate the approval of the issuance of the Gaming
License, (ii) in response to a request from the PGCB or other Governmental
Authority, or (iii) to structure the ownership of Borrower in a manner
that would not result in the payment of any additional fee upon the closing of
the CCR Transaction under the PA Gaming Act or the PA Gaming Regulations,
including without limitation, pursuant to Section 1209 of the PA Gaming
Act, and so long as the Agent does not reasonably determine that such change
would preclude the Consummation Date occurring by the Deadline Date or change
or adversely affect Borrower’s ability to satisfy its obligations as
contemplated hereby or the economics of the transactions contemplated hereby.
Borrower shall provide notice to Agent prior to making any change in the
structure reflected in the Borrower Ownership Chart.

 

As used herein, the term “beneficially own” or “beneficial ownership”
shall be determined in accordance with Rule 13d-3 promulgated under the
Exchange Act.

 

“Charter Documents” shall mean the articles
of incorporation, certificate of incorporation, certificate of limited
partnership, certificate of limited liability company, charter or analogous
organizational instrument of any Person filed with the appropriate Governmental
Authorities, as applicable.

 

“Citibank Base Rate” shall mean the rate of
interest publicly announced by Citibank, N.A., New York, New York, from time to
time as its base rate.

 

“Claim Notice” has the meaning assigned to
such term in Section 10.12(g) hereof.

 

“Closing” shall have the meaning assigned to
such term in Section 2.3.

 

4

 

“Closing Date” shall mean the date and time
for delivery of the Notes as finally determined pursuant to Section 2.3
hereof.

 

“Code” shall mean the Internal Revenue Code
of 1986.

 

“Conditional/Category 1 Gaming License” shall
mean a Conditional Category 1 License or a Category 1 License, in each case
under the PA Gaming Act.

 

“Consummation Date” shall mean the day
identified in a written notice from Borrower to Agent that is a date on or
prior to the date that is thirty-five (35) days (or if Borrower does not
deliver any such written notice, such thirty-fifth day) following the earlier
to occur of (a) the PGCB Approval Date, and (b) the PGCB Issuance
Date; provided, however, that at the election of Borrower, it may provide
written notice to the Agent on or prior to thirty five days after the PGCB
Approval Date that the Consummation Date shall not occur if (1) the
lenders specified in the Financing Commitment Letter are not reasonably
satisfied with the conditions contained in the approval for issuance of the Conditional/Category
1 Gaming License to WTA, or (2) the lenders specified in the Financing
Commitment Letter reasonably object to the existence of any pending legal
challenge to the approval by the PGCB.

 

“Contingent Obligation” as applied to any
Person, shall mean any direct or indirect liability, contingent or otherwise,
of that Person (i) with respect to any Indebtedness, lease, dividend or
other obligation of another if the primary purpose or intent thereof by the
Person incurring the Contingent Obligation is to provide assurance to the
obligee of such obligation of another that such obligation of another will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof, (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings, or (iii) under Interest
Rate Protection Agreements. Contingent Obligations shall include (a) the
direct or indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another, (b) the
obligation to make take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (1) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment
or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise) or (2) to maintain
the solvency or any balance sheet item, level of income or financial condition
of another if, in the case of any agreement described under subclauses (1) or
(2) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.

 

“Control” (including the terms “Controlled By”
and “Under Common Control With”) means the possession, directly or indirectly
or as a trustee or executor (in each case, acting in a fiduciary capacity), of
the power to direct or cause the direction of the management or policies of 

 

5

 

a Person, whether through the ownership of equity securities, as
trustee or executor (in each case, acting in a fiduciary capacity), by contract
or credit arrangement or otherwise.

 

“Deadline Date” shall mean October 31,
2006; provided, however, that in the event the PGCB Issuance Date or PGCB
Approval Date occurs prior to October 31, 2006, the Deadline Date shall be
thirty-six (36) days following the PGCB Issuance Date or PGCB Approval Date, as
applicable.

 

“Default” shall mean any event or condition
that, but for the giving of notice or the lapse of time, or both, would
constitute a Specified Event of Default.

 

“Environmental Laws” means any civil and
criminal Laws, rules, permits or orders of Governmental Authorities relating to
or addressing pollution or protection of the environment, public health or
safety, including, without limitation, those relating to the presence, use,
production, processing, generation, handling, labeling transportation,
treatment, storage, disposal, distribution, testing, processing, Release,
threatened Release or discharge, investigation, control, exposure or cleanup of
Hazardous Materials, wastes, substances, storm water or waste water.

 

“Equity Commitment Agreement” means the
agreement between OCM AcquisitionCo and Agent dated as of the date hereof and
in the form of Exhibit G annexed hereto.

 

“ERISA” shall mean the Employee Retirement
Income Security Act of 1974 and the rules and regulations of any governmental
agency or authority, as from time to time in effect, promulgated thereunder.

 

“ERISA Affiliate” as applied to any Person,
means (i) any corporation which is a member of a controlled group of
corporations within the meaning of Section 414(b) of the Code of
which that Person is a member; (ii) any trade or business (whether or not
incorporated) which is a member of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Code of which
that Person is a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Code of which
that Person, any corporation described in clause (i) above or any trade or
business described in clause (ii) above is a member, provided, however,
that none of the Meadows Companies shall be considered an ERISA Affiliate of
Borrower. Any former ERISA Affiliate of Borrower or its Subsidiaries shall
continue to be considered an ERISA Affiliate within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of
Borrower or its Subsidiaries and with respect to liabilities arising after such
period for which Borrower or its Subsidiaries could be liable under the Code or
ERISA.

 

“Exchange Act” shall mean the Securities
Exchange Act of 1934 and any successor statute.

 

“Excluded Items” shall mean all of Borrower’s
right, title and interest in and to, and any and all claims or rights of
Borrower arising from, and all damages, recovery, indemnity or other remedies
of Borrower arising from or out of: (i) the Acquisition Agreement, (ii) the
other Transaction Documents entered into in connection with the Acquisition
Agreement, (iii) the MID Forbearance Agreement, (iv) the Borrower LLC
Agreement, (v) Borrower’s officers, directors 

 

6

 

and employees (including for service as an officer, director or
employee of any of the Meadows Companies), provided that the applicable
officer, director or employee waives and releases all claims against the
Meadows Companies, Magna and its Affiliates for claims related to service as an
officer, director and employee of the Meadows Companies, (vi) Borrower’s
attorney-client relationship and privilege, and any and all records,
communications, files, documents and instruments protected by the
attorney-client privilege or work product doctrine of Borrower, (vii) any
agreement by and between Borrower and any Affiliate or Parent Entity (other
than the Meadows Companies and their Subsidiaries) except to the extent
required to be transferred to the Meadows Companies as contemplated by Section 3.10
hereof in connection with a Stock Transfer, (viii) all Purchaser
Application Materials (as defined in Section 5.04(e) of the
Acquisition Agreement) except to the extent permitted to be used by Borrower or
a Meadows Company in accordance with Section 5.04(e) of the
Acquisition Agreement, (ix) any commitment letter, agreement and other
supporting documentation with a lender or other financing source for financing
in contemplation of the Second Closing or thereafter, including the Financing
Commitment Letter, (x) the letter of credit posted with the PGCB related to the
WTA Application and all supporting documentation, (xi) the Permitted Payments
and any agreements evidencing any Permitted Payments, and (xii) proceeds of any
of the foregoing.

 

“Financing Commitment Letter” shall have the
meaning assigned to such term in Section 4.2(c) hereof.

 

“Financing Statements” shall have the meaning
assigned to such term in Section 4.1 hereof.

 

“Fiscal Year” or “fiscal year” shall mean
each twelve month period ending on December 31 of each year.

 

“GAAP” shall have the meaning assigned to
such term in Section 1.2 hereof.

 

“Gaming License Application Event” shall mean
the occurrence of any of the following:

 

(a)                                  any
conviction in any jurisdiction of any directors, owners or key employee
qualifiers of Borrower or of any of its direct or indirect Affiliates or
owners, of a felony or gambling related offense, including without limitation,
which offense would cause Borrower or any of its Affiliates or any such
directors, owners or key employee qualifiers to be denied or disqualified from
obtaining a Conditional/Category 1 Gaming License, as provided in Section 1213
of the
Pennsylvania Race Horse Development and Gaming Act (Act 71) codified at
Title 4 of the Pennsylvania Consolidated Statutes, Sections 1101-1904
(the “PA Gaming Act”) and Section 435.1(n)(i) and (ii) of the
regulations promulgated by the PGCB thereunder (the “PA Gaming Regulations”);

 

(b)                                 any
failure of Borrower or any of its direct or indirect Affiliates, or any of
their respective directors, owners or key employee qualifiers (as defined in
the PA Gaming Act), to provide any supplementary information that the PGCB, its
designees, bureaus, agents or employees, or the Pennsylvania State Police,
including, but not limited to, any requests described in Sections 1207(11) and
1313(b) of the Act or 

 

7

 

Sections 421.4(b), 423.1(d), 423.4(c), 435.1(b), (c) and
(d), or 441.3(b) of the PA Gaming Regulations; and

 

(c)                                  any
failure to maintain the bond or letter of credit during the period that WTA has
an application for a Conditional/Category 1 Gaming License on file with the
PGCB, as required by Section 1313(c) of the PA Gaming Act and Section 441(10)(a) of
the PA Gaming Regulations;

 

(d)                                 any
failure of Borrower, any of its direct or indirect Affiliates or owners, any of
their respective key employee qualifiers, or any other person or entity that
holds a direct or indirect interest in the Borrower or any of its direct or
indirect Affiliates, to comply with a notice from the PGCB to divest the
interest in the Borrower or any of its direct or indirect Affiliates, or
owners, as set forth in Section 1312 of the PA Gaming Act and Section 441.8
of the PA Gaming Regulations;

 

(e)                                  any
transfer of the equity interests of any Person that owns directly or indirectly
any of the equity interests of Borrower to the extent that such transfer could
reasonably be expected to delay in any material respect the approval by the
PGCB of the Conditional/Category 1 Gaming License to WTA, it being understood
that the consummation of the CCR Transaction and any other ownership change
contemplated by the Borrower Ownership Chart or in response to any inquiry or
request by the PGCB shall not be deemed to constitute an event under this
clause (e); or

 

(f)                                    the
commencement by Borrower or any person or entity directly or indirectly
Affiliated with or related to Borrower, or the participation as a party by
Borrower or any such person or entity, in any ongoing civil proceeding in which
Borrower or any person affiliated with or related to Borrower is seeking to
overturn or otherwise challenge a decision or order of the PGCB or the
Pennsylvania Harness Racing Commission pertaining to the approval, denial or
conditioning of a license to conduct harness horse race meetings with
pari-mutuel wagering or to operate slot machines, as set forth in Section 1308(c) of
the PA Gaming Act;

 

and in each event as set forth in subsections
(a) through (e) of this definition, the event or failure would
reasonably be expected to result in the disapproval of the application of WTA
for a Conditional/Category 1 Gaming License or a material delay in the issuance
of such license prior to the Deadline Date, and, if such event is subject to
cure (e.g. providing information, eliminating a Person from an application,
etc.), such event shall not have been cured on or prior to the earlier of (i) the
date required by the PGCB or (ii) thirty days after such event or failure
(unless Borrower is making commercially reasonable efforts to diligently pursue
a cure in which case it shall be sixty days).

 

“Governing Body” means the board of directors
or other body having the power to direct or cause the direction of the
management and policies of a Person that is a corporation, partnership, trust
or limited liability company.

 

“Governmental Authority” means any
government, any governmental or government-appointed entity, department,
commission, board, agency, regulatory authority or 

 

8

 

instrumentality, and any court, tribunal, or judicial body, whether
federal, state, local or foreign, or any arbitral body, including, without
limitation, the Pennsylvania Harness Racing Commission and the PGCB.

 

“Hazardous Materials” means (a) any
petroleum, petroleum products, by-products or breakdown products, radioactive
materials, asbestos-containing materials, urea formaldehyde foam, heavy metals
or polychlorinated biphenyls, (b) any waste, chemical, material or
substance defined or regulated as toxic or hazardous under any applicable
Environmental Law or (c) anything that is a “hazardous substance” pursuant
to CERCLA or any similar applicable state law, anything that is a “solid waste”
or “hazardous waste” pursuant to RCRA or any similar applicable state law or
any “pesticide,” “pollutant,” “contaminant,” “toxic chemical” or “noise.”

 

“Holdback Agreement” shall mean the holdback
agreement to be entered into between Borrower and Agent pursuant to Section 3.2
hereto, in the form of Exhibit H hereto.

 

“Holdback Documents” shall mean the Holdback
Agreement.

 

“Holder” shall mean (i) Seller, as the
initial holder of the Notes, and (ii) permitted transferees of Notes
pursuant to Sections 6.2 and 6.3 hereof.

 

“Indebtedness” shall mean, for any Person at
the time of any determination, without duplication, all obligations, contingent
or otherwise, of such Person that, in accordance with GAAP, should be
classified upon the balance sheet of such Person as indebtedness, but in any
event including:  (i) all obligations for borrowed money, (ii) all
obligations arising from installment purchases of property or representing the
deferred purchase price of property or services in respect of which such Person
is liable, contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course of
business on terms customary in the trade), (iii) all obligations evidenced
by notes, bonds, debentures, acceptances or instruments, or arising out of
letters of credit or bankers’ acceptances issued for such Person’s account, (iv) all
obligations, whether or not assumed, secured by any Lien or payable out of the
proceeds or production from any property or assets now or hereafter owned or
acquired by such Person, (v) all Contingent Obligations for which such
Person is obligated, (vi) the capitalized portion of lease obligations
under Capitalized Leases, (vii) all obligations for which such Person is
obligated pursuant to any Interest Rate Protection Agreements or derivative
agreements or arrangements, and (viii) all obligations of such Person upon
which interest charges are customarily paid or accrued.

 

“Indemnified Party” has the meaning assigned
to such term in Section 10.12(g) hereof.

 

“Indemnifying Party” has the meaning assigned
to such term in Section 10.12(g) hereof.

 

“Interest Rate Protection Agreement” shall
mean any interest rate swap, interest rate cap, interest rate collar or other
interest rate hedging agreement or arrangement.

 

“Investment” as applied to any Person shall
mean the amount paid or agreed to be paid or loaned, advanced or contributed to
other Persons, and in any event shall include (i) any direct or indirect
purchase or other acquisition of any notes, obligations, instruments, stock,
securities or 

 

9

 

ownership interest (including partnership interests and joint venture
interests) and (ii) any capital contribution to any other Person.

 

“Laws” shall mean any statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law
of any country or any state, province, locality, region or area therein, or any other jurisdiction.

 

“Lien” shall mean any security interest,
pledge, bailment, mortgage, hypothecation, deed of trust, conditional sales and
title retention agreement (including any lease in the nature thereof), charge,
encumbrance or other similar arrangement or interest in real or personal
property, now owned or hereafter acquired, whether such interest is based on
common law, statute or contract.

 

“Loan Parties” shall mean each of Borrower
and its Subsidiaries, including the Meadows Companies.

 

“Losses” shall have the meaning assigned to
such term in Section 10.12(h) hereof.

 

“Magna” shall have the meaning assigned to
such term in the preamble hereto.

 

“Magna Bridge Loan Agreement” shall mean the
Bridge Loan Agreement dated as of July 22, 2005 by and among Magna, the
guarantors party thereto and MID, acting through its Zug branch, as amended,
restated or modified from time to time.

 

“Magna Development Loan Agreement” shall mean
the Amended and Restated Loan Agreement (Reconstruction of Gulfstream Park,
Florida) dated as of July 22, 2005 by and among Gulfstream Park Racing
Association, Inc., MID, acting through its Zug branch, MEC, WTR, MLR,
Remington Park, Inc. and GPRA Thoroughbred Training Center, Inc., as
amended, restated or modified from time to time.

 

“Magna Event of Default” shall have the
meaning assigned to such term in Section 8.5 hereof.

 

“Magna Event of Default Notice” shall have
the meaning assigned to such term in Section 8.5 hereof.

 

“Magna Loan Documents” shall mean the Magna
Development Loan Agreement, the Magna Bridge Loan Agreement, and all other
agreements, instruments and documents delivered in connection therewith.

 

“Material Adverse Effect” shall mean (a) a
material adverse effect upon the business, operations, properties, assets or
condition (financial or otherwise) of the Meadows Companies taken as a whole or
(b) the material impairment of the ability of any Loan Party, Parent
Entity or OCM AcquisitionCo to perform, or of Agent or Holders to enforce, the
obligations of the Loan Parties, Parent Entities or OCM AcquisitionCo under the
Note Documents, subject to the Prior Liens.

 

“Maturity Date” shall mean the earliest of

 

10

 

(a)                                  the
Consummation Date;

 

(b)                                 five
(5) Business Days after the occurrence of any of the events set forth in
clauses (i)-(vi) of Section 3.10(a) hereof; and

 

(c)                                  the
occurrence of a Specified Event of Default under Section 8.1(g) or Section 8.1(h) hereof.

 

“Meadows Companies” shall mean the Acquired
Companies and their Subsidiaries existing immediately prior to the Closing
Date.

 

“Meadows Facility” shall have the meaning
assigned to that term in the Acquisition Agreement.

 

“MECPenn” shall mean MEC Pennsylvania Racing, Inc.,
a Pennsylvania corporation.

 

“MezzCo” shall have the meaning assigned to
such term in the preamble.

 

“MID” shall mean MID Islandi, SF., a
partnership formed under the laws of Iceland.

 

“MID Forbearance Agreement” means the
Forbearance and Release Agreement by and among MID, MECPenn, WTA, MLR, MEC and
Borrower in the form of Exhibit E hereto.

 

“MID Liens” shall mean the Liens of MID
created pursuant to, and securing the obligations outstanding under, the Magna
Bridge Loan Agreement, the Magna Development Loan Agreement, and the agreements
and documents related thereto.

 

“MID Pledge Agreement” shall mean the
Assignment Agreement by and between MID and Magna in the form of Exhibit M
hereto.

 

“Millennium Gaming” shall mean Millennium
Gaming, Inc., a Nevada corporation.

 

“MLR” shall mean Mountain Laurel Racing, Inc.,
a Delaware corporation.

 

“Mortgage” shall have the meaning assigned to
such term in Section 4.1 hereof.

 

“Multiemployer Plan” shall mean a
multiemployer plan (as defined in Section 3(37) of ERISA) pursuant to
which Borrower or its Subsidiaries or any of their respective ERISA Affiliates
contributes or has an obligation to contribute, in respect of any Employee,
officer or director of the Borrower or its Subsidiaries or any of their
respective ERISA Affiliates (together with any multiemployer plans to which
Borrower or its Subsidiaries or any of their respective ERISA Affiliates has
contributed or had an obligation to contribute).

 

“Net Insurance/Condemnation Proceeds” means
any cash payments or proceeds received by Borrower or any of its Subsidiaries (a) under
any business interruption or casualty insurance policy in respect of a covered
loss thereunder or (b) as a result of the taking of any assets of Borrower
or any of its Subsidiaries by any Person pursuant to the power of eminent
domain, condemnation or otherwise, or pursuant to a sale of any such assets to
a purchaser with such 

 

11

 

power under threat of such a taking, in each case net of (i) any
actual and reasonable documented costs incurred by Borrower or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Borrower or such Subsidiary in respect thereof and (ii) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on
any Indebtedness (other than the Notes or the Indebtedness secured by the Prior
Liens) that is (A) secured by a Lien on the stock or assets in question
and that is required to be repaid under the terms thereof and (B) actually
paid or payable within sixty days of receipt of such cash payment to a Person
that is not a Loan Party or an Affiliate of a Loan Party.

 

“Note Documents” shall mean this Agreement,
the Notes, the Subsidiary Guaranty, the Equity Commitment Agreement and the
Security Documents, and all other agreements, instruments and documents
delivered in connection therewith.

 

“Notes” shall mean the Tranche A Junior Notes
and the Tranche B Junior Notes.

 

“Obligations” shall mean and include the
principal of and interest (if any) on the Notes and shall mean any and all of
each Loan Party’s Indebtedness and/or liabilities to Agent or Holders of every
kind, nature and description, direct or indirect, secured or unsecured, joint,
several, joint and several, absolute or contingent, due or to become due, now
existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, and arising under this Agreement or under any Note Document or in
any way related hereto or thereto (including all interest accruing after the
commencement of any bankruptcy or similar proceeding whether or not enforceable
in such proceeding) and all obligations of any Loan Party to Agent or Holders
to perform acts or refrain from taking any action required under this
Agreement or under any Note Document.

 

“Occupancy Agreement” means any material lease,
agreements to lease, license and any other form of occupancy agreement
affecting any of the real property assets of Borrower or any of its
Subsidiaries.

 

“OCM AcquisitionCo” shall mean OCM
AcquisitionCo, LLC, a Nevada limited liability company.

 

“OCM HoldCo” shall mean OCM HoldCo, LLC, a
Delaware limited liability company.

 

“Operator” shall have the meaning assigned to
such term in the Racing Services Agreement.

 

“PA Gaming Act” shall have the meaning
assigned to that term in the definition of “Gaming License Application Event.”

 

“PA Gaming Regulations” shall have the
meaning assigned to that term in the definition of “Gaming License Application
Event.”

 

“Parent Entities” shall have the meaning
assigned to such term in the preamble hereto.

 

“Permitted Development” shall mean road and
other infrastructure improvements and the building of the temporary or
permanent casino, in each case associated with the Meadows Facility.

 

12

 

“Permitted Liens” shall have the meaning
assigned to such term Section 7.2(b) hereof.

 

“Permitted Payments” shall mean amounts
payable to Borrower for payments made in good faith for the benefit of a
Meadows Company on account of the Racing Operations (as defined in the Racing
Services Agreement) and other Business of the Meadows Companies (excluding any
amount or payment relating to the Permitted Development or any gaming license
or gaming business contemplated by the Transaction Documents), including,
without limitation, return of equity funds or loans made to the Meadows
Companies by Borrower for purposes that are permitted under this definition.

 

“Person” shall mean an individual,
corporation, partnership, joint venture, limited liability company, person
(including, without limitation, a “person” as defined in Section 13(d)(3) of
Exchange Act), trust, association or another entity.

 

“PGCB” shall mean the Pennsylvania Gaming
Control Board.

 

“PGCB Approval Date” shall mean the day on
which the PGCB approves the issuance of a Conditional/Category 1 Gaming License
to WTA. The PGCB Approval Date shall be determined without regard to whether or
not any conditions contained in the approval for issuance of the license are
reasonably acceptable to the lender specified in the Financing Commitment
Letter. Borrower and Agent acknowledge that the PGCB Approval Date shall be no
earlier than September 28, 2006.

 

“PGCB Issuance Date” shall mean the day on
which payment is made of the license fee imposed pursuant to Section 1209(a) of
the PA Gaming Act for the Conditional/Category 1 Gaming License issued to WTA.

 

“Plan” shall mean any employee benefit plan
(within the meaning of Section 3(3) of ERISA), other than a
Multiemployer Plan, maintained, contributed to or sponsored by any of Borrower
or its Subsidiaries or any of their respective ERISA Affiliates.

 

“Prior Liens” shall mean the MID Liens.

 

“Purchaser” shall have the meaning assigned
to such term in the preamble hereto.

 

“Purchaser Note Certificate Date” shall have
the meaning assigned to that term in Section 4.4 hereof.

 

“Purchaser Note Developments” shall have the
meaning assigned to such term in Section 4.4 hereof.

 

“Racing Services Agreement” shall mean the
Racing Services Agreement dated as of the Closing Date among MEC Racing
Management, MLR, WTA, MEC, MEC Pennsylvania Food Service, Inc. and
MECPenn.

 

“RCRA” shall mean the Resource Conservation
and Recovery Act (42 U.S.C. § 6901 et  seq.).

 

13

 

“Register” has the meaning assigned to such
term in Section 6.4(a).

 

“Release” means any release, spill, emission,
leaking, dumping, injection, pouring, deposit, discharge, dispersal, leaching
or migration of a Hazardous Material into the environment (including ambient
air, surface water, ground water, land surface or subsurface strata) or within
any building, structure or facility.

 

“Required Holders” shall mean, at any time,
Holders holding a pro rata percentage of the outstanding principal amount of
the Notes aggregating more than 50% at such time.

 

“Restricted Payment” means (i) any
dividend or other distribution, direct or indirect, on account of any shares of
any class of stock or ownership interests of Borrower or any Subsidiary of
Borrower now or hereafter outstanding, (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of stock or ownership interests of
Borrower or any Subsidiary of Borrower now or hereafter outstanding, (iii) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock
or ownership interests of Borrower or any Subsidiary of Borrower now or
hereafter outstanding, (iv) any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement,
defeasance (including in-substance or legal defeasance), sinking fund or
similar payment with respect to, any Indebtedness (other than the Notes and
other Obligations) contractually subordinated in right of payment to any Note
or (v) any payment of any management or other fee or any other amount of
any nature payable to any Parent Entity, OCM HoldCo, Millennium Gaming, or any
of their respective Affiliates.

 

“RSA Special Capital Expenditures” shall mean
Capital Expenditures required to be paid by the Subsidiary Guarantors to
maintain the Racing Operations (as defined in the Racing Services Agreement)
pursuant to Section 11.6.1 of the Racing Services Agreement.

 

“Second Closing” shall have the meaning
assigned to such term in Section 3.2(a) hereof.

 

“Securities Act” shall mean the Securities
Act of 1933, and any successor statute.

 

“Security Agreement” shall have the meaning
assigned to such term in Section 4.1 hereof.

 

“Security Documents” shall mean the Security
Agreement, the Mortgage, the Financing Statements, and all other documents,
instruments and other materials necessary to create or perfect the security
interests created pursuant to the Security Agreement and the other Security
Documents, subject to the Prior Liens.

 

“Seller” shall have the meaning assigned to
such term in the preamble hereto.

 

“Seller Note Certificate Date” shall have the
meaning assigned to such term in Section 4.4 hereof.

 

“Seller Note Developments” shall have the
meaning assigned to such term in Section 4.4 hereof.

 

14

 

“Specified Default Trigger Event” shall have
the meaning assigned to such term in Section 8.2(c) hereof.

 

“Specified Event of Default” shall have the
meaning assigned to such term in Section 8.1 hereof.

 

“Specified Event of Default Notice” shall
have the meaning assigned to such term in Section 8.2(b) hereof.

 

“Stock Transfer” shall mean the transfer by
Borrower to Magna of the Acquired Shares (subject to the Prior Liens but not
subject to any other liens created by the Borrower).

 

“Subsidiary” of any corporation shall mean
any other corporation or limited liability company of which the outstanding
Capital Stock possessing a majority of voting power in the election of
directors (otherwise than as the result of a default) is owned or controlled by
such corporation directly or indirectly through Subsidiaries.

 

“Subsidiary Guarantor” means each Subsidiary
of Borrower, including the Meadows Companies.

 

“Subsidiary Guaranty” means the Subsidiary
Guaranty executed and delivered by existing Subsidiaries of Borrower on the
Closing Date.

 

“Tax” or “Taxes” shall have the meaning
ascribed to such term in the Acquisition Agreement.

 

“Third Party” means any person that is not,
and is not an Affiliate of, Borrower, Parent Entities, OCM Acquisition, OCM
HoldCo, or Millennium Gaming.

 

“Tranche A Junior Notes” shall mean any
promissory notes of Borrower issued pursuant to Section 2.1(a),
substantially in the form of Exhibit A-1 annexed hereto, including
any such Notes issued in substitution therefor pursuant to Section 6.3 and
6.4 hereof.

 

“Tranche B Junior Notes” shall mean any
promissory notes of Borrower issued pursuant to Section 2.1(b),
substantially in the form of Exhibit A-2 annexed hereto, including
any such Notes issued in substitution therefor pursuant to Section 6.3 and
6.4 hereof.

 

“Transaction Documents” shall mean,
collectively, the Note Documents, the Acquisition Agreement, the Racing
Services Agreement, the Holdback Agreement, the XpressBet Amendments, the MID
Forbearance Agreement and all other
agreements contemplated hereby and thereby to which any of the Loan Parties or
any of their Affiliates is a party.

 

“Transactions” shall mean the issuance of the
Notes, the transfer of the Acquired Shares, the forbearance of the MID Liens
pursuant to the MID Forbearance Agreement, the Second Closing and/or the Stock
Transfer, each as contemplated by this Agreement, the Notes, the MID
Forbearance Agreement and all other agreements contemplated hereby and thereby.

 

“WTA” shall mean Washington Trotting
Association, Inc., a Delaware corporation.

 

15

 

“XpressBet Amendments” shall have the meaning
set forth in the Acquisition Agreement.

 

1.2                                 Accounting
Principles. The character or amount of any asset, liability, capital
account or reserve and of any item of income or expense to be determined, and
any consolidation or other accounting computation to be made, and the
construction of any definition containing a financial term, pursuant to this
Agreement shall be determined or made in accordance with generally accepted
accounting principles in the United States of America consistently applied (“GAAP”),
unless such principles are inconsistent with the express requirements of this
Agreement.

 

1.3                                 Other
Definitional Provisions; Construction. Whenever the context so requires,
neuter gender includes the masculine and feminine, the singular number includes
the plural and vice versa. The words “hereof” “herein” and “hereunder” and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not in any particular provision of this Agreement, and
references to section, article, annex, schedule, exhibit and like
references are references to this Agreement unless otherwise specified. A
Default or Specified Event of Default shall “continue” or be “continuing” until
such Default or Specified Event of Default has been cured or waived as provided
herein. References in this Agreement to any Persons shall include such Persons,
successors and permitted assigns. Unless otherwise expressly provided herein,
references to applicable laws, Charter Documents, agreements (including without
limitation the Note Documents) and other contractual instruments shall be
deemed to include all subsequent amendments, restatements, extensions,
supplements and other modifications thereto in accordance with the terms hereof
and thereof.

 

The use of the terms “Purchaser” and “Borrower”
for PA Meadows, LLC and “Seller,” “Agent,” and “Magna” for Magna Entertainment
Corp. is for descriptive purposes only and the use of any term is not intended
to affect or limit in any way the rights and obligations of PA Meadows, LLC or
Magna Entertainment Corp hereunder or in any other Note Document, the
Acquisition Agreement or any Transaction Document (as defined in the
Acquisition Agreement).

 

ARTICLE 2

 

ISSUE
AND SALE OF NOTES

 

2.1                                 Authorization
and Issuance of the Notes. In accordance with the Acquisition Agreement,
Purchaser has duly authorized the issuance to Seller of (a) $175,000,000
in aggregate principal amount of Purchaser’s Tranche A Junior Notes and (b) $25,000,000
in aggregate principal amount of Purchaser’s Tranche B Junior Notes.

 

2.2                                 Sale
and Purchase. Subject to the terms and conditions and in reliance upon the
representations, warranties and agreements set forth herein and in the
Acquisition Agreement, Borrower shall issue to Seller, and Seller shall accept
from Purchaser, for the purpose of paying the consideration for the acquisition
of all of the Acquired Shares by Purchaser in accordance with the terms of the
Acquisition Agreement, the Tranche A Junior Notes in the aggregate principal
amount of $175,000,000 and the Tranche B Junior Notes in the aggregate
principal amount of $25,000,000, in each case in accordance with the terms of
the Acquisition Agreement.

 

16

 

2.3                                 The
Closing. Delivery of the Notes (the “Closing”) in exchange for all
outstanding shares of Capital Stock of the Acquired Companies shall be made at
the offices of O’Melveny & Myers LLP, 7 Times Square, New York, New
York, commencing at 10:00 a.m., New York time, on July 26, 2006 or at
such place or on such other date as may be mutually agreeable to Borrower
and Seller, subject to the satisfaction of the conditions set forth in Sections
4.1, 4.2 and 4.3. The date and time of the Closing as finally determined
pursuant to this Section 2.3 are referred to herein as the “Closing Date.”  Such deliveries shall be made to Seller in
accordance with the terms of the Acquisition Agreement and this Agreement. If
the Closing Date does not occur on or prior to July 31, 2006, the Note
Agreement shall terminate and be of no further force and effect except as
provided herein.

 

ARTICLE 3

 

REPAYMENT
OF THE NOTES

 

3.1                                 Interest.
From and after the earliest of (a) the Consummation Date, (b) a
Specified Default Trigger Event, and (c) five (5) Business Days after
the Deadline Date, the Notes shall accrue interest on the outstanding principal
thereof, at a rate per annum equal to the Citibank Base Rate plus two percent
(2%), which interest shall compound monthly until paid in full, provided,
however, that upon the occurrence of a Deadline Date that occurs prior to the
PGCB Approval Date, if the Borrower and Agent are engaged in discussions to
consummate the Second Closing, then no interest will accrue on the Notes, and
interest will not commence accruing until the earliest of (A) agreement by
Borrower and Agent as to any interest accrual and (B) from and after five
days after either party delivers (i) a notice pursuant to Section 3.10(a) hereof
or (ii) a notice terminating such discussions. Any interest payable
hereunder shall be calculated on the basis of a 360-day year comprised of 12
thirty-day months and actual days elapsed. The amount of interest shall be
calculated by Agent and such calculations by Agent shall, absent manifest error,
be conclusive and binding.

 

3.2                                 Repayment
of the Notes; Exchange of Tranche B Junior Notes. In accordance with the
terms of this Section 3.2, Borrower covenants and agrees to repay or
satisfy, as applicable, the unpaid principal balance of the Notes and interest,
if any, in full, on the Maturity Date and Holders agree to accept in full
satisfaction of the Notes on the Maturity Date the applicable deliveries
provided for, in each case, as follows:

 

(a)                                  In
the event that the Maturity Date occurs under clause (a) of the definition
of Maturity Date or Seller and Purchaser otherwise elect to have the Second
Closing (as defined below), then, Seller and Purchaser shall take the following
actions and deliver the following documents at a closing to occur on such
Maturity Date or such other elected date, subject to satisfaction of the
conditions set forth in Section 4.4 hereof (the “Second Closing”): (i) Borrower
shall repay to Agent, for the ratable benefit of Holders of the Tranche A
Junior Notes, the unpaid principal balance of the Tranche A Junior Notes
together with interest, if any, accrued under the Notes in full in cash with
immediately available funds, and (ii) Borrower shall cause to be delivered
to Seller an executed counterpart of the Holdback Agreement executed by
Borrower in the form of Exhibit H attached hereto, together with an
opinion of counsel (satisfactory to Agent) 

 

17

 

substantially in the form of Exhibit J
attached hereto, and upon such delivery being made to Agent, and the payment in
full in cash of the Tranche A Junior Notes together with interest in cash, if
any, under the Notes being received by Agent, the entire principal amount of
the Notes outstanding shall be deemed repaid in full and the Notes shall be
deemed to be cancelled.

 

(b)                                 In
the event the Maturity Date arises in accordance with clause (b) of the
definition of Maturity Date, then upon the consummation of a Stock Transfer and
the payment of interest, if any, accrued on the Notes, the entire principal
amount of the Notes outstanding shall be deemed repaid in full and the Notes
shall be deemed to be cancelled and the acquisition of the Acquired Shares by
Purchaser shall be deemed to have been rescinded, including for all tax purposes.

 

3.3                                 Optional
Prepayment of Notes. Borrower may prepay to Agent the outstanding
principal amount of the Notes and interest, if any, in whole or in part, at any
time and from time to time. Any optional payments pursuant to this Section 3.3
shall be applied, first, ratably to prepay any amounts outstanding under the
Tranche A Junior Notes, and second, ratably to prepay any amounts outstanding
under the Tranche B Junior Notes. The Tranche B Junior Notes may be
prepaid by the delivery of the items set forth in Section 3.2(a)(ii) together
with interest (if any) on such Notes; provided however, that the Tranche B
Junior Notes may not be prepaid prior to the prepayment of the Tranche A
Junior Notes.

 

3.4                                 Notice
of Optional Prepayment. If Borrower shall elect to prepay any Notes
pursuant to Section 3.3 hereof, Borrower shall give notice of such
prepayment to Agent, specifying (i) the date on which such prepayment is
to be made, and (ii) the principal amount of such Notes to be prepaid on
such date. Notice of prepayment shall not cause the Notes to become due and
payable, and such notice may be withdrawn at any time.

 

3.5                                 Intentionally
Left Blank.

 

3.6                                 Payment.
Borrower will pay all sums becoming due on any Note to Agent by the method and
at the address specified for such purpose in Annex A, or by such other method
or at such other address as Agent shall have from time to time specified to
Borrower in writing for such purpose, without the presentation or surrender of
such Note or the making of any notation thereon, except that each Holder shall
surrender its Note(s) for cancellation reasonably promptly after payment or
prepayment in full of such Note(s) at Borrower’s principal executive office.

 

3.7                                 Risk
of Loss.

 

(a)                                  Condemnation.
If the whole of the Meadows Facility, or a portion thereof that would
reasonably be expected to limit or inhibit the ability to conduct gaming
operations at the Meadows Facility, delay the issuance of the
Conditional/Category 1 Gaming License or create or cause a restriction on
operation of the temporary or permanent casino for any period of time, is taken
or condemned in any eminent domain, condemnation, compulsory acquisition or
like proceeding by any competent authority for any public or quasi-public use
or purpose, in each case as reasonably determined by Borrower to be material,
then Borrower may transfer to Magna within thirty days of such 

 

18

 

action, the Acquired Shares (subject to the Prior
Liens but not subject to any Liens created by Borrower) in accordance with Section 3.10
hereof and the entire principal amount of the Notes outstanding shall be deemed
repaid in full and the Notes shall be deemed to be cancelled and the
acquisition of the Acquired Shares by Purchaser shall be deemed to have been
rescinded, including for all tax purposes, in accordance with Section 3.10
hereof. Upon the Stock Transfer, the Meadows Companies will be entitled to
participate, on their behalf and on behalf of the Holders, in the condemnation
proceeding as a defendant and have their share of the award determined by the
court overseeing the condemnation proceeding and subject to the Prior Liens,
the Meadows Companies will be entitled to all Net Insurance/Condemnation
Proceeds, other than Permitted Payments.

 

(b)                                 Destruction.
If all or a portion of the Meadows Facility is destroyed in whole or in part by
fire or other casualty, and such destruction would reasonably be expected to
limit or inhibit the ability to conduct gaming operations at the Meadows
Facility, delay the issuance of the Conditional/Category 1 Gaming License or
create or cause a restriction on the operation of the temporary or permanent
casino for any period of time, in each case as reasonably determined by
Borrower to be material, then Borrower may elect within thirty (30) days
after the date of the casualty to transfer to Magna the Acquired Shares
(subject to the Prior Liens but not subject to any Liens created by Borrower)
in accordance with Section 3.10 hereof and the entire principal amount of the
Notes outstanding shall be deemed repaid in full and the Notes shall be deemed
to be cancelled and the acquisition of the Acquired Shares by Purchaser shall
be deemed to have been rescinded, including for all tax purposes, in accordance
with Section 3.10 hereof. All proceeds from the insurance policies
maintained under the Racing Services Agreement to rebuild the Meadows Facility
shall from and after such transfer be for the benefit of the Meadows Companies,
and subject to the Prior Liens, the Meadows Companies will be entitled to all
Net Insurance/Condemnation Proceeds, other than Permitted Payments.

 

3.8                                 Maximum
Lawful Rate. This Agreement, the Notes and the other Note Documents are
hereby limited by this Section 3.8. In no event, whether by reason of acceleration
of the maturity of the amounts due hereunder or otherwise, shall interest and
fees contracted for, charged, received, paid or agreed to be paid to Holders
exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, interest and fees would otherwise be payable to Agent
or Holders in excess of the maximum amount permissible under applicable law,
the interest and fees shall be reduced to the maximum amount permitted under
applicable law. If from any circumstance Agent or Holders shall have received
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excess of interest shall be applied to
the reduction of the principal amount of the Notes, in such manner as may be
determined by Holders, and not to the payment of fees or interest, or if such
excessive interest exceeds the unpaid balance of the principal amount of the
Notes, such excess shall be refunded to Borrower.

 

3.9                                 Certain
Waivers. Borrower waives to the fullest extent under applicable law any
rights to presentment, demand, protest or (except as expressly required hereby)
notice of any kind.

 

19

 

3.10                           Stock
Transfer.

 

(a)                                  Stock
Transfer Triggers. Borrower shall immediately (and in any event within five
Business Days) consummate a Stock Transfer and pay any interest accrued (if
any) under the Notes as contemplated by Section 3.2(b):  (i) upon Purchaser’s or Seller’s notice
after Purchaser’s election to not proceed with the Second Closing as a result
of Seller Note Developments that would result in a Seller Material Adverse
Effect in accordance with Section 4.4(a)(i) hereof or the failure of
the conditions set forth in Section 4.4(a)(ii) or 4.4(a)(iii) to
be satisfied or waived, (ii) upon Seller’s or Purchaser’s notice after
Seller’s election to not proceed with the Second Closing as a result of
Purchaser Note Developments that would result in a Purchaser Material Adverse
Effect, (iii) upon a Specified Event of Default Notice by Agent hereunder
or the occurrence of a Specified Default Trigger Event; (iv) upon a Magna
Event of Default Notice by Borrower hereunder, (v) upon Borrower’s
election to effect a Stock Transfer pursuant to Section 3.7 or (vi) upon
demand by Agent or Borrower at any time after the Deadline Date so long as the
Consummation Date has not occurred.

 

(b)                                 Approvals.
If completion of the Stock Transfer requires the approval of or filing with any
Governmental Authority, the parties will use commercially reasonable efforts to
obtain such approvals and make such filings. To the extent that the transfer of
the Acquired Shares is delayed for a period of time to obtain any approval or
comply with any filing requirement, then the period of time for Borrower to
complete the Stock Transfer shall be extended for the period of time to obtain
the approval or comply with the filing requirement (and any associated waiting
period) so long as the Borrower is continuing to use its commercially
reasonable efforts to obtain such approvals and make such filings. Borrower
agrees to enter into an irrevocable escrow or other arrangement reasonably
satisfactory to Borrower and Magna so that the Acquired Shares shall be
automatically returned to Magna upon receipt of the approval or compliance with
the filing requirement.

 

(c)                                  Completion.
Upon the completion of a Stock Transfer and the payment of interest (if any)
accrued under the Notes, the entire principal amount of the Notes outstanding
shall be deemed repaid in full, the Notes shall be deemed to be cancelled and
the acquisition of the Acquired Shares by Purchaser shall be deemed to have
been rescinded, including for all tax purposes. In the event that Purchaser
transfers the Acquired Shares back to Seller in satisfaction of the Notes
pursuant to this Section 3.10, then Purchaser and Seller shall treat the
acquisition of the Acquired Shares by Purchaser from Seller as being rescinded
for all tax purposes and no Person shall take any position inconsistent
therewith unless otherwise required by a “determination” (as defined in Section 1313(a)(1) of
the Code) or by applicable state or local income or franchise tax law.

 

(d)                                 Further
Assurances. In the event that any assets or rights used in the conduct of
the Business (other than the Excluded Items) are held by Borrower (or any of
its Affiliates, but only if predominantly related to the Meadows Companies),
Borrower shall transfer (and cause to be transferred, as the case may be)
such assets and rights to the Meadows Companies prior to the Stock Transfer. Upon
or following a Stock 

 

20

 

Transfer, the Borrower shall promptly execute and
deliver to Magna such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such other actions as Magna may reasonably
deem necessary in order to effectuate the Stock Transfer and any transfer
contemplated by the preceding sentence. Following a Stock Transfer, upon the
request of Magna, Borrower shall cooperate with Magna to facilitate the
preparation of financial statements for the Meadows Companies during the period
from the Closing Date through the date of the Stock Transfer, including access
to accounting records, journals and work papers of the Meadows Companies during
such period.

 

(e)                                  Deemed
Representations. In the event of a Stock Transfer, the Borrower shall be
deemed to have represented, as of the date of the consummation of the Stock
Transfer, that it shall not have taken, and shall not have permitted any Meadows
Company to take, any action or cause any event to occur that would result in
any of the representations or warranties set forth in Section 3.03 (other
than the second sentence of Section 3.03(a)) and Section 3.04(a) (other
than the first sentence thereof) of the Acquisition Agreement to not be true
and correct as of the date of the consummation of the Stock Transfer.

 

3.11                           Termination
of Note. Subject to Section 10.12(a) hereof, this Agreement shall
terminate and be of no further force and effect, and the Borrower, the Holders
and the Agent shall have no further rights or obligations hereunder, upon the
repayment of the Notes (including interest thereunder in full) in accordance
with Section 3.2 or Section 3.3 hereof, the completion of a Stock
Transfer in accordance with Section 3.2(b) hereof and the payment of
interest under the Notes as required by Section 3.2(b) or the
exhaustion of the Agent’s and Holders’ exercise of the rights and remedies
under Sections 8.2, 8.3 and 8.4 hereof.

 

ARTICLE 4

 

CONDITIONS

 

4.1                                 Conditions
to Obligations of Purchaser and Seller. The obligation of Purchaser to
issue the Notes and the obligation of Seller to accept the Notes are subject
to, prior to or at the Closing, the delivery of the following documents or
agreements and the satisfaction of the following conditions:

 

(a)                                  Note
Documents. The following Note Documents shall be entered into by the
parties thereto:

 

(i)                                     Tranche
A Junior Notes in the aggregate principal amount of $175,000,000 and Tranche B
Junior Notes in the aggregate principal amount of $25,000,000;

 

(ii)                                  A
Subsidiary Guaranty substantially in the form of Exhibit B attached
hereto;

 

21

 

(iii)                               An
Equity Commitment Agreement substantially in the form of Exhibit G
attached hereto;

 

(iv)                              Junior
Security Agreements for each of Borrower and the Meadows Companies
substantially in the form of Exhibit C attached hereto (the “Security
Agreement”);

 

(v)                                 UCC-1
Financing Statements (the “Financing Statements”) for the Loan Parties and
jurisdictions listed on Schedule 4.1(a)(v) hereto, subject to the
Prior Liens;

 

(vi)                              Certificates
of insurance for all insurance of the Loan Parties existing on the Closing Date
together with any endorsements or loss payee designations requested by Seller;

 

(vii)                           A
mortgage substantially in the form of Exhibit D attached hereto (the “Mortgage”)
and for the real property identified therein; and

 

(viii)                        A lender’s
endorsement to the title policy to be delivered by Seller to Purchaser pursuant
to Section 5.11 of the Acquisition Agreement shall be issued in favor of
Agent and in a form reasonably satisfactory to Agent.

 

(b)                                 Forbearance
and Pledge Agreement.

 

(i)                                     Agent,
Purchaser, the Acquired Companies and MID shall have executed the MID
Forbearance Agreement, which shall be on terms satisfactory to MID, Agent and
Purchaser.

 

(ii)                                  Agent
and MID shall have executed the MID Pledge Agreement which shall be
satisfactory to Agent and MID.

 

(c)                                  Acquisition
Agreement Conditions. Each condition set forth in Article VIII of the
Acquisition Agreement shall have been satisfied except to the extent waived by
the party or parties having the right to the fulfillment of such condition.

 

(d)                                 Regulatory
Approvals. All authorizations,
approvals or other actions shall have been obtained from any Governmental
Authority, and all notices to or filings with any Governmental Authority shall
have been made, in each case, to the extent required by Purchaser or Seller in
connection with the execution, delivery and performance by Loan Parties or
their Affiliates of the Note Documents to which they are parties and the
consummation of the transactions contemplated by the Note Documents.

 

(e)                                  Intentionally
Omitted.

 

(f)                                    No
Default. No Default or Specified Event of Default shall have occurred and
be continuing nor shall it be reasonably anticipated that there will be any
Specified Event of Default immediately after giving effect to the execution of
the Note Documents.

 

22

 

(g)                                 Consents.
The parties shall have received all third party consents necessary or advisable
in connection with the Transactions, in each case to the extent reasonably
required by Purchaser or Seller, including without limitation any consents
required pursuant to the Magna Bridge Loan Agreement and the Magna Development
Loan Agreement.

 

4.2                                 Conditions
to Acceptance of Notes by Seller. The obligation of Seller to accept the
Notes is subject to the satisfaction, prior to or at the Closing, of the
following conditions:

 

(a)                                  Representations
and Warranties True. The representations and warranties contained in Article IV
of the Acquisition Agreement and Section 5.1 and 10.15(a) hereof
shall be true and correct at and as of the Closing Date as though then made.

 

(b)                                 Closing
Documents. Borrower will have delivered or caused to be delivered to Agent
all of the following documents in form and substance reasonably
satisfactory to Agent:

 

(i)                                     certificates
of good standing issued as of a recent date prior to the Closing Date for
Borrower issued by its jurisdiction of organization;

 

(ii)                                  a
copy of the Charter Documents of Borrower, certified by the appropriate
governmental official of the jurisdiction of its organization as of a recent
date prior to the Closing Date;

 

(iii)                               a
copy of the Borrower LLC Agreement, certified as of the Closing Date by the
secretary, assistant secretary or manager, as applicable, of Borrower;

 

(iv)                              a
certificate of the secretary, assistant secretary, or manager of Borrower,
certifying (A) as to the names and true signatures of the officers or
other authorized person of the Borrower authorized to sign the Note Documents
and the other documents to be delivered by the Borrower hereunder and (B) certifying
the Charter Documents or By-laws of the Borrower on the Closing Date;

 

(v)                                 copies
of the resolutions duly adopted by the Borrower’s board of managers authorizing
the execution, delivery and performance by the Borrower of the Note Documents
and each of the other agreements, instruments and documents contemplated hereby
to which the Borrower is a party, and the consummation of all of the other
Transactions, certified as of the Closing Date by the secretary, assistant
secretary, or manager of the Borrower;

 

(vi)                              a
certificate of the secretary or assistant secretary, of each of the Meadows
Companies, certifying (A) as to the names and true signatures of the
officers or other authorized person of the respective Meadows Company
authorized to sign the Note Documents and the other documents to be delivered
by such Person hereunder and (B) certifying that there has been and will
be no change in the Charter Documents or By-laws of such Person on the Closing
Date other than as disclosed therein;

 

23

 

(vii)                           copies
of the resolutions duly adopted by each of the Meadows Companies’ and each of
the Parent Entity’s board of directors, board of managers or other governing
body, authorizing the execution, delivery and performance by the respective
Meadows Company or Parent Entity, as the case may be, of the Note
Documents and, in the case of the Meadows Companies, each of the other
agreements, instruments and documents contemplated hereby to which the
respective Meadows Company is a party, certified as of the Closing Date by the
secretary, assistant secretary or manager of the respective Meadows Company;

 

(viii)                        a
certificate dated as of the Closing Date from an officer, or manager of
Borrower stating that the conditions specified in this Section 4.2 have
been fully satisfied or waived by Agent; and

 

(ix)                                an
opinion of Munger, Tolles & Olson LLP, counsel to the Borrower and the
Parent Entities, in the form of Exhibit I-1 hereto and an opinion of
Fox Rothschild, counsel to the Borrower, in the form of Exhibit I-2
hereto.

 

(c)                                  Financing
Commitment Letter. Purchaser shall have delivered to Seller a fully
executed commitment letter relating to the financing intended to be used to
repay the Tranche A Junior Note in full on the Second Closing, which commitment
letter shall be in form and substance satisfactory to Seller (such letter,
the “Financing Commitment Letter”).

 

(d)                                 Waiver.
Any condition specified in this Section 4.2 may be waived by Agent,
and any condition specified in Section 4.1, on account of Seller, may be
waived by Agent.

 

4.3                                 Conditions
to Issuance of Notes by Borrower. The obligation of Borrower to issue the
Notes is subject to the satisfaction, prior to or at the Closing, of the
following conditions:

 

(a)                                  Representations
and Warranties True. The representations and warranties contained in Section 5.2
hereof shall be true and correct at and as of the Closing Date as though then
made.

 

(b)                                 Closing
Documents. Seller will have delivered or caused to be delivered to
Purchaser all of the following documents in form and substance reasonably
satisfactory to Purchaser:

 

(i)                                     certificates
of good standing issued as of a recent date prior to the Closing Date for Magna
issued by its jurisdiction of organization;

 

(ii)                                  a
copy of the Charter Documents of Magna, certified by the appropriate
governmental official of the jurisdiction of its organization as of a recent
date prior to the Closing Date;

 

(iii)                               a
copy of the By-laws of Magna, certified as of the Closing Date by the secretary
or assistant secretary, as applicable, of Magna;

 

24

 

(iv)                              a
certificate of the secretary or assistant secretary of Magna, certifying (A) as
to the names and true signatures of the officers or other authorized person of
Magna authorized to sign the Note Documents and the other documents to be
delivered by Magna hereunder and (B) certifying that there has been no
change in the Charter Documents or By-laws of Magna on the Closing Date;

 

(v)                                 copies
of the resolutions duly adopted by Magna authorizing the execution, delivery
and performance by Magna of this Agreement and the other agreements,
instruments and documents contemplated hereby to which Magna is a party, and
the consummation of all of the other Transactions, certified as of the Closing
Date by the secretary or assistant secretary, or manager of Magna;

 

(vi)                              a
certificate dated as of the Closing Date from an officer, or manager of Magna
stating that the conditions specified in this Section 4.3 have been fully
satisfied or waived by Purchaser; and

 

(vii)                           an
opinion of in-house counsel of Seller and the Agent, in the form of Exhibit L
hereto.

 

(c)                                  Waiver.
Any condition specified in this Section 4.3 may be waived by
Borrower, and any condition specified in Section 4.1, on account of
Purchaser, may be waived by Borrower.

 

4.4                                 Conditions
to the Second Closing.

 

(a)                                  Conditions
to Obligations of Purchaser. The obligation of Purchaser to consummate the
Second Closing is subject to the satisfaction, prior to or at the Second
Closing, of the following conditions:

 

(i)                                     at
the Second Closing (or, if Purchaser delivers a written notice to Seller
referencing this Section 4.4(a)(i) and indicating that Purchaser
expects that the Second Closing will occur, or that the PGCB Issuance Date will
occur, then no later than five days after Seller’s receipt of such written
notice), Purchaser shall have received a certificate from Seller (i) indicating
which, if any, representations and warranties of Seller contained in the
Acquisition Agreement would not be true and correct if made on the date of the
delivery of such certificate with respect to facts and circumstances arising
after the Closing Date (the “Seller Note Certificate Date”) other than such
representations and warranties as are made as of another date, which would not
be true and correct as of such other date, and (ii) describing the
circumstances, if any, which would cause such representations and warranties to
not be so true and correct if made on the Seller Note Certificate Date (or on
such other date if made on another date) as a result of events, occurrences or
change in circumstances that has occurred since the Closing Date (such
circumstances, the “Seller Note Developments”); provided, however, that Seller
Note Developments shall not include (a) breaches of representations and
warranties not within the knowledge of Seller (or not within 

 

25

 

what reasonably should have been within the knowledge
of Seller) with respect to facts and circumstances relating to any period after
the Closing Date and (b) breaches of representations and warranties to the
extent resulting from (1) any actions taken or omitted to be taken by
Seller, Purchaser or any of their respective Affiliates in compliance with the
terms of the Transaction Documents or (2) any actions taken or omitted to
be taken by or on behalf of any of the Meadows Companies (not within the sole
or shared control of the Operator under the Racing Services Agreement) after
the Closing Date (other than activities taken or omitted to be taken by Operator
under the Racing Services Agreement) or by or on behalf of the Borrower or any
of its Affiliates (other than the Meadows Companies); and if there are Seller
Note Developments that would result, together with Seller Developments (as
defined in the Acquisition Agreement), in a Seller Material Adverse Effect (as
defined in the Acquisition Agreement with reference to the “Closing Date” to be
“Seller Note Certificate Date” for purposes of this certificate), Purchaser
shall have the right not to proceed to the Second Closing pursuant to a written
notice delivered to Seller not more than five (5) days following the
Seller Note Certificate Date and such election shall constitute a failure of
the conditions to the Second Closing pursuant to this Section 4.4(a)(i), and
Purchaser or Seller shall have the right to provide a notice for a Stock
Transfer under Section 3.10; provided that Seller Note Developments will
not constitute a breach of representation or warranty by Seller hereunder,
under such certificate or under the Acquisition Agreement whether or not
Purchaser proceeds with the Second Closing;

 

(ii)                                  the
MID Liens (and all other Liens created by MID or its Affiliates) and the Liens
created pursuant to the Note Documents shall be released in a manner whereby
release occurs concurrently with Borrower’s performance under Section 3.2(a) hereof
and there shall be no other Liens on the Acquired Shares other than any Liens
granted by Borrower or the Acquired Companies after the Closing Date and
Permitted Exceptions (as defined in the Acquisition Agreement); and

 

(iii)                               the
Subsidiary Guaranty shall be terminated by Magna in a manner whereby
termination occurs concurrently with the Borrower’s performance under Section 3.2(a) hereof
and the Subsidiary Guaranty shall be of no further force and effect.

 

(b)                                 Conditions
to Obligations of Seller. The obligation of Seller to consummate the Second
Closing is subject to the satisfaction, prior to or at the Second Closing, of
the following condition:

 

(i)                                     pursuant
to a written notice delivered to Purchaser prior to the earlier of the date not
more than five (5) days following the Seller Note Certificate Date or the
date of the Second Closing, Seller shall have received a certificate from
Purchaser (i) indicating which, if any, representations and warranties of
Purchaser contained in the Acquisition Agreement would not be true and correct
if made on the date of the delivery of such certificate with respect to facts
and 

 

26

 

circumstances arising after the Closing Date (the “Purchaser
Note Certificate Date”) other than such representations and warranties as are
made as of another date, which would not be true and correct on and as of such
other date, and (ii) describing the circumstances, if any, which would
cause such representations and warranties to not be so true and correct if made
on the Purchaser Note Certificate Date (or on such other date if made on
another date) as a result of events, occurrences or change in circumstances
that has occurred since the Closing Date (such circumstances, the “Purchaser
Note Developments”), and, if there are Purchaser Note Developments that would
result, together with Purchaser Developments (as defined in the Acquisition
Agreement), in a Purchaser Material Adverse Effect (as defined in the
Acquisition Agreement with reference to “Closing Date” to be “Purchaser Note
Certificate Date” for purposes of this Certificate), Agent shall have the right
not to proceed to the Second Closing pursuant to a written notice delivered not
more than five (5) days following the Purchaser Note Certificate Date and
such election shall constitute a failure of the conditions to the Second
Closing pursuant to this Section 4.4(b)(i), and Agent or Seller shall have
the right to provide a notice for a Stock Transfer under Section 3.10;
provided that Purchaser Note Developments will not constitute a breach of
representation or warranty by Purchaser hereunder, under such certificate or
under the Acquisition Agreement whether or not Seller proceeds with the Second
Closing.

 

ARTICLE 5

 

REPRESENTATIONS
AND WARRANTIES

 

5.1                                 Representations
and Warranties of Borrower. As a material inducement to Seller to enter
into this Agreement and accept the Notes, Borrower hereby represents and
warrants to Agent with respect to Borrower only, and not with respect to Seller
or the Meadows Companies, as follows:

 

(a)                                  Organization,
Powers, Qualification, Good Standing. Borrower is a limited liability
company duly formed, validly existing and in good standing under the laws of
the State of Delaware.

 

(b)                                 Authorization
of Note Issuance, etc.

 

(i)                                     Authorization.
The execution, delivery and performance of each of the Note Documents to which
Borrower is a party have been duly authorized by all necessary action on the part of
Borrower. The execution, delivery and performance of each of the Note Documents
have been authorized by all necessary action on the part of each of the
Meadows Companies that is party thereto.

 

(ii)                                  No
Conflict; Litigation. The execution, delivery and performance by Borrower
of the Note Documents to which it is a party and the consummation 

 

27

 

of the transactions contemplated by the Note Documents
do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Borrower, the Charter
Documents of Borrower or any order, judgment or decree of any court or other
Governmental Authority binding on Borrower, (ii) conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of Borrower, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Borrower (other
than any Liens in favor of Agent or the Prior Liens), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
material contractual obligation of Borrower. There is no Action (as defined in
the Acquisition Agreement) against or affecting Borrower pending or, to
Borrower’s knowledge, threatened, which, if determined adversely to Borrower,
could reasonably be expected to have a Material Adverse Effect or which
purports to affect the legality, validity and enforceability of any Note
Document.

 

(iii)                               Governmental
Consents. The execution, delivery and performance by Borrower of the Note
Documents to which it is a party and the consummation of the transactions
contemplated by the Note Documents do not require authorization, approval or
other action by, and no notice to or filing with, any Governmental Authority,
except to the extent obtained and delivered to Agent prior to the date of this
Agreement.

 

(iv)                              Binding
Obligation. Each of the Note Documents to which Borrower is a party has
been duly executed and delivered by Borrower and is the legally valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability.

 

(c)                                  Matters
Relating to Collateral.

 

(i)                                     Governmental
Authorizations. To Borrower’s knowledge, no authorization, approval or
other action by, and no notice to or filing with, any Governmental Authority is
required for the pledge or grant by Borrower of the Liens purported to be
created pursuant to any of the Security Documents, except for filings or
recordings contemplated by the Security Documents and except as may be
required, in connection with the disposition of any collateral pledged pursuant
to the Security Documents, by laws generally affecting the offering and sale of
securities.

 

(ii)                                  Perfection.
To Borrower’s knowledge, the security interests in the collateral granted to
Agent by Borrower constitute valid security interests in the Borrower’s
interest in the collateral securing the payment of the Notes. Assuming all
filings and other actions necessary or desirable to perfect and protect such security
interests have been duly made or taken, to Borrower’s knowledge, the security
interests in the Borrower’s interest in the collateral granted to Agent by 

 

28

 

Borrower will constitute perfected security interests
therein prior to all other Liens (except for the Prior Liens).

 

(d)                                 Capitalization
and Related Matters. The authorized Capital Stock of Borrower and the
number and ownership of all outstanding Capital Stock of Borrower and its
direct and indirect owners are as set forth on the Borrower Ownership Chart
annexed as Schedule 5.1(d) hereto (the “Borrower Ownership Chart”). Borrower
will not be subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its Capital Stock. There are no
agreements among the Borrower’s equityholders with respect to the voting or
transfer of Borrower’s Capital Stock other than as described on the Borrower
Ownership Chart. Borrower does not own, or hold any rights to acquire, any
shares of stock or any other security or interest in any other Person (other
than the Meadows Companies), and Borrower has no Subsidiaries (other than the
Meadows Companies).

 

(e)                                  Compliance
with Acquisition Agreement. Borrower is not in material breach of any
representation, warranty, covenant or agreement of Borrower contained in the
Acquisition Agreement, and no condition exists that, with the giving of notice
or the lapse of time or both, would constitute such a breach.

 

(f)                                    Activities
of Borrower. As of the Closing Date, Borrower has at no time entered into
any agreements or conducted any business other than entering into the
Transaction Documents to which it is a party, and the other agreements set
forth on Schedule 5.1(f) hereto and performing its obligations
thereunder.

 

(g)                                 Deposit
Accounts. Except as is listed on the “Deposit Accounts Schedule” attached
hereto as Schedule 5.2(d), as of the Closing Date, Borrower does not
maintain any deposit securities or other account, including term deposit,
certificate of deposit money market account, with any Person.

 

(h)                                 Employee
Benefit Plans. Borrower does not maintain, contribute to or sponsor any
employee benefit plans (within the meaning of Section 3(3) of ERISA).
The Borrower’s only ERISA Affiliate is Cannery Casino Resorts, LLC, which does
not maintain, sponsor or contribute to any employee benefit plans that are
subject to Title IV of ERISA and has not maintained, sponsored or contributed
to any such employee benefit plans at any time during the preceding six years.

 

5.2                                 Representations
and Warranties of Magna. As a material inducement to Borrower to enter into
this Agreement and issue the Notes, Magna hereby represents and warrants to
Borrower as follows:

 

(a)                                  Organization,
Powers, Qualification, Good Standing. Magna has all requisite corporate
power and authority to enter into the Note Documents to which it is a party and
to carry out the transactions contemplated thereby.

 

(b)                                 Authorization,
etc.

 

29

 

(i)                                     Authorization
of Borrowing. The execution, delivery and performance of the Note Documents
to which it is a party and the MID Forbearance Agreement have been duly
authorized by all necessary action on the part of Magna.

 

(ii)                                  No
Conflict; Litigation. The execution, delivery and performance by Magna and
the consummation of the transactions contemplated by the Note Documents and the
MID Forbearance Agreement do not and will not (i) violate any provision of
any law or any governmental rule or regulation applicable to Magna, the
Charter Documents of Magna, or any order, judgment or decree of any court or
other Governmental Authority binding on Magna, 
(ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of Magna,  (iii) result
in or require the creation or imposition of any Lien upon any of the properties
or assets of Magna (other than the
Prior Liens), or (iv) require any approval of stockholders or any approval
or consent of any Person under any material contractual obligation of Magna. There
are no Actions against or affecting Magna pending or, to Magna’s knowledge,
threatened, which, if determined adversely to Magna could reasonably be
expected to have a Material Adverse Effect or which purports to affect the
legality, validity and enforceability of any Note Document or the MID
Forbearance Agreement.

 

(iii)                               Governmental
Consents. The execution, delivery and performance by Magna and the Meadows
Companies of the Note Documents to which they are parties and the MID
Forbearance Agreement and the consummation of the transactions contemplated by
the Note Documents and the MID Forbearance Agreement do not and will not
require authorization, approval or other action by, and no notice to or filing
with, any Governmental Authority, except to the extent obtained by Magna prior
to the date of this Agreement.

 

(iv)                              Binding
Obligation. Each of the Note Documents to which Magna is a party and the
MID Forbearance Agreement has been duly executed and delivered by Magna and is
the legally valid and binding obligation of Magna, enforceable against Magna,
in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors’ rights generally or by equitable principles relating to
enforceability.

 

(c)                                  Compliance
with Acquisition Agreement. Seller is not in material breach of any
representation, warranty, covenant or agreement of Seller contained in the
Acquisition Agreement, and no condition exists that, with the giving of notice
or the lapse of time or both, would constitute such a breach.

 

(d)                                 Deposit
Accounts. Except as is listed on the schedule attached hereto as Schedule 5.2(d),
as of the Closing Date, the Meadows Companies do not maintain any deposit
securities or other account, including term deposit, certificate of deposit
money market account, with any Person.

 

30

 

(e)                                  Magna Loan Documents; MID Liens. Seller has not received from MID
or given to MID a written notice of any event of default under the Magna Bridge
Loan Agreement or the Magna Development Loan Agreement that has occurred and is
continuing or of the occurrence or declaration of the maturity of the
obligations outstanding (whether by acceleration or by its terms) under the
Magna Loan Agreement or the Magna Development Loan Agreement. There are no
Liens on the Acquired Shares or the assets or properties of the Acquired Companies
in favor of MID or its Affiliates except as are subject to the MID Forbearance
Agreement.

 

(f)                                    MID
Forbearance Agreement. The MID Forbearance Agreement is enforceable against
MID, in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors’ rights generally or by equitable principles relating to
enforceability.

 

5.3                                 Effect
of Representations and Warranties. Purchaser’s representations made in Section 5.1(c) shall
not form the basis for any claim against Purchaser unless Purchaser has
acted fraudulently and with willful intention to deceive Seller.

 

ARTICLE 6

 

TRANSFER
OF NOTES

 

6.1                                 Restricted
Notes. Holders acknowledge that the Notes have not been registered under
the Securities Act and may be resold only if in compliance with the terms
of this Agreement and only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration is available, and that
Borrower is not required to register the Notes.

 

6.2                                 Legends;
Holder’s Representations. Each of the Holders hereby represents and
warrants to Borrower that it is an “accredited investor” within the meaning of Rule 501(a) under
the Securities Act and is acquiring the Notes for investment for its own
account, with no present intention of dividing its participation with others or
reselling or otherwise distributing the same in violation of this Agreement,
the Securities Act or any applicable state securities laws. Borrower may place
an appropriate legend on the Notes owned by Holders concerning the restrictions
set forth in this Article 6. Upon the assignment or transfer by any Holder
or any of its successors or assignees of all or any part of the Notes in
compliance with the terms of this Agreement, the term “Holder” as used herein
shall thereafter mean, to the extent thereof, the then holder or holders of
such Notes, or portion thereof. In the event that any Person other than Magna
or MID shall become a Holder, such person shall make all necessary filings with
the PGCB and any other relevant Governmental Authority requiring a filing.

 

6.3                                 Transfer
of Notes.

 

(a)                                  Restrictions.
A Holder may not transfer, assign or pledge any Note except as
permitted by the terms of this Agreement. The initial Holder of the Tranche A
Junior Notes and the Tranche B Junior Notes is Seller, it being understood that
Seller will pledge the Notes to MID pursuant to the MID Pledge Agreement. Seller
shall not 

 

31

 

transfer or otherwise assign the Notes to anyone other
than MID until after a Specified Default Trigger Event. Holders of a Tranche A
Junior Note may pledge or assign all or a part of such Tranche A
Junior Note to MID or to Magna. Magna may also (a) assign the payment
stream from a Note to MID and deliver to Borrower an irrevocable instruction to
pay any proceeds payable to Magna on it to MID, (b) issue a note from
Magna to MID secured by the payment stream from such Note and deliver to
Borrower an irrevocable instruction to pay any proceeds payable to such Holder
on such Note to MID in satisfaction of such Note, and (c) pledge the
Tranche B Junior Note to MID. The Holders have assigned the payment stream from
all Tranche A Junior Notes by the “Direction” as defined and set forth in the
MID Forbearance Agreement. Holders of a Tranche B Junior Note may not sell
participations in such Tranche B Junior Note. None of the restrictions on the
transfer or participation of the Notes shall be applicable after a Specified
Default Trigger Event.

 

(b)                                 Procedure.
Subject to Section 6.2 hereof and the restrictions set forth in this Section 6.3,
any Holder may transfer a Note to a new Holder as permitted by this
Agreement, or may exchange a Note for Notes of different denominations
(but not of different tranches), by surrendering such Note to Borrower duly
endorsed for transfer or accompanied by a duly executed instrument of transfer
naming the new Holder (or the current Holder if submitted for exchange only), together
with written instructions for the issuance of one or more new Notes specifying
the respective principal amounts of each new Note and the name of each new
Holder and each address therefor. Borrower shall simultaneously deliver to such
Holder or its designee such new Notes, shall mark the surrendered Notes as
canceled and shall provide notice of such transfer to Agent. For avoidance of
doubt, in the event that the Tranche B Junior Note is divided or transferred,
Borrower’s delivery requirement under Section 3.2(a)(ii) shall not be
altered. In lieu of the foregoing procedures, subject to Section 6.2
hereof and the restrictions set forth in this Section 6.3, a Holder may assign
a Note (in whole but not in part) to a new Holder by sending written notice to
Borrower and Agent of such assignment specifying the new Holder’s name and
address; in such case, Borrower shall promptly acknowledge such assignment in
writing to both the old and new Holder.

 

6.4                                 Registration
of Notes.

 

(a)                                  Borrower
will maintain (and make available for inspection by the Holders upon prior
notice at reasonable times) at its address referred to in Section 10.6(b) a
register for the recordation, of, and shall record, the names and addresses of
the Holders and the respective amounts of the Notes for each Holder from time
to time (the “Register”). Borrower shall deem and treat the Persons listed as
the Holder in the Register as the holders and owners of the corresponding Notes
listed therein for all purposes hereof; all amounts owed with respect to any
Note shall be owed to the Holder listed in the Register as the owner thereof;
and any request, authority or consent of any Person who, at the time of making
such request, or giving such authority or consent, is listed in the Register as
a Holder shall be conclusive and binding on the Borrower, absent manifest
error, subject to the entries in the Register, which shall, absent manifest
error, govern in the event of any inconsistency with any Holder’s records. Failure
to make any 

 

32

 

recordation in the Register or in any Holder’s
records, or any error in such recordation, shall not affect any Notes or any
obligation thereunder.

 

(b)                                 Upon
receipt of a Note pursuant to Section 6.3 above, the Borrower will record
the relevant information in the Register.

 

6.5                                 Replacement
of Lost Notes. Upon receipt of evidence reasonably satisfactory to Borrower
of the mutilation, destruction, loss or theft of any Notes and the ownership
thereof and an indemnity from the Holder or, in the case of a Holder other than
MID or Magna, a bond, if reasonably requested by Borrower, Borrower shall, upon
the written request of any Holder, execute and deliver in replacement thereof
new Notes in the same form, in the same original principal amount and dated the
same date as the Notes so mutilated, destroyed, lost or stolen; and such Notes
so mutilated, destroyed, lost or stolen shall then be deemed no longer
outstanding hereunder. If the Notes being replaced have been mutilated, they shall
be surrendered to Borrower.

 

ARTICLE 7

 

COVENANTS

 

7.1                                 Affirmative
Covenants. Borrower covenants that, so long as all or any of the principal
amount of the Notes shall remain outstanding, following the Closing Date:

 

(a)                                  Existence.
Borrower shall, and shall cause each of the Meadows Companies to do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence.

 

(b)                                 Businesses
and Properties; Compliance with Laws. Borrower shall not, and shall cause
each of the Meadows Companies not to, interfere with Operator’s performance of
its duties under the Racing Services Agreement, including with respect to its
operation of the business of the Meadows Companies, including at all times,
Operator’s actions to (i) do or cause to be done all things necessary to
preserve, renew and keep in full force and effect the rights, licenses
(including without limitation all harness racing licenses and all gaming
licenses), registrations, permits, certifications, approvals, consents,
franchises, patents, copyrights, trademarks and trade names of the Meadows
Companies, and any other trade names that may be material to the conduct
of their businesses; (ii) comply in all material respects with all laws
and regulations applicable to the operation of such business, including but not
limited to, all Environmental Laws, whether now in effect or hereafter enacted
and with all other applicable laws and regulations, (iii) take all action
that may be required to obtain, preserve, renew and extend all rights,
patents, copyrights, trademarks, tradenames, franchises, registrations,
certifications, approvals, consents, licenses, permits and any other
authorizations of the Meadows Companies that may be material to the
operation of such business, (iv) maintain, preserve and protect all
property material to the conduct of such business, and (v) except for
obsolete or worn out equipment, keep their property in good repair, working
order and condition and from time to time make, or cause to be 

 

33

 

made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at
all times. Borrower agrees that it will not, and will not permit any of its
Subsidiaries, to terminate the services of the Operator under the Racing
Services Agreement until after the Maturity Date and in accordance with the
terms of the Racing Services Agreement. Borrower shall not deposit or cause to
be deposited Hazardous Materials on any real property owned by the Meadows
Companies.

 

(c)                                  Conditional/Category
1 Gaming License and Related Licenses. Borrower shall, and shall cause each
of its Subsidiaries, to use its commercially reasonable efforts to (A) comply
with Section 5.04 of the Acquisition Agreement and (B) comply with
the requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority (including all Environmental Laws), noncompliance with
which could reasonably be expected to result in, individually or in the
aggregate, the loss of the harness racing licenses of Borrower or any of its
Subsidiaries, or in the ability of WTA to maintain its application and obtain
approval for and the issuance of a Conditional/Category 1 Gaming License. Notwithstanding
the foregoing, Borrower shall not be required to comply with the foregoing
covenant to the extent any failure to comply or breach is caused by Operator’s
breach of its obligations under the Racing Services Agreement or Seller’s
breach of its representations and warranties in the Acquisition Agreement.

 

(d)                                 Insurance.
Borrower shall not interfere with the Operator’s obligation to provide and pay
for insurance pursuant to Section 18.1 of the Racing Services Agreement.

 

(e)                                  Obligations
and Taxes. Other than taxes, assessments and charges that are the
responsibility of the Operator under the Racing Services Agreement, including
without limitation, under Section 3.1.15 of the Racing Services Agreement
or that relate to periods on or before the date of this Agreement, Borrower
shall, and shall cause each of the Meadows Companies to pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon them or upon their income or profits or in respect of their
properties before the same shall become delinquent or in default, as well as
all bona fide claims for labor, materials and supplies or otherwise, which, if
unpaid, might give rise to Liens or charges upon the properties of the Meadows
Companies or any part thereof; provided, however, that Borrower and the
Meadows Companies shall not be required to pay and discharge or to cause to be
paid and discharged any such tax, assessment, charge, levy or claim (i) so
long as the validity or amount thereof shall be contested in good faith by
appropriate actions and Borrower and the Meadows Companies shall, to the extent
required by GAAP, have set aside on their books adequate reserves with respect
thereto or (ii) caused by the actions of the Operator. Borrower will not
permit any of the Meadows Companies to file or consent to the filing of any
consolidated income tax return with any Person (other than with the Borrower). Notwithstanding
the foregoing, Borrower shall not be required to comply with the foregoing
covenant to the extent any failure to so comply is caused by Operator’s breach
of its obligations under the Racing Services Agreement or Magna’s breach of its
representations, warranties or covenants under the Acquisition Agreement.

 

34

 

(f)                                    Notices.
Borrower shall give Agent prompt written notice of the following:

 

(i)                                     Default.
Any Default or Specified Event of Default, specifying the nature and extent
thereof and the action (if any) that is proposed to be taken with respect
thereto;

 

(ii)                                  Licenses:  (A) promptly upon any executive officer
of Borrower obtaining knowledge of (1) the institution of, or written
threat by, any Governmental Authority of any proceeding against Borrower or any
of its Subsidiaries directly related to WTA’s application for a
Conditional/Category 1 Gaming License or (2) any material development in
any proceeding before the Harness Racing Commission or the PGCB (in which
Seller is not already present, a party or otherwise a recipient of notice),
that, in any case, (x) would reasonably appear likely to impair the ability of
the relevant Subsidiary of Borrower to obtain or maintain, as the case may be,
a harness racing license or a Conditional/Category 1 Gaming License; or (y)
seeks to enjoin or otherwise prevent such Loan Party from obtaining a
Conditional/Category 1 Gaming License, written notice thereof together with
such other information as may be reasonably requested by Agent to enable
Agent and its counsel to evaluate any of such proceedings (other than material
that is attorney-client privileged) and (B) as often as may be
reasonably requested by Agent (but not more often than weekly), an update, in
reasonable detail, of the status of Borrower’s and its Subsidiaries’ pending
application for a Conditional/Category 1 Gaming License;

 

(iii)                               Jurisdiction.
Any change in the name of Borrower or any Meadows Company or change in the
jurisdiction of formation of Borrower or any Meadows Company;

 

(iv)                              Orders;
Injunctions. Promptly upon any executive officer of Borrower obtaining
knowledge of the issuance by any court or governmental agency or authority of
any injunction, order, decision or other restraint prohibiting, or having the
effect of prohibiting, the making or maintaining of any indebtedness hereunder
or the initiation of any litigation or similar proceeding seeking any such
injunction, order or other restraint; and

 

(v)                                 Litigation.
Promptly upon any executive officer of Borrower obtaining knowledge of the
notice, filing or commencement of any action, suit or proceeding against any of
Borrower or its Subsidiaries whether at law or in equity or by or before any
court or any federal, state, municipal or other governmental agency or
authority and that, if adversely determined against any of Borrower or its
Subsidiaries, could result in uninsured liability in excess of $500,000 in the
aggregate.

 

(g)                                 Financial
Records; Access to Premises and Inspections and Other Matters. Borrower
shall maintain financial records in accordance with generally accepted
practices or consistent with their past practice. Except with respect to the
Excluded Items, the

 

35

 

Agent may reasonably request to permit any
authorized representative designated by the Agent to upon reasonable notice to
visit and inspect the properties and financial records of the Loan Parties and
to make extracts from such financial records or permit any authorized
representative designated by the Agent to discuss the affairs, finances and
conditions of the Loan Parties with the Loan Parties’ chief executive officer
or chief financial officer and such other officers as the Loan Parties shall
deem appropriate, and the Loan Parties’ independent public accountants, and the
Loan Parties shall reasonably cooperate with any such requests.

 

(h)                                 Financing
Commitment Letter. Borrower shall, and Borrower shall cause each Meadows
Company to, use commercially reasonable efforts to take such actions as are
necessary to expeditiously close the financings on the terms set forth in the
Financing Commitment Letter and, in the event that the Consummation Date
occurs, subject to Borrower’s right not to proceed to the Second Closing to the
extent provided under Section 4.4(a), use commercially reasonable efforts
to cause the Second Closing to occur. Borrower agrees to provide Agent with an
opportunity periodically to discuss progress on the financings with the lenders
signatory to the Financing Commitment Letter as reasonably requested by Agent.

 

(i)                                     Compliance
with Acquisition Agreement. Borrower shall comply in all material respects
with its obligations under the Acquisition Agreement, except where any failure
to so comply is caused by Operator’s breach of its obligations under the Racing
Services Agreement.

 

(j)                                     Further
Assurances. Borrower shall, and shall cause the Meadows Companies to,
promptly upon request by Agent, do, execute, acknowledge, deliver, record,
rerecord, file, refile, register and reregister, any and all such further acts,
deeds, conveyances, security agreements, financing statements and continuations
thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments that Agent may reasonably
require from time to time in order (i) to carry out more effectively the
purposes of the Note Documents, (ii) subject to the Prior Liens, to
subject to the Liens created by any of the Security Documents any of the
properties, rights or interests covered by any of the Security Documents, (iii) subject
to the Prior Liens, to perfect and maintain the validity, effectiveness and
priority of any of the Security Documents and the Liens intended to be created
thereby, and (iv) subject to the Prior Liens, to better assure, convey,
grant, assign, transfer, preserve, protect and confirm to Agent the rights
granted or now or hereafter intended to be granted to Agent under any Note
Document or under any other document executed in connection therewith, except
for the Excluded Items.

 

7.2                                 Negative
Covenants. Borrower covenants that, so long as all or any part of the
principal amount and interest, if any, of the Notes shall remain outstanding
and unless otherwise consented to by Agent:

 

(a)                                  Indebtedness.
Borrower shall not, and shall not permit any of the Meadows Companies to,
directly or indirectly, create, incur, assume, guarantee or be or remain liable
for, contingently or otherwise, or suffer to exist any Indebtedness, except:

 

36

 

(i)                                     Indebtedness
under the Note Documents;

 

(ii)                                  Indebtedness
of the Meadows Companies outstanding immediately prior to the Closing Date;

 

(iii)                               Indebtedness
of a Meadows Company to any other Meadows Company; provided that, to the
extent permitted by the Prior Liens, (A) a security interest in all such
intercompany Indebtedness shall have been granted to Agent and (B) such
intercompany Indebtedness shall be evidenced by a promissory note and such
promissory note shall have been pledged to Agent pursuant to the Security
Agreement;

 

(iv)                              Indebtedness
of Borrower not in excess of $1,000,000 in the aggregate and for which no
Meadows Company shall be liable;

 

(v)                                 the
endorsement of negotiable instruments for deposit or collection or similar
transactions constituting Contingent Obligations in the ordinary course of
business;

 

(vi)                              obligations
evidencing or arising out of bonds, letters of credit, deposits or similar
requirements imposed by the Pennsylvania Harness Racing Commission under
applicable laws and regulations;

 

(vii)                           obligations
of Borrower or the Meadows Companies evidencing or arising out of bonds,
letters of credit, deposits or similar requirements imposed by the PGCB under
applicable law or regulations, it being understood that the Meadows Companies
shall not be permitted to incur, guaranty or otherwise become liable for any
obligations described in this clause (vii) unless such obligation has been
funded or equity support reasonably satisfactory to Magna has been provided by
Affiliates of Borrower (other than any Meadows Company) that will be
enforceable obligations against Affiliates of Borrower (other than any Meadows
Company) after a Stock Transfer; and

 

(viii)                        obligations
of the Meadows Companies to the Borrower constituting Permitted Payments.

 

(b)                                 Negative
Pledge; Liens. Borrower shall not, and shall not permit any of the Meadows
Companies to, directly or indirectly, create, incur, assume or suffer to exist
any Lien of any kind on the Acquired Shares or the shares of stock or other
equity interests in any Subsidiaries of the Acquired Companies, except the
Prior Liens, the Liens created pursuant to the Note Documents and any Liens
existing immediately prior to the Closing Date. Borrower shall not permit any
of the Meadows Companies to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind on any of their properties or assets of
any kind, except the following (collectively, “Permitted Liens”):

 

(i)                                     Liens
created pursuant to the Note Documents;

 

(ii)                                  the
MID Liens;

 

37

 

(iii)                               Liens
for or priority claims imposed by law that are incidental to the conduct of
business or the ownership of properties and assets (including mechanic’s,
warehousemen’s, attorneys’ and statutory landlords’ liens) and deposits,
pledges or liens to secure statutory obligations, surety or appeal bonds or
other liens of like general nature incurred in the ordinary course of business
and not in connection with the borrowing of money; provided, however, that in
each case, the obligation secured is not overdue, or, if overdue, is being
contested in good faith and, to the extent required by GAAP, adequate reserves
have been set up by Borrower or its Subsidiaries as the case may be;

 

(iv)                              Liens
securing the payments of taxes, assessments and governmental charges or levies
incurred in the ordinary course of business that either (a) are not
delinquent, or (b) are being contested in good faith by appropriate
actions and as to which, to the extent required 
by GAAP, adequate reserves have been set aside on their books; and

 

(v)                                 Liens
of the Meadows Companies existing immediately prior to the Closing Date
(including as reflected on the title policy delivered pursuant to Section 4.1
hereof).

 

Except as provided in the Magna Loan Documents and the Note Documents,
Borrower shall not, and shall not permit any of the Meadows Companies to,
directly or indirectly, enter into any agreement prohibiting the creation or
assumption of any Lien upon any of the properties or assets of the Borrower or
the Meadows Companies, whether now owned or hereafter acquired.

 

Borrower shall not, and shall not permit any of the Meadows Companies
to, directly or indirectly, create or otherwise cause or become effective any
consensual encumbrance or restriction of any kind on the ability of any such
Subsidiary to (i) pay dividends or make any other distributions on any of
such Subsidiary’s Capital Stock owned by Borrower or any other Subsidiary of
Borrower, (ii) repay or prepay any Indebtedness owed by such Subsidiary to
Borrower or any other Subsidiary of Borrower, (iii) make loans or advances
to Borrower or any other Subsidiary of Borrower, or (iv) transfer any of
its property or assets to Borrower or any other Subsidiary of Borrower, except
as provided in the Note Documents or the Magna Loan Documents.

 

(c)                                  Contingent
Obligations. The Meadows Companies shall not become liable for any
Contingent Obligations, except for the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business and as otherwise expressly permitted to be incurred by the Meadows
Companies under Section 7.2(a).

 

(d)                                 Capital
Expenditures. Except for the RSA Special Capital Expenditures, the Meadows
Companies shall not make or commit to make any payments on account of the
purchase or lease of any assets that if purchased would constitute fixed assets
or that if leased would constitute a Capitalized Lease.

 

38

 

(e)                                  Mergers,
etc. Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, merge into or consolidate or combine with any other
Person, or purchase, lease or otherwise acquire (in one transaction or a series of
related transactions) all or any material portion of (or in the case of the
Meadows Companies, any portion of) the property or assets of any Person other
than purchases or other acquisitions of inventory, materials, leases, property
and equipment in the ordinary course of business including, without limitation,
property permitted to be acquired pursuant to Section 7.2(d) hereof.

 

(f)                                    Sales
of Assets. Borrower shall not sell or transfer the Acquired Shares except
pursuant to a Stock Transfer. Borrower shall not permit any of the Meadows
Companies to, directly or indirectly, sell, transfer or otherwise dispose of
any of its assets, except as follows:

 

(i)                                     inventory
sold in the ordinary course of business;

 

(ii)                                  acquisition,
sale and investment in Cash Equivalents in accordance with Section 7.2(i) hereof;

 

(iii)                               sales,
assignments, transfers or dispositions of accounts in the ordinary course of
business for purposes of collection;

 

(iv)                              disposition
of obsolete, worn out or surplus property in the ordinary course of business;
and

 

(v)                                 in
order to resolve disputes that occur in the ordinary course of business, the
Meadows Companies may discount or otherwise compromise for less than the
face value thereof, notes or accounts receivable.

 

(g)                                 Affiliate
Transactions. Borrower shall not permit any of the Meadows Companies to,
directly or indirectly, make any loan or advance to any director, officer or
employee of Borrower or the Meadows Companies or any Affiliate of Borrower or
any of the Meadows Companies, or enter into or be a party to any transaction or
arrangement with any Affiliate of Borrower or any of the Meadows Companies,
including, without limitation, the purchase from, sale to or exchange of
property with, any merger or consolidation with or into, or the rendering of
any service by or for, any Affiliate of the Borrower, except for the
transactions specified on Schedule 7.2(g) hereto and, in any such
event, pursuant to the reasonable requirements of the Meadows Companies and
upon fair and reasonable terms no less favorable to the Meadows Companies than
would be obtained in a comparable arm’s-length transaction with a Person other
than an Affiliate.

 

(h)                                 Restricted
Payments. Borrower shall not, and shall not permit any of the Meadows
Companies to, declare, order, or pay, make or set apart any sum for any
Restricted Payment, except the following Restricted Payments shall be
permitted:  (i) any Meadows Company may make
a Restricted Payment to Borrower if Borrower uses such amount to make
Restricted Payments to each of its members for the state and federal income
taxes incurred by any such member with respect to income of the Meadows

 

39

 

Companies incurred after the Closing Date in
accordance with the terms the Borrower LLC Agreement as in effect on the date
hereof; provided that Borrower shall deliver simultaneously with the making of
any such payment to Agent an Officers’ Certificate signed by the chief
financial officer of Borrower, setting forth the amount of any such payment and
(ii) payments to Borrower to reimburse it for any Permitted Payments,
provided that Borrower shall deliver simultaneously with the making of any such
payment to Agent a Officer’s Certificate signed by the chief financial officer
of Borrower setting forth the amount of any such payment.

 

(i)                                     Advances,
Investments and Loans. Borrower shall not, and shall not permit any of the
Meadows Companies to, directly or indirectly, purchase or hold any stock, other
securities or evidences of Indebtedness of, or make or acquire or permit to
exist any loan or advance to, or make any investment or acquire any interest
whatsoever in, any other Person, except:

 

(i)                                     securities
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof;

 

(ii)                                  United
States dollar-denominated time deposits, certificates of deposit and bankers
acceptances of any bank or any bank whose short-term debt rating from Standard &
Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. (“S&P”),
is at least A-1 or the equivalent or from Moody’s Investors Service, Inc.
(“Moody’s”) is at least P-1 or the equivalent;

 

(iii)                               in
commercial paper with a rating of at least A-1 or the equivalent by S&P or
at least P-1 or the equivalent by Moody’s;

 

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

 

(v)                                 Investments
in money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (iv) above;

 

(vi)                              Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business;

 

(vii)                           receivables
created or acquired in the ordinary course of business and payable on customary
trade terms;

 

(viii)                        in the
case of the Subsidiary Guarantors, deposits made in the ordinary course of
business consistent with past practices to secure the performance of leases of
a Subsidiary Guarantor;

 

40

 

(ix)                                advances
to employees of a Subsidiary Guarantor in the ordinary course of business for
business expenses; provided, however, that the aggregate amount of such
advances at any time outstanding shall not exceed $100,000;

 

(x)                                   Investments
outstanding immediately prior to the Closing Date; and

 

(xi)                                Investments
by Borrower in any Subsidiary Guarantor (including the Acquired Shares) or by
any Subsidiary Guarantor in any other Subsidiary Guarantor.

 

(j)                                     Amendment
of Certain Documents; Issuance of Capital Stock. Borrower shall not, and
shall not permit any of its Subsidiaries to, amend, terminate, modify or waive
or agree to the amendment, modification or waiver of any term or provision of
the Charter Documents of Borrower and its Subsidiaries that, in any such case,
would reasonably be expected to be adverse to Holders without Agent’s consent. Borrower
shall not, and shall not permit any of its Subsidiaries, to issue any Capital
Stock or any warrants, options or other rights to acquire any Capital Stock.

 

(k)                                  Business.
Borrower shall not engage in any business other than owning the Capital
Stock of the Acquired Companies and taking actions and entering into agreements
and arrangements, to facilitate the Permitted Development, to obtain financing
for the Second Closing and for the Business after the Second Closing, and to
undertake any and all other actions as required under the Acquisition
Agreement, the Note Agreement, the Racing Services Agreement and the Note
Documents. Borrower shall not permit any of the Meadows Companies to engage,
directly or indirectly, in any business other than the Business; provided that
none of the Meadows Companies shall incur any obligations or liabilities in
connection with the Permitted Development or in connection with the gaming
business contemplated by the Transaction Documents, except that the Meadows
Companies may take actions that do not require the expenditure of their
own funds to facilitate the satisfaction of the conditions set forth in the
definition of Consummation Date unless funds or equity support reasonably
satisfactory to Magna has been provided by Affiliates of Borrower (other than
any Meadows Company) and the obligation to provide such funds is enforceable
against Affiliates of Borrower (other than any Meadows Company) after a Stock
Transfer. Borrower shall not acquire or form or permit to exist any
Subsidiaries other than the Meadows Companies without the consent of the Seller.
Borrower shall not interfere, and shall not allow the Meadows Companies to
interfere, with Operator’s (i) conduct of its business in the ordinary
course and consistent with past practice or its obligations under the Racing
Services Agreement, (ii) efforts to preserve intact the business
organization, assets and prospects of the Meadows Companies and (iii) efforts
to preserve the current relationships of each Meadows Company with its
respective customers, suppliers, distributors and other Persons with which each
Meadows Company has significant business relationships.

 

(l)                                     Fiscal
Year; Accounting. Borrower shall not, and shall not permit any of the
Meadows Companies to, change their 
Fiscal Year from ending on December 31 or 

 

41

 

method of accounting (other than immaterial changes in
methods), except as required by GAAP.

 

(m)                               Establishment
of New or Changed Business Locations. Borrower shall not permit any of the
Meadows Companies to relocate its principal executive offices or other
facilities or establish new business locations or store any inventory or other
assets at a location not identified to Agent on or before the date hereof,
without providing not less than twenty (20) days advance written notice to
Agent.

 

(n)                                 Changed
or Additional Business Names. Borrower shall not permit any of the Meadows
Companies to, directly or indirectly, change its corporate name or establish
new or additional trade names.

 

(o)                                 Sales
and Leasebacks. Borrower shall not permit any of the Meadows Companies to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an operating lease or a
Capitalized Lease, of any property (whether real, personal or mixed), whether
now owned or hereafter acquired, (i) that Borrower or any of its
Subsidiaries has sold or transferred or is to sell or transfer to any other
Person or (ii) that Borrower or any of its Subsidiaries intends to use for
substantially the same purpose as any other property that has been or is to be
sold or transferred by Borrower or any of its Subsidiaries to any Person in
connection with such lease.

 

(p)                                 Licenses
and Permits. Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, pledge any licenses or permits, held
by it or any of its Subsidiaries, to any third party other than pursuant to the
Prior Liens and to Agent to secure the Notes.

 

(q)                                 Occupancy Agreements. Except for the Racing Services
Agreement and agreements entered into by the Operator under the Racing Services
Agreement, Borrower shall not permit any of the Meadows Companies to, directly
or indirectly, enter into Occupancy
Agreements for any space which constitutes any material part of its real
property assets or any of them without the prior written approval of Agent,
other than stall agreements, horsemen’s quarters and leases for operations such
as blacksmiths and veterinarians on market terms and consistent with past
practice and renewals or extensions of Occupancy Agreements existing
immediately prior to the Closing Date.

 

(r)                                    Use.
Borrower shall not permit any of its Subsidiaries to, directly or indirectly,
permit any of their real property assets or any portion thereof to be
converted, or take any preliminary actions which could lead to a conversion to,
condominium or cooperative form of ownership.

 

(s)                                  Property
Manager. Borrower shall not permit any of the Meadows Companies to,
directly or indirectly, enter into any property management agreement in respect
of any of their real property assets without Agent’s prior written consent.

 

(t)                                    No
Commingling Funds. Except as provided to the contrary in the Racing Service
Agreement, Borrower shall not, and shall not permit any of its Subsidiaries to,

 

42

 

directly or indirectly, commingle any assets or funds
of Borrower or any of the Subsidiary Guarantors with assets or funds of any of
their respective shareholders, members, partners, principals, Affiliates or any
other Person.

 

(u)                                 ERISA.
Borrower and its ERISA Affiliates shall have no Plan or Multiemployer Plan
other than (i) plans that are not subject to Title IV of ERISA, (ii) the
Plans and Multiemployer Plans of the Meadows Companies existing as of the
Closing Date and (iii) the Plan created pursuant to Section 6.02(a) of
the Acquisition Agreement.

 

(v)                                 Real
Property. Borrower shall not permit any of the Meadows Companies to acquire
any fee interest in real property or leasehold property.

 

(w)                               Deposit
Accounts. The Borrower shall not establish or permit to exist any deposit,
securities or other account of any of the Meadows Companies unless a control
agreement has been entered into with respect to such account with MID and Agent
other than (x) accounts of the Meadows Companies in existence immediately prior
to the Closing and (y) accounts consisting solely of Excluded Items.

 

7.3                                 Covenant
Performance. Notwithstanding any other provision of this Agreement,
Borrower and its Subsidiaries shall be deemed to not be in breach of any
covenant set forth in this Article 7 or under any other provision of this
Agreement or any other Note Document, to the extent that such breach is the
result of (a) any act or omissions by or on behalf of the Meadows
Companies occurring prior to the Closing Date or by or on behalf of Seller, (b) any
act or omission by the Operator or any employee under the supervision of the
Operator or any failure by the Operator to perform any obligation under
the Racing Services Agreement or (c) a failure by Magna to comply with its
obligations under the Acquisition Agreement, this Note Agreement or any Note
Document. The covenants agreed to by Borrower under this Agreement shall not
impose upon Borrower or any of its Subsidiaries any obligation to take any
action to enforce the provisions of the Racing Services Agreement or remedy any
failure of Operator to perform services thereunder. Borrower shall have no
liability for, and shall not be in breach of this Agreement, for any action
taken or omission by the Operator under the Racing Services Agreement that
could be construed as a breach of the covenants and agreements in this
Agreement.

 

7.4                                 Magna
Covenants. Magna covenants that, so long as the Notes shall remain
outstanding and prior to the delivery of a Specified Event of Default Notice:

 

(a)                                  Bankruptcy.
Seller and its Subsidiaries shall not take any action or make any filing to
commence an involuntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect or
file any petition thereunder relating to or against Borrower or any other Loan
Party. Seller and its Subsidiaries shall not seek the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) for Borrower or any other Loan Party or any of its Subsidiaries or
for any substantial part of its property, or for the winding-up or
liquidation of their affairs.

 

43

 

(b)                                 Notices.
Magna shall give Purchaser prompt written notice of (i) written notice
received from MID or written notice delivered by Magna to MID of any default or
event of default under, or the occurrence or declaration of the maturity of the
obligations outstanding under (whether by acceleration or by its terms), any of
the Magna Bridge Loan Agreement or the Magna Development Loan Agreement, with
an explanation specifying the nature and extent thereof and the action (if any)
that is proposed to be taken with respect thereto, (ii) any amendment,
modification, termination, cancellation, or any notice given or agreement
relating to, the MID Forbearance Agreement and not otherwise provided to
Purchaser, or (iii) promptly upon any executive officer of Magna obtaining
knowledge of the issuance by any court or governmental agency or authority of
any injunction, order, decision or other restraint prohibiting, or having the
effect of prohibiting, the making or maintaining of any indebtedness hereunder
or the initiation of any litigation or similar proceeding seeking any such
injunction, order or other restraint.

 

(c)                                  Racing
Services Agreement. Magna agrees that neither it nor its Affiliates will
take any action to terminate the Racing Services Agreement until after the
earlier of (a) the Consummation Date, (b) a Specified Default Trigger
Event, and (c) five (5) Business Days after the Deadline Date and in
accordance with the Racing Services Agreement.

 

(d)                                 Compliance
with Acquisition Agreement. Seller shall comply in all material respects
with its obligations under the Acquisition Agreement.

 

(e)                                  Liens.
Magna shall not, and shall not permit any Affiliate, directly or
indirectly, to create, incur, or assume after the date hereof any Lien of any
kind on the Acquired Shares or the Meadows Companies, except the Prior Liens
and Liens pursuant to the Note Documents and with respect to the Meadows
Companies, any Liens in the ordinary course of business pursuant to performance
under the Racing Services Agreement.

 

7.5                                 Covenant
Performance. Notwithstanding any other provision of this Agreement, Magna
shall not be deemed to be in breach of any covenant set forth in this Article 7
or under any other provision of this Agreement, to the extent that such breach
is the result of (a) any act or omissions by or on behalf of the Meadows
Companies occurring after the Closing Date or by or on behalf of Borrower, or (b) a
failure by Borrower to comply with its obligations under the Acquisition
Agreement, this Note Agreement or any Note Document.

 

ARTICLE 8

 

EVENTS
OF DEFAULT

 

8.1                                 Specified
Events of Default by Borrower. A “Specified Event of Default” shall mean
the occurrence of one or more of the following described events:

 

(a)                                  Borrower
or its Subsidiaries shall default in the payment of principal of or interest on
the Notes (whether by payment of cash or, subject to Section 3.2(a),
delivery 

 

44

 

by it of Holdback Agreement) when due, whether at
maturity or by acceleration or otherwise, or the failure to make a Stock
Transfer as required under Section 3.10 hereof;

 

(b)                                 Borrower
or its Subsidiaries shall have defaulted under any agreement under which any
Indebtedness in an aggregate amount of $5 million or more is created and the
holder of such Indebtedness shall have accelerated the maturity of such
Indebtedness or otherwise commenced the exercise of remedies to collect such
Indebtedness;

 

(c)                                  any
representation or warranty in any Note Document made by any Borrower, any
Parent Entity or OCM AcquisitionCo, or any certificate or financial statement
furnished pursuant to the provisions hereof, shall prove to have been false or
misleading in any material respect as of the time made or furnished or deemed
made or furnished and is reasonably expected to result in Borrower’s inability
to consummate the Second Closing on or prior to the Deadline Date;

 

(d)                                 any
Loan Party shall default in the performance of any covenant, condition or
provision of Section 7.1(a), Sections 7.2(a)-(k), Section 7.2(m) and Section 7.2(n)
and such default, if reasonably capable of cure and if not as a result of a
willful or knowing breach of the Agreement by Borrower or its Affiliates, shall
not be remedied for a period of five (5) Business Days after the earlier
of (i) written notice from Agent to Borrower of such default or (ii) an
executive officer of Borrower obtaining knowledge of such default;

 

(e)                                  any
Loan Party shall default in the performance of any other covenant, condition or
provision of this Agreement, the Notes, the other Note Documents or the
Acquisition Agreement, and such default shall not be remedied for a period of
twenty (20) days after written notice from Agent of such default and the
default is reasonably expected to result in Borrower’s inability to consummate
the Second Closing on or prior to the Deadline Date;

 

(f)                                    Parent
Entities shall default in the performance of any covenant, condition or
provision of Section 10.15(b);

 

(g)                                 a
proceeding shall have been instituted in a court having jurisdiction in the
premises seeking a decree or order for relief in respect of any Loan Party or
any of its Subsidiaries or OCM AcquisitionCo in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of any Loan Party or any of its
Subsidiaries or OCM AcquisitionCo or for any substantial part of its
property, or for the winding-up or liquidation of their affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period of
sixty (60) days;

 

(h)                                 any
Loan Party or any of its Subsidiaries shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of or taking
possession by a receiver, 

 

45

 

liquidator, assignee, trustee, custodian, sequestrator
(or other similar official) of any Loan Party or any of its Subsidiaries or OCM
AcquisitionCo or for any substantial part of their property, or shall make
a general assignment for the benefit of creditors, or shall fail generally to
pay their debts as they become due, or shall take any action in furtherance of
any of the foregoing;

 

(i)                                     OCM
AcquisitionCo shall default under any of its payment or other material
obligations under the Equity Commitment Agreement or, any Affiliate shall
default under any of its material obligations related thereto or contest the
validity, enforceability of, or deny liability under, any of the obligations
related thereto;

 

(j)                                     Borrower
or any Subsidiary takes action to repudiate or contest the security interests
in favor of Agent or MID, other than to enforce the MID Forbearance Agreement;

 

(k)                                  any
Note Document, the Acquisition Agreement or the Racing Services Agreement shall
at any time after the Closing Date cease for any reason to be in full force and
effect or otherwise unenforceable (other than as a result of action by Seller);
or the Security Documents shall cease to create perfected security interests in
favor of Agent in any material portion of the collateral subject to or purported
to be subject thereto, subject to no other Liens other than Permitted Liens; or
any Loan Party or Affiliate thereof shall contest the validity or
enforceability of any Note Document or any provision thereof in writing or deny
in writing that it has any further liability, under any Note Document or any
provision thereof to which it is a party;

 

(l)                                     a
Gaming License Application Event shall have occurred and be continuing; or

 

(m)                               a
Change of Control shall have occurred.

 

In the event that Seller is in default under
its obligations in the Acquisition Agreement, the Racing Services Agreement,
this Agreement or any related agreement or document and a Specified Event of
Default is caused by the default by Seller in its obligations hereunder or
thereunder, then no such Specified Event of Default by Borrower shall be deemed
to have occurred and no remedies pursuant to Section 8.2 hereof with
respect to such Specified Event of Default shall be available to Agent.

 

8.2                                 Consequences
of Specified Event of Default.

 

(a)                                  Bankruptcy.
If a Specified Event of Default specified in paragraphs (g) or (h) of
Section 8.1 hereof shall occur, the unpaid balance of the Notes and
interest accrued thereon and all other obligations of the Loan Parties to the
holders thereof hereunder and thereunder shall be immediately due and payable,
without presentment, demand, protest or (except as expressly required hereby)
notice of any kind, all of which are hereby expressly waived.

 

(b)                                 Specified
Event of Default. If any other Specified Event of Default shall occur,
Agent, upon direction of Required Holders, may by written notice to
Borrower (a 

 

46

 

“Specified Event of Default Notice”), declare the
entire unpaid balance of the Notes, to be forthwith due and payable, and the
same shall thereupon become immediately due and payable, without presentment,
demand, protest or (except as expressly required hereby) notice of any kind,
all of which are hereby expressly waived and Borrower shall comply with the
terms of Section 3.10 and promptly complete the Stock Transfer.

 

(c)                                  Other
Rights and Remedies. After a Specified Event of Default Notice and upon the
failure of Borrower to comply with the provisions of Section 3.10 or upon
the occurrence of a Specified Event of Default specified in paragraphs (g) or
(h) of Section 8.1 (and without any notice) (any such event, a “Specified
Default Trigger Event”), Agent may exercise any and all other rights and
remedies available at law or in equity or pursuant to any Note Document,
including, exercise its rights with respect to the collateral.

 

8.3                                 Security.
Payments of principal of the Notes under this Agreement or the other Note
Documents are secured pursuant to the terms of the Security Documents.

 

8.4                                 Application
of Proceeds of Collateral and Payments after Specified Event of Default. Upon
the delivery of a Specified Event of Default Notice, if requested by Required
Holders, or upon acceleration of the obligations under the Note Documents
pursuant to Section 8.2(a), (a) all payments received by Agent,
whether from Borrower or any Subsidiary Guarantor or otherwise, and (b) all
proceeds received by Agent in respect of any sale of, collection from, or other
realization upon all or any part of the collateral under any Security
Document, subject to the Prior Liens, may, in the discretion of Agent, be held
by Agent as collateral for, and/or (then or at any time thereafter) applied in
full or in part by Agent, in each case in the following order of priority:

 

(i)                                     to
the payment of all out of pocket costs and expenses of such sale, collection or
other realization and all amounts for which Agent is entitled to compensation,
reimbursement and indemnification under any Note Document and all advances made
by Agent thereunder for the account of the applicable Loan Party, all in
accordance with the other terms of this Agreement and the Note Documents;

 

(ii)                                  thereafter,
to the payment of all obligations under the Tranche A Junior Notes for the
ratable benefit of the Holders thereof;

 

(iii)                               thereafter,
to the payment of all obligations under the Tranche B Junior Notes for the
ratable benefit of the Holders thereof;

 

(iv)                              thereafter,
to the payment of all other Obligations; and

 

(v)                                 thereafter,
to the payment to or upon the order of such Loan Party or to whosoever may be
lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

 

8.5                                 Event
of Default by Seller. A “Magna Event of Default” shall mean the occurrence
of one or more of the following described below:

 

47

 

(a)                                  any
material representation or warranty in any Note Document made by Seller, or any
certificate or financial statement furnished pursuant to the provisions hereof,
shall prove to have been false or misleading in any material respect as of the
time made or furnished or deemed made or furnished and is reasonably expected
to result in (i) Borrower’s inability to consummate the Second Closing on
or prior to the Deadline Date or (ii) the inability of WTA to obtain
approval of a gaming license from the PGCB by the Deadline Date;

 

(b)                                 Seller
shall default in the performance of any covenant, condition or provision of Section 7.4(a);

 

(c)                                  Seller
shall default in the performance of any other covenant, condition or provision
of this Agreement, the Notes, the other Note Documents, the Racing Services
Agreement or the Acquisition Agreement, and such default shall not be remedied
for a period of twenty (20) days after written notice from Borrower of such default
and the default is reasonably expected to result in (i) Borrower’s
inability to consummate the Second Closing on or prior to the Deadline Date or (ii) the
inability of WTA to obtain approval of a gaming license from the PGCB on or
prior to the Deadline Date;

 

(d)                                 MID
takes any action or institutes any proceeding to enforce its rights against the
Meadows Companies or their assets or properties, or against the Capital Stock
of any of the Meadows Companies, in each case in violation of the MID
Forbearance Agreement;

 

(e)                                  any
Person takes any action or institutes any proceeding against the Capital Stock
of the Meadows Companies arising from Liens existing immediately prior to the
Closing Date (other than MID in respect of the Prior Liens) and such action or
proceeding shall remain pending, undismissed or unresolved fifteen (15) days
after the earlier of (i) written notice from Borrower of such action or
proceeding or (ii) any executive officer of Seller obtaining knowledge of
such action or proceeding; and

 

(f)                                    Seller
or Operator shall default in the payment when due of any amounts, or the
performance of any material covenant, condition or provision of, the letter
between Magna, MEC Pennsylvania Racing Services and Borrower dated the date
hereof.

 

If a Magna Event of Default shall occur,
Borrower may give written notice thereof (a “Magna Event of Default Notice”),
and upon such notice, cause the Stock Transfer provided for in Section 3.10.

 

ARTICLE 9

 

AGENT

 

9.1                                 Authorization
and Action. Each Holder and each subsequent holder of any Note by its
acceptance thereof, hereby designates and appoints Magna as Agent hereunder and
authorizes Magna to take such actions as agent on its behalf and to exercise
such powers as are delegated to Agent by the terms of this Agreement and the
other Note Documents, together with 

 

48

 

such
powers as are reasonably incidental thereto. Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Holder, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of Agent
shall be read into this Agreement or otherwise exist for Agent. In performing
its functions and duties hereunder, Agent shall act solely as agent for Holders
and does not assume, nor shall be deemed to have assumed, any obligation or
relationship of trust or agency with or for any Loan Party or any of its
Affiliates or any of their respective successors or assigns. Agent shall not be
required to take any action on behalf of the Holders that exposes Agent to
personal liability or that is contrary to this Agreement or applicable Laws.
The appointment and authority of Agent hereunder shall terminate at the indefeasible
payment in full of the Notes and other Obligations, if any.

 

9.2                                 Delegation
of Duties. Agent may execute any of its duties under this Agreement by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. Agent shall not be
responsible to any Holder for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

 

9.3                                 Exculpatory
Provisions. Neither Agent nor any of its directors, officers, agents or
employees shall be (i) liable to any Holder for any action lawfully taken
or omitted to be taken by it or them under or in connection with this Agreement
(except for its, their or such Person’s own gross negligence or willful
misconduct, unless such action was taken or omitted to be taken by Agent at the
direction of the Required Holders), or (ii) responsible in any manner to
any of Holders for any recitals, statements, representations or warranties made
by the Loan Parties or any of their Affiliates contained in this Agreement, any
other Note Document or in any certificate, report, statement or other document
referred to or provided for in, or received under or in connection with, any
Note Document for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any Note Document or any other document
furnished in connection herewith, or for any failure of any of any Loan Party
or any of its Affiliates to perform their respective obligations
hereunder, or for the satisfaction of any condition specified in Article 4.
Agent shall not be under any obligation to any Holder to ascertain or to
inquire as to the observance or performance of any of the agreements or
covenants contained in, or conditions of, any Note Document, or to inspect the
properties, books or records of any Loan Party or any of its Affiliates.

 

9.4                                 Reliance.
As between the Agent and the Holders, the Agent shall in all cases be entitled
to rely, and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to any Loan Party or its Affiliates),
independent accountants and other experts selected by Agent. As between the
Agent and the Holders, Agent shall in all cases be fully justified in failing
or refusing to take any action under this Agreement or any other document
furnished in connection herewith unless it shall first receive such advice or
concurrence of the Required Holders or all of Holders, as applicable, as it
deems appropriate or it shall first be indemnified to its satisfaction by
Holders; provided, that, unless and until Agent shall have received such
advice, Agent may take or refrain from taking any action, as Agent shall
deem advisable and in the best interests of Holders  As between the Agent and the Holders, Agent
shall in all cases be fully protected in acting, or in refraining from acting,
in accordance with a request 

 

49

 

of
the Required Holders or all of Holders, as applicable, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all
Holders.

 

9.5                                 Non-Reliance
on Agent and Other Holders. Each Holder expressly acknowledges that neither
Agent, nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by Agent or hereafter taken, including, without limitation, any review of the
affairs of any Loan Party or any of its Affiliates, shall be deemed to
constitute any representation or warranty by Agent. Each Holder represents and
warrants to Agent that it has and will, independently and without reliance upon
Agent or any other Holder and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, prospects, financial and other conditions and
creditworthiness of each Loan Party or any of its Affiliates and made its own
decision to enter into this Agreement.

 

9.6                                 Agent
in its Individual Capacity. Agent, and each of its Affiliates may make
loans to, purchase securities from, provide services to, accept deposits from
and generally engage in any kind of business with any Loan Party or its
Subsidiaries or any Affiliate of Borrower or any of its Subsidiaries as though
Agent were not Agent hereunder.

 

9.7                                 Successor
Agent. In the event that an event of default has occurred and is continuing
under the Magna Bridge Loan Agreement or the Magna Development Loan Agreement,
MID Islandi shall be entitled to require that Magna resign as Agent and to
appoint MID Islandi, MID or one of its Subsidiaries as replacement Agent
hereunder, upon three (3) Business Days’ notice to Borrower and Magna, and
Magna will, upon the direction of the MID Islandi as aforesaid, resign as
Agent, and the Person designated by MID Islandi as replacement agent shall
become Agent hereunder and under the Note Documents for all purposes hereof and
thereof. After any retiring Agent’s resignation hereunder as Agent, the
provisions of Article 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.

 

9.8                                 Collections
and Disbursements.

 

(a)                                  Agent
will have the right to collect and receive all payments of the Notes, and to
collect and receive all reimbursements due hereunder, together with all fees,
charges or other amounts due under this Agreement and the other Note Documents
with regard to the Notes, and Agent will remit to each Holder, according to its
pro rata percentage, all such payments actually received by Agent in accordance
with the settlement procedures established from time to time. Settlements shall
occur on such dates as Agent may elect in its sole discretion, but which
shall be no later than two (2) Business Days following receipt thereof.

 

(b)                                 If
any such payment received by Agent is rescinded or otherwise required to be
returned for any reason at any time, whether before or after termination of
this Agreement or the other Note Documents, each Holder will, upon written
notice from Agent, promptly pay over to Agent its pro rata percentage of the
amounts so rescinded or returned, together with interest and other fees thereon
so rescinded or returned and such amounts shall continue to be secured under
the Security Documents.

 

50

 

(c)                                  All
payments by Agent and Holders to each other hereunder shall be in immediately
available funds. Agent will at all times maintain proper books of accounts and
records reflecting the interest of each Holder in the Notes, in a manner
customary to Agent’s keeping of such records, which books and records shall be
available for inspection by each Holder at reasonable times during normal
business hours, at such Holder’s sole expense. Agent may treat the payees
of any Note as the Holder thereof until written notice of the due transfer
thereof shall have been received by Agent in accordance with Section 6.3. In
the event that any Holder shall receive any payment in reduction of the Notes
in an amount greater than its applicable pro rata percentage in respect of
obligations to Holders evidenced hereby (including, without limitation amounts
obtained by reason of setoffs) such Holder shall hold such excess in trust for
Agent (on behalf of all other Holders) and shall promptly remit to Agent such
excess amount so that the amounts received by each Holder hereunder shall at
all times be in accordance with its applicable pro rata percentage. If,
however, any Holder that has received any such excess amount fails to remit
such amount to Agent, Agent shall reallocate the amounts paid on the next
payment date to each Holder so that, after giving effect to such payments, the
pro rata obligations owed by Borrower or its Affiliates to each Holder shall be
in an amount equal to the pro rata amount owed by Borrower or its Affiliates
before the date of the payment of such excess amount. In no event shall any
Holder be deemed to have a participation or other right in, to or against any
other Holder’s Note as a result of the payment of any excess amount.

 

9.9                                 Reporting.
During the term of this Agreement, Agent will promptly furnish each Holder such
reports and other information in Agent’s possession as any Holder may reasonably
request. Agent will promptly notify Holders when it receives actual knowledge
of any Specified Event of Default under the Note Documents.

 

9.10                           Consent
of Holders.

 

(a)                                  Except
as expressly provided herein, Agent shall have the sole and exclusive right to
service, administer and monitor the Notes and the Note Documents related
thereto, including, without limitation, the right to exercise all rights,
remedies, privileges and options under this Agreement and under the other Note
Documents, including, without limitation, the credit judgment with respect to
the purchasing of the Notes and the determination as to the basis on which and
extent to which acceptances of Notes may be made.

 

(b)                                 Notwithstanding
anything to the contrary contained in Section 9.10(a) above, Agent
shall not without the prior written consent of Required Holders:  (i) extend any payment date under the
Notes, (ii) reduce any interest rate applicable to any of the Notes, (iii) waive
any Specified Event of Default under Section 8.1(a), (iv) compromise
or settle all or a portion of the Indebtedness under the Notes except by a
Stock Transfer or as contemplated by the Second Closing, (v) release any
obligor from the Indebtedness under the Notes except in connection with full
payment and satisfaction of all Indebtedness under the Notes, a Stock Transfer
or as contemplated by the Second Closing, (vi) amend the definition of
Required Holders, or (vii) amend this Section 9.10(b).

 

51

 

(c)                                  [Intentionally
Omitted.]

 

(d)                                 Agent
shall have the sole and exclusive right, after consultation (to the extent
reasonably practicable under the circumstances) with all Holders and, unless
otherwise directed in writing by Required Holders, to exercise or refrain from
exercising any and all rights, remedies, privileges and options under this
Agreement or the other Note Documents and available at law or in equity to protect
the rights of Agent and Holders and collect the Indebtedness under the Notes,
including, without limitation, instituting and pursuing all legal actions
brought against each Loan Party or any of their respective its Subsidiaries or
to collect the Indebtedness under the Notes, or defending any and all actions
brought by any Loan Party or any of their respective Subsidiaries or other
Person; or incurring expenses or otherwise making expenditures to protect the
collateral, the Notes or Agent’s or any Holder’s rights or remedies.

 

(e)                                  Each
Holder hereby further authorizes Agent, on behalf of and for the benefit of
Holders, to enter into each Security Document as secured party and to be the
agent for and representative of Holders under the Subsidiary Guaranty, the
Equity Commitment Agreement, the MID Forbearance Agreement, and the other Note
Documents and each Holder agrees to be bound by the terms of Security Document,
the Subsidiary Guaranty, the Equity Commitment Agreement, the MID Forbearance
Agreement and the other Note Documents.

 

(f)                                    Except
with respect to a Stock Transfer, upon the proposed sale or other disposition
of any collateral under the Security Documents to any Person (other than an
Affiliate of Borrower) that is permitted by this Agreement or to which
Requisite Holders have otherwise consented, or the sale or other disposition of
all of the Capital Stock of a Subsidiary Guarantor to any Person (other than an
Affiliate of Borrower) that is permitted by this Agreement or to which
Requisite Holders have otherwise consented, for which a Loan Party desires to
obtain a security interest release or a release of the Subsidiary Guaranty from
Agent,  Agent shall, at Agent’s expense,
execute and deliver such releases of its security interest in such collateral
or such Subsidiary Guaranty, as may be reasonably requested by Borrower.

 

9.11                           This
Article Not Applicable to Loan Parties. This Article 9 is
included in this Agreement solely for the purpose of determining certain rights
as between Agent and Holders and does not create, nor shall it give rise to,
any rights in or obligations on the part of the Loan Parties and all
rights and obligations of the Loan Parties under this Agreement shall be
determined by reference to the provisions of this Agreement other than this Article 9.

 

ARTICLE 10

 

MISCELLANEOUS

 

10.1                           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that (i) neither
Borrower nor Parent Entities may assign or transfer their respective
rights hereunder or any 

 

52

 

interest
herein or delegate their duties hereunder without the consent of Required
Holders and (ii) Magna and Holders shall have the right to assign their
rights hereunder and under the Notes only in accordance with Article 6 and
Article 9, as the case may be.

 

10.2                           Modifications
and Amendments. The provisions of this Agreement may be modified,
waived or amended, but only by a written instrument signed by Borrower and
Agent and, only with respect to Section 10.15, by the Parent Entities.

 

10.3                           No
Implied Waivers; Cumulative Remedies; Writing Required. No delay or failure
in exercising any right, power or remedy hereunder shall affect or operate as a
waiver thereof; nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power or remedy
preclude any further exercise thereof or of any other right, power or remedy. The
rights and remedies hereunder are cumulative and not exclusive of any rights or
remedies that Agent or Holders may have. Any waiver, permit, consent or
approval of any kind or character of any breach or default under this Agreement
or any such waiver of any provision or condition of this Agreement must be in
writing, satisfy the conditions set forth in Section 9.10 and shall be
effective only to the extent in such writing specifically set forth.

 

10.4                           Reimbursement
of Expenses. Except as expressly provided herein, all costs and expenses,
including without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement shall be
paid by the party incurring such costs and expenses. Purchaser and Seller shall
split the cost of the title insurance policy referred to in Section 4.1
hereof, all recording or filing fees, taxes and other out-of-pocket costs
arising under or relating to the Security Documents and a Stock Transfer,
including the perfection of any Lien thereunder, and expenses incurred pursuant
to Section 9.10(f) hereof and 7.1(j) hereof. Purchaser shall be
responsible for all fees and expenses (including attorney’s fees) incurred
after a Specified Default Trigger Event in enforcing any obligations hereunder
or under the other Note Documents of or in collecting any payments due from any
Loan Party hereunder or under the other Note Documents (including in connection
with the sale of, collection from, or other realization upon any of the
collateral securing the obligations hereunder or the enforcement of the Note
Documents) or pursuant to any insolvency or bankruptcy proceedings.

 

10.5                           Holidays.
Whenever any payment or action to be made or taken hereunder or under the Notes
shall be stated to be due on a day that is not a Business Day, such payment or
action shall be made or taken on the next following Business Day, and such
extension of time shall be included in computing interest or fees, if any, in
connection with such payment or action.

 

10.6                           Notices.
All notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt but in no event less than three days after delivery
in accordance herewith) by delivery in person, by courier service, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this Section 10.6):

 

53

 

(a)                                  if
to Seller or Agent:

 

Magna Entertainment Corp.

337 Magna Drive

Aurora, Ontario

L4G 7K1, Canada

Facsimile: 
905-726-7177

Attn: 
CEO/General Counsel

 

with a copy to:

 

O’Melveny & Myers LLP

400 South Hope Street

15th Floor

Los Angeles, CA 90071

Facsimile: 
213-430-6407

Attn:                    Thomas W. Baxter, Esq.

Joseph K. Kim, Esq.

 

(b)                                 if
to Borrower:

 

PA Meadows, LLC

211 North Rampart Blvd.

Las Vegas, NV 
89145

Facsímile:  702-507-5992

Attn:                    William Wortman

William Paulos

 

with a copy to:

 

Munger, Tolles & Olson, LLP

355 S. Grand Avenue, 35th Floor

Los Angeles,
CA 90071-1560

Facsimile:  213-687-3702

Attn:  Sandra Seville-Jones, Esq.

 

(c)                                  if
to Holders other than Seller:

 

As set forth on Annex A

 

10.7                           Survival.
All representations and warranties contained herein or made in writing in
connection herewith shall survive the execution and delivery of this Agreement
and the delivery and acceptance of the Notes.

 

10.8                           Governing
Law; Jurisdiction; Service of Process. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York. Agent,
Holders, Borrower and Parent Entities hereby agree and consent to the exclusive
jurisdiction of, and service of process and venue in, the United States
District Court for the Southern District of 

 

54

 

New
York and the courts of the State of New York located in the County of New York,
State of New York and waive any objection with respect thereto, for the purpose
of any action, suit or proceeding arising out of or relating to this Agreement.

 

10.9                           WAIVER
OF JURY TRIAL. EACH OF THE HOLDERS, BORROWER, PARENT ENTITIES AND AGENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

 

10.10                     Severability. If any term
or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest
extent possible.

 

10.11                     Headings. The headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.

 

10.12                     Indemnity.

 

(a)                                  Survival.
Subject to the limitations and other provisions of this Agreement, the
representations, warranties, covenants or agreements of the parties contained
herein shall survive the date of the Second Closing and the Stock Transfer and
shall remain in full force and effect until the date that is six months from
the Second Closing, the completion of a Stock Transfer or the exhaustion of the
Agent’s and Holders’ exercise of the rights and remedies under Sections 8.2,
8.3 and 8.4; provided, however, (i) that the covenants and
agreements set forth in Section 3.2 (with respect to the payment of the
Notes and interest thereunder), Section 3.10 (in the case of a Stock
Transfer), Section 7.2(j), the third sentence of Section 7.2(k), Article IX
and Article X (including this Section 10.12), other than Section 10.15(a),
shall remain in full force and effect for the applicable periods specified in
the respective Sections or Articles or, if no such period is specified,
indefinitely; and (ii) the representations and warranties set forth in
Sections 5.1(a), 5.1(b)(i), 5.1(d), 5.1(i), 5.2(a), and 5.2(b)(i), shall survive indefinitely.

 

(b)                                 Indemnification
by Borrower. Borrower agrees, subject to the other terms and conditions of
this Agreement, to indemnify Agent, Holders and their respective Affiliates and
the officers, directors, employees and agents of each of the foregoing (each
being an “Agent Indemnified Person”) against and hold them harmless from all
Losses arising out of the breach of any representation, warranty, covenant or
agreement of any Loan Party, OCM AcquisitionCo or any Parent Entity under this
Agreement or under any other Note Document.

 

55

 

(c)                                  Tax
Benefit. Except in respect of any payments attributable to a failure to
timely repay or satisfy the Notes as expressly provided in Section 3.2(a) or
Section 3.10, respectively, of this Agreement, payments by Borrower
pursuant to Section 10.12(b) shall be limited to the amount of any
liability or damage that remains after deducting therefrom any Tax benefit to
Agent Indemnified Persons and any insurance proceeds and any indemnity,
contribution or other similar payment recovered by Agent Indemnified Persons
from any third party with respect thereto (it being agreed that any such Agent
Indemnified Person(s) will use its commercially reasonable efforts to recover
such proceeds and payments and that, promptly after the realization of any
insurance proceeds, indemnity, contribution or other similar payment, such
Agent Indemnified Person(s) shall reimburse Borrower for such reduction in
Losses for which such Agent Indemnified Person(s) was indemnified prior to the
realization of such reduction of Losses). A Tax benefit to an Agent Indemnified
Person for purposes of this Section 10.12 shall be reasonably determined
by Seller’s Accountants (as defined in the Acquisition Agreement) as the
difference between (i) the amount of federal, state and local Tax
Liabilities of such Agent Indemnified Person and its Affiliates for the year
with respect to which the indemnity payment is made, and (ii) the amount
of federal, state and local Tax Liabilities (as such terms are defined in the
Acquisition Agreement) of such Agent Indemnified Person and its Affiliates for
the year with respect to which the indemnity payment is made but without the
effect of event that gave rise to the indemnity payment. Magna shall provide
Borrower with calculations and/or other information reasonably supporting the
determination of the amount of the Tax benefit.

 

(d)                                 Limitation
on Claims. No claim may be made against Borrower for indemnification
pursuant to Section 10.12(b) in the event that the Notes are fully
paid in accordance with the terms of Section 3.2(a) of this
Agreement, other than claims for out-of-pocket expenditures suffered by Magna
and the Meadows Companies, as a result of any Loan Party’s, OCM AcquisitionCo’s
or Parent Entity’s breach of this Agreement or any other Note Document.

 

Anything in Section 10.12
to the contrary notwithstanding, no claim may be asserted nor may any
action be commenced against Magna or Borrower, as the case may be, for
breach of any representation, warranty, covenant or agreement contained herein,
unless written notice of such claim or action is received by Magna  or Borrower, respectively, describing in
reasonable detail the facts and circumstances with respect to the subject
matter of such claim or action. If a claim or a potential claim arises,
Borrower and Magna  shall promptly work
in good faith to determine the validity of such claim or potential claim within
a reasonable period of time and if such claim or potential claim is not
resolved to both the indemnified and indemnifying parties’ satisfaction within
such reasonable period of time, either party may commence legal proceedings
to resolve such claim or potential claim.

 

(e)                                  Indemnification
by Magna. Magna agrees, subject to the other terms and conditions of this
Agreement, to indemnify Borrower and its Affiliates and the officers,
directors, employees and agents of each of the foregoing (each being a “Borrower
Indemnified Person”) against and hold it harmless from (i) all Losses
arising out of the breach of any representation, warranty, covenant or
agreement of Agent or any Holder 

 

56

 

under this Agreement, the Notes or any Security
Document and (ii) if the Second Closing does not occur, but the Stock
Transfer occurs (or Magna and Borrower consummate a mutually agreed upon
alternative method for the return of all of the rights, properties and business
of the Meadows Companies to Magna), then any Liability (as defined in the
Acquisition Agreement) of Borrower to third parties arising out of Borrower’s
ownership of the Meadows Companies, but only to the extent such Liability also
arises from acts or omissions, or circumstances existing on or prior to the
Closing Date.

 

(f)                                    Tax
Benefit. Payments by Magna pursuant to Section 10.12(e) shall be
limited to the amount of any liability or damage that remains after deducting
therefrom (i) any Tax benefit to Borrower Indemnified Persons, and (ii) any
insurance proceeds and any indemnity, contribution or other similar payment
recovered by Borrower Indemnified Persons from any third party with respect
thereto (it being agreed that any such Borrower Indemnified Person(s) will use
its commercially reasonable efforts and will cause Companies and Subsidiaries
to use their respective commercially reasonable efforts, to recover such
proceeds and payments and that, promptly after the realization of any insurance
proceeds, indemnity, contribution or other similar payment, such Borrower
Indemnified Person(s) shall reimburse Agent for such reduction in Losses for
which such Borrower Indemnified Person(s) was indemnified prior to the
realization of reduction of such Losses). A Tax benefit to a Borrower
Indemnified Person for purposes of this Section 10.12(f) will
be reasonably determined by Borrower’s Accountants (as defined in the
Acquisition Agreement) as the difference between (i) the amount of
federal, state and local Tax Liabilities of such Borrower Indemnified Person
and its Affiliates (including the Companies and the Subsidiaries) for the year
with respect to which the indemnity payment is made, and (ii) the amount
of federal, state and local Tax Liabilities of such Borrower Indemnified Person
and its Affiliates (including the Companies and the Subsidiaries) for the year
with respect to which the indemnity payment is made but without the effect of
event that gave rise to the indemnity payment. Borrower shall provide Magna
with calculations and/or other information reasonably supporting the
determination of the Tax benefit.

 

(g)                                 Limitation
on Claims. No claims may be made against Magna for indemnification
pursuant to Section 10.12(e) in the event that a Stock Transfer has
been consummated (other than a Stock Transfer as a result of a Magna Event of
Default Notice) or the exercise of Agent’s and Holders’ rights and remedies
under Sections 8.2, 8.3 and 8.4, other than out-of-pocket expenditures suffered
by Borrower or its equity holders (rather than out-of-pocket expenditures
suffered by any of the Meadows Companies) as a result of Magna’s breach under
this Agreement, the Notes or any Security Document.

 

(h)                                 Third
Party Indemnification Procedures, Etc. Each Agent Indemnified Person or
Borrower Indemnified Person, as applicable, (for purposes of this Section 10.12(h),
an “Indemnified Party”) shall give the indemnifying party, as applicable (for
purposes of this Section 10.12(h), an “Indemnifying Party”) prompt written
notice (a “Claim Notice”) of any claim, assertion, event or proceeding by or in
respect of a third party of which it has knowledge concerning any liability or
damage as to which it may request indemnification under Section 10.12
provided, however, that no delay on the part 

 

57

 

of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any liability hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is materially
prejudiced by the delay. The Indemnifying Party shall have the right to assume,
through counsel of its own choosing, the defense or settlement of any such
claim or proceeding at its own expense. If the Indemnifying Party elects to
assume the defense of any such claim or proceeding, the Indemnified Party may participate
in such defense, but in such case the expenses of the Indemnified Party shall
be paid by it; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest (including, without
limitation, if there may be one or more legal or equitable defenses
available to the Indemnified Party which are different from or in addition to
those of the Indemnifying Party and representation by the same counsel would be
inappropriate due to the actual or potential differences between the parties)
that would make it inappropriate in the reasonable judgment of the Indemnified
Party for the same counsel to represent both the Indemnified Party and the Indemnifying
Party, then the Indemnified Party shall be entitled to retain its own counsel,
in each jurisdiction for which the Indemnified Party determines counsel is
required, at the expense of the Indemnifying Party. With reasonable notice, the
Indemnified Party shall provide the Indemnifying Party with reasonable access
to its records and personnel relating to any such claim, assertion, event or
proceeding during normal business hours and shall otherwise cooperate with the
Indemnifying Party in the defense or settlement thereof, and the Indemnifying
Party shall reimburse the Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith. If the Indemnifying Party
elects to assume the defense of any such claim or proceeding, the Indemnified
Party shall not pay, or permit to be paid, any part of any claim or demand
arising from such asserted liability unless the Indemnifying Party consents in
writing to such payment or unless the Indemnifying Party, subject to the
penultimate sentence of this Section 10.12(h), withdraws from the defense
of such asserted liability or unless a final judgment from which no appeal may be
taken by or on behalf of the Indemnifying Party is entered against the
Indemnified Party for such liability. If the Indemnifying Party shall fail to
defend, or if after commencing or undertaking any such defense, fails to
prosecute or withdraws from such defense, the Indemnified Party shall have the
right to undertake the defense or settlement thereof, at the expense of the
Indemnifying Party. If the Indemnified Party assumes the defense of any such
claim or proceeding pursuant to this Section 10.12(h) and proposes to
settle such claim or proceeding prior to a final judgment thereon or to forego
any appeal with respect thereto, then the Indemnified Party shall give the
Indemnifying Party prompt written notice thereof and the Indemnifying Party
shall have the right to participate in the settlement or assume or reassume the
defense of such claim or proceeding. Neither the Indemnified Party nor the
Indemnifying Party shall settle any claim or proceeding without the written
approval of the Indemnifying Party (in the case of a settlement by the
Indemnified Party) or of the Indemnified Party (in the case of a settlement by
the Indemnifying Party), which approval
shall not be unreasonably withheld.

 

(i)                                     Limitation
on Claims. “Losses” of a Person means any and all claims, actions or causes
of action, assessments, losses or damages, deficiencies, liabilities, costs,
awards, judgments, and expenses (including reasonable legal and expert fees and
expense, interest, penalties and all reasonable amounts paid in investigation,
defense, or 

 

58

 

settlement of any of the foregoing) suffered or incurred
by such persons. Neither Magna nor Borrower shall have any liability to any
Borrower Indemnified Person or Agent Indemnified Person, as the case may be,
under Section 10.12 for consequential or punitive damages. This Section 10.12(i) shall
not limit an Indemnified Party’s right to recover fees or expenses of counsel
or reimbursement or indemnity for claims by third parties to the extent
otherwise provided for in this Section 10.12 and paid or payable by an
Indemnified Party. “Losses” of Borrower Indemnified Persons shall be limited to
Losses suffered by Borrower and the equity holders of Borrower, and shall not
include Losses suffered by the Meadows Companies.

 

(j)                                     Exclusive
Remedy. Each of Magna and Borrower hereby acknowledges and agrees that,
from and after the consummation of the Second Closing in accordance with Section 3.2(a) of
this Agreement, or the consummation of the Stock Transfer in accordance with Section 3.10
of this Agreement, the sole and exclusive remedy of Agent Indemnified Persons
or Borrower Indemnified Persons, as the case may be, against Borrower or
Magna, as the case may be, with respect to any and all claims relating to
the subject matter of this Agreement shall be pursuant to the indemnification
provisions set forth in this Section 10.12, except for any claims arising
out of fraud and where a party is entitled to seek injunctive relief because
there is no adequate remedy at law. In furtherance of the foregoing, each of
Borrower and Magna hereby waives, from and after the consummation of the Second
Closing in accordance with Section 3.2(a) of this Agreement or the
consummation of the Stock Transfer in accordance with Section 3.10 of this
Agreement, and on behalf of itself and any other Borrower Indemnified Persons
or Agent Indemnified Persons, as the case may be, to the fullest extent
permitted under applicable law, any and all rights, claims and causes of action
such Borrower Indemnified Persons and Agent Indemnified Persons, as the case may be,
may have against Magna or Borrower, as the case may be, (other than
pursuant to this Section 10.12) relating to the subject matter of this
Agreement arising under or based upon any law, rule, regulation, order,
judgment or decree applicable to it or by which any of the properties of it or
any of its subsidiaries is bound or affected, subject to the exception set
forth in the immediately preceding sentence and subject to the claims, remedies and
other rights of Magna, Borrower and their respective Affiliates under the Note
Documents. Nothing in the forgoing provisions of this Section 10.12(j)
shall limit any rights or claims any party hereto, any Company, any Subsidiary
or MEC Pennsylvania Racing Services, Inc. or any of their respective
Affiliates may have under the Acquisition Agreement, the Racing Services
Agreement, the Holdback Agreement, the Equity Commitment Agreement or any
agreements related thereto.

 

(k)                                  Public
Announcements. Each of Borrower and Magna agrees that, in the event an
Indemnifying Party elects to assume the defense of any claim or proceeding
under Section 10.12(h), to the extent permitted by applicable law, it will
refrain from making any public announcements in respect of such claim or
otherwise communicating with the news media.

 

(l)                                     Jurisdiction.
Borrower and Magna hereby consent to the non-exclusive jurisdiction of any
court in which an Action by a third party is brought against any Indemnified
Party for purposes of any claim that an Indemnified Party may have under 

 

59

 

this Agreement with respect to such Action or the
matters alleged therein and agree that process may be served on Borrower
and Magna with respect to such a claim at the address specified in this
Agreement. Nothing in the foregoing provisions of this Section 10.12(l)
shall limit any rights or claims any party hereto, any Company, any Subsidiary,
MEC Pennsylvania Racing Services, Inc. or any of their respective
Affiliates may have under the Acquisition Agreement, the Racing Services
Agreement, the Holdback Agreement, the Equity Commitment Agreement or any
agreements related thereto  (including
any agreements guarantying the obligations under or otherwise lending credit
support to the Holdback Documents or Equity Commitment Agreement).

 

(m)                               Payments.
Notwithstanding any other provisions of this Section 10.12, the
obligations of Magna and Borrower to indemnify any Borrower Indemnified Person
or Agent Indemnified Person, respectively, shall be deferred until the earliest
to occur of the Second Closing, the Maturity Date, the Specified Default
Trigger Event or the Deadline Date; provided however, that Section 10.12(h) shall
not be so deferred. Once a
Loss is agreed to by
the Indemnifying Party or finally adjudicated to be payable pursuant to this Section 10.12,
the Indemnifying Party shall satisfy its obligations within fifteen (15)
Business Days after such agreement is reached or such final adjudication by
wire transfer of immediately available funds; provided, however, that during
the term of the Holdback Agreement, Borrower Indemnified Persons shall satisfy
any such required payments solely pursuant to the terms of the Holdback
Agreement. The parties hereto agree that should an Indemnifying Party not make
full payment of any such obligations (other than such obligations described in
the proviso set forth in the immediately preceding sentence) within such
fifteen (15) Business Day period, any amount payable shall accrue interest,
compounded annually, calculated from the date of agreement of the Indemnifying
Party or final, nonappealable adjudication through the date such payment has
been made, on the basis of the average of the daily rate of interest publicly
announced by Citibank N.A. in New York, New York from time to time as its base
rate from the date of such agreement or such adjudication to the date of such
payment. The parties hereto agree that if the Second Closing is consummated any
indemnification made pursuant to this Agreement (including without limitation
any indemnification covered by the Holdback Agreement or any indemnification
resulting in the reduction of amounts owing under the Notes) shall be treated
as an adjustment to the Purchase Price (as defined in the Acquisition
Agreement).

 

10.13                     Counterparts. This
Agreement and each of the other Note Documents may be executed in one or
more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

10.14                     Confidentiality. Prior
to the occurrence of any of the events set forth in Section 3.10(a)(i)-(vi),
each Holder and Agent shall, and shall cause its respective agents,
representatives, Affiliates, employees, officers and directors to,
protect (and not disclose or provide access to any Person) all information
obtained from Borrower or any of its Subsidiaries in connection with this
Agreement by using the same degree of care, but no less than a reasonable
degree of care, to prevent the unauthorized disclosure or use of such
information, as such Holder or Agent uses to protect its own confidential
information of a like nature; provided, 

 

60

 

however,
that this sentence shall not apply to any information that, at the time of
disclosure, (i) is disclosed by and between such Holder or Agent and its
respective agents, representatives, Affiliates, employees, officers or
directors on a need-to-know basis (provided that such Persons are bound by a
duty of confidentiality), (ii) is available publicly and was not disclosed
in breach of this Agreement by such Holder or Agent or its respective agents,
representatives, Affiliates, employees, officers or directors (provided that
information provided to or filed with any Governmental Authority shall not be
deemed to be publicly available by virtue of such filing), or (iii) is
required to be disclosed in compliance with Section 5.04 of the
Acquisition Agreement, federal and state laws or regulations or the regulations
governing any national securities exchange or quotation system or is requested
by a regulatory body that has authority over such Holder, Agent or Borrower
(provided that such Holder or Agent, as the case may be, provides prompt
notice to Borrower of the disclosure requirement and uses its reasonable
efforts to disclose only such confidential information as is legally required
to be disclosed and exercises reasonable efforts to obtain assurance that such
confidential information will be accorded confidential treatment); provided
further that this sentence shall not apply to any disclosure in connection with
the exercise of any remedies under the Note Documents or any action, suit or
proceeding relating to the Note Documents or the enforcement of rights
thereunder or, following the occurrence of a Specified Event of Default,
disclosure to a prospective Holder of the Notes.

 

Notwithstanding anything herein to the
contrary, information required to be treated as confidential by reason of the
foregoing shall not include, and Agent and each Holder may disclose to any
and all Persons, without limitation of any kind, any information with respect
to United States federal income tax treatment and United States federal income
tax structure of the transactions contemplated hereby and all materials of any
kind (including opinions or other tax analyses) that are provided to Agent or
such Holder relating to such tax treatment and tax structure.

 

10.15                     Provisions Applicable to Parent Entities.

 

(a)                                  As
a material inducement to Seller, Agent and Holders to enter into this Agreement
and accept the Notes, each Parent Entity hereby severally represents, warrants
and covenants to Agent and Holders as follows:

 

(i)                                     Organization,
Powers, Qualification, Good Standing. CCR is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Nevada. MezzCo is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Parent Entity has all requisite power and authority to enter into this
Agreement and the other Transaction Documents to which it is or may become
a party and to carry out the transactions contemplated hereby and thereby.

 

(ii)                                  Authorization.
The execution, delivery and performance of Transaction Documents to which a
Parent Entity is party have been duly authorized by all necessary action on the
part of such Parent Entity.

 

(iii)                               No
Conflict. The execution, delivery and performance by each Parent Entity of
the Transaction Documents to which a Parent Entity is party and 

 

61

 

the consummation of the transactions contemplated
thereby do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to any Parent Entity, the
Charter Documents of any Parent Entity or any order, judgment or decree of any
court or other Governmental Authority binding on any Parent Entity, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of any Parent Entity,
or (iii) require any approval of stockholders of any Parent Entity.

 

(iv)                              Governmental
Consents. The execution, delivery and performance by each Parent Entity of
the Transaction Documents to which any Parent Entity is party and the
consummation of the transactions contemplated thereby do not and will not
require authorization, approval or other action by, and no notice to or filing
with, any Governmental Authority.

 

(v)                                 Binding
Obligation. Each of the Transaction Documents to which any Parent Entity is
party has been duly executed and delivered by each Parent Entity and is the
legally valid and binding obligation of such Parent Entity, enforceable against
such Parent Entity in accordance with its respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors’ rights generally or by equitable principles
relating to enforceability.

 

(b)                                 No
Parent Entity shall directly or indirectly, including as a result of any action
of any of its respective Affiliates, cause or permit Borrower or any of its
Subsidiaries to:

 

(i)                                     commence
a voluntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect or file any
petition thereunder,

 

(ii)                                  consent
to the institution of any proceeding or petition under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect,

 

(iii)                               consent
to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law,

 

(iv)                              apply
for or consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property,

 

(v)                                 make
any assignment for the benefit of creditors,

 

(vi)                              admit
in writing its inability, to pay its debts as such debts become due, or

 

(vii)                           adopt
any resolution or otherwise authorize any action to approve any of the actions
referred to in clauses (i) through (vi) above.

 

62

 

10.16                     Pennsylvania Accounts. Notwithstanding
any other provision of this Note Agreement or any Note Document, collateral for
the Obligations (or any other obligations of the Borrower and the Meadows
Companies) shall not include amounts held in account for the Commonwealth of
Pennsylvania as specified by Chapter 12 of the Pennsylvania Race Horse
Development and Gaming Act (Act 71) (4 Pa.C.S.A. §1401, et seq.).

 

*          *          *

 

63

 

SIGNATURE PAGE TO

POST-CLOSING
AND NOTE ISSUANCE AGREEMENT

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  PA
  MEADOWS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOLELY WITH RESPECT TO SECTION 10.15,

  PARENT ENTITIES:

  
	
   

  	
   

  
	
   

  	
  CANNERY CASINO RESORTS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PA MEZZCO, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  MAGNA
  ENTERTAINMENT CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDERS:

  
	
   

  	
   

  
	
   

  	
  MAGNA
  ENTERTAINMENT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

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