Document:

Exhibit
10.1

 

PENN
NATIONAL GAMING, INC.,

 

and

 

Wells
Fargo Bank, National Association,

as Trustee

 

$250,000,000

63⁄4% SENIOR SUBORDINATED NOTES DUE 2015

 

INDENTURE

 

Dated
as of March 9, 2005

 

 

CROSS-REFERENCE TABLE*

 

	
  Trust
  Indenture

  Act Section

  	
   

  	
  Indenture Section

  
	
  310

  	
  (a)(1)

  	
   

  	
  7.10

  
	
   

  	
  (a)(2)

  	
   

  	
  7.10

  
	
   

  	
  (a)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(4)

  	
   

  	
  N.A.

  
	
   

  	
  (a)(5)

  	
   

  	
  7.10

  
	
   

  	
  (b)

  	
   

  	
  7.10

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  311

  	
  (a)

  	
   

  	
  7.11

  
	
   

  	
  (b)

  	
   

  	
  7.11

  
	
   

  	
  (c)

  	
   

  	
  N.A.

  
	
  312

  	
  (a)

  	
   

  	
  2.05

  
	
   

  	
  (b)

  	
   

  	
  13.03

  
	
   

  	
  (c)

  	
   

  	
  13.03

  
	
  313

  	
  (a)

  	
   

  	
  7.06

  
	
   

  	
  (b)(1)

  	
   

  	
  10.02

  
	
   

  	
  (b)(2)

  	
   

  	
  7.07

  
	
   

  	
  (c)

  	
   

  	
  7.06; 13.02

  
	
   

  	
  (d)

  	
   

  	
  7.06

  
	
  314

  	
  (a)

  	
   

  	
  4.03; 13.02

  
	
   

  	
  (c)(1)

  	
   

  	
  13.04

  
	
   

  	
  (c)(2)

  	
   

  	
  13.04

  
	
   

  	
  (c)(3)

  	
   

  	
  N.A.

  
	
   

  	
  (e)

  	
   

  	
  13.05

  
	
   

  	
  (f)

  	
   

  	
  N.A.

  
	
  315

  	
  (a)

  	
   

  	
  7.01

  
	
   

  	
  (b)

  	
   

  	
  7.05; 13.02

  
	
   

  	
  (c)

  	
   

  	
  7.01

  
	
   

  	
  (d)

  	
   

  	
  7.01

  
	
   

  	
  (e)

  	
   

  	
  6.11

  
	
  316

  	
  (a) (last sentence)

  	
   

  	
  2.09

  
	
   

  	
  (a)(1)(A)

  	
   

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  6.04

  
	
   

  	
  (a)(2)

  	
   

  	
  N.A.

  
	
   

  	
  (b)

  	
   

  	
  6.07

  
	
   

  	
  (c)

  	
   

  	
  2.12

  
	
  317

  	
  (a)(1)

  	
   

  	
  6.08

  
	
   

  	
  (a)(2)

  	
   

  	
  6.09

  
	
   

  	
  (b)

  	
   

  	
  2.04

  
	
  318

  	
  (a)

  	
   

  	
  13.01

  
	
   

  	
  (b)

  	
   

  	
  N.A.

  
	
   

  	
  (c)

  	
   

  	
  13.01

  

 

N.A.  means not applicable.

 

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

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
   

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS
  AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
   

  
	
  Section
  1.02.

  	
  Other
  Definitions

  	
   

  
	
  Section 1.03.

  	
  Incorporation by Reference of Trust
  Indenture Act

  	
   

  
	
  Section 1.04.

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2

  	
   

  
	
   

  	
   

  	
   

  
	
  THE
  NOTES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Form and Dating

  	
   

  
	
  Section 2.02.

  	
  Execution and Authentication

  	
   

  
	
  Section 2.03.

  	
  Registrar and
  Paying Agent

  	
   

  
	
  Section
  2.04.

  	
  Paying
  Agent To Hold Money in Trust

  	
   

  
	
  Section 2.05.

  	
  Holder Lists

  	
   

  
	
  Section 2.06.

  	
  Transfer and
  Exchange

  	
   

  
	
  Section 2.07.

  	
  Replacement Notes

  	
   

  
	
  Section 2.08.

  	
  Outstanding Notes

  	
   

  
	
  Section 2.09.

  	
  Treasury Notes

  	
   

  
	
  Section 2.10.

  	
  Temporary Notes

  	
   

  
	
  Section 2.11.

  	
  Cancellation

  	
   

  
	
  Section 2.12.

  	
  Defaulted Interest

  	
   

  
	
  Section
  2.13.

  	
  Issuance of
  Additional Notes

  	
   

  
	
  Section 2.14.

  	
  Designation

  	
   

  
	
  Section 2.15.

  	
  CUSIP Numbers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3

  	
   

  
	
   

  	
   

  	
   

  
	
  REDEMPTION AND PREPAYMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Notices to Trustee

  	
   

  
	
  Section
  3.02.

  	
  Selection
  of Notes To Be Redeemed

  	
   

  
	
  Section 3.03.

  	
  Notice of
  Redemption

  	
   

  
	
  Section
  3.04.

  	
  Effect of
  Notice of Redemption

  	
   

  
	
  Section
  3.05.

  	
  Deposit
  of Redemption or Purchase Price

  	
   

  
	
  Section
  3.06.

  	
  Notes
  Redeemed or Purchased in Part

  	
   

  
	
  Section
  3.07.

  	
  Optional
  Redemption and Gaming Redemption

  	
   

  
	
  Section 3.08.

  	
  Mandatory
  Redemption

  	
   

  
	
  Section
  3.09.

  	
  Offer
  To Purchase by Application of Excess Proceeds

  	
   

  

 

i

 

	
  ARTICLE
  4

  	
   

  
	
   

  	
   

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Payment of Notes

  	
   

  
	
  Section
  4.02.

  	
  Maintenance
  of Office or Agency

  	
   

  
	
  Section 4.03.

  	
  Reports

  	
   

  
	
  Section 4.04.

  	
  Compliance
  Certificate

  	
   

  
	
  Section 4.05.

  	
  Taxes

  	
   

  
	
  Section
  4.06.

  	
  Stay,
  Extension and Usury Laws

  	
   

  
	
  Section 4.07.

  	
  Restricted Payments

  	
   

  
	
  Section
  4.08.

  	
  Dividend
  and Other Payment Restrictions Affecting Subsidiaries

  	
   

  
	
  Section
  4.09.

  	
  Incurrence
  of Indebtedness and Issuance of Preferred Stock

  	
   

  
	
  Section 4.10.

  	
  Asset Sales

  	
   

  
	
  Section
  4.11.

  	
  Transactions
  with Affiliates

  	
   

  
	
  Section 4.12.

  	
  Liens

  	
   

  
	
  Section 4.13.

  	
  Corporate Existence

  	
   

  
	
  Section
  4.14.

  	
  Offer
  To Repurchase upon Change of Control and Ratings Decline

  	
   

  
	
  Section
  4.15.

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

  	
   

  
	
  Section 4.16.

  	
  Payments for
  Consent

  	
   

  
	
  Section
  4.17.

  	
  Designation
  of Restricted and Unrestricted Subsidiaries

  	
   

  
	
  Section 4.18.

  	
  Business Activities

  	
   

  
	
  Section
  4.19.

  	
  Payment of
  Liquidated Damages

  	
   

  
	
  Section 4.20.

  	
  Covenant Suspension

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5

  	
   

  
	
   

  	
   

  	
   

  
	
  SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  5.01.

  	
  Merger,
  Consolidation or Sale of Assets

  	
   

  
	
  Section
  5.02.

  	
  Successor
  Corporation Substituted

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6

  	
   

  
	
   

  	
   

  	
   

  
	
  DEFAULTS AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Events of Default

  	
   

  
	
  Section 6.02.

  	
  Acceleration

  	
   

  
	
  Section 6.03.

  	
  Other Remedies

  	
   

  
	
  Section 6.04.

  	
  Waiver of Past
  Defaults

  	
   

  
	
  Section 6.05.

  	
  Control by Majority

  	
   

  
	
  Section 6.06.

  	
  Limitation on Suits

  	
   

  
	
  Section
  6.07.

  	
  Rights
  of Holders of Notes To Receive Payment

  	
   

  
	
  Section 6.08.

  	
  Collection
  Suit by Trustee

  	
   

  
	
  Section
  6.09.

  	
  Trustee
  May File Proofs of Claim

  	
   

  
	
  Section 6.10.

  	
  Priorities

  	
   

  
	
  Section 6.11.

  	
  Undertaking for
  Costs

  	
   

  

 

ii

 

	
  ARTICLE
  7

  	
   

  
	
   

  	
   

  	
   

  
	
  TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Duties of Trustee

  	
   

  
	
  Section 7.02.

  	
  Rights of Trustee

  	
   

  
	
  Section
  7.03.

  	
  Individual
  Rights of Trustee

  	
   

  
	
  Section 7.04.

  	
  Trustee’s
  Disclaimer

  	
   

  
	
  Section 7.05.

  	
  Notice of Defaults

  	
   

  
	
  Section
  7.06.

  	
  Reports
  by Trustee to Holders of the Notes

  	
   

  
	
  Section 7.07.

  	
  Compensation
  and Indemnity

  	
   

  
	
  Section 7.08.

  	
  Replacement of
  Trustee

  	
   

  
	
  Section
  7.09.

  	
  Successor
  Trustee by Merger, etc.

  	
   

  
	
  Section
  7.10.

  	
  Eligibility;
  Disqualification

  	
   

  
	
  Section
  7.11.

  	
  Preferential
  Collection of Claims Against Company

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8

  	
   

  
	
   

  	
   

  	
   

  
	
  LEGAL
  DEFEASANCE AND COVENANT DEFEASANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  8.01.

  	
  Option
  To Effect Legal Defeasance or Covenant Defeasance

  	
   

  
	
  Section
  8.02.

  	
  Legal
  Defeasance and Discharge

  	
   

  
	
  Section 8.03.

  	
  Covenant Defeasance

  	
   

  
	
  Section
  8.04.

  	
  Conditions
  to Legal or Covenant Defeasance

  	
   

  
	
  Section
  8.05.

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

  	
   

  
	
  Section 8.06.

  	
  Repayment to
  Company

  	
   

  
	
  Section 8.07.

  	
  Reinstatement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9

  	
   

  
	
   

  	
   

  	
   

  
	
  AMENDMENT, SUPPLEMENT
  AND WAIVER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  9.01.

  	
  Without
  Consent of Holders of Notes

  	
   

  
	
  Section
  9.02.

  	
  With
  Consent of Holders of Notes

  	
   

  
	
  Section
  9.03.

  	
  Compliance
  with Trust Indenture Act

  	
   

  
	
  Section
  9.04.

  	
  Revocation
  and Effect of Consents

  	
   

  
	
  Section
  9.05.

  	
  Notation
  on or Exchange of Notes

  	
   

  
	
  Section
  9.06.

  	
  Trustee
  To Sign Amendments, etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10

  	
   

  
	
   

  	
   

  	
   

  
	
  SUBORDINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Agreement To
  Subordinate

  	
   

  
	
  Section
  10.02.

  	
  Liquidation;
  Dissolution; Bankruptcy

  	
   

  
	
  Section
  10.03.

  	
  Default
  on Designated Senior Debt

  	
   

  
	
  Section
  10.04.

  	
  Acceleration
  of Securities

  	
   

  
	
  Section
  10.05.

  	
  When
  Distribution Must Be Paid Over

  	
   

  
	
  Section 10.06.

  	
  Notice by Company

  	
   

  
	
  Section 10.07.

  	
  Subrogation

  	
   

  

 

iii

 

	
  Section 10.08.

  	
  Relative Rights

  	
   

  
	
  Section
  10.09.

  	
  Subordination
  May Not Be Impaired by Company

  	
   

  
	
  Section
  10.10.

  	
  Distribution
  or Notice to Representative

  	
   

  
	
  Section
  10.11.

  	
  Rights
  of Trustee and Paying Agent

  	
   

  
	
  Section
  10.12.

  	
  Authorization
  To Effect Subordination

  	
   

  
	
  Section 10.13.

  	
  Amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11

  	
   

  
	
   

  	
   

  	
   

  
	
  SUBSIDIARY GUARANTEES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Guarantee

  	
   

  
	
  Section
  11.02.

  	
  Subordination
  of Subsidiary Guarantee

  	
   

  
	
  Section
  11.03.

  	
  Limitation
  on Guarantor Liability

  	
   

  
	
  Section
  11.04.

  	
  Execution
  and Delivery of Subsidiary Guarantee and Supplemental Indenture

  	
   

  
	
  Section
  11.05.

  	
  Guarantors
  May Consolidate, etc., on Certain Terms

  	
   

  
	
  Section 11.06.

  	
  Releases
  Following Sale

  	
   

  
	
  Section
  11.07.

  	
  Discharge
  of Subsidiary Guarantee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12

  	
   

  
	
   

  	
   

  	
   

  
	
  SATISFACTION AND DISCHARGE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  12.01.

  	
  Satisfaction
  and Discharge

  	
   

  
	
  Section
  12.02.

  	
  Application
  of Trust Money

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  13

  	
   

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  13.01.

  	
  Trust
  Indenture Act Controls

  	
   

  
	
  Section 13.02.

  	
  Notices

  	
   

  
	
  Section
  13.03.

  	
  Communication
  by Holders of Notes with Other Holders of Notes

  	
   

  
	
  Section
  13.04.

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
   

  
	
  Section
  13.05.

  	
  Statements
  Required in Certificate or Opinion

  	
   

  
	
  Section
  13.06.

  	
  Rules by
  Trustee and Agents

  	
   

  
	
  Section
  13.07.

  	
  No
  Personal Liability of Directors, Officers, Employees and Stockholders

  	
   

  
	
  Section 13.08.

  	
  Governing Law

  	
   

  
	
  Section
  13.09.

  	
  No
  Adverse Interpretation of Other Agreements

  	
   

  
	
  Section 13.10.

  	
  Successors

  	
   

  
	
  Section 13.11.

  	
  Severability

  	
   

  
	
  Section 13.12.

  	
  Counterpart
  Originals

  	
   

  
	
  Section
  13.13.

  	
  Table
  of Contents, Headings, etc.

  	
   

  

 

iv

 

	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit
  A

  	
  FORM
  OF NOTE

  	
   

  
	
  Exhibit
  B

  	
  FORM
  OF CERTIFICATE OF TRANSFER

  	
   

  
	
  Exhibit
  C

  	
  FORM
  OF CERTIFICATE OF EXCHANGE

  	
   

  
	
  Exhibit
  D

  	
  FORM
  OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

  	
   

  
	
  Exhibit
  E

  	
  FORM
  OF SUBSIDIARY GUARANTEE

  	
   

  
	
  Exhibit
  F

  	
  FORM
  OF SUPPLEMENTAL INDENTURE

  	
   

  

 

v

 

INDENTURE dated as of
March 9, 2005 between Penn National Gaming, Inc., a Pennsylvania
corporation (the “Company”) and Wells Fargo Bank, National Association,
as trustee (the “Trustee”).

 

The Company and the
Trustee agree as follows for the benefit of each other and for the equal and
ratable benefit of the Holders of the 63⁄4% Series A Senior Subordinated
Notes due 2015 (the “Series A Notes”) and the 63⁄4% Series B
Senior Subordinated Notes due 2015 (the “Series B Notes” and,
together with the Series A Notes, the “Notes”) in the form of
Initial Notes (as defined below), and, if and when issued, such Additional
Notes (as defined below) that the Company may from time to time choose to issue
pursuant to this Indenture, in each case issuable as provided in this
Indenture.  References herein to the “Notes”
shall include the Initial Notes and the Additional Notes.  All things necessary to make this Indenture a
valid and legally binding agreement of the Company, in accordance with its
terms, have been done, and the Company has done all things necessary to make
the Notes, when executed by the Company, and authenticated and delivered by the
Trustee hereunder and duly issued by the Company, valid and legally binding
obligations of the Company.

 

ARTICLE 1

 

DEFINITIONS
AND INCORPORATION BY REFERENCE

 

Section 1.01.          Definitions.

 

“111/2% Issue Date”
means March 12, 2001.

 

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

 

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

 

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

 

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

 

“Additional Notes” means, subject to the
Company’s compliance with Sections 2.13 and 4.09, 63⁄4% Senior Subordinated
Notes due 2015 substantially in the form of Exhibit A and, if
required, containing the Private Placement Legend, issued from time to time
after the Issue Date under the terms of this Indenture (other than issuances
pursuant to Section 2.06, 2.07, 2.10, 3.06, 4.14 or 9.05 of this Indenture
and any Exchange Notes Issued in respect thereof).

 

 

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

 

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

 

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

 

“Argosy” means Argosy Gaming Company, a
Delaware corporation.

 

“Argosy Acquisition” means the acquisition
by the Company of Argosy pursuant to the Agreement and Plan of Merger, dated as
of November 3, 2004 (together with all exhibits, appendices, schedules and
annexes thereto), by and among Argosy, the Company and Thoroughbred Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of the Company, as
such agreement may be amended, restated or otherwise modified or supplemented
from time to time.

 

“Argosy Transactions” shall mean the merger
(but not the financing thereof) to occur in respect of or in connection with
the Argosy Acquisition and the payment of all fees and expenses in connection
with the foregoing and the financing thereof.

 

“Asset Sale” means:  (a) the sale, lease, conveyance or other
disposition of any assets; provided
that the sale, conveyance or other disposition of all or substantially all of
the assets of the Company and its Subsidiaries taken as a whole shall not constitute
an Asset Sale and shall be governed by the provisions of Section 4.14 and/or
Section 5.01 hereof and not by the provisions of Section 4.10 and (b) the
issuance or sale of Equity Interests in any of the Company’s Restricted Subsidiaries;
provided, however, that notwithstanding the
preceding, the following items will not be deemed to be Asset Sales:  (i) solely for purposes of the
provisions of Section 4.10, any single transaction or series of related
transactions that involves assets or Equity Interests having a fair market
value of less than $20.0 million; (ii) a transfer of assets between or
among the Company and any of its Restricted Subsidiaries; (iii) an issuance
of Equity Interests by any Restricted Subsidiary to the Company or to any other
Restricted Subsidiary; (iv) the sale, exchange for replacement items or
lease of equipment, inventory, accounts receivable or other assets in the
ordinary course of business; (v) (A) sales, transfers or other
dispositions of used, worn out, obsolete, damaged or surplus property, or
property otherwise unsuitable for use in connection with the business, by the
Company and its Restricted Subsidiaries in the ordinary course of business, and
(B) the abandonment or other sale, transfer or other disposition of
intellectual property that is, in the judgment of the Company, no longer economically
practicable to maintain or useful in the conduct of the business of the Company
and its Restricted Subsidiaries taken as a whole; (vi) the sale or other disposition
of cash or Cash Equivalents; (vii) a Restricted Payment or Permitted
Investment that is permitted by Section 4.07 hereof; (viii) (A) the
issuance or sale of directors’ qualifying shares or (B) the issuance, sale or
transfer of Equity Interests of foreign Restricted Subsidiaries to foreign
nationals to the extent required by applicable law; (xi) leases (as lessor
or sublessor) of real or personal property and guaranties of any such lease in
the ordinary course of business; (x) licenses and sublicenses by the
Company or any of its Restricted Subsidiaries of software, intellectual
property and other general intangibles in the ordinary course of business;
(xi)  terminations of Hedging Obligations; (xii) any settlement,
release, waiver or surrender of contract rights or contract, tort or other
litigation claims in the ordinary course of business; (xiii) solely for
purposes

 

2

 

of the provisions of Section 4.10, sales of Unrestricted Subsidiaries
or Equity Interests or other Investments therein or assets thereof;
(xiv) solely for purposes of the provisions of Section 4.10, the
occurrence of any Trigger Event; and (xv) the grant of any Liens not
prohibited by this Indenture and any exercise of remedies in respect
thereof.  In addition, for the avoidance
of doubt, conveyances, sales, leases, assignments, transfers or other
dispositions which would otherwise constitute Asset Sales but for the dollar
thresholds contained in the definition of Asset Sales shall be permitted.

 

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

 

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

 

“Board of Directors” means (a) with
respect to a corporation, the board of directors of the corporation;
(b) with respect to a partnership, the Board of Directors of the general
partner of the partnership; and (c) with respect to any other Person, the
board or committee of such Person serving a similar function.

 

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

 

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

 

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

 

“Capital Stock” means (1) in the case
of a corporation, corporate stock; (2) in the case of an association or
business entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock; (3) in the case of a
partnership or limited liability company, partnership or membership interests
(whether general or limited); and (4) any other interest or participation
that confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.

 

“Cash Equivalents” means:  (1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality of the United States
government (provided that the
full faith and credit of the United States is pledged in support of those
securities) having maturities of not more than one year after the date of
acquisition; (3) securities issued or directly and fully guaranteed or
insured by any state of the United States of America or any agency or
instrumentality thereof (and that are rated at the time of acquisition within
one of the two highest ratings for such securities by Moody’s or S&P)
having maturities of not more than one year after the date of acquisition;
(4) certificates of deposit, time deposits and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers’
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case, with any lender party to the Credit Facilities or with any
domestic commercial bank having capital and surplus of at least $250.0 million
at the time of acquisition; (5) repurchase obligations with a term of not
more than 30 days for underlying securities of the types described in clauses
(2) through (4) above entered into with any financial institution meeting the
qualifications specified in clause (4) above at the time of acquisition;
(6) commercial paper rated at the time of acquisition within one of the
two highest ratings obtainable for such securities by Moody’s or S&P and
maturing within one year after the date of acquisition; (7) marketable
short term money market and similar securities having the highest rating
obtainable from Moody’s & S&P at the time of acquisition and in

 

3

 

each case maturing within one year after the date of acquisition;
(8) other dollar denominated securities issued by any Person incorporated
in the United States rated at least “A” or the equivalent by S&P or at
least “A2” or the equivalent by Moody’s and in each case either (A) maturing
not more than one year after the date of acquisition or (B) which are subject
to a repricing arrangement (such as a Dutch auction) not more than one year after
the date of acquisition (and reprices at least yearly thereafter) which the
Person making the investment believes in good faith will permit such Person to
sell such security at par in connection with such repricing mechanism; and
(9) money market funds that invest primarily in Cash Equivalents of the
kinds described in clauses (1) through (8) of this definition.

 

“Change of Control” means the occurrence of
any of the following:  (1) the
direct or indirect sale, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole to any “person” (as that term is used
in Section 13(d) of the Exchange Act) other than a Principal or a Related Party
of a Principal or to the Company or any of its Restricted Subsidiaries;
(2) the adoption by shareholders of a plan relating to the liquidation or
dissolution of the Company; (3) the consummation of any transaction
(including any merger or consolidation) the result of which is that any
“person” (as defined above), other than the Principals and their Related
Parties or any holding company which owns 100% of the Voting Stock of the Company
(so long as no Change of Control would otherwise have occurred in respect of
the Voting Stock of such holding company), becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the Voting Stock of the Company,
measured by voting power rather than number of shares; (4) the
consummation of any transaction (including any merger or consolidation) the
result of which is that the Principals and their Related Parties (or any one of
them) (other than any holding company which owns 100% of the Voting Stock of
the Company (so long as no Change of Control would otherwise have occurred in
respect of the Voting Stock of such holding company)), becomes the Beneficial
Owner, directly or indirectly, of more than 66 2/3% of the Voting Stock of the
Company, measured by voting power rather than number of shares; or (5) the
first day on which a majority of the members of the Board of Directors of The
Company are not Continuing Directors.

 

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

 

“Clearstream” means Clearstream Banking,
S.A.

 

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

 

“Comparable Treasury Issue” means the
United States Treasury security selected by a Reference Treasury Dealer
appointed by the Company as having a maturity comparable to the remaining term
of the Notes (as if the final maturity of the Notes was March 1, 2010) that
would be utilized at the time of selection and in accordance with customary
financial practice in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Notes (as if the final
maturity of the Notes was March 1, 2010).

 

“Comparable Treasury Price” means, with
respect to any redemption date, (1) the average of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third business day preceding such
redemption date, as set forth in the daily statistical release (or any
successor release) published by the Federal Reserve Bank of New York and
designated “Composite 3:30 p.m. 
Quotations for U.S.  Government
Securities” or (2) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such

 

4

 

Reference Treasury Dealer Quotation or (B) if the Company obtains
fewer than three such Reference Treasury Dealer Quotations, the average of all
such Reference Treasury Dealer Quotations.

 

“Consolidated Cash Flow” means, with
respect to any specified Person for any period, the Consolidated Net Income of
such Person for such period plus (without duplication):  (1) provision for taxes based on income
or profits, plus franchise or similar taxes, of such Person and its Restricted
Subsidiaries for such period, to the extent deducted in computing such
Consolidated Net Income; plus (2) consolidated
interest expense of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued and whether or not capitalized (including any
amortization or write-off of deferred financing costs or debt issuance costs,
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations and the interest component of all payments
associated with Capital Lease Obligations, (net of the effect of all payments
made or received pursuant to Hedging Obligations), to the extent that any such
expense was deducted in computing such Consolidated Net Income; plus (3) any cost, charge, fee or
expense (including discounts and commissions and including fees and charges
incurred in respect of letters of credit or bankers acceptance financings)
associated with any Financing Activity, to the extent deducted in computing
such Consolidated Net Income; minus
(4) any gain associated with any Financing Activity, to the extent
increasing such Consolidated Net Income, and any loss associated with any
Financing Activity, to the extent decreasing such Consolidated Net Income; plus (5) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash expenses (excluding any such non-cash expense to the extent that
it represents an accrual of or reserve for cash expenses in any future period
or amortization of a prepaid cash expense that was paid in a prior period) of
such Person and its Restricted Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income (or Net Income); plus (6) to the extent deducted in
computing such Consolidated Net Income, any Pre-Opening Expenses; plus (7) the amount of any
restructuring charges (including those relating to severance, relocation costs
and one-time compensation charges) and any non recurring items of loss or
expense deducted in such period in computing Consolidated Net Income, minus any non-recurring items of income or
gain to the extent increasing Consolidated Net Income for such period; plus (8) without duplication, any
other non-cash charges or items of expense, including any write off or write
downs, reducing Consolidated Net Income for such period, excluding any such
charge that represents an accrual or reserve for a cash expenditure for a
future period on or prior to the final Stated Maturity of the Notes; plus (9) in any fiscal quarter during
which a purchase of property subject to any operating lease shall occur and
during the three following fiscal quarters, an amount equal to the quarterly
payment in respect of such lease (as if such purchase did not occur) times (a)
4 (in the case of the quarter in which such purchase occurs), (b) 3 (in the
case of the quarter following such purchase), (c) 2 (in the case of the second
quarter following such purchase) and (d) 1 (in the case of the third quarter
following such purchase), all as determined on a consolidated basis for the
Company and its Restricted Subsidiaries; minus
(10)  non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business, and other
than any items which represent the reversal of any accrual of, or cash reserve
for, anticipated cash charges for any prior period subsequent to the issue
date, in each case, on a consolidated basis and determined in accordance with
GAAP.  Consolidated Cash Flow shall be
further adjusted, in the event of any Expansion Capital Expenditures, by multiplying
the Consolidated Cash Flow attributable to such Expansion Capital Expenditures
(as determined by the Company) during the first three complete fiscal quarters
following completion of such Expansion Capital Expenditures by (x) 4 (with
respect to the first such quarter), (y) 2 (with respect to the first two such
quarters), and (z) 4/3 (with respect to the first three such quarters).

 

“Consolidated Leverage Ratio” means, with
respect to any Person, as of any date of determination, the ratio of (x)
Consolidated Total Indebtedness of such Person as of such date of determination
(the “Calculation Date”), after giving effect to all transactions to occur on
the Calculation Date

 

5

 

(including, without limitation, the merger or consolidation comprising
or giving rise to the Change of Control giving rise to the need to make the
calculation of the Consolidated Leverage Ratio and other mergers,
consolidations and transactions to occur in connection therewith), to (y)
Consolidated Cash Flow of such Person for the most recently ended four full fiscal
quarters for which internal financial statements are available (the “reference period”) immediately preceding
the Calculation Date.  For purposes of
this definition, “Consolidated Cash Flow” shall be calculated after giving
effect on a pro forma basis, without duplication, to:  (i) acquisitions (including the
occurrence of a Reverse Trigger Event) or investments that have been made by
the specified Person or any of its Restricted Subsidiaries and mergers and
consolidations (including, without limitation, any merger or consolidation
comprising or giving rise to the Change of Control giving rise to the need to
make the calculation of the Consolidated Leverage Ratio and other mergers,
consolidations and transactions to occur in connection therewith) during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date, and the change in Consolidated Cash Flow
resulting therefrom) will be given pro forma effect as if they had occurred on
the first day of the four-quarter reference period, and Consolidated Cash Flow
for such reference period: 
(a) shall include the Consolidated Cash Flow of the acquired
entities or applicable to such investments, and related transactions, and shall
otherwise be calculated on a pro forma basis in accordance with Regulation S-X
under the Securities Act, and (b)  such pro forma calculations shall,
without duplication, give effect to cost savings and other operating expense
reductions and improvements that have been realized or that are reasonably
expected to be realized within 12 months of the Calculation Date, as determined
by the chief financial officer or other senior financial officer of the Company
(in his or her reasonable judgment), in connection with the transaction which is
being given pro forma effect, including, but not limited to, the execution or
termination of any contracts, reduction of costs related to administrative
functions, the termination of any personnel or the closing (or the approval by
the Board of Directors of the Company or any other Person acquiring the Company
or having control over the Company after giving effect to such Change of
Control of any closing) of any facility, as applicable (regardless of whether
those cost savings and operating expense reductions could then be reflected in
pro forma financial statements under GAAP, Regulation S-X promulgated by the
SEC or any other regulation or policy of the SEC); (ii) any Person that is
a Restricted Subsidiary on the Calculation Date will be deemed to have been a
Restricted Subsidiary at all times during the applicable four-quarter reference
period, and any Person that is not a Restricted Subsidiary on the Calculation
Date will be deemed not to have been a Restricted Subsidiary at any time during
the applicable four-quarter reference period; (iii) the Consolidated Cash
Flow attributable to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the Calculation Date,
will be excluded; and (iv) the occurrence of a Trigger Event during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date, and the change in Consolidated Cash Flow
resulting therefrom, will be given pro forma effect as if it had occurred on
the first day of the four-quarter reference period.

 

“Consolidated Net Income” means, with
respect to any specified Person for any period, the aggregate of the Net Income
of such Person and its Restricted Subsidiaries (on the applicable date of determination)
for such period, on a consolidated basis, determined in accordance with GAAP; provided that, without duplication:  (1)  any gain or loss, together with any
related provision for taxes thereon, realized in connection with (a) any Asset
Sale or (b) any disposition of any securities by such Person or any of its
Restricted Subsidiaries, and any extraordinary gain or loss (together with any
related provision for taxes thereon) shall be excluded; (2) the Net Income
of any Person that is not a Restricted Subsidiary or that is accounted for by
the equity method of accounting shall be excluded; provided that Consolidated Net Income of such Person shall
be increased by the amount of dividends or distributions or other payments
(including management fees) that are actually paid or are payable in cash by
any Unrestricted Subsidiary or by any Restricted Subsidiary (or former
Restricted Subsidiary) with respect to which a Trigger Event has occurred
following the occurrence and during the continuance of such Trigger Event to
such Person or a Restricted Subsidiary thereof in respect of such period (or to
the extent converted into cash); (3) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or

 

6

 

payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, other
than limitations imposed either (x) pursuant to Acquired Debt which has been
irrevocably called for redemption, repurchase or other acquisition or in
respect of which the required steps have been taken to have such Acquired Debt
defeased or discharged, or a deposit has been made for such purpose (provided such Acquired Debt is in fact
redeemed, repurchased, repaid, defeased, discharged or otherwise acquired
within 100 days of the incurrence of the Acquired Debt), or (y) by Gaming Laws
generally applicable to all Persons operating a business similar to that of
such Restricted Subsidiary, unless, in either case, such restriction with
respect to the payment of dividends or similar distributions has been waived; provided that Consolidated Net Income of
such Restricted Subsidiary will be included to the extent of dividends or other
distributions or other payments actually paid or permitted to be paid in cash
(or to the extent converted into cash) by such Restricted Subsidiary in respect
of such period, to the extent not already included therein; (4) any goodwill
or other asset impairment charges or other asset write-offs or write downs,
including any resulting from the application of Financial Accounting Standards
Board Statement Nos. 142 and No. 144, and any expenses or charges relating to
the amortization of intangibles as a result of the application of Financial
Accounting Standards Board Statement No. 141, shall be excluded; (5) any
non-cash charges or expenses related to the repurchase of stock options to the
extent not prohibited by this Indenture, and any non-cash charges or expenses
related to the grant, issuance or repricing of, or any amendment or
substitution with respect to, stock appreciation or similar rights, stock
options, restricted stock, or other Equity Interests or other equity based awards
or rights or equivalent instruments, shall be excluded; (6) the cumulative
effect of a change in accounting principles shall be excluded; (7)  any
expenses or reserves for liabilities shall be excluded to the extent that such
Person or any of its Restricted Subsidiaries is entitled to indemnification
therefor under binding agreements; provided,
that any such liabilities for which such Person or such Restricted Subsidiaries
is not actually indemnified shall reduce Consolidated Net Income for the period
in which it is determined that such Person or such Restricted Subsidiary will
not be indemnified (to the extent such liabilities would otherwise reduce
Consolidated Net Income without giving effect to this clause (7)); and
(8) gains and losses resulting solely from fluctuations in currency values
and the related tax effects shall be excluded. 
For purposes of calculating Consolidated Net Income, any non-recurring
charges or expenses of such Person or of a company or business acquired by such
Person (in each case, including those relating to severance, relocation costs
and one time compensation charges and any charges or expenses in connection
with conforming accounting policies or reaudited, combining or restating
financial information), in each case, incurred in connection with the purchase
or acquisition of such acquired company or business by such Person (including
the Argosy Transactions) shall be added to the Consolidated Net Income of such
Person, to the extent any such charges or expenses were deducted in computing
such Consolidated Net Income of such Person.

 

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

 

7

 

“Continuing Directors” means, as of any
date of determination, any member of the Board of Directors of the Company
who:  (1)  was a member of such
Board of Directors on the date of this Indenture; or (2) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.

 

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

 

“Credit Facilities” means one or more debt
facilities or commercial paper facilities, in each case with banks or other
institutional lenders, providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables), letters of credit or other debt securities,
including any related notes, guarantees, collateral documents, agreements
relating to Hedging Obligations, and other instruments, agreements and
documents executed in connection therewith, in each case as amended, restated,
modified, renewed, refunded, replaced, restructured or otherwise refinanced in
whole or in part from time to time by one or more agreements, facilities
(whether or not in the form of a debt facility or commercial paper facility) or
instruments (but excluding in any event Debt Securities).

 

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

 

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

 

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

 

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

 

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

 

“Designated Senior Debt” means (1) any
Indebtedness outstanding under the Senior Credit Facilities; and (2) after
payment in full of all Obligations under the Senior Credit Facilities, any
other Senior Debt permitted under this Indenture the principal amount of which
is $25.0 million or more and that has been designated by the Company as
“Designated Senior Debt.”

 

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

 

“Disqualified Stock” means any Capital
Stock that, by its terms (or by the terms of any security into which it is convertible,
or for which it is exchangeable, in each case at the option of the holder of
the Capital Stock), or upon the happening of any event, matures or is
mandatorily redeemable,

 

8

 

pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder of the Capital Stock, in whole or in part, on or prior
to the date that is 91 days after the date on which the Notes mature provided, however,
only the portion of Capital Stock which is so redeemable or repurchasable prior
to such date will be deemed to be Disqualified Capital Stock.  Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders of the Capital Stock have the right to require the Company to
repurchase such Capital Stock upon the occurrence of a change of control or an
asset sale will not constitute Disqualified Stock if the terms of such Capital
Stock provide that the Company may not repurchase or redeem any such Capital
Stock pursuant to such provisions (x) unless such repurchase or redemption
complies with Section 4.07 or (y) prior to any purchase of the Notes as are
required to be purchased pursuant to the provisions of Section 4.14 and Section
4.10.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Existing Notes” means the Company’s 111/8%
senior subordinated notes due 2008, the Company’s 8 7/8% senior subordinated
notes due 2010 and the Company’s 6 7/8% senior subordinated notes due 2011.

 

“Expansion Capital Expenditures” means any
capital expenditure by the Company or any of its Restricted Subsidiaries in
respect of the purchase or other acquisition of any fixed or capital assets
that adds to or significantly improves the property of the Company and its
Restricted Subsidiaries,

 

9

 

excluding any such capital expenditures constituting a Permitted
Investment or a Restricted Payment or financed with Net Proceeds of an Asset
Sale and excluding capital expenditures in the ordinary course made to
maintain, repair, restore or refurbish the property of the Company and its
Restricted Subsidiaries in its then existing state or to support the
continuation of such Person’s day to day operations as then conducted.

 

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

 

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

 

For purposes of
calculating the Fixed Charge Coverage Ratio: 
(1) in the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, Guarantees, repays, defeases (whether by covenant
or legal defeasance), discharges, repurchases, retires or redeems (or makes an
irrevocable deposit in furtherance thereof) any Indebtedness (other than
ordinary working capital borrowings) or issues, repurchases or redeems
preferred stock subsequent to the commencement of the period for which the
Fixed Charge Coverage Ratio is being calculated and on or prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the “Calculation Date”),
then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect
thereto, and the use of the proceeds therefrom (including any such transaction
giving rise to the need to calculate the Fixed Charge Coverage Ratio), in each
case, as if the same had occurred at the beginning of the applicable
four-quarter reference period and Fixed Charges relating to any such Indebtedness
or preferred stock that has been repaid, defeased (whether by covenant or legal
defeasance), discharged, repurchased, retired or redeemed (or with respect to
which an irrevocable deposit has been made in furtherance thereof) shall be
excluded; (2) acquisitions (including the occurrence of a Reverse Trigger
Event) or investments that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date, and the change in Consolidated Cash Flow resulting therefrom) will be
given pro forma effect as if they had occurred on the first day of the
four-quarter reference period, and Consolidated Cash Flow for such reference
period:  (a) shall include the
Consolidated Cash Flow of the acquired entities or applicable to such
investments, and related transactions, and shall otherwise be calculated on a
pro forma basis in accordance with Regulation S-X under the Securities Act, and
(b) such pro forma calculations shall, without duplication, give effect to
cost savings and other operating expense reductions and improvements that have
been realized or that are reasonably expected to be realized within 12 months
of the Calculation Date, as determined by the chief financial officer or other
senior financial officer of the Company (in his or her reasonable judgment), in
connection with the transaction which is being given pro forma effect,
including, but not limited to, the execution or termination of any contracts,
reduction of costs related to administrative functions, the termination of any
personnel or the closing (or the approval by the Board of Directors of the
Company of any closing) of any facility, as applicable (regardless of whether
those cost savings and operating expense reductions could then be reflected in
pro forma financial statements under GAAP, Regulation S-X promulgated by the
SEC or any other regulation or policy of the SEC); (3) (a) any Person
that is a Restricted Subsidiary on the Calculation Date will be deemed to have
been a Restricted Subsidiary at all times during the applicable four-quarter
reference period, and (b) any Person that is not a Restricted Subsidiary on

 

10

 

the Calculation Date will be deemed not to have been a Restricted
Subsidiary at any time during the applicable four-quarter reference period;
(4) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, will be excluded; (5) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, will be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date; (6) Fixed Charges
attributable to Expansion Capital Expenditures shall be excluded until the
first complete fiscal quarter following completion of such Expansion Capital
Expenditures; (7) the occurrence of a Trigger Event during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date, and the change in Consolidated Cash Flow and
Fixed Charges resulting therefrom, will be given pro forma effect as if it had
occurred on the first day of the four-quarter reference period;
(8) interest on a Capitalized Lease Obligation shall be deemed to accrue
at an interest rate reasonably determined by a responsible financial or
accounting officer of such specified Person to be the rate of interest implicit
in such Capitalized Lease Obligation in accordance with GAAP; and
(9) interest on Indebtedness that may optionally be determined at an
interest rate based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rate, shall be deemed to have been based upon
the rate actually chosen, or, if none, then based upon such optional rate as
such specified Person may designate.

 

“Fixed Charges” means, with respect to any
specified Person and its Restricted Subsidiaries for any period, the sum,
without duplication, of:  (1) the
consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued, (x) including original issue
discount, non-cash interest payments (but excluding any non-cash interest
expense attributable to the movement in the mark to market valuation of Hedging
Obligations or other derivative instruments pursuant to Financial Accounting
Standards Board Statement No.  133 “Accounting for Derivative Instruments and Hedging
Activities” and excluding interest expense associated with a
Permitted Joint Venture Investment (including any related Investment Guarantee
or Investment Guarantee Indebtedness) except as provided in clause (3) below), the
interest component of any deferred payment obligations constituting
Indebtedness, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers’ acceptance financings, and net of
the effect of all payments made or received pursuant to Hedging Obligations,
but (y) excluding any amortization or write-off of deferred financing costs or
debt issuance costs and excluding commitment fees and other transaction
expenses associated with undertaking, or proposing to undertake, any Financing
Activity; plus (2) the
consolidated interest of such Person and its Restricted Subsidiaries that was
capitalized during such period, whether paid or accrued; plus (3) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries, whether or not such Guarantee or Lien is called
upon (provided that any interest
expense in respect of any Permitted Joint Venture Investment (including any
related Investment Guarantee or Investment Guarantee Indebtedness) or the
Pennwood Debt will not be counted pursuant to this clause (3) except to the
extent that the Company or any of its Restricted Subsidiaries actually makes
payments in respect thereof or is imminently required to actually make payments
thereunder in which case, pro forma effect shall be given to all such payments
that the Company, in good faith, reasonably expects to be required to pay
during the next four quarters as though such payments had been made for the
relevant period (but without duplication of amounts paid so that, in any event,
no more than four quarters of payments are counted); plus (4) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock of such Person or any
of its Restricted Subsidiaries, other than dividends on Equity Interests
payable solely in Equity Interests of the Company (other than Disqualified
Stock) or to the Company or a Restricted Subsidiary of the Company, on a
consolidated basis and in accordance with GAAP.

 

11

 

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

 

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

 

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

 

“Gaming Authority” means any governmental
agency, authority, board, bureau, commission, department, office or
instrumentality with regulatory, licensing or permitting authority or
jurisdiction over any gaming business or enterprise or any Gaming Facility
(including the Alcohol and Gaming Commission of Ontario, the Colorado Division
of Gaming, the Colorado Limited Gaming Control Commission, the Illinois Gaming
Board, Indiana Gaming Commission, the Iowa Racing and Gaming Commission, the Louisiana
Gaming Control Board, the Maine Harness Racing Commission, the Maine Gambling
Control Board, the Mississippi Gaming Commission, the Mississippi State Tax
Commission, the Missouri Gaming Commission, the New Jersey Racing Commission,
the New Jersey Casino Control Commission, the Pennsylvania State Horse Racing
Commission, the Pennsylvania State Harness Racing Commission, the West Virginia
Racing Commission and the West Virginia Lottery Commission), or with
regulatory, licensing or permitting authority or jurisdiction over any gaming
operation (or proposed gaming operation) owned, managed or operated by the
Company or any of its Restricted Subsidiaries.

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

“Hedging Obligations” means, with respect
to any specified Person, the obligations of such Person under:  (1) interest rate swap agreements,
currency swap agreement, interest rate cap agreements, interest rate collar
agreements, commodity swap agreement, commodity cap agreement, commodity collar
agreement or foreign exchange contract; and (2) other agreements or
arrangements designed to hedge or protect such Person against, or transfer or
mitigate, fluctuations in interest rates or currency exchange rates.

 

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

 

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

 

“Indebtedness” means, with respect to any
specified Person, any indebtedness of such Person, whether or not contingent:  (1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or, without double counting, reimbursement agreements in
respect thereof); (3) in respect of banker’s acceptances; (4) representing
Capital Lease Obligations; (5) representing the balance deferred and
unpaid of the purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable or insurance premium financing
or is payable through the issuance of Equity Interests (other than Disqualified
Stock) of the Company; or (6) representing net obligations under any
Hedging Obligations, if and to the extent any of the preceding items (other
than letters of credit and Hedging Obligations) would appear as a liability
upon a balance sheet of the specified Person prepared in accordance with
GAAP.  In addition, the term
“Indebtedness” includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of the types referred to in clauses
(1) through (6) above of any other Person, other than by endorsement of
negotiable instruments for collection in the ordinary course of business.  Notwithstanding the foregoing, in no event
should obligations of the Company or any Affiliate of the Company pursuant to
the put or indemnity provisions set forth in the Pocono Downs Sale Documents constitute
Indebtedness.

 

The amount of any
Indebtedness outstanding as of any date will be:  (a) the accreted value of the
Indebtedness, in the case of any Indebtedness issued with original issue
discount; (b) the principal amount of the Indebtedness, together with any
interest on the Indebtedness that is more than 30 days past due, in the case of
any other Indebtedness; (c) in the case of Indebtedness of others secured
by a Lien on any assets of the specified Person, the lesser of the amount of
such Indebtedness and the fair market value of such assets; and (d) in the
case of clause (5) above, the net present value thereof determined in
accordance with GAAP.

 

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

 

13

 

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

 

“Initial Notes” means $250,000,000
aggregate principal amount of 63⁄4% senior subordinated notes due 2015 issued on
the Issue Date, substantially in the form of Exhibit A.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

“Issue Date” means March 9, 2005.

 

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

 

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

 

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

 

“Liquidated Damages” means additional
interest payable to Holders of Notes following the occurrence of a Registration
Default on the principal amount of Transfer Restricted Notes held by such
Holders as described under the Registration Rights Agreement.

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

“Permitted Investments” means:  (1) any Investment in the Company or in
a Restricted Subsidiary of the Company; (2) any Investment in cash and
Cash Equivalents; (3) any Investment by the Company or any Subsidiary of
the Company in a Person if, as a result of, or in connection with, such
Investment:  (a) such Person becomes
a Restricted Subsidiary of the Company; or (b) such Person, in one
transaction or a series of related transactions, is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company; (4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 4.10 hereof; (5) any Investment solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Company or
made with the proceeds of a substantially concurrent sale of such Equity Interests
made for such purpose; (6) any Investments received (a) in exchange for or
in compromise of obligations incurred in the ordinary course of business,
including in satisfaction of judgments, in settlement of delinquent or overdue
accounts or pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of any trade creditor, customer or other debtor,
or (b) as a result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to a secured Investment or transfer of title with
respect to any secured Investment in default; (7) Hedging Obligations;
(8) the extension of credit to customers of the Company or its Restricted
Subsidiaries consistent with gaming industry practice in the ordinary course of
business; (9) loans and advances to officers, directors and employees for
payroll, business related travel expenses, moving or relocation expenses,
drawing accounts and other similar expenses, in each case, incurred in the
ordinary course of business; (10) loans and advances to officers,
directors and employees other than incurred pursuant to clause (9) of this
definition in an aggregate amount not to exceed $10.0 million outstanding at
any time; (11) receivables owing to the Company or any of its Restricted
Subsidiaries if created or acquired in the ordinary course of business;
(12) Investments in any Person to the extent such Investments consist of
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers’ compensation, performance and other similar deposits (including
deposits made with respect to gaming licenses) made in the ordinary course of
business; (13) Investments in Pennwood arising from any payment in respect
of the Existing Indebtedness related to Pennwood; (14) any Investment
existing on the issue date of the Notes; (15) Investments of any Person in
existence at the time such Person becomes a Subsidiary of the Company, provided such Investment was not made in
connection with or in anticipation of such Person becoming a Subsidiary of the
Company; (16) Indebtedness under the Notes, the Senior Credit Facilities,
the Existing Notes and the guarantees related thereto (other than any of the
foregoing constituting Indebtedness subordinated in right of payment to the
Notes); (17) (a) a Permitted Joint Venture Investment and (b) any
Investment Guarantee Payments with respect to a guarantee, agreement or other
extension of credit that qualified as a Permitted Joint Venture Investment at
the time the guarantee or extension of credit was made or the agreement was
entered into, unless, in the case of this clause (b), such guarantee, agreement
or extension of credit no longer qualifies as a Permitted Joint Venture
Investment (whether by reason of a change in the ownership thereof, the
continued existence of a written control or management arrangements or of a
written agreement for Development Services or otherwise) (it being understood
that, in such circumstance, such Investment Guarantee Payments will be
permitted to be made but shall be included (at the option of the Company) (to
the extent that the Permitted Joint Venture Investment to which such Investment
Guarantee Payment relates was not previously included in the second proviso of
the definition of “Permitted Joint Venture Investment” or in clause (x), (y) or
(z) of the last proviso of the definition of “Permitted Joint Venture
Investment”) in (x) the calculation of Investments utilizing the basket set
forth in the second proviso of the definition of “Permitted Joint Venture Investment”
or (y) Permitted Investments (other than this clause (17)) or (z) the
calculation of the aggregate amount of Restricted Payments available pursuant
to clause (3) of the first paragraph of Section 4.07 hereof (as if such
Investment were not a Permitted Investment), in which case, for the purpose of
clause (z) only, any payments received at any time in respect of such
Investment will be included in clause (3)(c) of such paragraph); (18) any
Investment in a Permitted Business having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (18) that are
at that time outstanding, not to exceed 15% of Total Assets, less the

 

17

 

amount of any Investments made and outstanding under the second proviso
of the definition of “Permitted Joint Venture Investment” and calculated at the
time of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value); (19) consummation of the Argosy Transactions; (20) the
occurrence of a Reverse Trigger Event; and (21) the acquisition by the
Company or any of its Restricted Subsidiary of the Pocono Downs Assets pursuant
to the terms of the Pocono Downs Put Obligation and any other transactions
contemplated by the Pocono Downs Put Obligation.

 

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

 

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

 

18

“Permitted Junior Securities” means  (1) Equity Interests in the Company or
(2) Debt Securities of the Company that are subordinated to all Senior
Debt and any debt securities issued in exchange for Senior Debt to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt under this Indenture.

 

“Permitted Liens” means:  (1) (a) Liens on property of the Company
or any Restricted Subsidiary securing obligations under Senior Debt of the
Company or in respect of any Credit Facilities evidencing obligations (other
than subordinated Indebtedness or pari passu
Indebtedness), in each case that is permitted by the terms of this Indenture to
be incurred and (b) Liens on property of any Restricted Subsidiary securing
obligations of such Restricted Subsidiary (other than guarantees of Debt
Securities of the Company that are subordinate or junior in right of payment to
any Senior Debt of the Company), it being understood that distinctions between
categories of Indebtedness that exist by reason of any Liens securing some but
not all of such Indebtedness or securing such Indebtedness with greater or
lesser priority or with different collateral will not result in Indebtedness
being subordinate or junior in right of payment; (2) Liens in favor of the
Company or any Restricted Subsidiary; (3) Liens on property of a Person
existing at the time such Person is merged with or into or consolidated with
the Company or any Subsidiary of the Company or otherwise becomes a Subsidiary
of the Company and amendments or modifications thereto and replacements or
refinancings thereof; provided
that such Liens were not granted in connection with, or in anticipation of,
such merger or consolidation or acquisition and do not extend to any assets
other than those of such Person merged into or consolidated with the Company or
the Subsidiary; (4) Liens (including extensions, renewals or replacements
thereof) on property existing at the time of acquisition of the property by the
Company or any Subsidiary of the Company, provided
that such Liens were in existence prior to the contemplation of such
acquisition; (5) (a) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of
a like nature incurred in the ordinary course of business; (b) Liens incurred
or deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of insurance or social
security or premiums with respect thereto; (c) Liens imposed by Gaming Laws or
Gaming Authorities, and Liens on deposits made to secure gaming license
applications or to secure the performance of surety or other bonds; and (d)
Liens securing obligations with respect to letters of credit issued in
connection with any of the items referred to in this paragraph (5);
(6) Liens to secure Indebtedness (including Purchase Money Indebtedness
and Capital Lease Obligations) permitted by clause (4) of the second paragraph
of Section 4.09 hereof covering only the assets being financed with such
Indebtedness (and directly related assets, including proceeds and replacements
thereof or assets which were financed with Indebtedness permitted by such
clauses that has been refinanced (including successive refinancings));
(7) Liens existing on the date of this Indenture; (8) Liens for
taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate
proceedings, provided that any
reserve required by GAAP has been made therefor; (9) Liens incurred during
any Suspension Period; (10) Liens securing obligations to the trustee
pursuant to the compensation and indemnity provisions of this Indenture and
Liens owing to an indenture trustee in respect of any other Indebtedness
permitted to be incurred under Section 4.09 hereof; (11) Liens on trusts,
cash or Cash Equivalents or other funds provided in connection with the
defeasance, discharge or redemption of Indebtedness permitted to occur under
this Indenture; (12) Liens arising out of judgments or awards not
resulting in a default; (13) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of goods entered
into by the Company or any of its Restricted Subsidiaries in the ordinary
course of business; (14) bankers’ Liens, rights of setoff and other
similar Liens existing solely with respect to cash and Cash Equivalents on
deposit in one or more accounts maintained by the Company or any of its
Restricted Subsidiaries, in each case granted in the ordinary course of
business in favor of the bank or banks with which such accounts are maintained,
securing amounts owing to such bank with respect to cash management and
operating account arrangements, including those involving pooled accounts and
netting arrangements; (15) Permitted Vessel Liens; (16) the filing of
UCC financing statements solely as a precautionary measure in connection with
operating leases or consignment of goods; and (17) other Liens

 

19

 

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

 

“Permitted Refinancing Indebtedness” means
any Indebtedness or Disqualified Capital Stock of the Company or any of its
Restricted Subsidiaries issued within 60 days after repayment of, in exchange
for, or the net proceeds of which are used to extend, refinance, renew,
replace, defease, discharge, redeem, tender for, repay, refund or otherwise
retire or acquire for value, in whole of in part (collectively, a
“refinancing”), any Indebtedness or Disqualified Capital Stock of the Company
or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:  (1) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not
exceed the principal amount (or accreted value, if applicable) of the
Indebtedness refinanced (plus all accrued interest on the Indebtedness and the
amount of all fees, expenses and premiums incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of the Indebtedness being refinanced (or, if
earlier, 91 days after the stated maturity of the Notes), and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of the Indebtedness being refinanced; (3) if the Indebtedness
being refinanced is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment to, the
Notes on terms at least as favorable, taken as a whole, to the Holders of Notes
as those contained in the documentation governing the Indebtedness being
refinanced; and (4) such Indebtedness is incurred either by the Company or
by the Restricted Subsidiary who is the obligor (as primary obligor or
guarantor) on the Indebtedness being refinanced.

 

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

 

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

 

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

 

“Pocono Downs Put Obligation” shall mean the
obligation of the Company, the “Sellers”
(as such term is defined in the definition of Pocono Downs Sale Documents) or
any of their respective affiliates to repurchase from the buyer thereof the
Pocono Downs Assets in accordance with the terms of the Pocono Downs Sale
Documents.

 

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

 

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

 

20

 

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

 

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

 

“Purchase Money Indebtedness” means
Indebtedness of the Company or any of its Restricted Subsidiaries incurred for
the purpose of financing, within 180 days of incurrence, all or any part
of the purchase price or cost of installation, construction or improvement of
any property.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

“Registration Rights Agreement” means, (a)
the registration rights agreement dated as of the date of this Indenture among
the Company and Deutsche Bank Securities Inc., Bear, Sterns & Co. Inc.,
Calyon Securities (USA), Inc., Goldman, Sachs & Co., Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, SC Americas Securities,
LLC and Wells Fargo Securities, LLC, or (b) any future registration rights
agreement entered into by the Company relating to Additional Notes, in the case
of each of clauses (a) and (b), as such agreement may be amended, modified or
supplemented from time to time.

 

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

 

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

 

“Related Party” means (1) any
controlling stockholder, 80% (or more) owned Subsidiary, or immediate family
member (in the case of an individual) of any Principal; or (2) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of any one or more Principals and/or such other
Persons referred to in the immediately preceding clause (1).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

“SEC” means the Securities and Exchange
Commission.

 

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

 

“Senior Credit Facilities” means the
amended and restated Credit Agreement dated as of December 5, 2003 among the
Company, as borrower, the guarantors party thereto, the several lenders from
time to time party thereto and Bear, Stearns & Co.  Inc.  as
Sole Lead Arranger and Sole Bookrunner, Merrill Lynch, Pierce, Fenner &
Smith Incorporated as Syndication Agent, Bear Stearns Corporate Lending
Inc.  as Swingline Lender, Administrative
Agent and Collateral Agent, and Société Générale and Credit Lyonnais New York
Branch as Joint Documentation Agents and the lenders from time to time party
thereto, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case
as amended, modified, renewed, refunded, restructured, replaced or refinanced
from time to time including increases in principal amount (whether the same are
provided by the original agents and lenders under such Senior Credit Facilities
or other agents or other lenders).

 

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

 

(1)           any
Indebtedness of the Company under the Credit Facilities or otherwise permitted
to be incurred under the terms of this Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it shall not be
senior in right of payment to any Indebtedness of the Company, and (2) all
Obligations with respect to the items listed in the preceding clause (1).  Notwithstanding anything to the contrary in
the preceding, Senior Debt will not include: 
(a)  any liability for federal,
state, local or other taxes owed or owing by the Company; (b) any Indebtedness
of the Company to any of its Subsidiaries; (c) any trade payables; (d) any
Existing Notes or guarantees thereof; or (e) the portion of any Indebtedness
that is incurred in violation of this Indenture.

 

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

 

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

 

“Shreveport Entities” means collectively,
HWCC-Shreveport Inc., a Louisiana corporation, HCS I, Inc., a Louisiana
corporation, HCS II Inc., a Louisiana corporation, Hollywood Casino
Shreveport, a Louisiana partnership, Shreveport Capital Corporation, a
Louisiana corporation, HCS-Golf Course LLC, a Delaware limited liability
company, and HWCC-Louisiana Inc., a Louisiana corporation.

 

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

 

23

 

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

 

“Subsidiary” means, with respect to any
specified Person, (1) any corporation, association or other business
entity of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees of the corporation, association
or other business entity is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and (2) any partnership (a) the
sole general partner or the managing general partner of which is such Person or
a Subsidiary of such Person or (b) the only general partners of which are
that Person or one or more Subsidiaries of that Person (or any combination
thereof).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

“Unrestricted Subsidiary” means any
Subsidiary of the Company (other than a Permitted Joint Venture) that is designated
by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that: 
(1) either (A) such Subsidiary to be so designated has total
assets of $100,000 or less or (B) immediately after giving pro forma
effect to such designation, the Company could incur $1.00 of Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09; (2) such Subsidiary is not, at the time of such
designation, party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms
of any such agreement, contract, arrangement or understanding are no less
favorable to the Company or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of the Company, or
would otherwise be permitted if entered into at the time of such designation
pursuant to Section 4.11; and (3) such Subsidiary is a Person with respect
to which neither the Company nor any of its Restricted Subsidiaries has any
direct or indirect Investment (including a deemed Investment at the time of
designation in an amount equal to the fair market value of the relevant
Subsidiary) that could not have been made at the time of such designation
pursuant to Section 4.07; provided
that the Shreveport Entities shall initially be designated as Unrestricted
Subsidiaries.

 

Any designation of a
Subsidiary of the Company (other than any of the Shreveport Entities) as an
Unrestricted Subsidiary will be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such designation
and an Officers’ Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof.  If, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted Subsidiary, it
will thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date and, if such
Indebtedness is not permitted to be incurred as of such date under Section 4.09
hereof, the Company will be in default of such Section.  The Board of Directors of the Company may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be
deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and
such designation will only be permitted if (1) such Indebtedness is
permitted under Section 4.09 hereof, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period;
and (2) no Default or Event of Default would be in existence following
such designation.

 

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

 

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

 

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

 

25

 

Section 1.02.                                             Other
Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Affiliate Transaction”

  	
   

  	
  4.11

  
	
  “Asset Sale Offer”

  	
   

  	
  3.09

  
	
  “Authentication Order”

  	
   

  	
  2.02

  
	
  “Change of Control
  Offer”

  	
   

  	
  4.14

  
	
  “Change of Control
  Payment”

  	
   

  	
  4.14

  
	
  “Change of Control
  Payment Date”

  	
   

  	
  4.14

  
	
  “Covenant Defeasance”

  	
   

  	
  8.03

  
	
  “Covenant Suspension
  Event”

  	
   

  	
  4.20

  
	
  “Excess Proceeds”

  	
   

  	
  4.10

  
	
  “incur”

  	
   

  	
  4.09

  
	
  “Legal Defeasance”

  	
   

  	
  8.02

  
	
  “Offer Amount”

  	
   

  	
  3.09

  
	
  “Offer Period”

  	
   

  	
  3.09

  
	
  “Paying Agent”

  	
   

  	
  2.03

  
	
  “Permitted Debt”

  	
   

  	
  4.09

  
	
  “Purchase Date”

  	
   

  	
  3.09

  
	
  “Registrar”

  	
   

  	
  2.03

  
	
  “Reinstatement Date”

  	
   

  	
  4.20

  
	
  “Restricted Payments”

  	
   

  	
  4.07

  
	
  “Suspended Covenants”

  	
   

  	
  4.20

  
	
  “Suspension Period”

  	
   

  	
  4.20

  

 

Section 1.03.                             Incorporation by
Reference of Trust Indenture Act.

 

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

 

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

 

“indenture securities” means the Notes;

 

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

 

“indenture to be qualified” means this
Indenture;

 

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

 

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

 

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

 

26

 

Section 1.04.          Rules
of Construction.

 

Unless the context
otherwise requires:

 

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

 

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

 

(c)           “or” is not exclusive;

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 2

 

THE NOTES

 

Section 2.01.                             Form and Dating.

 

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

 

The terms and provisions
contained in the Notes shall constitute, and are hereby expressly made, a part
of this Indenture, and the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.  However, to the extent
any provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

 

(b)           Global
Notes.  Notes issued in global form
shall be substantially in the form of Exhibit A attached hereto
(including the Global Note Legend thereon and the “Schedule of Exchanges of
Interests in the Global Note” attached thereto).  Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the
Global Note Legend thereon and without the “Schedule of Exchanges of Interests
in the Global Note” attached thereto). 
Each Global Note shall represent such of the outstanding Notes as shall
be specified therein and each shall provide that it shall

 

27

 

represent the aggregate principal amount of outstanding Notes from time
to time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions.  Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

 

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

 

Section 2.02.                             Execution and
Authentication.

 

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

 

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

 

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

 

The Trustee or an
authenticating agent shall, upon receipt of a Company Order, authenticate
Initial Notes for original issue in an aggregate principal amount of
$250,000,000.  The aggregate principal
amount of the Initial Notes may not exceed $250,000,000 except as provided in
Section 2.07 hereof.  The Company
may issue, without the consent of the Holders, an unlimited aggregate principal
amount of Additional Notes under the Indenture in accordance with Section 2.13,
provided that such issuance is
not prohibited by Section 4.09.

 

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

 

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

 

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

 

Section 2.03.                             Registrar
and Paying Agent.

 

The Company shall
maintain an office or agency where Notes may be presented for registration of transfer
or for exchange (“Registrar”) and an office or agency where Notes may be
presented for payment (“Paying Agent”). 
The Registrar shall keep a register of the Notes and of their transfer
and

 

28

 

exchange.  The Company may
appoint one or more co-registrars and one or more additional paying
agents.  The term “Registrar” includes
any co-registrar and the term “Paying Agent” includes any additional paying
agent.  The Company may change any Paying
Agent or Registrar without notice to any Holder.  The Company shall notify the Trustee in
writing of the name and address of any Agent not a party to this
Indenture.  If the Company fails to
appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such.  The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.

 

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

 

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

 

Section 2.04.                             Paying
Agent To Hold Money in Trust.

 

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

 

Section 2.05.                             Holder
Lists.

 

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

 

Section 2.06.                             Transfer
and Exchange.

 

(a)           Transfer and Exchange of Global Notes.  A Global Note may not be transferred as a
whole except by the Depositary to a nominee of the Depositary, by a nominee of
the Depositary to the Depositary or to another nominee of the Depositary, or by
the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary.  All Global
Notes will be exchanged by the Company for Definitive Notes if:

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

(B)           (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding the
Person in whose name such Definitive Note shall be registered to effect the
transfer or exchange referred to in (1) above. 
Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii)
shall be deemed to have been satisfied upon

 

30

 

receipt by the Registrar
of the instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes.  Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global Notes contained in
this Indenture and the Notes or otherwise applicable under the Securities Act,
the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant
to Section 2.06(h) hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(D)          the
Registrar receives the following:

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(E)           if
such beneficial interest is being transferred to an Institutional Accredited
Investor in reliance on an exemption from the registration requirements of the
Securities Act other than those listed in subparagraphs (B) through (D) above,
a certificate to

 

32

 

the effect set forth in Exhibit
B hereto, including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(D)          the
Registrar receives the following:

 

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

 

(2)           if the holder of such
beneficial interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery thereof in the form of
a Definitive Note that does not bear the Private

 

33

 

Placement
Legend, a certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(D)          the
Registrar receives the following:

 

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

 

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

 

and, in each such case
set forth in this subparagraph (D), if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of Counsel in form reasonably
acceptable

 

35

 

to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain compliance with
the Securities Act.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

(D)          the
Registrar receives the following:

 

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

 

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

 

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

 

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

 

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

 

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

 

37

 

not affiliates (as
defined in Rule 144) of the Company, and accepted for exchange in the
Exchange Offer; and

 

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

 

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

 

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

 

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

 

THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH BELOW.  BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL
BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT),  (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN ACCREDITED INVESTOR (AS
DEFINED IN RULE 501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT (AN
“ACCREDITED INVESTOR”), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS

 

38

 

LEGEND.  IN CONNECTION WITH ANY TRANSFER OF THIS
SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE
PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.  AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.

 

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

 

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

 

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

 

(h)           Cancellation and/or Adjustment of Global Notes.  At such time as all beneficial interests in a
particular Global Note have been exchanged for Definitive Notes or a particular
Global Note has been redeemed, repurchased or canceled in whole and not in
part, each such Global Note shall be returned to or retained and canceled by
the Trustee in accordance with Section 2.11 hereof.  At any time prior to such cancellation, if
any beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Notes
represented by such Global Note shall be reduced accordingly and an endorsement
shall be made on such Global Note by the Trustee or by the Depositary at the
direction of the Trustee to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note,
such other Global Note shall be increased accordingly and an endorsement shall
be made on such Global Note by the Trustee or by the Depositary at the
direction of the Trustee to reflect such increase.

 

39

 

(i)            General Provisions Relating to Transfers and
Exchanges.

 

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

 

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

 

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

 

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

 

(v)           The
Company shall not be required (A) to issue, to register the transfer of or
to exchange any Notes during a period beginning at the opening of business 15
days before the day of any selection of Notes for redemption under
Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest Payment
Date.

 

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

 

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

 

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

 

Section 2.07.                             Replacement
Notes.

 

If any mutilated Note is
surrendered to the Trustee or the Company and the Trustee receives evidence to
its satisfaction of the destruction, loss or theft of any Note, the Company
shall issue and the Trustee, upon receipt of an Authentication Order, shall
authenticate a replacement Note if the Trustee’s requirements are met.  If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Company to protect the

 

40

 

Company, the Trustee, any Agent and any authenticating agent from any
loss that any of them may suffer if a Note is replaced.  The Company may charge for its expenses in
replacing a Note.

 

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

 

Section 2.08.                             Outstanding
Notes.

 

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

 

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

 

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

 

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

 

Section 2.09.                             Treasury
Notes.

 

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

 

Section 2.10.                             Temporary
Notes.

 

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

 

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

 

41

 

Section 2.11.                             Cancellation.

 

The Company at any time
may deliver Notes to the Trustee for cancellation.  The Registrar and Paying Agent shall forward
to the Trustee any Notes surrendered to them for registration of transfer, exchange
or payment.  The Trustee and no one else
shall cancel all Notes surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall destroy canceled Notes (subject
to the record retention requirement of the Exchange Act).  Certification of the destruction of all
canceled Notes shall be delivered to the Company.  The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.

 

Section 2.12.                             Defaulted
Interest.

 

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

 

Section 2.13.                             Issuance
of Additional Notes.

 

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

 

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

 

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

 

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

 

42

 

Section 2.14.                             Designation.

 

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

 

Section 2.15.                             CUSIP
Numbers.

 

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

 

ARTICLE 3

 

REDEMPTION
AND PREPAYMENT

 

Section 3.01.                             Notices
to Trustee.

 

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

 

Section 3.02.                             Selection
of Notes To Be Redeemed.

 

If less than all of the
Notes are to be redeemed or purchased in an offer to purchase at any time, the
Trustee will select Notes to be redeemed or purchased among the Holders of the
Notes in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis, by
lot or in accordance with any other method the Trustee considers fair and
appropriate; provided that any
redemption pursuant to Section 3.07(b) hereof shall be effected on a pro rata basis or on as nearly a pro rata basis as is practicable (subject
to DTC procedures) unless such method is otherwise prohibited or is not practicable.  In the event of partial redemption by lot,
the particular Notes to be redeemed shall be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to the redemption
date by the Trustee from the outstanding Notes not previously called for
redemption.

 

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

 

43

Section 3.03.                             Notice
of Redemption.

 

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

 

The notice shall identify
the Notes to be redeemed and shall state:

 

(a)           the redemption date;

 

(b)           the redemption price;

 

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

 

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

 

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

 

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

 

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

 

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

 

At the Company’s request,
the Trustee shall give the notice of redemption in the Company’s name and at
its expense; provided, however, that the Company shall have
delivered to the Trustee, at least 45 days prior to the redemption date (unless
a shorter period is acceptable to the Trustee), an Officers’ Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.

 

Section 3.04.                             Effect
of Notice of Redemption.

 

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

 

44

 

Section 3.05.                             Deposit
of Redemption or Purchase Price.

 

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

 

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

 

Section 3.06.                             Notes
Redeemed or Purchased in Part.

 

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

 

Section 3.07.                             Optional
Redemption and Gaming Redemption.

 

(a)           At
any time prior to March 1, 2010, the Company may redeem the Notes for cash at
its option, in whole or in part, at any time or from time to time, upon not
less than 30 days nor more than 60 days notice to each Holder of notes,
at a redemption price equal to the greater of (1) 100% of the principal
amount of the Notes being redeemed and (2) the sum of the present values
of the principal amount of the Notes being redeemed and scheduled payments of
interest on such notes to March 1, 2010, discounted to the date of redemption
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 50 basis points, together in either case with
accrued and unpaid interest, if any, to the date of redemption.

 

(b)           At
any time prior to March 1, 2008, the Company may on any one or more occasions
redeem up to 35% of the aggregate principal amount of Notes issued under this
Indenture at a redemption price of 106.750% of the principal amount, plus accrued
and unpaid interest to the redemption date, with the net cash proceeds of one
or more Equity Offerings; provided
that:  (1) at least 65% of the aggregate
principal amount of Notes issued under this Indenture remains outstanding
immediately after the occurrence of such redemption (excluding Notes held by
the Company and its Subsidiaries); and (2) the redemption occurs within
180 days of the date of the closing of such Equity Offering.

 

(c)           Except
as described in subparagraphs (a) and (b) above, the Notes will not be
redeemable at the Company’s option prior to March 1, 2010.  On and after March 1, 2010, the Company may
redeem all or a part of the Notes upon not less than 30 nor more than
60 days’ notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest

 

45

 

on the Notes redeemed, to the applicable redemption date, if redeemed
during the twelve-month period beginning on March 1 of the years indicated
below: 

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  103.375

  	
  %

  
	
  2011

  	
   

  	
  102.250

  	
  %

  
	
  2012

  	
   

  	
  101.125

  	
  %

  
	
  2013 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

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

 

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

 

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

 

Section 3.08.                             Mandatory
Redemption.

 

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

 

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

 

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

 

The Asset Sale Offer
shall be made to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with proceeds of sales of assets.  The Asset Sale Offer shall remain open for a
period of 20 Business Days following its commencement and no longer, except to
the extent that a longer period is required by applicable law (the “Offer
Period”).  No later than five
Business Days after the termination of the Offer Period (the “Purchase Date”),
the Company shall purchase the principal

 

46

 

amount of Notes required to be purchased pursuant to Section 4.10
hereof (the “Offer Amount”) or, if less than the Offer Amount has been
tendered, all Notes tendered in response to the Asset Sale Offer.  Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)           that Holders shall be
entitled to withdraw their election if the Company, the depositary or the Paying
Agent, as the case may be, receives, not later than the expiration of the Offer
Period, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to have
such Note purchased;

 

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

 

47

 

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

 

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

 

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

 

ARTICLE 4

 

COVENANTS

 

Section 4.01.                             Payment
of Notes.

 

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

 

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

 

Section 4.02.                             Maintenance
of Office or Agency.

 

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

 

48

 

agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee.

 

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

 

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

 

Section 4.03.                             Reports.

 

(a)           Whether
or not required by the SEC, so long as any Notes are outstanding, the Company
shall furnish to the Trustee for mailing to the Holders of Notes, within 15
days after the time periods specified in the SEC’s rules and regulations,
(i) all quarterly and annual financial information that is filed or that
would be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if or as if the Company were required to file such Forms, including a
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and, with respect to the annual information only, a report on the
annual financial statements by the Company’s certified independent accountants;
and (ii) all current reports that would be required to be filed with the
SEC on Form 8-K if the Company were required to file such reports.  The availability of the foregoing materials
on the SEC’s EDGAR service shall be deemed to satisfy the Company’s obligations
to furnish such materials to the Trustee for mailing to the Holders of Notes.

 

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

 

Section 4.04.                             Compliance
Certificate.

 

(a)           The
Company shall deliver to the Trustee, within 105 days after the end of each
fiscal year, an Officers’ Certificate stating that a review of the activities
of the Company and its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event
of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is prohibited
or if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.

 

(b)           So
long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants, the year-end financial statements
delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company’s independent public

 

49

 

accountants (who shall be a firm of established national reputation)
that in making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Article 4 or
Article 5 hereof or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.

 

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

 

Section 4.05.                             Taxes.

 

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

 

Section 4.06.                             Stay,
Extension and Usury Laws.

 

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

 

Section 4.07.                             Restricted
Payments.

 

The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly:  (a) declare or pay any
dividend or make any other distribution on account of the Company’s or any of
its Restricted Subsidiaries’ Equity Interests (other than (x) dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or (y) to the Company or a Restricted Subsidiary of the
Company); (b) purchase, redeem or otherwise acquire or retire for value
(x) any Equity Interests of the Company (other than Disqualified Stock
issued after the date of this Indenture within 365 days of the Stated
Maturity of such Disqualified Stock) or (y) any preferred stock of a
Restricted Subsidiary of the Company (other than within 365 days of the
Stated Maturity thereof), in the case of each of clauses (x) and (y),
other than any such Equity Interests or preferred stock held by the Company or
a Restricted Subsidiary of the Company); (c) make any payment of principal
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value, any Indebtedness of the Company that is subordinated to the
Notes (except a payment within 365 days of the Stated Maturity thereof);
or (d) make any Restricted Investment (all such payments and other actions
set forth in these clauses (a) through (d) being collectively
referred to as “Restricted Payments”), unless, at the time of and after
giving effect to such Restricted Payment:

 

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

 

50

 

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

 

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

 

(A)          50%
of the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter immediately
following the 111/2% Issue Date to the end of the
Company’s most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such deficit),
plus

 

(B)           100%
of (x) the aggregate net cash proceeds received by the Company since the 111/2%
Issue Date as a contribution to its common equity capital or from the issue or
sale of Equity Interests of the Company (other than Disqualified Stock) or from
the issue or sale of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of the Company, in each case, that
have been converted into or exchanged for such Equity Interests (other than
Equity Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company), and (y) the purchase price of any Permitted
Business Assets or other assets acquired in exchange for the issue or sale of
Equity Interests of the Company (other than Disqualified Stock) or from the
issue or sale of convertible or exchangeable Disqualified Stock or convertible
or exchangeable debt securities of the Company that have been converted into or
exchanged for such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary of the Company)
following the date of this Indenture, plus

 

(C)           to
the extent that any Restricted Investment (including to designate a Subsidiary
as an Unrestricted Subsidiary) that was made after the 111/2%
Issue Date and was included in the calculation of Restricted Payments made
under this Indenture:  (x) is sold
for cash or otherwise liquidated or repaid for cash, in whole or in part, or
(y) results in, or is otherwise returned or reduced by, the payment of
principal, interest, dividends or distributions, or repayments of loans or
advances, or other transfers of assets, or the satisfaction, release,
expiration, cancellation or reduction (other than by means of payments by the
Company or any of its Restricted Subsidiaries) of Indebtedness or other
obligations (including any such Indebtedness or other obligations guaranteed by
the Company or any of its Restricted Subsidiaries, including any Investment
Guarantee), or any payments under management contracts or services agreements,
an amount equal to the lesser of (i) the reduction of or return with
respect to, and all other payments received with respect to, such Restricted
Investment (less the cost of disposition, if any) and (ii) the initial
amount of such Restricted Investment that was included in the calculation of
Restricted Payments made under this Indenture, plus

 

(D)          to
the extent that any Restricted Investment was made after the 111/2%
Issue Date in an entity that subsequently becomes a Restricted Subsidiary and
such

 

51

 

Restricted Investment
remains outstanding, the aggregate amount of such Restricted Investments, plus

 

(E)           to
the extent that any Unrestricted Subsidiary of the Company is redesignated as a
Restricted Subsidiary in compliance with Section 4.18 hereof after the 111/2%
Issue Date, the lesser of (1) the fair market value of the Company’s
Investment in such Subsidiary as of the date of such redesignation or
(2) such fair market value as of the date on which such Subsidiary was
originally designated as an Unrestricted Subsidiary.

 

The preceding provisions
will not prohibit:   (1) the payment
of any dividend or the consummation of any irrevocable redemption within
60 days after the date of declaration of the dividend or giving of the
redemption notice, as applicable, if at the date of declaration or giving of
the redemption notice, as the case may be, the dividend or redemption payment
would have complied with the provisions of this Indenture; (2) the
redemption, repurchase, retirement, defeasance or other acquisition of any
subordinated Indebtedness of the Company or of any Equity Interests of the
Company in exchange for, or by conversion into, or out of the net cash proceeds
of the substantially concurrent sale (other than to a Restricted Subsidiary of
the Company) of, Equity Interests of the Company (other than Disqualified Stock)
or of any Person that is or becomes, substantially concurrently with such
transaction, a holding company of the Company; provided
that the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition will be
excluded from clause (iii)(B) of the preceding paragraph; (3) the
defeasance, redemption, repurchase or other acquisition of subordinated
Indebtedness of the Company with the net cash proceeds from an incurrence of,
or in exchange for, Permitted Refinancing Indebtedness; (4) the payment of
any dividend by a Restricted Subsidiary of the Company to the holders of its
Equity Interests (other than preferred stock) on a pro rata basis, or the repurchase by a Restricted Subsidiary
of its Equity Interests (other than preferred stock) if that purchase is made
on a pro rata basis from holders
of such Equity Interests; (5) redemptions, repurchases or repayments of
Indebtedness or Equity Interests of the Company or any of its Subsidiaries to
the extent required by any Gaming Authority having jurisdiction over the
Company or any Restricted Subsidiary or deemed necessary by the Board of
Directors of the Company in order to avoid the suspension, revocation or denial
of a gaming license by any Gaming Authority, or as required under Section
3.07(d) hereof; (6) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company or any Restricted
Subsidiary of the Company held by any member of the Company’s (or any of its
Restricted Subsidiaries’) present or former management, any director or any
employee (or heirs of, estates of or trusts formed by such persons) upon the
death, disability, retirement or termination of employment of such officer,
director or employee or pursuant to any equity subscription agreement, stock
option agreement, employment agreement, severance agreement or similar
agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests may not exceed $10.0 million in any fiscal year, and provided, further,
that any amounts not used in any fiscal year may be carried forward for up to
two succeeding fiscal year periods until used; (7) the declaration and
payment of dividends to holders of the Company’s Disqualified Stock and to
holders of preferred stock of Restricted Subsidiaries issued in accordance with
Section 4.09 hereof; (8) repurchases of Equity Interests deemed to occur
upon exercise of stock options if such Equity Interests represent a portion of
the exercise price of such options; (9) if a Change of Control Triggering
Event or an Asset Sale has occurred and the Company shall have consummated the
Change of Control Offer or Asset Sale Offer, respectively, and purchased on the
Change of Control Payment Date or the Asset Sale Payment Date, respectively,
all Notes tendered in response to the Change of Control Offer or the Asset Sale
Offer, respectively, pursuant to Section 4.14 or 4.10 respectively, any
purchase or redemption (within 60 days after the Change of Control Payment Date
or the Asset Sale Payment Date, respectively) of any Indebtedness that is
subordinated to the Notes required pursuant to the terms thereof as a result of
such Change of Control or Asset Sale at a purchase or redemption price not to
exceed the outstanding principal amount (or accreted value, as applicable)
thereof, plus accrued and unpaid interest thereon, if any, plus any premium
thereon, if any; provided, however, that at the time of such purchase
or redemption, no Default or Event of Default

 

52

 

shall have occurred and be continuing (or would result therefrom);
(10) consummation of the Argosy Transactions; (11) purchase by the
Company or any of its Restricted Subsidiaries of preferred stock of a
Restricted Subsidiary of the Company if after giving effect thereto the
Company’s and its Restricted Subsidiaries’ direct or indirect aggregate
percentage ownership of the Equity Interests of such Restricted Subsidiary
increases; (12) Investment Guarantee Payments, Permitted Joint Venture
Investments or other Investments (without duplication) that the Company has
elected to include in the calculation of Restricted Payments pursuant to either
clause (17)(b)(z) of the definition of “Permitted Investments” or
clause (z) of the definition of “Permitted Joint Venture Investment”;
(13) any payment made relating to any Trust Agreement; and (14) other
Restricted Payments not to exceed $100.0 million.

 

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

 

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

 

Section 4.08.                             Dividend
and Other Payment Restrictions Affecting Subsidiaries.

 

The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to:  (1) pay dividends or make any other distributions
on its Capital Stock to the Company or any of its Restricted Subsidiaries, or
pay any indebtedness owed to the Company or any of its Restricted Subsidiaries;
(2) make loans or advances to the Company or any of its Restricted
Subsidiaries; or (3) transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries.

 

However, the preceding
restrictions will not apply to encumbrances or restrictions existing under or
by reason of:  (1) the provisions of
any agreements governing Existing Indebtedness or Credit Facilities and any
other agreements as in effect on the date of this Indenture and any amendments,

 

53

 

modifications, restatements, renewals, increases, supplements, refundings,
restructurings, replacements or other refinancings of those agreements, provided that the amendments,
modifications, restatements, renewals, increases, supplements, refundings,
restructurings, replacements or other refinancings are no more restrictive,
taken as a whole, in the good faith judgment of the Company, with respect to
such dividend and other payment restrictions than those contained in the most
restrictive of those agreements on the date of this Indenture;
(2) (x) this Indenture and the Notes, in each case as the same may be
amended from time to time in accordance with the terms thereof, and
(y) other Indebtedness pari passu
with the Notes, provided that in
the case of this clause (y), the restrictions contained in the agreements
governing such pari passu Indebtedness
are no more restrictive, taken as a whole, in the good faith judgment of the
Company, than those contained in this Indenture and the Notes;
(3) applicable law, rule, regulation, decree or order (including any
Gaming Law and any rules, regulations, orders or requirements of any Gaming
Authority); (4) any agreement or instrument (including those governing
Indebtedness (including Acquired Debt) or Capital Stock) of a Person acquired
by the Company or any of its Restricted Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness or Capital Stock
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the property or assets of
the Person, so acquired, provided
that, in the case of Indebtedness, Disqualified Stock or preferred stock, such
Indebtedness, Disqualified Stock or preferred stock was permitted by the terms
of this Indenture to be incurred; (5) customary restrictions on subletting
or assignment of any lease or sublease governing a leasehold interest of the
Company or any Restricted Subsidiary; (6) non-assignment provisions or
other customary restrictions arising under any purchase money financing or
licenses or other contracts entered into in the ordinary course of business;
(7) purchase money obligations or Capital Lease Obligations permitted to
be incurred under this Indenture that impose restrictions on that property of
the nature described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of a Restricted
Subsidiary that imposes restriction on action by that Restricted Subsidiary pending
its sale or other disposition; (9) restrictions on the transfer of any
property subject to a contract with respect to an Asset Sale or other transfer,
conveyance or disposition permitted under this Indenture; (10) Permitted
Refinancing Indebtedness, provided
that the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, in the good
faith judgment of the Company, than those contained in the agreements governing
the Indebtedness being refinanced; (11) Liens securing Indebtedness
otherwise permitted to be incurred under the provisions of Section 4.12 hereof
that limit the right of the debtor to dispose of the assets subject to such
Liens; (12) restrictions in respect of Equity Interests in joint ventures
or non-wholly owned Restricted Subsidiaries or the property of joint ventures
or non-wholly owned Restricted Subsidiaries; (13) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into
in the ordinary course of business; (14) Senior Debt, including the Senior
Credit Facilities, provided that
the restrictions contained in the agreements governing such Senior Debt are no
more restrictive, taken as a whole, in the good faith judgment of the Company,
than those contained in the Senior Credit Facilities as of the date of this
Indenture; (15) any Indebtedness incurred or preferred stock issued by
Foreign Subsidiaries that is permitted to be incurred after the issue date
pursuant to the provisions of Section 4.09 hereof; (16) restrictions
imposed pursuant to any of the Trust Agreements upon the occurrence of a
Trigger Event; (17) agreements in existence with respect to a Restricted
Subsidiary at the time it is so designated, provided,
however, that such agreements are
not entered into in anticipation or contemplation of such designation; and
(18) restrictions imposed by Gaming Authorities on entities holding, or
operating pursuant to, Gaming Approvals.

 

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

 

54

 

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

 

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

 

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

 

(1)            the incurrence by the
Company and/or any of its Restricted Subsidiaries of Indebtedness and letters
of credit pursuant to the Credit Facilities or otherwise; provided that the aggregate principal
amount of all Indebtedness then classified as having been incurred in reliance
upon this clause (1) that remains outstanding under such Credit Facilities
or otherwise after giving effect to such incurrence does not exceed the greater
of (A) either (x) $1.25 billion if the Argosy Acquisition has
not been consummated at, or substantially concurrently with, the time of
incurrence or (y) $3.025 billion if the Argosy Acquisition has been
consummated at, or substantially concurrently with, the time of incurrence, less the aggregate amount of all Net
Proceeds of Asset Sales consummated after the date of this Indenture that have
been applied by the Company or any of its Restricted Subsidiaries to repay any
Indebtedness under a Credit Facility or otherwise incurred under this
clause (1) (and to reduce commitments with respect thereto in the case of
any such Indebtedness that is revolving credit Indebtedness) pursuant to
Section 4.10 hereof and (B) 2.0 times the Consolidated Cash Flow of the
Company and its Restricted Subsidiaries for the period consisting of the four
full fiscal quarters for which financial statements are available that immediately
precede the date on which the Indebtedness is incurred (after giving pro forma
effect to the application of the net proceeds of such Indebtedness and to those
matters referred to in clauses (1), (2) and (3) of the second
paragraph of the definition of “Fixed Charge Coverage Ratio” that have occurred
since the beginning of such four quarter period as if they had occurred at the
start of such period); provided, however, that the maximum amount permitted
to be outstanding under this clause (1) shall not be deemed to limit
additional Indebtedness under the Credit Facilities to the extent the
incurrence of such additional Indebtedness is permitted pursuant to any of the
other provisions under this Section 4.09;

 

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

 

(3)            the
incurrence by the Company of Indebtedness represented by the Notes to be issued
on the date of this Indenture in the principal amount of $250.0 million
(and the Exchange Notes issued in exchange therefor);

 

55

 

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

 

(5)            the
incurrence by the Company or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used
to refinance, Indebtedness (including an Investment Guarantee) that
(a) was permitted by this Indenture to be incurred under the first
paragraph of this Section 4.09 or clause (2), (3), (4), (9) or,
without duplication, (15) of this Section 4.09 or this clause (5) or
(b) was incurred during any Suspension Period;

 

(6)            the
incurrence by the Company or any of its Restricted Subsidiaries of intercompany
Indebtedness between or among the Company and any of its Restricted
Subsidiaries (including Indebtedness of any Restricted Subsidiary to the
Company or another Restricted Subsidiary or of the Company to a Restricted
Subsidiary constituting the purchase price in respect of intercompany transfers
of goods and services made in the ordinary course of business); provided, however,
that (a) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the Company
or a Restricted Subsidiary of the Company and (b) any sale or other
transfer (excluding Liens permitted by this Indenture) of any such Indebtedness
to a Person that is neither the Company nor a Restricted Subsidiary of the Company
will be deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Subsidiary, as the case may be, that was not permitted
by this clause (6);

 

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

 

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

 

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

 

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

 

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

 

56

 

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

 

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

 

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

 

(15)          the
incurrence or issuance by the Company and/or any of its Restricted Subsidiaries
of additional Indebtedness, Disqualified Stock or preferred stock in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refinance any other Indebtedness incurred pursuant to this clause (15),
not to exceed $150.0 million.

 

For purposes of
determining compliance with this Section 4.09 in the event that an item of
proposed Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (1) through (15) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company will be permitted to classify such item of Indebtedness on the date
of its incurrence in any manner that complies with this Section 4.09.  In addition, the Company may, at any time,
change the classification of an item of Indebtedness (or any portion thereof)
to any other clause or to the first paragraph of this Section 4.09, provided that the Company or the
applicable Restricted Subsidiary would be permitted to incur such item of
Indebtedness (or portion thereof) pursuant to such other clause or the first
paragraph of this Section 4.09, as the case may be, at such time of
reclassification.  Indebtedness under the
Senior Credit Facilities outstanding on the date on which the Notes are first
issued and authenticated under this Indenture or to be incurred under Credit
Facilities or otherwise in connection with the Argosy Acquisition (other than
Acquired Debt) will be deemed to have been incurred on such date in reliance on
the exception provided by clause (1) of the definition of “Permitted Debt”
to the extent permitted by such exception.

 

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

 

57

 

Section 4.10.                             Asset
Sales.

 

(a)           The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:  (1) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of the Asset Sale at least equal to the fair market
value of the assets or Equity Interests issued or sold or otherwise disposed
of; and (2) at least 75% of the consideration received in the Asset Sale by the
Company or such Restricted Subsidiary is in the form of (x) cash or Cash
Equivalents or (y) Permitted Business Assets; provided, however, that for purposes of this
clause (2), each of the following will be deemed to be cash:  (a) any liabilities, as shown on the
Company’s or such Restricted Subsidiary’s most recent balance sheet, of the
Company or such Restricted Subsidiary (other than contingent liabilities and
liabilities of the Company that are by their terms subordinated to the Notes)
that are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability; and (b) any securities, notes or other obligations received
by the Company or such Restricted Subsidiary from such transferee that within
90 days of the consummation of such Asset Sale, subject to ordinary
settlement periods, are converted by the Company or such Restricted Subsidiary
into cash or Cash Equivalents, to the extent of the cash or Cash Equivalents
received in that conversion.

 

(b)           Within
360 days after the receipt of any Net Proceeds from an Asset Sale, the
Company may apply an amount equal to those Net Proceeds at its option:  (1) to repay Senior Debt or Indebtedness of
any Restricted Subsidiary (other than Existing Notes) and, if such Indebtedness
repaid is revolving credit Indebtedness, to correspondingly reduce commitments
with respect thereto; (2) to improve real property or make capital
expenditures; (3) to invest in or acquire Permitted Business Assets; (4) to
enter into binding commitment to take any of the actions described in foregoing
clauses (1), (2) and (3), and take such action within 12 months after
the date of such commitment; or (5) any combination of the foregoing clauses
(1) through (4).

 

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

 

(c)           Any
Net Proceeds from Asset Sales that are not applied or invested as provided in
the preceding paragraph will constitute “Excess Proceeds”.  When the aggregate amount of Excess Proceeds
exceeds $25.0 million, the Company will make either the offers set forth
in clause (a) or the offer set forth in clause (b), the choice of
offer to be determined by the Company in its sole discretion: (a) the Company
will make an offer (an “Asset Sale Offer”) to all Holders of Notes (the
“Note Asset Sale Offer”), and an offer to all holders of any other
Indebtedness that is pari passu
with the Notes (the “Pari Passu Asset Sale Offer”) containing provisions
similar to those set forth in this Indenture with respect to offers to purchase
or redeem with the proceeds of sales of assets, to purchase, on a pro rata basis (with Excess Proceeds pro
rated between the Holders of Notes and such holders of pari passu Indebtedness based upon the
respective outstanding aggregate principal amounts (or accreted value, as
applicable) on the date the Note Asset Sale Offer and the Pari Passu Asset Sale
Offer, respectively, are made), the maximum principal amount of the Notes and
the maximum principal amount (or accreted value, as applicable) of such other pari passu Indebtedness that may be
purchased out of the respective pro rata
amounts of Excess Proceeds.  To the
extent that the aggregate principal amount of Notes or the aggregate principal
amount (or accreted value, if applicable) of such pari passu Indebtedness tendered into the Note Asset Sale
Offer and the Pari Passu Asset Sale Offer, respectively, is less than the
principal amount of Notes or the principal amount (or accreted value, if
applicable) of such pari passu
Indebtedness offered to be purchased in the Note Asset Sale Offer or the Pari
Passu Asset Sale Offer, respectively, the Company and its Restricted
Subsidiaries may use those remaining Excess Proceeds for any purpose not
otherwise prohibited by this Indenture. 
If the aggregate principal amount of Notes or the aggregate principal
amount (or accreted value, if applicable) of such pari passu Indebtedness tendered into the Note Asset Sale
Offer or the Pari Passu Asset Sale Offer,

 

58

 

respectively, exceeds the respective pro
rata amounts of Excess Proceeds, the applicable trustee will select
such Notes or such other pari passu
Indebtedness, as the case may be, to be purchased on a pro rata basis, (b) the Company will make
an Asset Sale Offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in this
Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets to purchase the maximum principal amount of Notes and such
other pari passu Indebtedness
that may be purchased out of the Excess Proceeds.  If any Excess Proceeds remain after
consummation of such Asset Sale Offer, the Company may use those Excess
Proceeds for any purpose not otherwise prohibited by this Indenture.  If the aggregate principal amount of Notes
and other pari passu Indebtedness
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
applicable trustee will select the Notes and such other pari passu Indebtedness to be purchased on
a pro rata basis.  The offer price in any Asset Sale Offer will
be equal to 100% of principal amount plus accrued and unpaid interest to the
date of purchase (the “Asset Sale Payment Date”), and will be payable in
cash.  Upon completion of each Asset Sale
Offer, the amount of Excess Proceeds will be reset at zero.

 

(d)           If
any non-cash consideration received by the Company or any of its Restricted
Subsidiaries, as the case may be, in connection with any Asset Sale is
converted into or sold or otherwise disposed of for cash (other than interest
received with respect to any such non-cash consideration), then such conversion
or disposition, at the time of such conversion or disposition, shall be subject
to the provisions of this Section 4.10 (subject to the proviso of the
definition of “Asset Sale”).  The Company
will comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent those laws
and regulations are applicable in connection with each repurchase of Notes
pursuant to an Asset Sale Offer.  To the
extent that the provisions of any securities laws or regulations conflict with
the Asset Sale provisions of this Indenture, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Asset Sale provisions of this Indenture by
virtue of such conflict.  The agreements
governing the Company’s outstanding Senior Debt currently prohibit the Company
from purchasing any Notes with Asset Sale proceeds, and also provide that
certain change of control or asset sale events with respect to the Company
would constitute a default under these agreements.  Any future credit agreements or other agreements
relating to Senior Debt to which the Company becomes a party may contain
similar restrictions and provisions.  In
the event a Change of Control Triggering Event or an Asset Sale occurs at a
time when the Company is prohibited from purchasing Notes, the Company could
seek the consent of its senior lenders to the purchase of Notes or could
attempt to refinance the borrowings that contain such prohibition.  If the Company does not obtain such a consent
or repay such borrowings, the Company will remain prohibited from purchasing
Notes.  In such case, the Company’s
failure to purchase tendered Notes would constitute an Event of Default under
this Indenture which would, in turn, constitute a default under such Senior
Debt.  In such circumstances, the
subordination provisions in this Indenture would likely restrict payments to
the Holders of Notes.

 

Section 4.11.                             Transactions
with Affiliates.

 

(a)           The
Company shall not, and shall not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding,
loan, advance or guarantee with or for the benefit of, any Affiliate (each, an
“Affiliate Transaction”), unless: 
(1) the Affiliate Transaction is on terms that are not materially
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or
such Restricted Subsidiary with an unrelated Person; and (2) the Company
delivers to the Trustee: (a) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $10.0 million, a resolution of the Board of Directors set forth
in an officers’ certificate certifying that such Affiliate Transaction complies
with clause (1) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the

 

59

 

Board of Directors; and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $50.0 million, an opinion as to the fairness to
the Holders of such Affiliate Transaction from a financial point of view issued
by an accounting, appraisal or investment banking firm of national standing.

 

(b)           The
following items will not be deemed to be Affiliate Transactions and, therefore,
will not be subject to the provisions of Section 4.11 (a):  (1) any indemnification or employment
agreements or arrangements and benefit plans or arrangements, and any transactions
contemplated by any of the foregoing relating to compensation and employee
benefits matters, in each case in respect of employees, officers or directors
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business; (2) transactions between or among the Company
and/or its Restricted Subsidiaries; (3) transactions with a Person that is
an Affiliate of the Company solely because the Company or one of its Restricted
Subsidiaries owns an Equity Interest in such Person; (4) payment of
reasonable directors’ fees and indemnity provided on behalf of officers,
directors or employees of the Company or any of its Restricted Subsidiaries;
(5) sales or issuances of Equity Interests (other than Disqualified Stock)
of the Company to Affiliates of the Company; (6) Permitted Investments
(other than Permitted Investments in a joint venture or an Unrestricted Subsidiary,
which shall be subject to clause (11) below) and Restricted Payments that
are permitted by the provisions of this Indenture described under Section 4.07
hereof; (7) transactions disclosed in the Company’s SEC filings prior to
the date of this Indenture and any agreements as in effect on the date of
issuance of the Notes and transactions contemplated thereby and any renewals,
replacements or amendments thereof (so long as the terms of such renewals,
replacements or amendments are not less favorable to the Holders of the Notes
in any material respect, taken as a whole, as compared to the applicable
agreement as in effect on the date of issuance of the Notes); (8) the
occurrence of a Trigger Event and the transactions contemplated by the Trust
Agreements; (9) transactions with persons who have entered into an
agreement, contract or arrangement with the Company or any of its Restricted
Subsidiaries to manage, own or operate a Gaming Facility because the Company
and its Restricted Subsidiaries have not received the requisite Gaming Approvals
or are otherwise not permitted to manage, own or operate such Gaming Facility
under applicable Gaming Laws; provided
that such transactions shall have been approved by a majority of the
disinterested members of the Company’s Board of Directors and determined by
them to be in the best interests of the Company; (10) transactions with
customers, clients, suppliers, or purchasers or sellers of goods or services,
in each case in the ordinary course of business and otherwise in compliance
with the terms of this Indenture which are fair to the Company and its
Restricted Subsidiaries taken as a whole, in the determination of the Company’s
Board of Directors or management, or are on terms at least as favorable as
might reasonably have been obtained at such time from an unaffiliated party;
and (11) transactions with joint ventures and Unrestricted Subsidiaries
approved by a majority of the disinterested members of the Company’s Board of
Directors; provided that no
Affiliate of the Company (other than the Company and its Restricted Subsidiaries)
has an interest (other than indirectly through the Company and other than
Unrestricted Subsidiaries or such joint ventures) in any such joint venture or
Unrestricted Subsidiary.

 

Section 4.12.                             Liens.

 

The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, create, incur,
assume or otherwise cause or suffer to exist or become effective any Lien of
any kind securing Indebtedness (other than Permitted Liens) upon any of its
property or assets, now owned or hereafter acquired, unless all payments due
under this Indenture and the Notes are secured (1) on an equal and ratable
basis with the obligations so secured (if such obligations are pari passu with the Notes) until such time
as such obligations are no longer secured by a Lien or (2) on a senior
basis to the obligations so secured to the extent such obligations are subordinated
in right of payment to the Notes.

 

60

 

Section 4.13.                             Corporate
Existence.

 

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

 

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

 

(a)           If
a Change of Control Triggering Event occurs, each Holder of Notes shall have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple of $1,000) of that Holder’s Notes pursuant to an offer
by the Company (a “Change of Control Offer”) on the terms set forth in
this Indenture.  In the Change of Control
Offer, the Company shall offer a payment in cash equal to 101% of the aggregate
principal amount of Notes repurchased plus accrued and unpaid interest on the
Notes repurchased, to the date of purchase (the “Change of Control Payment”).  Subject to the last paragraph in subsection
(b) herein, within 30 days following the occurrence of a Change of Control
Triggering Event, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control Triggering
Event pursuant to this Section 4.14 and stating: (1) that the Change of Control
Offer is being made pursuant to this Section 4.14 and that all Notes tendered
will be accepted for payment; (2) the purchase price and the purchase date, which
shall be no earlier than 30 Business Days and no later than 60 Business Days
from the date such notice is mailed (the “Change of Control Payment Date”);
(3) that any Note not tendered will continue to accrue interest; (4) that,
unless the Company defaults in the payment of the Change of Control Payment,
all Notes accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date; (5) that
Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender the Notes, with the form entitled “Option
of Holder to Elect Purchase” on the reverse of the Notes completed, to the
Paying Agent at the address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control Payment Date; (6)
that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and (7) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof.  The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes as a
result of a Change of Control Triggering Event. 
To the extent that the provisions of any securities laws or regulations
conflict with the Change of Control provisions of this Indenture, the Company
shall comply with the applicable securities laws and regulations and will not
be deemed to have breached its obligations under the Change of Control
provisions of this Indenture by virtue of such conflict.

 

61

 

(b)           On
the Change of Control Payment Date, the Company shall, to the extent
lawful:  (1) accept for payment all Notes
or portions of Notes properly tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all Notes or portions of Notes properly tendered; and (3)
deliver or cause to be delivered to the Trustee the Notes properly accepted
together with an Officers’ Certificate stating the aggregate principal amount
of Notes or portions of Notes being purchased by the Company.  The paying agent shall promptly mail to each
Holder of Notes properly tendered the Change of Control Payment for such Notes,
and the Trustee shall promptly authenticate and mail (or cause to be transferred
by book entry) to each Holder a new note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each new note shall be in a
principal amount of $1,000 or an integral multiple of $1,000.  Prior to complying with any of the provisions
of this Section 4.14, but in any event within 90 days following the
occurrence of a Change of Control Triggering Event, the Company shall either
repay all outstanding Senior Debt in cash or Cash Equivalents or obtain the
requisite consents, if any, under all agreements governing outstanding Senior
Debt to permit the repurchase of Notes required by this Section 4.14.  The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.  The provisions
described above that require the Company to make a Change of Control Offer
following the occurrence of a Change of Control Triggering Event will be
applicable whether or not any other provisions of this Indenture are
applicable.  Except as described above
with respect to a Change of Control Triggering Event, this Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.

 

(c)           The
Company shall not be required to make a Change of Control Offer upon the
occurrence of a Change of Control Triggering Event if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in this Indenture applicable to a Change of
Control Offer made by the Company and purchases all Notes properly tendered and
not withdrawn under the Change of Control Offer.  The definition of “Change of Control”
includes a phrase relating to the direct or indirect sale, lease, transfer,
conveyance or other disposition of “all or substantially all” of the properties
or assets of the Company and its Subsidiaries taken as a whole.  Although there is a limited body of case law
interpreting the phrase “substantially all,” there is no precise established
definition of the phrase under applicable law. 
Accordingly, the ability of a Holder of Notes to require the Company to
repurchase its Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.

 

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

 

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

 

62

 

not apply to distinctions between categories of Indebtedness that exist
by reason of any Liens securing some but not all of such Indebtedness or
securing such Indebtedness with greater or lesser priority or with different
collateral.

 

Section 4.16.                             Payments
for Consent.

 

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

 

Section 4.17.                             Designation
of Restricted and Unrestricted Subsidiaries.

 

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

 

Section 4.18.                             Business
Activities.

 

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

 

Section 4.19.                             Payment
of Liquidated Damages.

 

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

 

Section 4.20.                             Covenant
Suspension.

 

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

 

63

 

unless the Board of Directors of the Company could have designated such
Subsidiaries as Unrestricted Subsidiaries in compliance with this Indenture
assuming the following sections of this Indenture had not been suspended:

 

(1)            Section 4.07,

 

(2)            Section 4.08,

 

(3)            Section 4.09,

 

(4)            Section 4.10,

 

(5)            Section 4.11,

 

(6)            Section 4.18, and

 

(7)            clause (4) of the
first paragraph of Section 5.01

 

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

 

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

 

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

 

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

 

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

 

(f)            Notwithstanding
the foregoing, neither (i) the continued existence, after the Reinstatement
Date, of facts and circumstances or obligations that were incurred or otherwise
came into existence during a Suspension Period nor (ii) the performance of any
such obligations, shall constitute a breach of any covenant set forth in this
Indenture or cause a Default or Event of Default hereunder; provided that

 

64

 

(1) the Company and its Restricted Subsidiaries did not incur or
otherwise cause such facts and circumstances or obligations to exist in
anticipation of a withdrawal or downgrade by the applicable Rating Agency below
an Investment Grade Rating and (2) the Company reasonably believed that such
incurrence or actions would not result in such withdrawal or downgrade.

 

ARTICLE 5

 

SUCCESSORS

 

Section 5.01.                             Merger,
Consolidation or Sale of Assets.

 

The Company shall not,
directly or indirectly: (1) consolidate or merge with or into another
Person (whether or not the Company is the surviving corporation); or
(2) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to another
Person unless:  (i) either
(A) the Company is the surviving corporation; or (B) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, conveyance or other
disposition has been made is a corporation organized or existing under the laws
of the United States, any state of the United States or the District of
Columbia; (ii) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which such sale,
assignment, transfer, conveyance or other disposition has been made assumes all
the obligations of the Company under the Notes, this Indenture and the
Registration Rights Agreement pursuant to agreements reasonably satisfactory to
the Trustee; (iii) immediately after such transaction no Default or Event
of Default exists; and (iv) on the date of such transaction after giving
pro forma effect thereto and to any related financing transactions as if the
same had occurred at the beginning of the applicable four-quarter period, (a) the
Company or the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
conveyance or other disposition has been made, will be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of Section 4.09 hereof or
(b) the Company (or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to which such
sale, assignment, transfer, conveyance or other disposition has been made) and
its Restricted Subsidiaries will have a Fixed Charge Coverage Ratio equal to or
greater than the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries immediately prior to such transaction.  In addition, the Company may not, directly or
indirectly, lease all or substantially all of its properties or assets, in one
or more related transactions, to any other Person.

 

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

 

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

 

65

 

Section 5.02.                             Successor
Corporation Substituted.

 

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

 

ARTICLE 6

 

DEFAULTS AND
REMEDIES

 

Section 6.01.                             Events
of Default.

 

An “Event of Default”
occurs if:

 

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

 

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

 

(c)           the Company or any of
its Restricted Subsidiaries fails to comply with any of the provisions of
Sections 4.10, 4.14 or 5.01 hereof;

 

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

 

(e)           a default occurs under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries that is a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) whether such Indebtedness or
guarantee now exists, or is created after the date of this Indenture, if that
default:  (i) is caused by a failure to
pay principal on such Indebtedness at final maturity (a “Payment Default”);
or (ii) results in the acceleration of such Indebtedness prior to its express
maturity, and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under

 

66

 

which there
has been a Payment Default or the maturity of which has been so accelerated,
aggregates $100.0 million or more; provided,
that this clause (e) shall not apply to any Investment Guarantee or Investment
Guarantee Indebtedness unless the Company or one of its Restricted Subsidiaries
defaults in the performance of its payment obligations in respect of its Investment
Guarantee of such Investment Guarantee Indebtedness;

 

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

 

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

 

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

 

Section 6.02.                             Acceleration.

 

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

 

67

 

Section 6.03.                             Other
Remedies.

 

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

 

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

 

Section 6.04.                             Waiver
of Past Defaults.

 

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

 

Section 6.05.                             Control
by Majority.

 

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

 

Section 6.06.                             Limitation
on Suits.

 

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

 

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

 

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

 

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

 

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

 

68

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

 

A Holder of a Note may
not use this Indenture to prejudice the rights of another Holder of a Note or
to obtain a preference or priority over another Holder of a Note.

 

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

 

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

 

Section 6.08.                             Collection
Suit by Trustee.

 

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

 

Section 6.09.                             Trustee
May File Proofs of Claim.

 

The Trustee is authorized
to file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof.  To the extent
that the payment of any such compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such proceeding, shall
be denied for any reason, payment of the same shall be secured by a Lien on,
and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise.  Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.

 

69

 

Section 6.10.                             Priorities.

 

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

 

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

 

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

 

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

 

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

 

Section 6.11.                             Undertaking
for Costs.

 

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

 

ARTICLE 7

 

TRUSTEE

 

Section 7.01.                             Duties
of Trustee.

 

(a)           If
an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in its exercise, as a prudent person would exercise or
use under the circumstances in the conduct of such person’s own affairs.

 

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

 

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

 

(ii)           in the absence of bad
faith on its part, the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements

 

70

 

of this
Indenture.  However, the Trustee shall examine
the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 7.02.                             Rights
of Trustee.

 

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

 

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

 

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

 

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

 

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

 

71

 

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

 

Section 7.03.                             Individual
Rights of Trustee.

 

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

 

Section 7.04.                             Trustee’s
Disclaimer.

 

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

 

Section 7.05.                             Notice
of Defaults.

 

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

 

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

 

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

 

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

 

Section 7.07.                             Compensation
and Indemnity.

 

The Company shall pay to
the Trustee from time to time compensation for its acceptance of this Indenture
and services hereunder as agreed between the Company and the Trustee.  The Trustee’s

 

72

 

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

 

The Company shall
indemnify the Trustee against any and all losses, liabilities or expenses incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Indenture, including the costs and expenses of enforcing
this Indenture against the Company (including this Section 7.07) and
defending itself against any claim (whether asserted by the Company or any
Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith.  The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder.  The Company shall defend the claim and the
Trustee shall cooperate in the defense. 
The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. 
The Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.

 

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

 

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

 

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

 

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

 

Section 7.08.                             Replacement
of Trustee.

 

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

 

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

 

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

 

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

 

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

 

(d)           the Trustee becomes
incapable of acting.

 

73

 

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

 

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

 

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

 

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

 

Section 7.09.                             Successor
Trustee by Merger, etc.

 

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

 

Section 7.10.                             Eligibility;
Disqualification.

 

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

 

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

 

Section 7.11.                             Preferential
Collection of Claims Against Company.

 

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

 

74

 

ARTICLE 8

 

LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

 

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

 

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

 

Section 8.02.                             Legal
Defeasance and Discharge.

 

Upon the Company’s
exercise under Section 8.01 hereof of the option applicable to this
Section 8.02, the Company shall, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, “Legal
Defeasance”).  For this purpose,
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be “outstanding” only for the purposes of
Section 8.05 hereof and the other Sections of this Indenture referred to
in (a) and (b) below, and to have satisfied all its other obligations under
such Notes and this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging the same),
except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: 
(a) the rights of Holders of outstanding Notes to receive payments
in respect of the principal of, or interest or premium and Liquidated Damages,
if any, on such Notes when such payments are due from the trust referred to
below, (b) the Company’s obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, the replacement of mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (c) the rights,
powers, trusts, duties and immunities of the Trustee, and the Company’s obligations
in connection therewith and (d) this Article 8.  Subject to compliance with this
Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.

 

Section 8.03.                             Covenant
Defeasance.

 

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

 

75

 

hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04
hereof, Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of
Default.  The Company may exercise Legal
Defeasance regardless of whether it previously has exercised Covenant Defeasance
and the Company may, within 90 days following the exercise of Covenant
Defeasance, redeem the Notes in whole and not in part pursuant to an optional
redemption as provided under Section 3.07(a) hereof and apply the defeasance
trust to such redemption.

 

Section 8.04.                             Conditions
to Legal or Covenant Defeasance.

 

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

 

In
order to exercise either Legal Defeasance or Covenant Defeasance,

 

(a)           the Company must
irrevocably deposit with the Trustee, in trust, for the benefit of the Holders
of the Notes, cash in U.S.  dollars,
non-callable Government Securities, or a combination of cash in U.S.  dollars and non-callable Government
Securities, in amounts as shall be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of, or
interest and premium and Liquidated Damages, if any, on the outstanding Notes
on the stated maturity or on the applicable redemption date, as the case may
be, and the Company must specify whether the Notes are being defeased to
maturity or to a particular redemption date provided
that the Company may (within 90 days of such deposit) subsequently redeem the
Notes in whole and in part as provided under Section 3.07(a);

 

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

 

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

 

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

 

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

 

76

 

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

 

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

 

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

 

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

 

Subject to
Section 8.06 hereof, all money and non-callable Government Securities
(including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”)
pursuant to Section 8.04 hereof in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as Paying Agent) as the Trustee
may determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium and Liquidated Damages, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.

 

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

 

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

 

Section 8.06.                             Repayment
to Company.

 

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

 

77

 

Notwithstanding the
foregoing, in the case of a covenant or legal defeasance or discharge to the
applicable redemption date for a redemption pursuant to Section 3.07(a), the
excess (if any) of (x) the amount deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal
of, premium or Liquidated Damages, if any, or interest on the Notes over (y)
the redemption price determined pursuant to Section 3.07(a) (including accrued
and unpaid interest, if any, to the applicable redemption date) shall be paid
to the Company on its request or (if then held by the Company) shall be
discharged from such trust on the applicable redemption date.

 

Section 8.07.                             Reinstatement.

 

If the Trustee or Paying
Agent is unable to apply any United States dollars or non-callable Government
Securities in accordance with Section 8.02 or 8.03 hereof, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company’s obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 hereof until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 8.02 or 8.03 hereof, as
the case may be; provided, however, that, if the Company makes any
payment of principal of, premium or Liquidated Damages, if any, or interest on
any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.

 

ARTICLE 9

 

AMENDMENT,
SUPPLEMENT AND WAIVER

 

Section 9.01.                             Without
Consent of Holders of Notes.

 

Notwithstanding
Section 9.02 of this Indenture, the Company and the Trustee may amend or
supplement this Indenture or the Notes without the consent of any Holder of a
Note:

 

(a)           to cure any ambiguity,
defect or inconsistency;

 

(b)           to provide for
uncertificated Notes in addition to or in place of certificated Notes or to
alter the provisions of Article 2 hereof (including the related
definitions) in a manner that does not materially adversely affect any Holder;

 

(c)           to provide for the
assumption of the Company’s obligations to the Holders of the Notes by a successor
to the Company pursuant to Article 5 hereof;

 

(d)           to comply with the
rules of any applicable securities depositary;

 

(e)           to comply with
applicable Gaming Laws, to the extent that such amendment or supplement is not
materially adverse to the Holders of Notes;

 

(f)            to provide for the
issuance of additional Notes in accordance with the limitations set forth in
this Indenture including Section 4.09;

 

(g)           to make any change that
would provide any additional rights or benefits to the Holders of the Notes (including
to provide for any guarantees of the Notes or any collateral securing the
Notes) or that does not adversely affect the legal rights hereunder of any Holder
of the Note; or

 

78

 

(h)           to comply with
requirements of the SEC in order to effect or maintain the qualification of
this Indenture under the TIA.

 

Upon the request of the
Company accompanied by a resolution of its Board of Directors authorizing the
execution of any such amended or supplemental Indenture, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee
shall join with the Company in the execution of any amended or supplemental
Indenture authorized or permitted by the terms of this Indenture and to make
any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into such amended or
supplemental Indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.

 

Section 9.02.                             With
Consent of Holders of Notes.

 

Except as provided below
in this Section 9.02, the Company and the Trustee may amend or supplement
this Indenture (including Sections 3.09, 4.10 and 4.14 hereof) and the
Notes with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes voting as a single class (including consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, the Notes).

 

Upon the request of the
Company accompanied by a resolution of its Board of Directors authorizing the
execution of any such amended or supplemental Indenture, and upon the filing
with the Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company
in the execution of such amended or supplemental Indenture unless such amended
or supplemental Indenture directly affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.

 

It shall not be necessary
for the consent of the Holders of Notes under this Section 9.02 to approve
the particular form of any proposed amendment or waiver, but it shall be
sufficient if such consent approves the substance thereof.

 

After an amendment,
supplement or waiver under this Section becomes effective, the Company shall
mail to the Holders of Notes affected thereby a notice briefly describing the
amendment, supplement or waiver.  Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or supplemental
Indenture or waiver.

 

Subject to
Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate
principal amount of the Notes then outstanding voting as a single class may
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Notes.  However,
without the consent of each Holder affected, an amendment or waiver under this
Section 9.02 may not:

 

(a)           reduce the principal
amount of Notes whose Holders must consent to an amendment, supplement or
waiver;

 

79

 

(b)           reduce the principal of
or change the fixed maturity of any note or alter the provisions with respect
to the redemption of the Notes (other than provisions relating to the covenants
described under Sections 3.09, 4.10 and 4.14 hereof);

 

(c)           reduce the rate of or
change the time for payment of interest on any Note;

 

(d)           waive a Default or
Event of Default in the payment of principal of, or interest or premium, or Liquidated
Damages, if any, on the Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate principal amount of the
Notes and a waiver of the payment default that resulted from such
acceleration);

 

(e)           make any Note payable
in money other than that stated in the Notes;

 

(f)            make any change in the
provisions of this Indenture relating to waivers of past Defaults or the rights
of Holders of Notes to receive payments of principal of, or interest or premium
or Liquidated Damages, if any, on the Notes;

 

(g)           waive a redemption
payment with respect to any note (other than a payment required by one of the
covenants described under Sections 3.09, 4.10 and 4.14 hereof); or

 

(h)           make any change in
Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions.

 

In addition, any
amendment to, or waiver of, Article 10 of this Indenture that adversely
affects the rights of the Holders of the Notes shall require the consent of the
Holders of at least 75% in principal amount of the Notes then outstanding
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes).

 

Section 9.03.                             Compliance
with Trust Indenture Act.

 

Every amendment or
supplement to this Indenture or the Notes shall be set forth in an amended or
supplemental Indenture that complies with the TIA as then in effect.

 

Section 9.04.                             Revocation
and Effect of Consents.

 

Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note
is a continuing consent by the Holder of a Note and every subsequent Holder of
a Note or portion of a Note that evidences the same debt as the consenting
Holder’s Note, even if notation of the consent is not made on any Note.  However, any such Holder of a Note or
subsequent Holder of a Note may revoke the consent as to its Note if the
Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. 
An amendment, supplement or waiver becomes effective in accordance with
its terms and thereafter binds every Holder.

 

Section 9.05.                             Notation
on or Exchange of Notes.

 

The Trustee may place an
appropriate notation about an amendment, supplement or waiver on any Note
thereafter authenticated.  The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

 

80

 

Failure to make the
appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.

 

Section 9.06.                             Trustee
To Sign Amendments, etc.

 

The Trustee shall sign
any amended or supplemental Indenture authorized pursuant to this Article Nine
if the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. 
The Company may not sign an amendment or supplemental Indenture until
the Board of Directors approves it.  In
executing any amended or supplemental indenture, the Trustee shall be entitled
to receive and (subject to Section 7.01 hereof) shall be fully protected
in relying upon, in addition to the documents required by Section 13.04
hereof, an Officer’s Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized or permitted
by this Indenture.

 

ARTICLE 10

 

SUBORDINATION

 

Section 10.01.                       Agreement
To Subordinate.

 

The Company agrees, and
each Holder by accepting a Note agrees, that the Indebtedness evidenced by the
Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article 10, to the prior payment in full of all Senior
Debt (whether outstanding on the date hereof or hereafter created, incurred,
assumed or guaranteed), and that the subordination is for the benefit of the
holders of Senior Debt.

 

Section 10.02.                       Liquidation;
Dissolution; Bankruptcy.

 

Upon any distribution to
creditors of the Company in a liquidation or dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property, in an assignment for the benefit of
creditors or any marshaling of the Company’s assets and liabilities:

 

(i)            holders
of Senior Debt shall be entitled to receive payment in full of all Obligations
due in respect of such Senior Debt (including interest after the commencement
of any such proceeding at the rate specified in the applicable Senior Debt) and
all outstanding letters of credits under Credit Facilities shall either have
been terminated or cash collateralized in accordance with the terms thereof,
before Holders of the Notes shall be entitled to receive any payment on, or
distribution with respect to the Notes (except that Holders of the Notes may
receive and retain (A) Permitted Junior Securities and (B) payments
made from any defeasance trust created pursuant to Section 8.01 hereof),
and

 

(ii)           until
all Obligations with respect to Senior Debt (as provided in clause (i)
above) are paid in full, any distribution to which Holders would be entitled
but for this Article 10 shall be made to holders of Senior Debt (except
that Holders of Notes may receive (A) Permitted Junior Securities and (B)
payments and other distributions made from any defeasance trust created pursuant
to Section 8.01 hereof), as their interests may appear.

 

81

 

Section 10.03.                       Default
on Designated Senior Debt.

 

(a)           The
Company may not make any payment on or distribution to the Trustee or any
Holder in respect of Obligations with respect to the Notes (except
(A) Permitted Junior Securities and (B) payments and other
distributions made from any defeasance trust created pursuant to
Section 8.01 hereof) until all principal and other Obligations with respect
to the Senior Debt have been paid in full if:

 

(i)            a
payment default of any principal or other Obligations with respect to
Designated Senior Debt occurs and is continuing beyond any applicable grace
period in the agreement, indenture or other document governing such Designated
Senior Debt; or

 

(ii)           any
other default on Designated Senior Debt occurs and is continuing that then
permits holders of the Designated Senior Debt to accelerate its maturity and
the Trustee receives a notice of the default (a “Payment Blockage Notice”)
from the applicable agent under the Senior Credit Facilities, the Company or
any holder of any Designated Debt.  If
the Trustee receives any such Payment Blockage Notice, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless and
until (A) at least 360 days shall have elapsed since the effectiveness of
the immediately prior Payment Blockage Notice and (B) all scheduled
payments of principal, premium, if any, and interest on the Securities that
have come due have been paid in full in cash. 
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 90 consecutive days.

 

(b)           The
Company may and shall resume payments on and distributions in respect of the
Notes:

 

(i)            in
the case of a payment default, upon the date on which such default is cured or
waived; and

 

(ii)           in
the case of a nonpayment default, upon the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which the
applicable Payment Blockage Notice is received,

 

unless the maturity of
any Designated Senior Debt has been accelerated.

 

Notwithstanding the
foregoing, the Company shall be permitted to repurchase, redeem, repay or
prepay any or all of the Notes to the extent required to do so by any Gaming
Authority, as described under Section 3.07 hereof.

 

Section 10.04.                       Acceleration
of Securities.

 

If payment of the
Securities is accelerated because of an Event of Default, the Company shall
promptly notify holders of Senior Debt of the acceleration.

 

Section 10.05.                       When
Distribution Must Be Paid Over.

 

In the event that the
Trustee or any Holder receives any payment of any Obligations with respect to
the Notes at a time when a Responsible Officer of the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by
Section 10.03 hereof, such payment shall be held by the Trustee or such
Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered to,

 

82

 

the holders of Senior Debt as their interests may appear or their
Representative under this Indenture or other agreement (if any) pursuant to
which Senior Debt may have been issued, as their respective interests may
appear, for application to the payment of all Obligations with respect to Senior
Debt remaining unpaid to the extent necessary to pay such Obligations in full
in accordance with their terms, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Debt.

 

With respect to the
holders of Senior Debt, the Trustee undertakes to perform only such obligations
on the part of the Trustee as are specifically set forth in this
Article 10, and no implied covenants or obligations with respect to the
holders of Senior Debt shall be read into this Indenture against the
Trustee.  The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Debt, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Debt shall be entitled by virtue of this Article 10,
except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.

 

Section 10.06.                       Notice
by Company.

 

The Company shall
promptly notify the Trustee and the Paying Agent of any facts known to the
Company that would cause a payment of any Obligations with respect to the Notes
to violate this Article 10, but failure to give such notice shall not
affect the subordination of the Notes to the Senior Debt as provided in this
Article 10.

 

Section 10.07.                       Subrogation.

 

After all Senior Debt is
paid in full and until the Notes are paid in full, Holders of Notes shall be
subrogated (equally and ratably with all other Indebtedness pari passu with the Notes) to the rights
of holders of Senior Debt to receive distributions applicable to Senior Debt to
the extent that distributions otherwise payable to the Holders of Notes have
been applied to the payment of Senior Debt. 
A distribution made under this Article 10 to holders of Senior Debt
that otherwise would have been made to Holders of Notes is not, as between the
Company and Holders, a payment by the Company on the Notes.

 

Section 10.08.                       Relative
Rights.

 

This Article 10
defines the relative rights of Holders of Notes and holders of Senior
Debt.  Nothing in this Indenture shall:

 

(i)            impair,
as between the Company and Holders of Notes, the obligation of the Company,
which is absolute and unconditional, to pay principal of and interest on the
Notes in accordance with their terms;

 

(ii)           affect
the relative rights of Holders of Notes and creditors of the Company other than
their rights in relation to holders of Senior Debt; or

 

(iii)          prevent
the Trustee or any Holder of Notes from exercising its available remedies upon
a Default or Event of Default, subject to the rights of holders and owners of
Senior Debt to receive distributions and payments otherwise payable to Holders
of Notes.

 

If the Company fails
because of this Article 10 to pay principal of or interest on a Note on
the due date, the failure is still a Default or Event of Default.

 

83

 

Section 10.09.                       Subordination
May Not Be Impaired by Company.

 

No right of any holder of
Senior Debt to enforce the subordination of the Indebtedness evidenced by the
Notes shall be impaired by any act or failure to act by the Company or any
Holder or by the failure of the Company or any Holder to comply with this
Indenture.

 

Section 10.10.                       Distribution
or Notice to Representative.

 

Whenever a distribution
is to be made or a notice given to holders of Senior Debt, the distribution may
be made and the notice given to their Representative.

 

Upon any payment or
distribution of assets of the Company referred to in this Article 10, the
Trustee and the Holders of Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction or upon any certificate of
such Representative or of the liquidating trustee or agent or other Person making
any distribution to the Trustee or to the Holders of Notes for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 10.

 

Section 10.11.                       Rights
of Trustee and Paying Agent.

 

Notwithstanding the
provisions of this Article 10 or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment or distribution by the Trustee,
and the Trustee and the Paying Agent may continue to make payments on the
Notes, unless the Trustee shall have received at its Corporate Trust Office at
least five Business Days prior to the date of such payment written notice of
facts that would cause the payment of any Obligations with respect to the Notes
to violate this Article 10.  Only
the Company or a Representative may give the notice.  Nothing in this Article 10 shall impair
the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.

 

The Trustee in its
individual or any other capacity may hold Senior Debt with the same rights it
would have if it were not Trustee.  Any
Agent may do the same with like rights.

 

Section 10.12.                       Authorization
To Effect Subordination.

 

Each Holder of Notes, by
the Holder’s acceptance thereof, authorizes and directs the Trustee on such Holder’s
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article 10, and appoints the Trustee to
act as such Holder’s attorney-in-fact for any and all such purposes.  If the Trustee does not file a proper proof
of claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the
time to file such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.

 

Section 10.13.                       Amendments.

 

The provisions of this
Article 10 shall not be amended or modified without the written consent of
the holders of all Senior Debt.

 

84

 

ARTICLE 11

 

SUBSIDIARY
GUARANTEES

 

No Person shall be
required to guarantee the Notes pursuant to this Article 11, except as
expressly provided in Section 4.15 with respect to a Restricted Subsidiary that
is required to provide a senior subordinated guarantee in respect of the
Notes.  This Article 11 shall be
effective only with respect to such a Guarantor and only at such time as, and
only to the extent that, such a senior subordinated guarantee is required to be
provided in respect of the Notes by such Guarantor pursuant to Section 4.15.

 

Section 11.01.                       Guarantee.

 

On the Issue Date, there
will exist no Guarantors.  With respect
to any Person that becomes a Guarantor after the Issue Date as required by
Section 4.15, such Guarantor agrees as set forth in this Article 11.

 

Subject to this Article
11, each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the obligations of the
Company hereunder or thereunder, that: 
(a) the principal of and interest on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that same will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.  Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Guarantors shall be jointly and severally obligated to
pay the same immediately.  Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of collection.

 

The Guarantors hereby
agree that their obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor.  Each Guarantor
hereby waives diligence, presentment, demand of payment, filing of claims with
a court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all demands
whatsoever and covenant that this Subsidiary Guarantee shall not be discharged
except by complete performance of the obligations contained in the Notes and
this Indenture.

 

If any Holder or the
Trustee is required by any court or otherwise to return to the Company, the
Guarantors or any custodian, trustee, liquidator or other similar official
acting in relation to either the Company or the Guarantors, any amount paid either
to the Trustee or such Holder, this Subsidiary Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect.

 

Each Guarantor agrees
that it shall not be entitled to any right of subrogation in relation to the
Holders in respect of any obligations guaranteed hereby until payment in full
of all obligations guaranteed hereby. 
Each Guarantor further agrees that, as between the Guarantors, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may

 

85

 

be accelerated as provided in Article 6 hereof for the purposes of this
Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (y) in the event of any declaration of acceleration of such obligations as
provided in Article 6 hereof, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Guarantors for the purpose of
this Subsidiary Guarantee.  The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.

 

Section 11.02.                       Subordination
of Subsidiary Guarantee.

 

The Obligations of each
Guarantor under its Subsidiary Guarantee pursuant to this Article 11 shall be
junior and subordinated to the Senior Guarantee of such Guarantor on the same
basis as the Notes are junior and subordinated to Senior Debt of the
Company.  For the purposes of the
foregoing sentence, the Trustee and the Holders shall have the right to receive
and/or retain payments by any of the Guarantors only at such times as they may
receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article 11 hereof.

 

Section 11.03.                       Limitation
on Guarantor Liability.

 

Each Guarantor, and by
its acceptance of Notes, each Holder, hereby confirms that it is the intention
of all such parties that the Subsidiary Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any Subsidiary
Guarantee.  To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor will, after giving effect to such
maximum amount and all other contingent and fixed liabilities of such Guarantor
that are relevant under such laws, and after giving effect to any collections
from, rights to receive contribution from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
this Article 11, result in the obligations of such Guarantor under its
Subsidiary Guarantee not constituting a fraudulent transfer or conveyance.

 

Section 11.04.                       Execution
and Delivery of Subsidiary Guarantee and Supplemental Indenture.

 

To evidence its
Subsidiary Guarantee set forth in Section 11.01, each Guarantor hereby agrees
that a notation of such Subsidiary Guarantee substantially in the form included
in Exhibit E shall be endorsed by an Officer of such Guarantor on each
Note authenticated and delivered by the Trustee and that this Indenture shall
be executed on behalf of such Guarantor by its President or one of its Vice
Presidents.

 

Each Guarantor shall
promptly execute a supplemental indenture substantially in the form included in
Exhibit F.

 

Each Guarantor hereby
agrees that its Subsidiary Guarantee set forth in Section 11.01 shall remain in
full force and effect notwithstanding any failure to endorse on each Note a
notation of such Subsidiary Guarantee.

 

If an Officer whose
signature is on this Indenture or on the Subsidiary Guarantee no longer holds
that office at the time the Trustee authenticates the Note on which a
Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless.

 

86

 

If a Subsidiary Guarantee
has been provided, the delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such
Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantors.

 

Section 11.05.                       Guarantors
May Consolidate, etc., on Certain Terms.

 

Except as otherwise
provided in Section 11.06, no Guarantor may consolidate with or merge with or
into (whether or not such Guarantor is the surviving Person) another Person
whether or not affiliated with such Guarantor unless:

 

(a)           subject to Section
11.06 hereof, the Person formed by or surviving any such consolidation or
merger (if other than a Guarantor or the Company) unconditionally assumes all
the obligations of such Guarantor, pursuant to a supplemental indenture in form
and substance reasonably satisfactory to the Trustee, under the Notes, the
Indenture and the Subsidiary Guarantee on the terms set forth herein or
therein; and

 

(b)           immediately after
giving effect to such transaction, no Default or Event of Default exists.

 

In case of any such
consolidation, merger, sale or conveyance and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Subsidiary Guarantee
endorsed upon the Notes and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor
with the same effect as if it had been named herein as a Guarantor.  Such successor Person thereupon may cause to
be signed any or all of the Subsidiary Guarantees to be endorsed upon all of
the Notes issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee. 
All the Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under this Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this
Indenture as though all of such Subsidiary Guarantees had been issued at the
date of the execution hereof.

 

Except as set forth in
Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing
contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.

 

Section 11.06.                       Releases
Following Sale.

 

In the event (i) of a
sale or other disposition of all of the assets of any Guarantor, by way of
merger, consolidation or otherwise, (ii) of a sale or other disposition of all
to the capital stock of any Guarantor, in each case to a Person that is not
(either before or after giving effect to such transactions) a Restricted
Subsidiary of the Company or (iii) that the Company properly designates any
Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in
accordance with this Indenture, then such Guarantor (in the event of a sale or
other disposition, by way of merger, consolidation or otherwise, of all of the
capital stock of such Guarantor) or the corporation acquiring the property (in
the event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) will be released and relieved of any obligations
under its Subsidiary Guarantee; provided
that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of this Indenture, including without
limitation Section 4.10 hereof.  Upon
delivery by the Company to the Trustee of an Officers’ Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made
by the Company in

 

87

 

accordance with the provisions of this Indenture, including without
limitation Section 4.10 hereof, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Subsidiary Guarantee.

 

Any Guarantor not
released from its obligations under its Subsidiary Guarantee shall remain
liable for the full amount of principal of and interest on the Notes and for
the other obligations of any Guarantor under this Indenture as provided in this
Article 11.

 

Section 11.07.                       Discharge
of Subsidiary Guarantee.

 

A Guarantor shall be
automatically and unconditionally released and discharged of its Subsidiary
Guarantee and its obligations in respect of this Indenture and the Notes
without any action required on the part of the Trustee or any Holder of Notes
at such time as such Guarantor’s guarantee or joint and several liability with
respect to all Other Senior Subordinated Debt Securities of the Company is
released or discharged, or, at the Company’s option, if the Guarantor is not a
guarantor of or jointly and severally liable with respect to such Other Senior
Subordinated Debt Securities.

 

ARTICLE 12

 

SATISFACTION
AND DISCHARGE

 

Section 12.01.                       Satisfaction
and Discharge.

 

This Indenture shall be
discharged and shall cease to be of further effect as to all Notes issued
thereunder, when:

 

(1)           either:

 

(a)           all
Notes that have been authenticated, except lost, stolen or destroyed Notes that
have been replaced or paid and Notes for whose payment money has been deposited
in trust and, if provided for in this Indenture, thereafter repaid to the
Company, have been delivered to the Trustee for cancellation; or

 

(b)           all
Notes that have not been delivered to the Trustee for cancellation have become
due and payable by reason of the mailing of a notice of redemption or otherwise
or shall become due and payable within one year and the Company has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust
solely for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination of cash in U.S. dollars and
non-callable Government Securities, in amounts as shall be sufficient without
consideration of any reinvestment of interest, to pay and discharge the entire
indebtedness on the Notes not delivered to the Trustee for cancellation for
principal, premium and Liquidated Damages, if any, and accrued interest to the
date of maturity or redemption;

 

(2)           no Default or Event of
Default has occurred and is continuing on the date of the deposit or shall
occur as a result of the deposit (after giving effect thereto) and the deposit
shall not result in a breach or violation of, or constitute a default under,
any other instrument to which the Company is a party or by which the Company is
bound;

 

88

 

(3)           the Company has paid or
caused to be paid all other sums payable by it under this Indenture; and

 

(4)           the Company has
delivered irrevocable instructions to the Trustee under this Indenture to apply
the deposited money toward the payment of the Notes at maturity or the
redemption date, as the case may be.

 

In addition, the Company
must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee
stating that all conditions precedent to satisfaction and discharge have been
satisfied.  Notwithstanding the
satisfaction and discharge of this Indenture, if money shall have been
deposited with the Trustee pursuant to subclause (b) of clause (1) of
this Section, the provisions of Section 12.02 and Section 8.06 shall
survive.

 

Section 12.02.                       Application
of Trust Money.

 

Subject to the provisions
of Section 8.06, all money deposited with the Trustee pursuant to
Section 11.01 shall be held in trust and applied by it, in accordance with
the provisions of the Notes and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal (and premium or Liquidated Damages, if any) and interest for whose
payment such money has been deposited with the Trustee; but such money need not
be segregated from other funds except to the extent required by law.  If the Trustee or Paying Agent is unable to
apply any money or Government Securities in accordance with Section 11.01
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 11.01; provided that
if the Company has made any payment of principal of, premium or Liquidated
Damages, if any, or interest on any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.

 

ARTICLE 13

 

MISCELLANEOUS

 

Section 13.01.                       Trust
Indenture Act Controls.

 

If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by TIA
§ 318(c), the imposed duties shall control.

 

Section 13.02.                       Notices.

 

Any notice or
communication by the Company or the Trustee to the others is duly given if in
writing and delivered in Person or mailed by first class mail (registered or
certified, return receipt requested), telex, telecopier or overnight air
courier guaranteeing next day delivery, to the others’ address:

 

89

 

	
  If to the Company
  and/or any Guarantor:

  
	
   

  	
   

  
	
   

  	
  Penn National Gaming,
  Inc.

  
	
   

  	
  Wyomissing Professional
  Center

  
	
   

  	
  825 Berkshire
  Boulevard, Suite 200

  
	
   

  	
  Wyomissing, PA 19610

  
	
   

  	
  Telecopier No.: (610)
  376-2842

  
	
   

  	
  Attention: Robert S.
  Ippolito

  
	
   

  	
   

  
	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Skadden, Arps, Slate,
  Meagher & Flom LLP

  
	
   

  	
  300 South Grand Avenue

  
	
   

  	
  Suite 3400

  
	
   

  	
  Los Angeles, CA 90071

  
	
   

  	
  Telecopier No.: (213)
  687-5600

  
	
   

  	
  Attention: Rodrigo
  Guerra, Jr., Esq.

  
	
   

  	
   

  
	
  If to the Trustee:

  
	
   

  	
   

  
	
   

  	
  Wells Fargo Bank,
  National Association

  
	
   

  	
  Sixth Street &
  Marquette Avenue

  
	
   

  	
  N9303-120

  
	
   

  	
  Minneapolis, MN 55479

  
	
   

  	
  Telecopier No.: (612)
  667-9825

  
	
   

  	
  Attention: Jeffrey Rose

  

 

The Company or the
Trustee, by notice to the others may designate additional or different
addresses for subsequent notices or communications.

 

All notices and
communications (other than those sent to Holders) shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.

 

Any notice or
communication to a Holder shall be mailed by first class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing
next day delivery to its address shown on the register kept by the
Registrar.  Any notice or communication
shall also be so mailed to any Person described in TIA § 313(c), to the
extent required by the TIA.  Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.

 

If a notice or
communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.

 

If the Company mails a
notice or communication to Holders, it shall mail a copy to the Trustee and
each Agent at the same time.

 

90

 

Section 13.03.                       Communication
by Holders of Notes with Other Holders of Notes.

 

Holders may communicate
pursuant to TIA § 312(b) with other Holders with respect to their rights
under this Indenture or the Notes.  The
Company, the Trustee, the Registrar and anyone else shall have the protection
of TIA § 312(c).

 

Section 13.04.                       Certificate
and Opinion as to Conditions Precedent.

 

Upon any request or
application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:

 

(a)           an Officers’
Certificate in form and substance reasonably satisfactory to the Trustee (which
shall include the statements set forth in Section 13.05 hereof) stating
that, in the opinion of the signers, all conditions precedent and covenants, if
any, provided for in this Indenture relating to the proposed action have been
satisfied; and

 

(b)           an Opinion of Counsel
in form and substance reasonably satisfactory to the Trustee (which shall include
the statements set forth in Section 13.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants have been
satisfied.

 

Section 13.05.                       Statements
Required in Certificate or Opinion.

 

Each certificate or opinion
with respect to compliance with a condition or covenant provided for in this
Indenture (other than a certificate provided pursuant to TIA § 314(a)(4))
shall comply with the provisions of TIA § 314(e) and shall include:

 

(a)           a statement that the
Person making such certificate or opinion has read such covenant or condition;

 

(b)           a brief statement as to
the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are based;

 

(c)           a statement that, in
the opinion of such Person, he or she has made such examination or investigation
as is necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been satisfied; and

 

(d)           a statement as to whether
or not, in the opinion of such Person, such condition or covenant has been satisfied.

 

Section 13.06.                       Rules by
Trustee and Agents.

 

The Trustee may make
reasonable rules for action by or at a meeting of Holders.  The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its functions.

 

Section 13.07.                       No
Personal Liability of Directors, Officers, Employees and Stockholders.

 

No director, officer,
employee, incorporator or direct or indirect stockholder of the Company or any
successor entity, as such, shall have any liability for any obligations of the
Company under the Notes, this Indenture, or the Registration Rights Agreement,
or for any claim based on, in respect of,

 

91

 

or by reason of, such obligations or their creation.  Each Holder of Notes by accepting a note
waives and releases all such liability. 
The waiver and release are part of the consideration for issuance of the
Notes.  The waiver may not be effective
to waive liabilities under the federal securities laws.

 

Section 13.08.                       Governing
Law.

 

THIS INDENTURE AND THE
NOTES SHALL BE GOVERENED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE
OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES
327(B).

 

EACH OF THE PARTIES
HERETO (A) IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR, IF SUCH
COURT WILL NOT ACCEPT JURISDICTION, THE SUPREME COURT OF THE STATE OF NEW YORK
OR ANY COURT OF COMPETENT CIVIL JURISDICTION SITTING IN NEW YORK COUNTY, NEW
YORK, (B) UNCONDITIONALLY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS
A DEFENSE OR OTHERWISE ANY CLAIMS THAT IT IS NOT SUBJECT TO THE JURISDICTION OF
THE ABOVE COURTS, THAT SUCH ACTION OR SUIT IS BROUGHT IN AN INCONVENIENT FORUM
OR THAT THE VENUE OF SUCH ACTION, SUIT OR OTHER PROCEEDING IS IMPROPER AND
AGREES THAT IT SHALL NOT ATTEMPT TO DENY OR DEFEAT SUCH JURISDICTION BY MOTION
OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT AND (C) AGREES THAT IT SHALL NOT
BRING ANY ACTION RELATING TO THE INDENTURE OR THE NOTES IN ANY COURT OTHER THAN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR, IF
SUCH COURT WILL NOT ACCEPT JURISDICTION, THE SUPREME COURT OF THE STATE OF NEW
YORK OR ANY COURT OF COMPETENT CIVIL JURISDICTION SITTING IN NEW YORK COUNTY,
NEW YORK.

 

Section 13.09.                       No
Adverse Interpretation of Other Agreements.

 

This Indenture may not be
used to interpret any other indenture, loan or debt agreement of the Company or
its Subsidiaries or of any other Person. 
Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.

 

Section 13.10.                       Successors.

 

All agreements of the
Company in this Indenture and the Notes shall bind its successors.  All agreements of the Trustee in this
Indenture shall bind its successors.

 

Section 13.11.                       Severability.

 

In case any provision in
this Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

92

 

Section 13.12.                       Counterpart
Originals.

 

The parties may sign any
number of copies of this Indenture.  Each
signed copy shall be an original, but all of them together represent the same
agreement.

 

Section 13.13.                       Table of
Contents, Headings, etc.

 

The Table of Contents,
Cross-Reference Table and Headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part of this Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.

 

[Signatures on following page]

 

93

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

 

	
   

  	
  PENN NATIONAL GAMING,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ William J. Clifford

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William J. Clifford

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

94

 

	
  WELLS FARGO BANK,
  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Jeffery Rose

  	
   

  
	
   

  	
  Name:

  	
  Jeffrey Rose

  
	
   

  	
  Title:

  	
  Corporate Trust Officer

  
						

 

95

 

EXHIBIT A

 

FORM
OF NOTE

 

[Face of Note]

 

CUSIP/CINS
                      

 

63/4%
[Series A] [Series B] Senior Subordinated Notes due 2015

 

	
  No.

  	
   

  	
  $

  

 

PENN
NATIONAL GAMING, INC.  promises
to pay to                                                  
or registered assigns, the principal sum of                                                Dollars on                          , 2015.

 

Interest Payment Dates:                           and
                          

 

Record Dates:                           and
                          

 

Dated:                           ,
                   

 

	
   

  	
  PENN
  NATIONAL GAMING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

This is one of the Notes
referred to

in the within-mentioned
Indenture:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  

 

A-1

 

[Back of Note]

 

63/4% [Series A] [Series B] Senior
Subordinated Notes due 2015

 

[Insert the Global Note Legend, if applicable pursuant to the
provisions of the Indenture]

 

[Insert the Private Placement Legend, if applicable pursuant to the
provisions of the Indenture]

 

Capitalized terms used
herein shall have the meanings assigned to them in the Indenture referred to
below unless otherwise indicated.

 

1.             Interest.  Penn National Gaming, Inc., a Pennsylvania
corporation (the “Company”), promises to pay interest on the principal
amount of this Note at 63⁄4% per
annum from March 9, 2005 until maturity and shall pay any Liquidated
Damages.  Any Liquidated Damages
following the occurrence of a Registration Default shall be assessed on the
principal amount of Transfer Restricted Securities held by such Holder as
described in the Registration Rights Agreement. 
The Company shall pay interest and any Liquidated Damages semi-annually
in arrears on March 1 and September 1 of each year, or if any such day is
not a Business Day, on the next succeeding Business Day (each an “Interest
Payment Date”).  Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the
first Interest Payment Date shall be September 1, 2005.  The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest and any Liquidated Damages (without regard
to any applicable grace periods) from time to time on demand at the same rate
to the extent lawful.  Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

 

2.             Method
of Payment.  The Company will pay
interest on the Notes (except defaulted interest) and Liquidated Damages, if
any, to the Persons who are registered Holders of Notes at the close of
business on February 15 and August 15 preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the
Indenture with respect to defaulted interest. 
The Notes will be payable as to principal, premium and Liquidated Damages,
if any, and interest at the office or agency of the Company maintained for such
purpose within the City and State of New York, or, at the option of the
Company, payment of interest and any Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and any
Liquidated Damages on, all Global Notes and all other Notes the Holders of
which hold at least $1,000,000 in principal amount of the Notes and shall have
provided wire transfer instructions to the Company or the Paying Agent.  Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

 

3.             Paying
Agent and Registrar.  Initially,
Wells Fargo Bank, National Association, the Trustee under the Indenture, will
act as Paying Agent and Registrar.  The
Company may change any Paying Agent or Registrar without notice to any
Holder.  The Company or any of its
Subsidiaries may act in any such capacity.

 

A-2

 

4.             Indenture.  The Company issued the Notes under an
Indenture dated as of March 9, 2005 (“Indenture”) among the Company
and the Trustee.  The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S.  Code §§ 77aaa-77bbbb).  The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the provisions
of this Indenture shall govern and be controlling.

 

5.             Optional
Redemption.

 

(a)           At
any time prior to March 1, 2008, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount of Notes
originally issued under the Indenture at a redemption price of 106.750% of the
principal amount, plus accrued and unpaid interest and Liquidated Damages, if
any, to the redemption date, with the net cash proceeds of one or more Equity
Offerings; provided that at least
65% of the aggregate principal amount of Notes issued under the Indenture
remains outstanding immediately after the occurrence of such redemption
(excluding Notes held by the Company and its Subsidiaries); and the redemption
occurs within 90 days of the date of the closing of such Equity Offering.

 

(b)           At
any time prior to March 1, 2010, Penn National may redeem the Notes for cash at
its option, in whole or in part, at any time or from time to time, upon not
less than 30 days nor more than 60 days notice to each Holder of
Notes, at a redemption price equal to the greater of (1) 100% of the
principal amount of the Notes being redeemed and (2) the sum of the
present values of the principal amount of the notes being redeemed and
scheduled payments of interest on such Notes to March 1, 2010, discounted to
the date of redemption on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points,
together in either case with accrued and unpaid interest, if any, to the date
of redemption.

 

(c)           Except
as described in subparagraphs (a) and (b) above, the Notes shall not be
redeemable at the Company’s option prior to March 1, 2010.  On and after March 1, 2010, the Company
may redeem all or a part of the Notes upon not less than 30 nor more than 60
days’ notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated
Damages, if any, on the Notes redeemed, to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 1 of the years
indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  103.375

  	
  %

  
	
  2011

  	
   

  	
  102.250

  	
  %

  
	
  2012

  	
   

  	
  101.125

  	
  %

  
	
  2013 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

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

 

A-3

 

Damages, if any, to the earlier of the date of redemption or the date
of the denial of license or qualification or of the finding of unsuitability by
such Gaming Authority, (B) the price at which such holder or beneficial
owner acquired the Notes, together with accrued interest and Liuidated Damages,
if any, to the earlier of the date of redemption or the date of the denial of
license or qualification or of the finding of unsuitability by such Gaming
Authority, or (C) such other lesser amount as may be required by any
Gaming Authority.

 

6.             Mandatory
Redemption.

 

Except as set forth in
paragraph 7 below, the Company shall not be required to make mandatory
redemption payments with respect to the Notes.

 

7.             Repurchase
at Option of Holder.

 

(a)           If
there is a Change of Control Triggering Event, the Company will be required to
make an offer (a “Change of Control Offer”) to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder’s Notes
at a purchase price equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase (the “Change of Control Payment”).  Within 30 days following the occurrence
of a Change of Control Triggering Event, the Company will mail a notice to each
Holder setting forth the procedures governing the Change of Control Offer as
required by the Indenture.

 

(b)           If
the Company or a Subsidiary consummates any Asset Sales, within five days of
each date on which the aggregate amount of Excess Proceeds exceeds $25.0
million, the Company will commence an offer to all Holders of Notes (as “Asset
Sale Offer”) pursuant to Section 3.09 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess Proceeds
at an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture. 
To the extent that the aggregate amount of Notes tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company (or such
Subsidiary) may use such deficiency for general corporate purposes.  If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee will select the Notes to be purchased on a pro rata basis.  Holders of Notes that are the subject of an
offer to purchase will receive an Asset Sale Offer from the Company prior to
any related purchase date and may elect to have such Notes purchased by
completing the form entitled “Option of Holder to Elect Purchase” on the
reverse of the Notes.

 

8.             Notice
of Redemption.  Notice of redemption
will be mailed at least 30 days but not more than 60 days before the redemption
date to each Holder whose Notes are to be redeemed at its registered
address.  Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed.  On and after the redemption date interest
ceases to accrue on Notes or portions thereof called for redemption.

 

9.             Denominations,
Transfer, Exchange.  The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000.  The transfer of
Notes may be registered and Notes may be exchanged as provided in the
Indenture.  The Registrar and the Trustee
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and the Company may require a Holder to pay any taxes
and fees required by law or permitted by the Indenture.  The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part.  Also, the Company

 

A-4

 

need not exchange or register the transfer of any Notes for a period of
15 days before a selection of Notes to be redeemed or during the period
between a record date and the corresponding Interest Payment Date.

 

10.           Persons
Deemed Owners.  The registered Holder
of a Note may be treated as its owner for all purposes.

 

11.           Amendment,
Supplement and Waiver.  Subject to
certain exceptions, the Indenture or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes voting as a single class, and any existing default
or compliance with any provision of the Indenture or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class. 
Without the consent of any Holder of a Note, the Indenture or the Notes
may be amended or supplemented to cure any ambiguity, defect or inconsistency,
to provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company’s obligations to Holders of
the Notes in case of a merger or consolidation, to comply with the rules of any
applicable securities depositary, to comply with applicable Gaming Laws, to the
extent that such amendment or supplement is not materially adverse to the Holders
of Notes, to provide for the issuance of additional Notes in accordance with
the limitations set forth in the Indenture including Section 4.09, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes (including to provide for any guarantees of the Notes or any
collateral securing the notes) or that does not adversely affect the legal
rights under the Indenture of any such Holder, to comply with the requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act, or to allow any Guarantor to execute a supplemental
indenture to the Indenture and/or a Subsidiary Guarantee with respect to the
Notes.

 

12.           Defaults
and Remedies.  Events of Default
include:  (i) default for
30 days in the payment when due of interest or Liquidated Damages on the
Notes; (ii) default in payment when due of principal of or premium, if
any, on the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
(iii) failure by the Company or any of its Restricted Subsidiaries to
comply with Section 4.10, 4.14 or 5.01 of the Indenture; (iv) failure
by the Company or any of its Restricted Subsidiaries for 60 days after notice
to the Company by the Trustee or the Holders of at least 25% in principal
amount of the Notes then outstanding voting as a single class to comply with
certain other agreements in the Indenture or the Notes; (v) default under
certain other agreements relating to Indebtedness of the Company which default
results in the acceleration of such Indebtedness prior to its express maturity;
(vi) certain final judgments for the payment of money that remain
undischarged for a period of 60 days; and (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable.  Notwithstanding the foregoing, in the case of
an Event of Default arising from certain events of bankruptcy or insolvency,
all outstanding Notes shall become due and payable without further action or
notice.  Holders may not enforce the
Indenture or the Notes except as provided in the Indenture.  Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. 
The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal, interest or Liquidated Damages) if it
determines that withholding notice is in their interest.  The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event
of Default and its consequences under the Indenture except a continuing Default
or Event of Default in the payment of interest or Liquidated Damages on, or the
principal of, the Notes.  The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware

 

A-5

 

of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

 

13.           Trustee
Dealings with Company.  The Trustee,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not the Trustee.

 

14.           No
Recourse Against Others.  A director,
officer, employee, incorporator or direct or indirect stockholder, of the
Company, as such, shall not have any liability for any obligations of the
Company under the Notes, the Indenture or the Registration Rights Agreement or
for any claim based on, in respect of, or by reason of, such obligations or
their creation.  Each Holder by accepting
a Note waives and releases all such liability. 
The waiver and release are part of the consideration for the issuance of
the Notes.

 

15.           Authentication.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

 

16.           Abbreviations.  Customary abbreviations may be used in the
name of a Holder or an assignee, such as: 
TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).

 

17.           Additional
Rights of Holders of Restricted Global Notes and Restricted Definitive Notes.  In addition to the rights provided to Holders
of Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement.

 

18.           CUSIP
Numbers.  Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Notes and
the Trustee may use CUSIP numbers in notices of redemption as a convenience to
Holders.  No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

 

The Company will furnish
to any Holder upon written request and without charge a copy of this Indenture
and/or the Registration Rights Agreement. 
Requests may be made to:

 

Penn National Gaming,
Inc.

Wyomissing Professional Center

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

Attention:  Robert S.  Ippolito

 

A-6

 

ASSIGNMENT
FORM

 

To assign this Note, fill
in the form below:

 

(I) or
(we) assign and transfer this Note to:                                                                                      

(Insert assignee’s legal name)

 

                                                                                                                                                                        

(Insert assignee’s
soc.  sec.  or tax I.D. 
no.)

 

                                                                                                                                                                        

(Print or type
assignee’s name, address and zip code)

 

and irrevocably appoint                                                                                     to
transfer this Note on the books of the Company. 
The agent may substitute another to act for him.

 

 

	
  Date:

  	
   

  	
  Your Signature:

  

 

 

(Sign exactly as your name appears on the face of this
Note)

 

Signature
Guarantee*:                                                                                       

 

*                 Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-7

 

OPTION
OF HOLDER TO ELECT PURCHASE

 

If you want to elect to
have this Note purchased by the Company pursuant to Section 4.10 or 4.14
of the Indenture, check the appropriate box below:

 

	
   

  	
  o

  	
  Section 4.10

  	
   

  	
  o

  	
  Section 4.14

  

 

If you want to elect to have
only part of the Note purchased by the Company pursuant to Section 4.10 or
Section 4.14 of the Indenture, state the amount you elect to have
purchased:

 

	
  $

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Your Signature:

  	
   

  	
   

  
	
  (Sign exactly as
  your name appears on the face of this Note)

  
	
   

  	
   

  
	
  Tax Identification No.:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee*:

  	
   

  	
   

  
												

 

 

*                 Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-8

 

SCHEDULE OF EXCHANGES OF INTERESTS IN
THE GLOBAL NOTE (1)

 

The following exchanges
of a part of this Global Note for an interest in another Global Note or for a
Definitive Note, or exchanges of a part of another Global Note or Definitive
Note for an interest in this Global Note, have been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of Decrease

  in Principal Amount

  of This Global Note

  	
   

  	
  Amount of Increase in

  Principal Amount of

  This Global Note

  	
   

  	
  Principal Amount of

  This Global Note

  Following Such

  Decrease (or Increase)

  	
   

  	
  Signature of

  Responsible Officer

  of Trustee or Note

  Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(1)           This
schedule should be included only if the Note is issued in global form.

 

A-9

 

EXHIBIT B

 

FORM
OF CERTIFICATE OF TRANSFER

 

Penn National Gaming,
Inc.

Wyomissing Professional Center

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

 

Wells Fargo Bank,
National Association

608 2nd Avenue South

Minneapolis, MN 55479

Attention:  Jeffrey Rose

 

Re:  63/4% Senior
Subordinated Notes due 2015

 

Reference is hereby made
to the Indenture, dated as of March 9, 2005 (the “Indenture”),
between Penn National Gaming, Inc., as issuer (the “Company”), and Wells
Fargo Bank, National Association, as trustee. 
Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

 

                                       
(the “Transferor”) owns and proposes to transfer the Note[s] or interest
in such Note[s] specified in Annex A hereto, in the principal amount of $                              in
such Note[s] or interests (the “Transfer”), to                                                             
(the “Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, the
Transferor hereby certifies that:

 

[CHECK
ALL THAT APPLY]

 

1.             o            Check
if Transferee will take delivery of a beneficial interest in the 144A Global
Note or a Definitive Note Pursuant to Rule 144A.  The Transfer is being effected pursuant to
and in accordance with Rule 144A under the United States Securities Act of
1933, as amended (the “Securities Act”), and, accordingly, the
Transferor hereby further certifies that the beneficial interest or Definitive
Note is being transferred to a Person that the Transferor reasonably believed
and believes is purchasing the beneficial interest or Definitive Note for its
own account, or for one or more accounts with respect to which such Person exercises
sole investment discretion, and such Person and each such account is a “qualified
institutional buyer” within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Transfer is in compliance
with any applicable blue sky securities laws of any state of the United
States.  Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the 144A Global Note and/or the Definitive Note and in the Indenture and the
Securities Act.

 

2.             o            Check
if Transferee will take delivery of a beneficial interest in the Regulation S
Global Note or a Definitive Note pursuant to Regulation S.  The Transfer is being effected pursuant to
and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly, the Transferor hereby further certifies that (i) the
Transfer is not being made to a person in the United States and (x) at the
time the buy order was originated, the Transferee was outside the United States
or such Transferor and any Person acting on its behalf reasonably believed and
believes that the Transferee was outside the United States or (y) the
transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the
United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the

 

B-1

 

Securities Act, (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act, and
(iv) if the proposed transfer is being made prior to the expiration of the
Restricted Period, the transfer is not being made to a U.S.  Person or for the account or benefit of a
U.S.  Person (other than an Initial
Purchaser).  Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Note and/or the Definitive Note and in the Indenture
and the Securities Act.

 

3.             o            Check
and complete if Transferee will take delivery of a beneficial interest in the
IAI Global Note or a Definitive Note pursuant to any provision of the
Securities Act other than Rule 144A or Regulation S.  The Transfer is being effected in compliance
with the transfer restrictions applicable to beneficial interests in Restricted
Global Notes and Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act and any applicable blue sky securities laws of any
state of the United States, and accordingly the Transferor hereby further
certifies that (check one):

 

(a)           o            such
Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act;

 

or

 

(b)           o            such
Transfer is being effected to the Company or a subsidiary thereof;

 

or

 

(c)           o            such
Transfer is being effected pursuant to an effective registration statement
under the Securities Act and in compliance with the prospectus delivery
requirements of the Securities Act;

 

or

 

(d)           o            such
Transfer is being effected to an Institutional Accredited Investor and pursuant
to an exemption from the registration requirements of the Securities Act other
than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby
further certifies that it has not engaged in any general solicitation within
the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if the Company so requests, an Opinion of Counsel
provided by the Transferor or the Transferee (a copy of which the Transferor
has attached to this certification), to the effect that such Transfer is in
compliance with the Securities Act.  Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the Private Placement Legend
printed on the IAI Global Note and/or the Definitive Notes and in the Indenture
and the Securities Act.

 

4.             o            Check
if Transferee will take delivery of a beneficial interest in an Unrestricted
Global Note or of an Unrestricted Definitive Note.

 

(a)           o            Check
if Transfer is pursuant to Rule 144. 
(i) The Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of

 

B-2

 

the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. 
Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will
no longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

 

(b)           o            Check
if Transfer is Pursuant to Regulation S. 
(i) The Transfer is being effected pursuant to and in accordance
with Rule 903 or Rule 904 under the Securities Act and in compliance
with the transfer restrictions contained in the Indenture and any applicable
blue sky securities laws of any state of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities
Act.  Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.

 

(c)           o            Check
if Transfer is Pursuant to Other Exemption. 
(i) The Transfer is being effected pursuant to and in compliance
with an exemption from the registration requirements of the Securities Act
other than Rule 144, Rule 903 or Rule 904 and in compliance with
the transfer restrictions contained in the Indenture and any applicable blue
sky securities laws of any State of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities
Act.  Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will not be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

 

This certificate and the
statements contained herein are made for your benefit and the benefit of the
Company.

 

	
   

  	
  [Insert Name of
  Transferor]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  
	
  Dated:

  	
   

  	
   

  
				

 

B-3

 

ANNEX
A TO CERTIFICATE OF TRANSFER

 

1.             The
Transferor owns and proposes to transfer the following:

 

[CHECK
ONE OF (a) OR (b)]

 

(a)           o            a
beneficial interest in the:

 

(i)            o            144A
Global Note (CUSIP                     ),
or

 

(ii)           o            Regulation
S Global Note (CUSIP                     ),
or

 

(iii)          o            IAI
Global Note (CUSIP                     );
or

 

(b)           o            a
Restricted Definitive Note.

 

2.             After
the Transfer the Transferee will hold:

 

[CHECK
ONE]

 

(a)           o            a
beneficial interest in the:

 

(i)            o            144A
Global Note (CUSIP                     ),
or

 

(ii)           o            Regulation
S Global Note (CUSIP                     ),
or

 

(iii)          o            IAI
Global Note (CUSIP                     );
or

 

(iv)          o            Unrestricted
Global Note (CUSIP                     );
or

 

(b)           o            a
Restricted Definitive Note; or

 

(c)           o            an
Unrestricted Definitive Note, in accordance with the terms of this Indenture.

 

B-4

 

EXHIBIT C

 

FORM
OF CERTIFICATE OF EXCHANGE

 

Penn National Gaming,
Inc.

Wyomissing Professional Center

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

 

Wells Fargo Bank,
National Association

608 2nd Avenue South

Minneapolis, MN 55479

Attention:  Jeffrey Rose

 

Re:  63/4% Senior
Subordinated Notes due 2015

 

(CUSIP              )

 

Reference is hereby made
to the Indenture, dated as of March 9, 2005 (the “Indenture”),
between Penn National Gaming, Inc., as issuer (the “Company”), and Wells
Fargo Bank, National Association, as trustee. 
Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

 

                                        ,
(the “Owner”) owns and proposes to exchange the Note[s] or interest in
such Note[s] specified herein, in the principal amount of $                    
in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner
hereby certifies that:

 

1.             Exchange
of Restricted Definitive Notes or Beneficial Interests in a Restricted Global
Note for Unrestricted Definitive Notes or Beneficial Interests in an
Unrestricted Global Note

 

(a)           o            Check if Exchange is from beneficial
interest in a Restricted Global Note to beneficial interest in an Unrestricted
Global Note.  In connection with the
Exchange of the Owner’s beneficial interest in a Restricted Global Note for a
beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner’s own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
the Global Notes and pursuant to and in accordance with the United States
Securities Act of 1933, as amended (the “Securities Act”),
(iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the beneficial interest in an Unrestricted
Global Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

 

(b)           o            Check
if Exchange is from beneficial interest in a Restricted Global Note to
Unrestricted Definitive Note.  In
connection with the Exchange of the Owner’s beneficial interest in a Restricted
Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i)
the Definitive Note is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Definitive
Note is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.

 

(c)           o            Check
if Exchange is from Restricted Definitive Note to beneficial interest in an
Unrestricted Global Note.  In connection
with the Owner’s Exchange of a Restricted Definitive

 

C-1

 

Note for a beneficial interest in an Unrestricted Global Note, the
Owner hereby certifies (i) the beneficial interest is being acquired for
the Owner’s own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act,
(iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the beneficial interest is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.

 

(d)           o            Check
if Exchange is from Restricted Definitive Note to Unrestricted Definitive
Note.  In connection with the Owner’s
Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note,
the Owner hereby certifies (i) the Unrestricted Definitive Note is being
acquired for the Owner’s own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Unrestricted Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any
state of the United States.

 

2.             Exchange
of Restricted Definitive Notes or Beneficial Interests in Restricted Global
Notes for Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes

 

(a)           o            Check
if Exchange is from beneficial interest in a Restricted Global Note to
Restricted Definitive Note.  In
connection with the Exchange of the Owner’s beneficial interest in a Restricted
Global Note for a Restricted Definitive Note with an equal principal amount,
the Owner hereby certifies that the Restricted Definitive Note is being
acquired for the Owner’s own account without transfer.  Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note issued
will continue to be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Definitive Note and in the
Indenture and the Securities Act.

 

(b)           o            Check
if Exchange is from Restricted Definitive Note to beneficial interest in a
Restricted Global Note.  In connection
with the Exchange of the Owner’s Restricted Definitive Note for a beneficial
interest in the [CHECK ONE] 144A Global Note, Regulation S Global Note, IAI
Global Note with an equal principal amount, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner’s own account
without transfer and (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, and in compliance with
any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the beneficial interest issued will
be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the relevant Restricted Global Note and in the Indenture and
the Securities Act.

 

D-2

 

This certificate and the
statements contained herein are made for your benefit and the benefit of the
Company.

 

	
   

  	
  [Insert Name of
  Transferor]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

D-3

 

EXHIBIT D

 

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

 

Penn National Gaming,
Inc.

Wyomissing Professional Center

825 Berkshire Boulevard, Suite 200

Wyomissing, PA 19610

 

Wells Fargo Bank,
National Association

608 2nd Avenue South

Minneapolis, MN 55479

Attention:  Jeffrey Rose

 

Re:  63/4% Senior
Subordinated Notes due 2015

 

Reference is hereby made
to the Indenture, dated as of March 9, 2005 (the “Indenture”),
between Penn National Gaming, Inc., as issuer (the “Company”), and Wells
Fargo Bank, National Association, as trustee. 
Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

 

In connection with our
proposed purchase of $                             
aggregate principal amount of:

 

(a)           o            a
beneficial interest in a Global Note, or

 

(b)           o            a
Definitive Note,

 

we confirm that:

 

1.             We
understand that any subsequent transfer of the Notes or any interest therein is
subject to certain restrictions and conditions set forth in the Indenture and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes or any interest therein except in compliance with, such
restrictions and conditions and the United States Securities Act of 1933, as
amended (the “Securities Act”).

 

2.             We
understand that the offer and sale of the Notes have not been registered under
the Securities Act, and that the Notes and any interest therein may not be
offered or sold except as permitted in the following sentence.  We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we should sell
the Notes or any interest therein, we will do so only (A) to the Company
or any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a “qualified institutional buyer” (as defined therein),
(C) to an institutional “accredited investor” (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a
U.S.  broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and if the
Company so requests, an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such transfer is in compliance with the Securities
Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of
Rule 144(k) under the Securities Act or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing the Definitive Note or beneficial interest in
a Global Note from us in a transaction meeting the requirements of
clauses (A) through (E) of this paragraph a notice advising such purchaser
that resales thereof are restricted as stated herein.

 

D-1

 

3.             We
understand that, on any proposed resale of the Notes or beneficial interest
therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions.  We further
understand that the Notes purchased by us will bear a legend to the foregoing effect.

 

4.             We
are an institutional “accredited investor” (as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment.

 

5.             We
are acquiring the Notes or beneficial interest therein purchased by us for our
own account or for one or more accounts (each of which is an institutional “accredited
investor”) as to each of which we exercise sole investment discretion.

 

You and the Company are
entitled to rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters covered
hereby.

 

	
   

  	
  [Insert Name of
  Accredited Investor]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

D-2

 

EXHIBIT E

FORM
OF SUBSIDIARY GUARANTEE

 

For value received, each
Guarantor (which term includes any successor Person under the Indenture) has,
jointly and severally, unconditionally guaranteed, to the extent set forth in
the Indenture and subject to the provisions in the Indenture dated as of March
9, 2005 (the “Indenture”) among Penn National Gaming, Inc. (the “Company”)
and Wells Fargo Bank, National Association, as trustee (the “Trustee”),
(a) the due and punctual payment of the principal of, premium, if any, and interest
on the Notes (as defined in the Indenture), whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest
on overdue principal and premium or Liquidated Damages, if any, and, to the
extent permitted by law, interest, and the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee all in
accordance with the terms of the Indenture and (b) in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.  The
obligations of the Guarantors to the Holders of Notes and to the Trustee
pursuant to the Subsidiary Guarantee and the Indenture are expressly set forth
in Article 11 of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Subsidiary Guarantee.  Each Holder of a Note, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and directs
the Trustee, on behalf of such Holder, to take such action as may be necessary
or appropriate to effectuate the subordination as provided in the Indenture and
(c) appoints the Trustee attorney-in-fact of such Holder for such purpose; provided, however,
that the Indebtedness evidenced by this Subsidiary Guarantee shall cease to be
so subordinated and subject in right of payment upon any defeasance of this Note
in accordance with the provisions of the Indenture.

 

	
   

  	
  [NAME
  OF GUARANTOR(S)]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

E-1

 

EXHIBIT F

 

FORM
OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

 

SUPPLEMENTAL INDENTURE
(this “Supplemental Indenture”), dated as of                         ,
among                                      
(the “Guaranteeing Subsidiary”), a subsidiary of Penn National Gaming,
Inc.  (or its permitted successor), a
Pennsylvania corporation (the “Company”), the Company and Wells Fargo
Bank, National Association, as trustee under this Indenture referred to below
(the “Trustee”).

 

W
I T N E S S E T H

 

WHEREAS, the Company has
heretofore executed and delivered to the Trustee an indenture (the “Indenture”),
dated as of March 9, 2005 providing for the issuance of an unlimited
amount of 63⁄4% Senior Subordinated Notes due 2015 (the “Notes”);

 

WHEREAS, the Indenture
provides that under certain circumstances the Guaranteeing Subsidiary shall
execute and deliver to the Trustee a supplemental indenture pursuant to which
the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s
Obligations under the Notes and the Indenture on the terms and conditions set
forth herein (the “Subsidiary Guarantee”); and

 

WHEREAS, pursuant to
Section 9.01 of the Indenture, the Trustee is authorized to execute and
deliver this Supplemental Indenture.

 

NOW THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and
the Trustee mutually covenant and agree for the equal and ratable benefit of
the Holders of the Notes as follows:

 

1.             Capitalized
Terms.  Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.

 

2.             Agreement
to Guarantee.  The Guaranteeing
Subsidiary hereby agrees as follows:

 

(a)           To
jointly and severally Guarantee, on a senior subordinated basis, to each Holder
of a Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, the Notes or the obligations of the Company hereunder
or thereunder, that:

 

(i)            the
principal of and interest on the Notes will be promptly paid in full when due,
whether at maturity, by acceleration, redemption or otherwise, and interest on
the overdue principal of and interest on the Notes, if any, if lawful, and all
other obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and

 

(ii)           in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that same will be promptly paid in full when due or

 

F-1

 

performed in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.  Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Guarantors shall be jointly and severally obligated to
pay the same immediately.

 

(b)           The
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or the Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor.

 

(c)           The
following is hereby waived: diligence presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice
and all demands whatsoever.

 

(d)           Except
as otherwise provided by the Indenture, this Subsidiary Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and the Indenture, and the Guaranteeing Subsidiary accepts all obligations
of a Guarantor under the Indenture.

 

(e)           If
any Holder or the Trustee is required by any court or otherwise to return to
the Company, the Guarantors, or any Custodian, Trustee, liquidator or other
similar official acting in relation to either the Company or the Guarantors,
any amount paid by either to the Trustee or such Holder, this Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

 

(f)            The
Guaranteeing Subsidiary shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.

 

(g)           As
between the Guarantors, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the obligations guaranteed hereby may
be accelerated as provided in Article 6 of the Indenture for the purposes
of this Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration
of such obligations as provided in Article 6 of the Indenture, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee.

 

(h)           The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.

 

(i)            Pursuant
to Section 11.03 of the Indenture, after giving effect to any maximum
amount and any other contingent and fixed liabilities that are relevant under
any applicable Bankruptcy or fraudulent conveyance laws, and after giving
effect to any collections from, any rights to receive contribution from or
payments made by or on behalf of any other

 

F-2

 

Guarantor in respect of
the obligations of such other Guarantor under Article 11 of this
Indenture, this new Subsidiary Guarantee shall be limited to the maximum amount
permissible such that the obligations of such Guarantor under this Subsidiary
Guarantee will not constitute a fraudulent transfer or conveyance.

 

3.             Execution
and Delivery.  Each Guaranteeing
Subsidiary agrees that the Subsidiary Guarantees shall remain in full force and
effect notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.

 

4.             Guaranteeing
Subsidiary May Consolidate, etc.  on
Certain Terms.

 

(a)           The
Guaranteeing Subsidiary may not consolidate with or merge with or into (whether
or not such Guarantor is the surviving Person) another corporation, Person or
entity whether or not affiliated with such Guarantor unless:

 

(i)            subject
to Sections 11.05 and 11.06 of the Indenture, the Person formed by or
surviving any such consolidation or merger (if other than a Guarantor or the
Company) unconditionally assumes all the obligations of such Guarantor,
pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Notes, this Indenture and the Subsidiary
Guarantee on the terms set forth herein or therein; and

 

(ii)           immediately
after giving effect to such transaction, no Default or Event of Default exists.

 

(b)           In
case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor corporation, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of the Indenture to be
performed by the Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor.  Such successor
corporation thereupon may cause to be signed any or all of the Subsidiary
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee.  All the Subsidiary Guarantees
so issued shall in all respects have the same legal rank and benefit under the
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of the Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.

 

(c)           Except
as set forth in Articles 4 and 5 and Section 11.06 of Article 11
of the Indenture, and notwithstanding clauses (a) and (b) above, nothing
contained in the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.

 

5.             Releases.

 

(a)           In
the event of a sale or other disposition of all of the assets of any Guarantor,
by way of merger, consolidation or otherwise, or a sale or other disposition of
all the capital stock of any Guarantor, in each case to a Person that is not
(either before or after giving effect to such transaction) a Restricted
Subsidiary of the Company, then such Guarantor (in the event of a sale or other

 

F-3

 

disposition, by way of merger, consolidation or otherwise, of all of
the capital stock of such Guarantor) or the corporation acquiring the property (in
the event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) will be released and relieved of any obligations
under its Subsidiary Guarantee; provided
that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture, including without
limitation Section 4.10 of the Indenture. 
Upon delivery by the Company to the Trustee of an Officers’ Certificate
and an Opinion of Counsel to the effect that such sale or other disposition was
made by the Company in accordance with the provisions of the Indenture,
including without limitation Section 4.10 of the Indenture, the Trustee
shall execute any documents reasonably required in order to evidence the
release of any Guarantor from its obligations under its Subsidiary Guarantee.

 

(b)           A
Guarantor shall be automatically and unconditionally released and discharged of
its Subsidiary Guarantee and its obligations in respect of this Indenture and
the Notes without any action required on the part of the Trustee or any Holder
of Notes at such time as such Guarantor’s guarantee or joint and several
liability with respect to all Other Senior Subordinated Debt Securities of the
Company is released or discharged, or, at the Company’s option, if the
Guarantor is not a guarantor of or jointly and severally liable with respect to
any Other Senior Subordinated Debt Securities.

 

(c)           Any
Guarantor not released from its obligations under its Subsidiary Guarantee
shall remain liable for the full amount of principal of and interest on the
Notes and for the other obligations of any Guarantor under the Indenture as
provided in Article 11 of the Indenture.

 

6.             No
Recourse Against Others.  No past,
present or future director, officer, employee, incorporator, stockholder or
agent of the Guaranteeing Subsidiary, as such, shall have any liability for any
obligations of the Company or any Guaranteeing Subsidiary under the Notes, any
Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation.  Each Holder of the Notes by
accepting a Note waives and releases all such liability.  The waiver and release are part of the
consideration for issuance of the Notes. 
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.

 

7.             New York
Law to Govern.  THE INDENTURE AND THE
NOTES SHALL BE GOVERENED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE
OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES
327(B).

 

EACH OF THE PARTIES
HERETO (A) IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR, IF SUCH
COURT WILL NOT ACCEPT JURISDICTION, THE SUPREME COURT OF THE STATE OF NEW YORK
OR ANY COURT OF COMPETENT CIVIL JURISDICTION SITTING IN NEW YORK COUNTY, NEW
YORK, (B) UNCONDITIONALLY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS
A DEFENSE OR OTHERWISE ANY CLAIMS THAT IT IS NOT SUBJECT TO THE JURISDICTION OF
THE ABOVE COURTS, THAT SUCH ACTION OR SUIT IS BROUGHT IN AN INCONVENIENT FORUM
OR THAT THE VENUE OF SUCH ACTION, SUIT OR OTHER PROCEEDING IS IMPROPER AND
AGREES THAT IT SHALL NOT ATTEMPT TO DENY OR

 

F-4

 

DEFEAT SUCH JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY
SUCH COURT AND (C) AGREES THAT IT SHALL NOT BRING ANY ACTION RELATING TO THE
INDENTURE OR THE NOTES IN ANY COURT OTHER THAN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK OR, IF SUCH COURT WILL NOT ACCEPT
JURISDICTION, THE SUPREME COURT OF THE STATE OF NEW YORK OR ANY COURT OF
COMPETENT CIVIL JURISDICTION SITTING IN NEW YORK COUNTY, NEW YORK.

 

8.             Counterparts.  The parties may sign any number of copies of
this Supplemental Indenture.  Each signed
copy shall be an original, but all of them together represent the same
agreement.

 

9.             Effect
of Headings.  The Section headings
herein are for convenience only and shall not affect the construction hereof.

 

10.           The
Trustee.  The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Supplemental Indenture or for or in respect of the recitals
contained herein, all of which recitals are made solely by the Guaranteeing
Subsidiary and the Company.

 

F-5

 

IN WITNESS WHEREOF, the
parties hereto have caused this Supplemental Indenture to be duly executed and
attested, all as of the date first above written.

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  

 

 

	
   

  	
  [GUARANTEEING
  SUBSIDIARY]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  PENN
  NATIONAL GAMING, INC.

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  [EXISTING
  GUARANTORS]

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL

  ASSOCIATION,

  
	
   

  	
  as
  Trustee

  
	
   

  	
  By:

  
	
   

  	
  Authorized Signatory

  

 

F-6Exhibit 10.50

 

[FORM OF] MANAGEMENT
STOCKHOLDER’S AGREEMENT

 

This Management Stockholder’s Agreement (this “Agreement”) is entered
into as of [DATE] between Amphenol Corporation, a Delaware Corporation (the “Company”),
and [NAME] (the “Management Stockholder”) (the Company and the Management
Stockholder being hereinafter collectively referred to as the “Parties”).

 

Reference is made to the Agreement and Plan of Merger dated as of January 23,
1997, among NXS Acquisition Corp., a Delaware corporation (“Newco”), and the
Company entered into an Agreement and Plan of Merger (the “Merger Agreement”)
pursuant to which Newco was merged with and into the Company (the “Merger”).

 

This Agreement is one of several other agreements (“Other Management
Stockholders’ Agreements”) which have been, or which in the future will be,
entered into between the Company and other individuals who are or will be key
employees of the Company or one of its subsidiaries (collectively, the “Other
Management Stockholders”).

 

The Company has granted to the Management Stockholder an option or
options to purchase Common Stock (“Options”) at an exercise price of [$GRANT
PRICE] per share of Common Stock pursuant to the terms of the Amended 1997
Option Plan for Key Employees of Amphenol Corporation and Subsidiaries (the “Option
Plan”) and the “Non-Qualified Stock Option Agreement” attached hereto as
Exhibit A.

 

NOW THEREFORE, to implement the foregoing and in consideration of the
grant of Options and of the mutual agreements contained herein, the Parties
agree as follows:

 

1.                                       [Intentionally
omitted]

 

2.                                       Management
Stockholder’s Representations, Warranties and Agreements.

 

(a)                                  The
Management Stockholder agrees and acknowledges that he will not, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (any such act being referred to herein as a “transfer”) any shares
of the Common Stock issuable upon exercise of the Options (the “Option Stock”
or the “Stock”) unless such transfer complies with Section 3 of this
Agreement.  If the Management Stockholder
is an “affiliate” (as defined under Rule 405 of the rules and regulations
promulgated under the Act and as interpreted by the Board of Directors of the
Company) of the Company (an “Affiliate”), the Management Stockholder also
agrees and acknowledges that he will not transfer any shares of the Stock
unless (i) the transfer is pursuant to an effective registration statement
under the Securities Act of 1933, as amended, and the rules and regulations in
effect thereunder (the “Act”), and in compliance with applicable provisions of
state securities laws or (ii) (A) counsel for the Management Stockholder (which
counsel shall be reasonably acceptable to the Company) shall have furnished the
Company with an opinion, satisfactory in form and substance to the Company,
that no such registration is required because of the availability of an
exemption from registration under the Act and (B) if the Management Stockholder
is a citizen or resident of any country other than the United States, or the
Management Stockholder desires to effect any transfer in any such country,
counsel for the

 

 

Management Stockholder (which counsel shall be reasonably satisfactory
to the Company) shall have furnished the Company with an opinion or other
advice reasonably satisfactory in form and substance to the Company to the
effect that such transfer will comply with the securities laws of such
jurisdiction.  Notwithstanding the
foregoing, the Company acknowledges and agrees that any of the following
transfers are deemed to be in compliance with the Act and this Agreement and no
opinion of counsel is required in connection therewith: (x) a transfer made
pursuant to Section 4, 5 or 6 hereof, (y) a transfer upon the death of the
Management Stockholder to his executors, administrators, testamentary trustees,
legatees or beneficiaries (the “Management Stockholder’s Estate”) or a transfer
to the executors, administrators, testamentary trustees, legatees or
beneficiaries of a person who has become a holder of Stock in accordance with
the terms of this Agreement, provided that it is expressly understood that any
such transferee shall be bound by the provisions of this Agreement and (z) a
transfer made after the Base Date in compliance with the federal securities
laws to a trust or custodianship the beneficiaries of which may include only
the Management Stockholder, his spouse or his lineal descendants (a “Management
Stockholder’s Trust”) or a transfer made after the third anniversary of the
Base Date to such a trust by a person who has become a holder of Stock in
accordance with the terms of this Agreement, provided that such transfer is
made expressly subject to this Agreement and that the transferee agrees in
writing to be bound by the terms and conditions hereof.

 

(b)                                 [NOT
APPLICABLE AFTER MAY 19, 2002] The certificate (or certificates) representing
the Stock shall bear a legend in substantially the following form:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES
WITH THE PROVISIONS OF THE MANAGEMENT STOCKHOLDER’S AGREEMENT BETWEEN AMPHENOL
CORPORATION (“THE COMPANY”) AND THE MANAGEMENT STOCKHOLDER NAMED ON THE FACE
HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY).”

 

(c)                                  [NOT
APPLICABLE AFTER MAY 19, 2002] The Management Stockholder acknowledges that he
has been advised that (i) the Option Stock may not be registered under the Act
and may not be transferred unless registered pursuant to an effective
Registration Statement under the Act or pursuant to a transaction that is
exempt from the registration requirements of such Act, (ii) a restrictive
legend in the form heretofore set forth shall be placed on the certificates
representing the Stock and (iii) a notation shall be made in the appropriate
records of the Company indicating that the Stock is subject to restrictions on
transfer and appropriate stop transfer restrictions will be issued to the
Company’s transfer agent with respect to the Stock.  If the Management Stockholder is an
Affiliate, the Management Stockholder also acknowledges that (1) the Stock must
be held indefinitely and the Management Stockholder must continue to bear the
economic risk of the investment in the Stock unless it is subsequently
registered under the Act or an exemption from such registration is available,
(2) when and if shares of the Stock may be disposed of without registration in
reliance on Rule 144 of the rules and regulations promulgated under the Act,
such disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule and (3) if the Rule 144 exemption is not
available, public sale without registration will require compliance with some
other exemption under the Act.

 

 

(d)                                 [NOT
APPLICABLE AFTER MAY 19, 2002] If any shares of the Stock are to be disposed of
in accordance with Rule 144 under the Act or otherwise, the Management
Stockholder shall promptly notify the Company of such intended disposition and
shall deliver to the Company at or prior to the time of such disposition such
documentation as the Company may reasonably request in connection with such
sale and, in the case of a disposition pursuant to Rule 144, shall deliver to
the Company an executed copy of any notice on Form 144 required to be filed
with the Securities and Exchange Commission (the “SEC”).

 

(e)                                  The
Management Stockholder agrees that, if any shares of the capital stock of the
Company are offered to the public pursuant to an effective registration
statement under the Act (other than registration of securities issued under an
employee plan), the Management Stockholder will not effect any public sale or
distribution of any shares of the Stock not covered by such registration
statement from the time of the receipt of a notice from the Company that the
Company has filed or imminently intends to file such registration statement to,
or within 180 days after, the effective date of such registration statement,
unless otherwise agreed to in writing by the Company.

 

(f)                                    The
Management Stockholder represents and warrants that (i) with respect to the
Options, he has received and reviewed the document(s) comprising the Prospectus
(the “Prospectus”) relating to Option Stock, and the documents referred to
therein, certain of which documents set forth the rights, preferences and
restrictions relating to the Stock and (ii) he has been given the opportunity
to obtain any additional information or documents and to ask questions and
receive answers about such documents, the Company and the business and
prospects of the Company which he deems necessary to evaluate the merits and
risks related to his investment in Option Stock, if any, and to verify the
information contained in the Prospectus and the information received as
indicated in this Section 2(f)(ii), and he has relied solely on such
information.

 

(g)                                 The
Management Stockholder further represents and warrants that (i) his financial
condition is such that he can afford to bear the economic risk of holding the
Option Stock, for an indefinite period of time and has adequate means for
providing for his current needs and personal contingencies, (ii) he can afford
to suffer a complete loss of his or her investment in the Option Stock, (iii)
he understands and has taken cognizance of all risk factors related to the
purchase of the Option Stock, if any, including those set forth in the
Prospectus referred to above, and (iv) his knowledge and experience in
financial and business matters are such that he is capable of evaluating the
merits and risks of his purchase of the Option Stock, if any, as contemplated
by this Agreement.

 

3.                                       Restriction
on Transfer.  [NOT APPLICABLE AFTER
MAY 19, 2002]

 

Except for transfers permitted by clauses (x), (y) and (z) of Section 2(a)
or a sale of shares of Stock pursuant to an effective registration statement
under the Act filed by the Company or pursuant to the Sale Participation
Agreement (as defined below), the Management Stockholder agrees that he will
not transfer any shares of the Stock at any time prior to the fifth anniversary
of the Base Date.  No transfer of any
such shares in violation hereof shall be made or recorded on the books of the
Company and any such transfer shall be void and of no effect.

 

 

4.                                       Right
of First Refusal.  [NO LONGER
APPLICABLE]

 

If on the fifth anniversary of the Base Date the Common Stock is not
admitted to trading on any national securities exchange or the NASDAQ Stock
Market, and, at any time after the fifth anniversary of the Base Date and prior
to a Public Offering (as hereinafter defined), the Management Stockholder
receives a bona fide offer to purchase any or all of his shares of Stock (the “Offer”)
from a third party (the “Offeror”) which the Management Stockholder wishes to
accept, the Management Stockholder shall cause the Offer to be reduced to
writing and shall notify the Company in writing of his wish to accept the
Offer.  The Management Stockholder’s
notice shall contain an irrevocable offer to sell such shares of Stock to the
Company (in the manner set forth below) at a purchase price equal to the price
contained in, and on the same terms and conditions of, the Offer, and shall be
accompanied by a true copy of the Offer (which shall identify the
Offeror).  At any time within 30 days
after the date of the receipt by the Company of the Management Stockholder’s
notice, the Company shall have the right and option to purchase, or to arrange
for a third party to purchase, all of the shares of Stock covered by the Offer
either (i) at the same price and on the same terms and conditions as the Offer
or (ii) if the Offer includes any consideration other than cash, then at the
sole option of the Company, at the equivalent all cash price, determined in
good faith by the Company’s Board of Directors, by delivering a certified bank
check or checks in the appropriate amount (and any such non-cash consideration
to be paid) to the Management Stockholder at the principal office of the
Company against delivery of certificates or other instruments representing the
shares of Stock so purchased, appropriately endorsed by the Management
Stockholder.  If at the end of such 30
day period, the Company has not tendered the purchase price for such shares in
the manner set forth above, the Management Stockholder may during the
succeeding 30 day period sell not less than all of the shares of Stock covered
by the Offer to the Offeror at a price and on terms no less favorable to the
Management Stockholder than those contained in the Offer.  Promptly after such sale, the Management
Stockholder shall notify the Company of the consummation thereof and shall
furnish such evidence of the completion and time of completion of such sale and
of the terms thereof as may reasonably be requested by the Company.  If, at the end of 30 days following the
expiration of the 30 day period for the Company to purchase the Stock, the
Management Stockholder has not completed the sale of such shares of the Stock
as aforesaid, all the restrictions on sale, transfer or assignment contained in
this Agreement shall again be in effect with respect to such shares of the
Stock.

 

5.                                       Management
Stockholder’s Resale of Stock and Options to the

Company Upon The Management Stockholder’s Death or Disability or

in Case of Certain Terminations of Employment.    [NO LONGER APPLICABLE]

 

(a)                                  Except
as otherwise provided herein, if, prior to the fifth anniversary of the Base
Date, (i) the Management Stockholder is still in the employ of the Company or
any subsidiary of the Company, or has retired from the Company and its
subsidiaries at age 65 or over (or such other age as may be approved by the
Board of Directors of the Company) after having been employed by the Company or
any subsidiary for at least three years after the Base Date, and (ii) the
Management Stockholder either dies or becomes permanently disabled then the
Management Stockholder, the Management Stockholder’s Estate or a Management
Stockholder’s Trust, as the case may be, shall have the right, for six months
following the date of death or permanent disability, (A) to sell to the
Company, and the Company shall be required to purchase, on one occasion, all or
any portion of the shares of Stock then held by the Management Stockholder, the
Management Stockholder’s Estate and/or the Management Stockholder’s Trust, as
the case may be, at the Section 5(a) Repurchase Price, as determined in
accordance with Section 7, and (B) to require the Company to pay to the
Management Stockholder or the Management Stockholder’s

 

 

Estate or the Management Stockholder’s Trust, as the case may be, an
additional amount equal to the Option Excess Price determined on the basis of a
Section 5(a) Repurchase Price as provided in Section 8 with respect
to the termination of outstanding Options held by the Management Stockholder.

 

(b)                                 [Intentionally
omitted]

 

(c)                                  The
Management Stockholder, the Management Stockholder’s Estate and/or the
Management Stockholder’s Trust, as the case may be, shall send written notice
to the Company of its intention to sell shares of Stock in exchange for the
payment referred in Section 5(a) above and to terminate such Options in
exchange for the payment referred to in Section 5(a) (the “Redemption
Notice”).  The completion of the purchase
shall take place at the principal office of the Company on the tenth business
day after the giving of the Redemption Notice. 
The applicable Repurchase Price and any payment with respect to the
Options as described above shall be paid by delivery to the Management Stockholder,
the Management Stockholder’s Estate or the Management Stockholder’s Trust, as
the case may be, of a certified bank check or checks in the appropriate amount
payable to the order of the Management Stockholder, the Management Stockholder’s
Estate or the Management Stockholder’s Trust, as the case may be, against
delivery of certificates or other instruments representing the Stock so
purchased and appropriate documents cancelling the Options so terminated
appropriately endorsed or executed by the Management Stockholder, the
Management Stockholder’s Estate or the Management Stockholder’s Trust, or his,
her or its duly authorized representative. 
For purposes of this Agreement, the Management Stockholder shall be
deemed to have a “permanent disability” if the Management Stockholder is unable
to engage in the activities required by the Management Stockholder’s job by
reason of any medically determined physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for
a continuous period of not less than 12 months.

 

(d)                                 Notwithstanding
anything in Section 5(a) to the contrary and subject to Section 11,
if there exists and is continuing a default or an event of default on the part
of the Company or any subsidiary of the Company under any loan, guarantee or
other agreement under which the Company or any subsidiary of the Company has
borrowed money or if the repurchase referred to in Section 5(a) would
result in a default or an event of default on the part of the Company or any
subsidiary of the Company under any such agreement or if a repurchase would not
be permitted under the Delaware General Corporation Law (the “DGCL”) or would
otherwise violate the DGCL (or if the Company reincorporates in another state,
the business corporation law of such state) (each such occurrence being an “Event”),
the Company shall not be obligated to repurchase any of the Stock or the
Options from the Management Stockholder, the Management Stockholder’s Estate or
a Management Stockholder’s Trust, as the case may be, until the first business
day which is 10 calendar days after all of the foregoing Events have ceased to
exist (the “Repurchase Eligibility Date”); provided, however,
that (i) the number of shares of Stock subject to repurchase under this Section 5(d)
shall be that number of shares of Stock, and (ii) in the case of a repurchase
pursuant to Section 5(a), the number of Exercisable Option Shares (as
defined in Section 8) for purposes of calculating the Option Excess Price
payable under this Section 5(d) shall be the number of Exercisable Option
Shares, held by the Management Stockholder, the Management Stockholder’s Estate
or a Management Stockholder’s Trust, as the case may be, at the time of
delivery of a Redemption Notice in accordance with Section 5(c) hereof; provided,
further, that the Repurchase Calculation Date shall be determined in
accordance with Section 7 as of the Repurchase Eligibility Date (unless,
in a repurchase pursuant to Section 5(a), the Section 5(a)

 

 

Repurchase Price would be greater if the Repurchase Calculation Date
had been determined as if no Event had occurred in which case, solely for
purposes of this proviso, the Repurchase Calculation Date shall be
determined as if no Event had occurred). 
All Options exercisable as of the date of a Redemption Notice, in the
case of a repurchase pursuant to Section 5(a), shall continue to be
exercisable until the repurchase pursuant to such Redemption Notice, provided
that to the extent any Options are exercised after the date of such Redemption
Notice, the number of Exercisable Option Shares for purposes of calculating the
Option Excess Price shall be reduced accordingly.

 

(e)                                  Notwithstanding
any other provision of this Section 5 to the contrary and subject to Section 11,
the Management Stockholder, the Management Stockholder’s Estate or a Management
Stockholder’s Trust, as the case may be, shall have the right to withdraw any
Redemption Notice which has been pending for 60 or more days and which has
remained unsatisfied because of the provisions of Section 5(d).

 

6.                                       The
Company’s Option to Repurchase Stock

and Options of Management Stockholder. 
[NO LONGER APPLICABLE]

 

(a)                                  If,
on or prior to the fifth anniversary of the Base Date, (i) the Management
Stockholder’s active employment with the Company (and/or, if applicable, its
subsidiaries) is terminated by the Company with Cause (as hereinafter defined)
or by the Management Stockholder without Good Reason (as hereinafter defined),
(ii) the beneficiaries of a Management Stockholder’s Trust shall include any
person or entity other than the Management Stockholder, his spouse or his
lineal descendants, or (iii) the Management Stockholder shall effect a transfer
of any of the Stock other than as permitted in this Agreement (each, a “Section 6(a)
Call Event”), then the Company shall have the right to purchase all, but not
less than all, of the shares of the Stock then held by the Management
Stockholder or a Management Stockholder’s Trust at the Section 6(a)
Repurchase Price determined in accordance with Section 7 hereof.  If any Section 6(a) Call Event has
occurred, then, whether or not the Company exercises the call rights granted
under this Section 6(a), the Options (whether or not then exercisable)
held by the Management Stockholder or the Management Stockholder’s Trust, as
the case may be, will terminate immediately without payment therefor.

 

(b)                                 If,
on or prior to the fifth anniversary of the Base Date, the Management
Stockholder’s employment is terminated as a result of the death or permanent
disability of the Management Stockholder or if the Management Stockholder dies
or becomes permanently disabled after the retirement of the Management
Stockholder from the Company or any of its subsidiaries at age 65 or over (or such
other age as may be approved by the Board of Directors of the Company) after
having been employed by the Company or any subsidiary for at least three years
after the Base Date, (each a “Section 6(b) Call Event”), then the Company
shall have the right to purchase all, but not less than all, of the shares of
Stock then held by the Management Stockholder, the Management Stockholder’s
Estate or a Management Stockholder’s Trust at the Section 5(a) Repurchase
Price.

 

(c)                                  If,
on or prior to the fifth anniversary of the Base Date, the Management
Stockholder’s employment is terminated as a result of a termination by the
Management Stockholder with Good Reason or upon the retirement of the
Management Stockholder from the Company or any of its subsidiaries at age 65 or
over (or such other age as may be approved by the Board of Directors of the
Company) after having been employed by the Company or any

 

 

subsidiary for at least three years after the Base Date, or by the
Company without Cause (each a “Section 6(c) Call Event” and together with Section 6(a)
Call Events and Section 6(b) Call Events, “Call Events”), then the Company
shall have the right to purchase all, but not less than all, of the shares of
Stock then held by the Management Stockholder or a Management Stockholder’s
Trust at the Section 6(c) Repurchase Price.

 

(d)                                 The
Company shall have a period of 75 days from the date of a Call Event in which
to give notice in writing to the Management Stockholder of the exercise of such
election (“Call Notice”).  In the event
that the Company exercises its right to repurchase shares of Stock pursuant to Section 6(b)
or Section 6(c), the Company shall also pay the Management Stockholder an
amount equal to the Option Excess Price determined on the basis of the Section 5(a)
Repurchase Price or Section 6(c) Repurchase Price, respectively, as
provided in Section 8, with respect to the termination of outstanding
Options held by the Management Stockholder.

 

(e)                                  The
completion of the purchases pursuant to the foregoing shall take place at the
principal office of the Company on the tenth business day after the giving of
notice of the exercise of the option to purchase.  The applicable Repurchase Price and any
payment with respect to the Options as described in Sections 6(d) above shall
be paid by delivery to the Management Stockholder, the Management Stockholder’s
Estate or a Management Stockholder’s Trust, as the case may be, of a certified
bank check or checks in the appropriate amount payable to the order of the
Management Stockholder, the Management Stockholder’s Estate or a Management
Stockholder’s Trust, as the case may be, against delivery of certificates or
other instruments representing the Stock so purchased and appropriate documents
cancelling the Options so terminated, appropriately endorsed or executed by the
Management Stockholder, the Management Stockholder’s Estate or a Management
Stockholders Trust or his, her or its authorized representative.

 

(f)                                    Notwithstanding
any other provision of this Section 6 to the contrary and subject to Section 11,
if there exists and is continuing any Event, the Company shall delay the
repurchase of any of the Stock or the Options (pursuant to a Call Notice timely
given in accordance with Section 6(d) hereof) from the Management Stockholder,
the Management Stockholder’s Estate or a Management Stockholder’s Trust, as the
case may be, until the Repurchase Eligibility Date; provided, however,
that (i) the number of shares of Stock subject to repurchase under this Section 6(f)
shall be that number of shares of Stock and (ii) in the case of a repurchase
pursuant to Section 6(b) or Section 6(c), the number of Exercisable
Option Shares for purposes of calculating the Option Excess Price payable under
this Section 6(f) shall be the number of Exercisable Option Shares held by
the Management Stockholder, the Management Stockholder’s Estate or a Management
Stockholder’s Trust, as the case may be, at the time of delivery of a Call
Notice in accordance with Section 6(d) hereof; and provided, further,
that the Repurchase Calculation Date shall be determined in accordance with Section 7
based on the Repurchase Eligibility Date (unless (x) in the case of a Section 6(b)
Call Event or a Section 6(c) Call Event, the applicable Repurchase Price
would be greater if the Repurchase Calculation Date had been determined as if
no Event had occurred, in which case the Repurchase Calculation Date shall be
determined as if no Event had occurred, and (y) in the case of a Section 6(a)
Call Event, the applicable Repurchase Price would be less if the Repurchase
Calculation Date had been determined as if no Event had occurred, in which case
the Repurchase Calculation Date shall be determined as if no Event had
occurred).  All Options exercisable as of
the date of a Call Notice, in the case of a repurchase pursuant to Section 6(b)
or Section 6(c), shall continue to be 

 

 

exercisable until the repurchase pursuant to such Call Notice, provided
that to the extent that any Options are exercised after the date of such Call
Notice, the number of Exercisable Option Shares for purposes of calculating the
Option Excess Price shall be reduced accordingly.

 

7.                                       Determination
of Repurchase Price.   [NO LONGER
APPLICABLE]

 

(a)                                  The
Section 5(a) Repurchase Price, Section 6(a) Repurchase Price and the Section 6(c)
Repurchase Price are hereinafter collectively referred to as the “Repurchase
Price.”  The Repurchase Price shall be
calculated on the basis of the unaudited financial statements of the Company or
the Market Price Per Share (as defined in Section 7(j)) as of the last day
of the month preceding the later of (i) the month in which the event giving
rise to the repurchase occurs and (ii) the month in which the Repurchase
Eligibility Date occurs (hereinafter called the “Repurchase Calculation Date”).  The event giving rise to the repurchase shall
be the death, permanent disability, retirement or termination of employment, as
the case may be, of the Management Stockholder, not the giving of any notice
required pursuant to Section 5 or 6.

 

(b)                                 The
Section 5(a) Repurchase Price shall be a per share Repurchase Price equal
to the Base Price, provided that if the Book Value Per Share (as defined in Section 7(h))
(or, after a Public Offering, the Market Price Per Share) as of the Repurchase
Calculation Date is greater than the Base Price, then the Section 5(a)
Repurchase Price shall be equal to the Base Price plus the amount by which the
Book Value Per Share (or, after a Public Offering, the Market Price Per Share)
as of the Repurchase Calculation Date exceeds the Base Price.

 

(c)                                  [Intentionally
omitted]

 

(d)                                 The
Section 6(a) Repurchase Price shall be a per share Repurchase Price equal
to the least of (i) after a Public Offering, the Market Price Per Share, (ii)
if the Book Value Per Share as of the Repurchase Calculation Date is less than
the Base Price, the Base Price less the amount by which the Base Price exceeds
Book Value Per Share as of the Repurchase Calculation Date (but shall not be
less than zero),  and (iii) if the Book
Value Per Share as of the Repurchase Calculation Date exceeds the Base Price,
the Base Price plus (x) the Percentage (as defined below) multiplied by (y) the
amount by which the Book Value Per Share as of the Repurchase Calculation Date
exceeds the Base Price.

 

(e)                                  The
Section 6(c) Repurchase Price shall be a per share Repurchase Price equal
to the Base Price, provided (x) if the Book Value Per Share (or, after a Public
Offering, the Market Price Per Share) as of the Repurchase Calculation Date is
less than the Base Price, then the Section 6(c) Repurchase Price shall
equal the Base Price less the amount by which the Base Price exceeds Book Value
Per Share (or, after a Public Offering, the Market Price Per Share) as of the
Repurchase Calculation Date, and (y) if the Book Value Per Share (or, after a
Public Offering, the Market Price Per Share) as of the Repurchase Calculation
Date is greater than the Base Price, then the Section 6(c) Repurchase
Price shall equal the Base Price plus the amount by which the Book Value Per
Share (or, after a Public Offering, the Market Price Per Share) as of the
Repurchase Calculation Date exceeds the Base Price, as the case may be.

 

(f)                                    For
purposes of this Agreement the following definitions shall apply: “Cause” shall
mean (i) the Management Stockholder’s willful and continued failure to perform
Management Stockholder’s duties with respect to the Company or its subsidiaries
which continues beyond ten days after a written demand for substantial
performance is delivered to

 

 

Management Stockholder by the Company or (ii) misconduct by Management
Stockholder involving (x) dishonesty or breach of trust in connection with
Management Stockholder’s employment or (y) conduct which would be a reasonable
basis for an indictment of Management Stockholder for a felony or for a
misdemeanor involving moral turpitude or (z) which results in a demonstrable
injury to the Company; and “Good Reason” shall mean (i) a reduction in
Management Stockholder’s base salary (other than a broad based salary reduction
program affecting many members of management), (ii) a substantial reduction in
Management Stockholder’s duties and responsibilities other than as approved by
the Chief Executive Officer of the Company as of the date of this Agreement,
(iii) the elimination or reduction of the Management Stockholder’s eligibility
to participate in the Company’s benefit programs that is inconsistent with the
eligibility of similarly situated employees of the Company to participate
therein, or (iv) a transfer of the Management Stockholder’s primary workplace
by more than fifty (50) miles from the workplace as of the date hereof.

 

(g)                                 For
purposes of this Agreement, the “Percentage” shall be determined as follows:

 

	
  Repurchase
  Calculation Date

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date through and including the first
  anniversary of the Base Date

  	
   

  	
  0%

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The first anniversary of the Base Date through and including the
  second anniversary of the Base Date

  	
   

  	
  20%

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The second anniversary of the Base Date through and including the
  third anniversary of the Base Date

  	
   

  	
  40%

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The third anniversary of the Base Date through and including the
  fourth anniversary of the Base Date

  	
   

  	
  60%

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The fourth anniversary of the Base Date through and including the
  fifth anniversary of the Base Date

  	
   

  	
  80%

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The fifth anniversary of the Base Date

  	
   

  	
  100%

  	
   

  	
   

  

 

(h)                                 As
used herein, “Book Value Per Share” shall be the quotient of (a) (i)
$455,440,830 plus (ii) the aggregate net income of the Company from and
after the date of the Effective Time of the Merger (as decreased by any net
losses from and after the date of the Effective Time of the Merger) excluding
any one time costs and expenses charged to income associated with the Merger
and any related transactions plus (iii) the aggregate dollar amount
contributed to (or credited to common stockholders’ equity of) the Company
after the date of the Effective Time of the Merger as equity of the Company
(including consideration to be received upon exercise of the Options and other
stock equivalents) plus (iv) to the extent reflected as deductions to
Book Value Per Share in clause (ii) above, or minus, to the extent reflected as
additions to Book Value Per Share in clause (ii) above, unusual or other items
recognized by the Company (including, without limitation, one time or accelerated
write-offs of good will), in each case, if and to the extent determined in the
sole discretion of the Board of Directors of the Company, minus, (v) the
aggregate dollar amount of any dividends paid by the Company after the date of
the Effective Time of the Merger, divided by (b) the sum of the number of
shares of Common Stock then outstanding and the number of shares of Common
Stock issuable upon the

 

 

exercise of all outstanding stock options and other rights to acquire
Common Stock and the conversion of all securities convertible into shares of
Common Stock.  The items referred to in
the calculations set forth in clauses (a)(ii), (a)(iii), (a)(iv) and (a)(v) of
the immediately preceding sentence shall be determined in accordance with
generally accepted accounting principles applied on a basis consistent with any
prior periods as reflected in the consolidated financial statements of the
Company.

 

(i)                                     As
used herein the term “Public Offering” shall mean the sale of shares of Common
Stock to the public subsequent to the date hereof pursuant to a registration
statement under the Act which has been declared effective by the SEC (other
than a registration statement on Form S-8 or any other similar form) which
results in an active trading market in 35% or more of the Common Stock.  A “Qualified Public Offering” shall mean a
Public Offering pursuant to an effective registration statement relating to the
sale of shares of the Common Stock held by KKR 1996 Fund L.P., a Delaware
limited partnership (the “Partnership”) or NXS Associates, L.P., a Delaware
limited partnership, or their respective affiliates; provided, however,
that a “Qualified Public Offering” shall be deemed to have occurred if there
has been any Public Offering and there exists an active trading market in 40%
or more of the Common Stock.

 

(j)                                     As
used herein, the term “Market Price Per Share” shall mean the price per share
equal to the average of the last sale price of the Common Stock on the
Repurchase Calculation Date on each exchange on which the Common Stock may at
the time be listed or, if there shall have been no sales on any of such
exchanges on the Repurchase Calculation Date, the average of the closing bid
and asked prices on each such exchange at the end of the Repurchase Calculation
Date or if there is no such bid and asked price on the Repurchase Calculation
Date on the next preceding date when such bid and asked price occurred or, if
the Common Stock shall not be so listed, the average of the closing sales
prices as reported by NASDAQ at the end of the Repurchase Calculation Date in
the over-the-counter market.  If the
Common Stock is not so listed or reported by NASDAQ, then the Market Price Per
Share shall be the Book Value Per Share.

 

(k)                                  In
determining the Repurchase Price, appropriate adjustments shall be made for any
stock dividends, splits, combinations, recapitalizations or any other
adjustment in the number of outstanding shares of Common Stock in order to
maintain, as nearly as practicable, the intended operation of the provisions of
this Section 7.

 

8.                                       Stock
Issued to Management Stockholder Upon Exercise of Stock Options; Termination of
Options.

 

(a)                                  The
Company may from time to time grant to the Management Stockholder, in addition
to the Options, options under the Option Plan to purchase shares of Common
Stock at the Base Price or at a different option exercise price.  The term “Issued Stock” as used in this
Agreement shall include all shares of Common Stock of the Company purchased by
the Management Stockholder pursuant to this Agreement and issued to the
Management Stockholder by the Company upon exercise of the Options and of any
other stock options held by the Management Stockholder.

 

(b)                                 [NO
LONGER APPLICABLE]  In the case of an
exercise of the put or call rights described above in Section 6(a), all
outstanding Options of the Management Stockholder (whether or not then
exercisable) will be automatically terminated without payment therefor.  In

 

 

the case of an exercise of the put rights described above in Section 5(a)
or of the call rights described above in Sections 6(b) or 6(c), all outstanding
Options granted to the Management Stockholder under the Option Plan or
otherwise, whether or not then exercisable, will be automatically terminated
upon the payment by the Company to the Management Stockholder, pursuant to the
provisions of Sections 5(a) or 6(d) of this Agreement, as the case may be, of
an amount equal to the Option Excess Price. 
If the Option Excess Price is zero or a negative number, all outstanding
stock options granted to the Management Stockholder under the Option Plan or
otherwise, whether or not then exercisable, shall be automatically terminated
upon the repurchase of Stock as provided in Sections 5(a), 6(b) or 6(c).  With respect to each Option, the Option
Excess Price is the excess, if any, of the Section 5(a) Repurchase Price
or the Section 6(c) Repurchase Price, depending on which Repurchase Price
is being used to repurchase the remainder of the Stock, over the Option
Exercise Price (as defined in the Non-Qualified Option Agreement), multiplied
by the number of Exercisable Option Shares thereunder.  For purposes hereof, “Exercisable Option
Shares” shall mean the shares of Common Stock which, at the time of
determination of the Option Excess Price could be purchased by the Management
Stockholder upon exercise of his or her outstanding options.  The Company will use its reasonable best
efforts to cause a Registration Statement on Form S-8 covering shares of Issued
Stock contemplated hereby to be filed within six months of the date hereof.

 

9.                                       The
Company’s Representations and Warranties.

 

(a)                                  The
Company represents and warrants to the Management Stockholder that (i) this
Agreement has been duly authorized, executed and delivered by the Company and
(ii) the Issued Stock, when issued and delivered in accordance with the terms
hereof, will be duly and validly issued, fully paid and nonassessable.

 

(b)                                 The
Company will file the reports required to be filed by it under the Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, to
the extent required from time to time to enable the Management Stockholder to
sell shares of Stock without registration under the Act within the limitations
of the exemptions provided by (A) Rule 144 under the Act, as such Rule may be
amended from time to time, or (B) any similar rule or regulation hereafter
adopted by the SEC.  Notwithstanding
anything contained in this Section 9(b), the Company may de-register under
Section 12 of the Exchange Act if it is then permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder and, in such
circumstances, shall not be required hereby to file any reports which may be
necessary in order for Rule 144 or any similar rule or regulation under the Act
to be available.  Nothing in this Section 9(b)
shall be deemed to limit in any manner the restrictions on sales of Stock
contained in this Agreement.

 

10                                    “Piggyback”
Registration Rights  [NOT APPLICABLE
AFTER MAY 19, 2002]

 

(a)                                  Effective
upon the date of this Agreement, until the later of (i) the first occurrence of
a Qualified Public Offering (as defined in Section 7(i) above) or (ii) the
fifth anniversary of the Base Date, the Management Stockholder hereby agrees to
be bound by all of the terms, conditions and obligations of the Registration
Rights Agreement dated as of May 19, among the Company (as successor by Merger
to Newco), KKR 1996 Fund L.P., NXS Associates, L.P. KKR Partners II, L.P. and
NXS I, L.L.C. (the “Registration Rights Agreement”) and, in the case of a
Qualified Public Offering and subject to the limitations set forth in this Section 10,
shall have all of the rights and privileges of the Registration Rights
Agreement, in each case as if the

 

 

Management Stockholder were an original party (other than the Company)
thereto; provided, however, that the Management Stockholder shall
not have any rights to request registration under Section 3 of the
Registration Rights Agreement; and provided  further, that the
Management Stockholder shall not be bound by any amendments to the Registration
Rights Agreement unless the Management Stockholder consents thereto.  Notwithstanding anything to the contrary
contained in the Registration Rights Agreement, the Management Stockholder’s
rights and obligations under the Registration Rights Agreement shall be subject
to the limitations and additional obligations set forth in this Section 10.  All Stock purchased or held by the Management
Stockholder, the Management Stockholder’s Estate or the Management Stockholder’s
Trust pursuant to this Agreement shall be deemed to be Registrable Securities
as defined in the Registration Rights Agreement.

 

(b)                                 The
Company will promptly notify the Management Stockholder in writing (a “Notice”)
of any proposed registration (a “Proposed Registration”) in connection with a
Qualified Public Offering.  If within 15
days of the receipt by the Management Stockholder of such Notice, the Company
receives from the Management Stockholder, the Management Stockholder’s Estate
or the Management Stockholder’s Trust a written request (a “Request”) to
register shares of Stock held by the Management Stockholder, the Management
Stockholder’s Estate or the Management Stockholder’s Trust (which Request will
be irrevocable unless otherwise mutually agreed to in writing by the Management
Stockholder and the Company), shares of Stock will be so registered as provided
in this Section 10; provided, however, that for each such
registration statement only one Request, which shall be executed by the Management
Stockholder, the Management Stockholder’s Estate or the Management Stockholder’s
Trust, as the case may be, may be submitted for all Registrable Securities held
by the Management Stockholder, the Management Stockholder’s Estate and the
Management Stockholder’s Trust.

 

(c)                                  The
maximum number of shares of Stock which will be registered pursuant to a
Request will be the lowest of (i) the number of shares of Stock then held by
the Management Stockholder (which for purposes of this subparagraph (c) shall include
shares held by the Management Stockholder’s Estate or a Management Stockholder’s
Trust), including all shares of Stock which the Management Stockholder is then
entitled to acquire under an unexercised Option to the extent then exercisable
or (ii) the maximum number of shares of Stock which the Company can register in
the Proposed Registration without adverse effect on the offering in the view of
the managing underwriters (reduced pro rata with all Other Management
Stockholders) as more fully described in subsection (d) of this Section 10
or (iii) the maximum number of shares which the Management Stockholder (pro
rata based upon the aggregate number of shares of Common Stock the Management
Stockholder and all Other Management Stockholders have requested be registered)
and all Other Management Stockholders are permitted to register under the
Registration Rights Agreement.

 

(d)                                 If
a Proposed Registration involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
shares of Stock requested to be included in the Proposed Registration exceeds
the number which can be sold in such offering, so as to be likely to have an
adverse effect on the price, timing or distribution of the shares of Stock
offered in such Qualified Public Offering as contemplated by the Company, then
the Company will include in the Proposed Registration (i) first, 100% of the
shares of Stock the Company proposes to sell and (ii) second, to the extent of
the number of shares of Stock requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, the number of shares of Stock

 

 

which the “Holders” (as defined in the Registration Rights Agreement),
including, without limitation, the Management Stockholder and Other Management
Stockholders have requested to be included in the Proposed Registration, such
amount to be allocated pro rata among all requesting Holders on the basis of
the relative number of shares of Stock then held by each such Holder (provided
that any shares thereby allocated to any such Holder that exceed such Holder’s
request will be reallocated among the remaining requesting Holders in like
manner).

 

(e)                                  Upon
delivering a Request the Management Stockholder will, if requested by the
Company, execute and deliver a custody agreement and power of attorney in form
and substance satisfactory to the Company with respect to the shares of Stock
to be registered pursuant to this Section 10 (a “Custody Agreement and
Power of Attorney”).  The Custody
Agreement and Power of Attorney will provide, among other things, that the
Management Stockholder will deliver to and deposit in custody with the
custodian and attorney-in-fact named therein a

 

certificate or certificates representing such shares of Stock (duly
endorsed in blank by the registered owner or owners thereof or accompanied by
duly executed stock powers in blank) and irrevocably appoint said custodian and
attorney-in-fact as the Management Stockholder’s agent and attorney-in-fact
with full power and authority to act under the Custody Agreement and Power of
Attorney on the Management Stockholder’s behalf with respect to the matters
specified therein.

 

(f)                                    The
Management Stockholder agrees that he or she will execute such other agreements
as the Company may reasonably request to further evidence the provisions of
this Section 10.

 

11                                    Pro
Rata Repurchases.  [NO LONGER
APPLICABLE]

 

Notwithstanding anything to the contrary contained in Sections 5, 6 or
7, if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Management Stockholders’
Agreements would result in an Event, then the Company shall make purchases from,
and payments to, the Management Stockholder and Other Management Stockholders
pro rata (on the basis of the proportion of the number of shares of Stock and
the number of Options each such Management Stockholder and all Other Management
Stockholders have elected or are required to sell to the Company) for the
maximum number of shares of Stock and shall pay the Option Excess Price for the
maximum number of Options permitted without resulting in an Event (the “Maximum
Repurchase Amount”).  The provisions of Section 5(d)
and 6(f) shall apply in their entirety to payments and repurchases with respect
to Options and shares of Stock which may not be made due to the limits imposed
by the Maximum Repurchase Amount under this Section 11.  Until all of such Stock and Options are
purchased and paid for by the Company, the Management Stockholder and the Other
Management Stockholders whose Stock and Options are not purchased in accordance
with this Section 11 shall have priority, on a pro rata basis, over other
purchases of Common Stock and Options by the Company pursuant to this Agreement
and Other Management Stockholders’ Agreements.

 

12                                    Rights
to Negotiate Repurchase Price.

 

Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing shares of Stock or Options from the Management
Stockholder, at any time, upon such terms and conditions, and for such price,
as may be mutually agreed upon between the Parties,

 

 

whether or not at the time of such purchase circumstances exist which
specifically grant the Company the right to purchase, or the Management
Stockholder the right to sell, shares of Stock or the Company has the right to
pay, or the Management Stockholder has the right to receive, the Option Excess
Price under the terms of this Agreement.

 

13                                    Covenant
Regarding 83(b) Election.

 

Except as the Company may otherwise agree in writing, the Management
Stockholder hereby covenants and agrees that he will make an election provided
pursuant to Treasury Regulation 1.83-2 with respect to the Stock to be acquired
upon each exercise of the Management Stockholder’s Non-Qualified Options; and
Management Stockholder further covenants and agrees that he will furnish the
Company with copies of the forms of election the Management Stockholder files
within 30 days after the date hereof, and within 30 days after each exercise of
Management Stockholder’s Non-Qualified Options and with evidence that each such
election has been filed in a timely manner.

 

14                                    Notice
of Change of Beneficiary.

 

Immediately prior to any transfer of Stock to a Management Stockholder’s
Trust, the Management Stockholder shall provide the Company with a copy of the
instruments creating the Management Stockholder’s Trust and with the identity
of the beneficiaries of the Management Stockholder’s Trust.  The Management Stockholder shall notify the
Company immediately prior to any change in the identity of any beneficiary of
the Management Stockholder’s Trust.

 

15                                    Expiration
of Certain Provisions.

 

The provisions contained in Sections 4, 5 and 6 of this Agreement and
the portion of any other provision of this Agreement which incorporates the
provisions of Sections 4, 5 and 6, shall terminate and be of no further force
or effect with respect to any shares of Stock sold by the Management Stockholder
(i) pursuant to an effective registration statement filed by the Company
pursuant to Section 10 hereof or (ii) pursuant to the terms of the Sale
Participation Agreement of even date herewith, among the Management
Stockholder, and KKR 1996 Fund L.P., NXS Associates, L.P. and KKR Partners II,
L.P.

 

The provisions contained in Sections 2(e), 3, 4, 5, 6 and 13 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporate the provisions of such Sections, shall terminate and be of no
further force or effect upon (i) the sale of all or substantially all of the
assets of the Company to a person or group that is not an affiliate of Kohlberg
Kravis Roberts & Co. L.P. (“KKR”), (ii) an acquisition of voting stock of
the Company resulting in more than 50% of the voting stock of the Company being
held by a person or group that does not include KKR or any of its affiliates or
(iii) the consummation of a merger, reorganization, business combination or
liquidation of the Company, but only if such merger, reorganization, business
combination or liquidation results in the Partnership or NXS Associates, L.P.,
or any affiliate or affiliates thereof, together no longer having the power (A)
to elect a majority of the Board of Directors of the Company or such other
corporation which succeeds to the Company’s rights and obligations pursuant to
such merger, reorganization, business combination or liquidation, or (B) if the
resulting entity of such merger, reorganization, business combination or
liquidation is not a corporation, to select the general partner(s) or other
persons or entities controlling the operations and business of the resulting
entity.  Such provisions and the

 

 

portion of any other provisions of this Agreement which incorporate
such provisions shall also terminate and be of no further force and effect if
the Management Stockholder’s employment is terminated and the Company has not
given a Call Notice within 75 days from the date of the applicable Call Event
(i) with respect to all the Stock of a Management Stockholder if the Management
Stockholder’s employment has been terminated as a result of termination by the
Management Stockholder with Good Reason or by the Company without Cause, and
(ii) with respect to only the Retained Stock and any Issued Stock (other than
any shares acquired upon the exercise of Options) or Market Stock of a
Management Stockholder if the Management Stockholder’s employment has been
terminated for any other reason.

 

16                                    Recapitalizations,
etc.

 

The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Stock or the Options, to any and all shares of
capital stock of the Company or any capital stock, partnership units or any
other security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or substitution of the Stock or
the Options, by reason of any stock dividend, split, reverse split,
combination, recapitalization, liquidation, reclassification, merger,
consolidation or otherwise.

 

17                                    Management
Stockholder’s Employment by the Company.

 

Nothing contained in this Agreement or in any other agreement entered
into by the Company and the Management Stockholder contemporaneously with the
execution of this Agreement (i) obligates the Company or any subsidiary of the
Company to employ the Management Stockholder in any capacity whatsoever or (ii)
prohibits or restricts the Company (or any such subsidiary) from terminating
the employment, if any, of the Management Stockholder at any time or for any
reason whatsoever, with or without Cause, and the Management Stockholder hereby
acknowledges and agrees that neither the Company nor any other person has made
any representations or promises whatsoever to the Management Stockholder
concerning the Management Stockholder’s employment or continued employment by
the Company or any subsidiary of the Company.

 

18                                    State
Securities Laws.

 

The Company hereby agrees to use its best efforts to comply with all
state securities or “blue sky” laws which might be applicable to the sale of
the Stock and the issuance of the Options to the Management Stockholder.

 

19                                    Binding
Effect.

 

The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. 
In the case of a transferee permitted under Section 2(a) hereof,
such transferee shall be deemed the Management Stockholder hereunder; provided,
however, that no transferee (including without limitation, transferees referred
to in Section 2(a) hereof) shall derive any rights under this Agreement
unless and until such transferee has delivered to the Company a valid
undertaking and becomes bound by the terms of this Agreement.

 

 

20                                    Amendment.

 

This Agreement may be amended only by a written instrument signed by
the Parties hereto.

 

21                                    Closing.

 

Except as otherwise provided herein, the closing of each purchase and
sale of shares of Stock and the payment of the Option Excess Price, if any,
pursuant to this Agreement shall take place at the principal office of the
Company on the tenth business day following delivery of the notice by either
Party to the other of its exercise of the right to purchase or sell such Stock
hereunder or to cause the payment of the Option Excess Price, if any.

 

22                                    Applicable
Law.

 

The laws of the state of Delaware (or if the Company reincorporates in
another state, of that state) shall govern the interpretation, validity and
performance of the terms of this Agreement, regardless of the law that might be
applied under principles of conflicts of law. 
Any suit, action or proceeding against the Management Stockholder, with
respect to this Agreement, or any judgment entered by any court in respect of
any thereof, may be brought in any court of competent jurisdiction in the State
of Delaware (or if the Company reincorporates in another state, in that state)
or New York, as the Company may elect in its sole discretion, and the
Management Stockholder hereby submits to the non-exclusive jurisdiction of such
courts for the purpose of any such suit, action, proceeding or judgment.  By the execution and delivery of this
Agreement, the Management Stockholder appoints The Corporation Trust Company,
at its office in New York, New York or Wilmington, Delaware (or if the Company
reincorporates in another state, an office in that state), as the case may be,
as his agent upon which process may be served in any such suit, action or
proceeding.  Service of process upon such
agent, together with notice of such service given to the Management Stockholder
in the manner provided in Section 25 hereof, shall be deemed in every
respect effective service of process upon him in any suit, action or
proceeding.  Nothing herein shall in any
way be deemed to limit the ability of the Company to serve any such writs,
process or summonses in any other manner permitted by applicable law or to obtain
jurisdiction over the Management Stockholder, in such other jurisdictions and
in such manner, as may be permitted by applicable law.  The Management Stockholder hereby irrevocably
waives any objections which he may now or hereafter have to the laying of the
venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in any court of competent jurisdiction in the State of
Delaware (or if the Company reincorporates in another state, in that state) or
New York, and hereby further irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in any
inconvenient forum.  No suit, action or
proceeding against the Company with respect to this Agreement may be brought in
any court, domestic or foreign, or before any similar domestic or foreign
authority other than in a court of competent jurisdiction in the State of
Delaware (or if the Company reincorporates in another state, in that state) or
New York, and the Management Stockholder hereby irrevocably waives any right which
he may otherwise have had to bring such an action in any other court, domestic
or foreign, or before any similar domestic or foreign authority.  The Company hereby submits to the
jurisdiction of such courts for the purpose of any such suit,

 

 

action or proceeding.  Each Party
hereto hereby irrevocably and unconditionally waives trial by jury in any legal
action or proceeding in relation to this Agreement and for any counterclaim
therein.

 

23                                    Assignability
of Certain Rights by the Company.

 

The Company shall have the right to assign any or all of its rights or
obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6 hereof;
provided, however, that the Company shall remain obligated to perform its
obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it.

 

24                                    Miscellaneous.

 

In this Agreement (i) all references to “dollars” or “$” are to United
States dollars and (ii) the word “or” is not exclusive.  If any provision of this Agreement shall be
declared illegal, void or unenforceable by any court of competent jurisdiction,
the other provisions shall not be affected, but shall remain in full force and
effect.

 

25                                    Notices.

 

All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt requested, postage prepaid, or by overnight delivery or
telecopy, to the Party to whom it is directed:

 

(a)                                  If
to the Company, to it at the following address:

c/o Kohlberg Kravis Roberts & Co.

2800 Sand Hill Road - Suite 200

Menlo Park, California  94025

Attn: 
Michael Michelson

 

with a copy to:

Simpson Thacher & Bartlett

425 Lexington Avenue

New York, New York  10017-3909

Attn: 
Charles I. Cogut, Esq.

 

(b)                                 If
to the Management Stockholder, to him at the address set forth below under his
signature;

 

or at such other address as either party shall have specified by notice
in writing to the other.

 

26                                    Covenant
Not to Compete; Confidential Information.

 

(a)                                  In
consideration of the Company granting Options to the Management Stockholder and
entering into this Agreement with the Management Stockholder, the Management
Stockholder hereby agrees effective as of the Base Date, for so long as the
Management Stockholder is employed by the Company or one of its subsidiaries
and for a period

 

 

of one year thereafter (the “Noncompete Period”), the Management
Stockholder shall not, directly or indirectly, engage in the production, sale
or distribution of any product produced, sold, distributed or which is in
development by the Company or its subsidiaries on the date hereof or during the
Noncompete Period anywhere in the world in which the Company or its
subsidiaries is doing business other than through the Management Stockholder’s
employment with the Company or any of its subsidiaries.  In the event that the Management Stockholder’s
employment is terminated by the Management Stockholder for Good Reason or by
the Company without Cause, then the Company shall pay the Management
Stockholder an amount equal to 50% of such Management Stockholder’s base salary
on the date of the termination of the Management Stockholder’s employment.  At the Company’s option, the Noncompete
Period may be extended for an additional one year period if (i) within nine
months of the termination of the Management Stockholder’s employment, the
Company gives the Management Stockholder notice of such extension and (ii) beginning
with the first anniversary of such termination, the Company pays the Management
Stockholder an amount equal to 50% of the Management Stockholder’s base salary
on the date of the termination of his employment.  Each amount referred to in the preceding two
sentences shall be paid in installments in a manner consistent with the then
current salary payment policies of the Company; provided that if at any time
the Company elects, in its sole discretion, to waive further compliance by the
Management Stockholder with the requirements of this Section 26(a) (upon
the Management Stockholder securing alternate employment or otherwise), then
the Company shall be relieved of its obligation to pay the unpaid balance, if
any, of such amounts which is then owing to the Management Stockholder.  For purposes of this Agreement, the phrase “directly
or indirectly engage in” shall include any direct or indirect ownership or
profit participation interest in such enterprise, whether as an owner,
stockholder, partner, joint venturer of otherwise, and shall include any direct
or indirect participation in such enterprise as a consultant, licensor of
technology or otherwise.

 

(b)                                 The
Management Stockholder will not disclose or use at any time any Confidential
Information (as defined below) of which the Management Stockholder is or
becomes aware, whether or not such information is developed by him, except to
the extent that such disclosure or use is directly related to and required by
the Management Stockholder’s performance of duties, if any, assigned to the
Management Stockholder by the Company. 
As used in this Agreement, the term “Confidential Information” means
information that is not generally known to the public and that is used,
developed or obtained by the Company or its subsidiaries in connection with its
business, including but not limited to (i) products or services, (ii) fees,
costs and pricing structures, (iii) designs, (iv) computer software, including
operating systems, applications and program listings, (v) flow charts, manuals
and documentation, (vi) data bases, (vii) accounting and business methods,
(viii) inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice, (ix)
customers and clients and customer or client lists, (x) other copyrightable
works, (xi) all technology and trade secrets, and (xii) all similar and related
information in whatever form. 
Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Management Stockholder proposes to disclose or use such information.  The Management Stockholder acknowledges and
agrees that all copyrights, works, inventions, innovations, improvements,
developments, patents, trademarks and all similar or related information which
relate to the actual or anticipated business of the Company and its
subsidiaries (including its predecessors) and conceived, developed or made by
the Management Stockholder while employed by the Company or its subsidiaries
belong to the Company.  The Management
Stockholder will perform all actions reasonably requested by the Company
(whether during or after the Noncompete Period) to establish and confirm such

 

 

ownership at the Company’s expense (including without limitation
assignments, consents, powers of attorney and other instruments).  If the Management Stockholder is bound by any
other agreement with the Company regarding the use or disclosure of
confidential information, the provisions of this Agreement shall be read in
such a way as to further restrict and not to permit any more extensive use or
disclosure of confidential information.

 

(c)                                  Notwithstanding
clauses (a) and (b) above, if at any time a court holds that the restrictions
stated in such clauses (a) and (b) are unreasonable or otherwise unenforceable
under circumstances then existing, the parties hereto agree that the maximum
period, scope or geographic area determined to be reasonable under such
circumstances by such court will be substituted for the stated period, scope or
area.  Because the Management Stockholder’s
services are unique and because the Management Stockholder has had access to
Confidential Information, the parties hereto agree that money damages will be
an inadequate remedy for any breach of this Agreement.  In the event a breach or threatened breach of
this Agreement, the Company or its successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce, or prevent any violations of, the provisions hereof (without the
posting of a bond or other security).

 

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

 

 

	
   

  	
  AMPHENOL CORPORATION

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Martin H. Loeffler

  	
   

  
	
   

  	
   

  	
  Chairman, President & CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: Management Stockholder

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
    Address of Management Stockholder

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