Document:

MesquiteGamingWimingtonTrustSecondLienCreditAgreement

Exhibit 10.2
EXECUTED VERSION

SECOND LIEN CREDIT AGREEMENT
THIS SECOND LIEN CREDIT AGREEMENT (this “Agreement”), dated as of August 22, 2013, is by and between MESQUITE GAMING, LLC, a Nevada limited liability company (the “Borrower”), and MICHAEL J. GAUGHAN FAMILY, LLC, a Nevada limited liability company (“MJG LLC”), JOHN F. GAUGHAN FAMILY LLC, a Nevada limited liability company (“JFG LLC”), MICHAEL J. GAUGHAN, Trustee of the Marital Trust as created under the Gaughan 1993 Trust dated December 28, 1993 (“MT”), FRANKLIN TOTI, Trustee of the Frank Toti Trust dated May 6, 2008 (“TOTI”), and NGA BLOCKER, LLC, a Nevada limited liability company (“NGA”),(MJG LLC, JFG LLC, MT, TOTI, and NGA, each, a “Lender” and collectively, the “Lenders”), and Wilmington Trust, National Association, as administrative agent and collateral agent for the Lenders (“LOAN AGENT”). 
Article I 
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1    Defined Terms.  As used in this Agreement the following terms shall have the following respective meanings (and such meanings shall apply equally to both the singular and plural form of the terms defined, as the context requires):
 “Affiliate”:  When used with reference to any Person, (a) each Person that, directly or indirectly, controls, is controlled by or is under common control with, the Person referred to, (b) each Person that beneficially owns or holds, directly or indirectly, 5% or more of any class of voting Equity Interests of the Person referred to, (c) each Person, 5% or more of the voting Equity Interests of which is beneficially owned or held, directly or indirectly, by the Person referred to, and (d) each of such Person’s officers, directors, joint venturers and partners.  The term control (including the terms “controlled by” and “under common control with”) means the possession, directly, of the power to direct or cause the direction of the management and policies of the Person in question.
 “Board”:  The Board of Governors of the Federal Reserve System or any successor thereto.
“Borrower”:  As defined in the opening paragraph hereof.
“Business Day”:  Any day (other than a Saturday, Sunday or legal holiday in the State of Nevada) on which banks are permitted to be open in Las Vegas, Nevada.
“Capital Expenditures”:  For any period and any Person, the sum of all amounts that would, in accordance with GAAP, be included as additions to property, plant and equipment on a consolidated statement of cash flows of such Person during such period, in respect of (a) the acquisition, construction, improvement, replacement or betterment of land, buildings, machinery, equipment or of any other fixed assets or leaseholds, (b) to the extent related to and not included in (a) above, materials, contract labor (excluding expenditures properly chargeable to repairs or maintenance in accordance with GAAP), and (c) other capital expenditures and other uses recorded as capital expenditures or similar terms having substantially the same effect.

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“Capitalized Lease”:  A lease of (or other agreement conveying the right to use) real or personal property with respect to which at least a portion of the rent or other amounts thereon constitutes Capitalized Lease Obligations.
“Capitalized Lease Obligations”:  As to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real or personal property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board), and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP (including such Statement No. 13).
“Cash Equivalents”:  Without duplication, (i) short-term obligations of, or fully guaranteed by, the United States of America, (ii) commercial paper rated A-1 or better by S&P or P-1 or better by Moody’s, (iii) demand deposit accounts maintained in the ordinary course of business, (iv) certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $500,000,000; provided in each case that the same provides for payment of both principal and interest (and not principal alone or interest alone) and is not subject to any contingency regarding the payment of principal or interest, and (v) shares of money market mutual funds that are rated at least “AAAm” or “AAA-G” by S&P or “P-1” or better by Moody’s.
 “Change in Law”:  Any of (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by the Lender with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority that is applicable to the Borrower or is of general applicability and that is made or issued after the date of this Agreement.  Notwithstanding the foregoing for purposes of this definition, all requests, rules, guidelines or directives in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act shall be deemed to be a Change in Law regardless of the date enacted, adopted or issued and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States financial regulatory authorities, in each case pursuant to Basel III, shall be deemed to be a Change in Law regardless of the date adopted, issued, promulgated or implemented.  
“Change of Control”:  The occurrence, after the Closing Date and without prior written Lender Consent, of:  (i) the direct or indirect transfer of Equity Interests of the Borrower (or other securities convertible into such Equity Interests) representing more than 50% of the combined voting power of all Equity Interests of the Borrower on a fully-diluted basis, unless  Michael J. Gaughan Family LLC and Anthony Toti and/or their respective Affiliates continue to hold not less than 50% of the combined voting power of all Equity Interests of the Borrower on a fully diluted basis; or (ii) except following a transaction permitted by Section 6.1 or 6.2, the Borrower ceasing to own and control, directly or indirectly through one or more other Subsidiaries, 100% of the Equity Interests or 100% of the voting power of each Subsidiary (in 

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each case other than de minimis Equity Interests or voting power required by local law of any foreign Subsidiary to be held by local officers) entitled to vote in the election of the Board of Managers (or other similar body) of such Subsidiary. 
“Closing Date”:  August 22, 2013.
“Code”:  The Internal Revenue Code of 1986, as amended.
“Commitments”:  The Term Loan Commitment.
“Commodity Exchange Act”:  The Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute.
“Constituent Documents”:  With respect to any Person, as applicable, such Person’s certificate of incorporation, articles of incorporation, bylaws, certificate of formation, articles of organization, limited liability company agreement, management agreement, operating agreement, shareholder agreement, partnership agreement or similar document or agreement governing such Person’s existence, organization or management or concerning disposition of Equity Interests of such Person or voting rights among such Person’s owners.
“Contingent Obligation”:  With respect to any Person at the time of any determination, without duplication, any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or otherwise: (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any direct or indirect security therefor, (b) to purchase property, securities, Equity Interests or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness, (c) to maintain working capital, equity capital or other financial statement condition of the primary obligor so as to enable the primary obligor to pay such Indebtedness or otherwise to protect the owner thereof against loss in respect thereof, or (d) entered into for the purpose of assuring in any manner the owner of such Indebtedness of the payment of such Indebtedness or to protect the owner against loss in respect thereof; provided, that the term “Contingent Obligation” shall not include endorsements for collection or deposit, in each case in the ordinary course of business.
“Deed of Trust”:  The Second Lien Deed of Trust, Assignment of Leases and Rents, Security Agreement, and Financing Statement dated as of the Closing Date executed by the owners of the Real Property in respect of the Real Property in favor of the Loan Agent, as it may from time to time be supplemented, modified, amended, extended or replaced, and any other deed of trust or mortgage that may from time to time be executed in favor of the Loan Agent securing the Obligations. 
“Deed of Trust Documents”:  Collectively, (a) the Deed of Trust, (b) a title policy in an amount and in form and substance satisfactory to the Lenders, (c) any and all other documents or instruments executed and delivered by the owners of the Real Property to the Loan Agent in connection with the Deed of Trust, and (d) any and all documents or instruments amending, 

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supplementing, restating, replacing, relating to or otherwise modifying any of the foregoing documents.
“Default”:  Any event that, with the giving of notice or lapse of time, or both, would constitute an Event of Default.
“Defined Benefit Plan”:  Each defined benefit plan (whether in existence on the Closing Date or thereafter instituted), within the meaning of 3(35) of ERISA that is subject to Title IV of ERISA, maintained for the benefit of employees, officers or directors of the Borrower or of any ERISA Affiliate.
“EBITDA”:  For any period of determination, the consolidated net income of the Borrower and its Subsidiaries before deductions for income taxes, Interest Expense, depreciation and amortization, calculated excluding non-recurring gains and losses, in each case calculated for said period without duplication and in accordance with GAAP.  

“Environmental Indemnity Agreement”:  The Environmental and ADA Indemnification Agreement dated as of the Closing Date between the Loan Parties and the Lenders.
“Equity Interests”:  All shares, interests, participation or other equivalents, however designated, of or in a corporation or limited liability company, whether or not voting, including but not limited to common stock, member interests, warrants, preferred stock, convertible debentures, and all agreements, instruments and documents convertible, in whole or in part, into any one or more or all of the foregoing.
“ERISA”:  The Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate”:  Any trade or business (whether or not incorporated) that is a member of a group of which the Borrower is a member and that is treated as a single employer under Section 414 of the Code.
“ERISA Event”:  Any of (a) any Reportable Event; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA); (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or the assertion by a Multiemployer Plan that  the Borrower or any ERISA Affiliate has Withdrawal Liabilities or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA or, in endangered or critical status, within the meaning of Section 432 of the Code or Section 305 of ERISA; (d) the filing of a notice of intent to terminate a Plan with the PBGC or the actual termination of a Plan, the treatment of a Plan amendment as a termination under Section 4041 of ERISA, the commencement of proceedings by the PBGC to terminate a Plan, or the termination of a Multiemployer Plan under Section 4041A of ERISA; (e) a failure by the Borrower or any ERISA Affiliate to make required contributions to a Plan or Multiemployer Plan that; (f) an event or condition that would reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (g) a determination that any Plan is, or 

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is expected to be, in “at risk” status (as defined in Section 430(i)(4) of the Code or Section 304(i)(4) of ERISA); (h) an application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Internal Revenue Code with respect to any Plan; (i) a non-exempt prohibited transaction occurs with respect to any Plan for which the Borrower is liable; or (j) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a)(2) of the Internal Revenue Code by any fiduciary or disqualified person with respect to any Plan for which the Borrower is liable.  
“Event of Default”:  Any event described in Section 7.1.
“Financials”: As defined in Section 4.5.
“First Lien Credit Agreement”: That certain Credit Agreement dated as of the date hereof among the Borrower and Nevada State Bank, as amended, restated, supplemented or otherwise modified from time to time in accordance with this Agreement and the First Lien Subordination Agreement. 
 “First Lien Facility”: The revolving loan and term loan facility obtained by the Borrower pursuant to the terms of the First Lien Credit Agreement, in an aggregate principal amount of up to $26,000,000 on the Closing Date.
“First Lien Lender”: Nevada State Bank, its successors and assigns.  
“First Lien Loan Documents”:  The First Lien Credit Agreement and any other document or instrument given by any Person in favor of the First Lien Lender to evidence, secure or guaranty all or any portion of the First Lien Facility, in each case as such document or instrument may from time to time be supplemented, modified, amended, extended or replaced.
“First Lien Subordination Agreement”:  That certain Subordination Agreement of even date herewith between the First Lien Lender and the Lenders, pursuant to which the Lenders’ rights under the Loan Documents are subordinated to the rights of the First Lien Lender under the First Lien Facility on the terms and conditions set forth therein.
“Fixed Charge Coverage Ratio”:  As of the date of determination, subject to the following provisions of this definition, the ratio of the following, in each case calculated without duplication and on a consolidated basis for the Borrower and its Subsidiaries in accordance with GAAP:
(a)        trailing twelve month EBITDA, minus the sum of (i) Capital Expenditures paid in cash (net of any amounts financed or funded with capital contributions to the extent such capital contributions are included in EBITDA) during the trailing twelve month period, (ii) Restricted Payments paid during the trailing twelve month period pursuant to Section 6.7(c) of the First Lien Credit Agreement, and (iii) income taxes paid in cash during the trailing twelve month period, 
to

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(b)        the sum, without duplication, of Interest Expense paid in cash during the trailing twelve month period  plus the aggregate amount of all scheduled principal payments made during the trailing twelve month period with respect to Total Liabilities, including the principal portion of  scheduled payments made with respect to Capitalized Lease Obligations and Subordinated Debt, but excluding any scheduled principal payments made with respect to insurance premium financing and any principal payments made pursuant to Section 2.6(a)(iii) of the First Lien Credit Agreement.  The foregoing computed sum is herein referred to as “Fixed Charges.”
Notwithstanding the foregoing, for the purpose of computing the Fixed Charge Coverage Ratio for the three fiscal-quarter periods ending December 31, 2013, March 31, 2014, and June 30, 2014, Fixed Charges shall not be computed on the basis of applicable payments made during the trailing twelve month period, but, instead, (i) for the fiscal-quarter ending December 31, 2013, Fixed Charges shall be equal to the total amount of  such payments made during the period from October 1, 2013 through December 31, 2013 multiplied by four (4); (ii) for the fiscal-quarter ending March 31, 2014, Fixed Charges shall be equal to the total amount of such payments made during the period from October 1, 2013 through March 31, 2014 multiplied by two (2); and (iii) for the fiscal-quarter ending June 30, 2014, Fixed Charges shall be equal to the total amount of such payments made during the period from October 1, 2013  through June 30, 2014, multiplied by four-thirds (4/3).
“GAAP”:  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 may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of any date of determination.
“Gaming Authority”:  Collectively, the Nevada Gaming Commission, the Nevada State Gaming Control Board, and any other Governmental Authority that holds regulatory, licensing or permitting authority over gambling or casino activities conducted by Borrower or any Subsidiary within its jurisdiction.
“Gaming Laws”:  All laws pursuant to which any Gaming Authority possesses regulatory, licensing or permitting authority over gambling or casino activities conducted by Borrower or any Subsidiary within its jurisdiction.
“Governmental Authority”:  The government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guarantor”:  Each direct and indirect Subsidiary of the Borrower. As of the Closing Date, the Guarantors are 5.47 RBI, LLC, C & HRV, LLC, CasaBlanca Resorts, LLC, Oasis 

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Interval Management, LLC, Oasis Interval Ownership, LLC, Oasis Recreational Properties, Inc., RBG, LLC, and VRCC, LLC.
“Guaranty”:  The guaranty dated of the Closing Date and executed by the Guarantors in favor of the Lenders, as from time to time supplemented, modified, amended, extended or replaced.
“Immediately Available Funds”:  Funds with good value on the day and in the city in which payment is received.
“Indebtedness”:  With respect to any Person at the time of any determination, without duplication: (a) all obligations of such Person for borrowed money (including non-recourse obligations), (b) all obligations of such Person evidenced by debentures, notes or other similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid or accrued, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (e) all obligations of such Person issued or assumed as installment purchases of property or the deferred purchase price of property or services in respect of which such Person is liable, contingently or otherwise, as obligor or otherwise (including all earn-out or like obligations), (f) all obligations of others secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Capitalized Lease Obligations of such Person, (h) all obligations of such Person in respect of interest rate swap agreements, cap or collar agreements, interest rate futures or option contracts, currency swap agreements, currency futures or option agreements and other similar contracts (i) all obligations of such Person, actual or contingent, as an account party in respect of letters of credit or bankers’ acceptances, (j) all obligations of any partnership or joint venture as to which such Person is or may become personally liable, (k) all mandatory redemption, repurchase, put option or dividend obligations of such Person under any Equity Interests issued by such Person, and (l) all Contingent Obligations of such Person.  Notwithstanding the foregoing, no Operating Lease (or any guaranty thereof) or obligations for the payment of insurance premiums over time shall be included as Indebtedness.
“Indemnitee”:  As defined in Section 8.12.
“Ineligible Assignee”:  Any of the following Persons, and any Affiliate of any of the following Persons:   Z Capital Partners, L.L.C., James J. Zenni, Jr., Black Diamond Capital Management, L.L.C. and Stephen H. Deckoff.
“Interest Expense”:  For any period of determination and any Person, the aggregate consolidated amount, without duplication, of interest paid, accrued or scheduled to be paid in respect of any Indebtedness of such Person, including (a) all but the principal component of payments in respect of conditional sale contracts, Capitalized Leases and other title retention agreements, (b) commissions, discounts and other fees and charges with respect to letters of credit and bankers’ acceptance financings and (c) net costs under interest rate protection agreements, in each case determined in accordance with GAAP.

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“Investment”:  The acquisition, purchase, making or holding of any Equity Interests or other security, any loan, advance, contribution to capital, extension of credit (except for trade and customer accounts receivable for inventory sold or services rendered in the ordinary course of business and payable in accordance with customary trade terms), any acquisitions of real or personal property (other than real and personal property acquired in the ordinary course of business) and any purchase or commitment or option to purchase Equity Interests, securities or other debt of or any interest in another Person or any integral part of any business or the assets comprising such business or part thereof and the formation of, or entry into, any partnership as a limited or general partner or the entry into any joint venture.  The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, less all cash returns, cash dividends, and cash distributions (or the fair market value of any non-cash returns, dividends, and distributions) received by such Person, less all liabilities expressly assumed by another Person in connection with the sale of such Investment, and all loans and advances shall be taken at the principal amount thereof then remaining unpaid.
“Lenders”:  As defined in the opening paragraph hereof.
“Lender Consent”:  As of any date of determination, approval of those holding in the aggregate at least a 75% interest in the Term Loan, as determined by the Loan Agent.
 “Lien”:  With respect to any Person, any security interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device (including the interest of each lessor under any Capitalized Lease), in, of or on any assets or properties of such Person, now owned or hereafter acquired, whether arising by agreement or operation of law.
 “Loan Agent”:  Wilmington Trust, National Association, in its capacity as the administrative and collateral agent for the Lenders under any of the Loan Documents, or any successor agent in such capacity.
“Loan Agent’s Office”: The Loan Agent’s address as set forth on the signature page hereto, or such other address as the Loan Agent may from time to time notify to the Loan Parties and the Lenders.
“Loan Documents”:  This Agreement, the Term Notes (if any), the Security Agreement, the Deed of Trust Documents, the Guaranty, the Subordination Agreement, and any other document or instrument given by any Person in favor of the Lenders to secure or guaranty all or any portion of the Obligations, in each case as such document or instrument may from time to time be supplemented, modified, amended, extended or replaced.
“Loan Parties”:  The Borrower and the Guarantors.
“Material Adverse Occurrence”:  Any occurrence of whatsoever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding) that could reasonably be expected to materially and adversely affect (a) the financial condition or 

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operations of the Borrower and its Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party, or any writing executed pursuant thereto, or (c) the validity, collectability or enforceability of any of the Loan Documents or the rights or remedies of the Lenders or Loan Agent under the Loan Documents.
“Multiemployer Plan”:  A multiemployer plan, as such term is defined in Section 4001(a)(3) of ERISA, that is maintained (on the Closing Date, within the five years preceding the Closing Date, or at any time after the Closing Date) for employees of the Borrower or any ERISA Affiliate.
“Obligations”:  All unpaid principal of and accrued and unpaid interest on the Term Loan, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of any Loan Party to the Lenders or Loan Agent or any indemnified party arising under the Loan Documents, in all cases whether now existing or hereafter arising or incurred, whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several, and together with all renewals, modifications, extensions, increases, substitutions or replacements of any such obligations or liabilities.
“Operating Lease”:  Any operating lease that is required to be treated as a capital lease in accordance with GAAP as a result of any changes in accounting principles after December 31, 2010, that is required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board.
“PBGC”:  The Pension Benefit Guaranty Corporation, established pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the functions thereof.
“Permitted Acquisition”:  As defined in Section 6.12(e).
“Permitted Liens”:  Liens permitted by Section 6.14.
“Person”:  Any natural person, corporation, partnership, limited partnership, limited liability company, joint venture, firm, association, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity.
 “Plan”:  Each employee benefit plan (whether in existence on the Closing Date or thereafter instituted), as such term is defined in Section 3 of ERISA, maintained for the benefit of employees, officers or directors of the Borrower or of any ERISA Affiliate, other than a Multiemployer Plan.
 “Prohibited Transaction”:  The respective meanings assigned to such term in Section 4975 of the Code and Section 406 of ERISA.

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“Rate Protection Agreement”:  Any interest rate swap, cap or option agreement, or any other agreement pursuant to which the Borrower hedges interest rate risk with respect to a portion of the Obligations, entered into by the Borrower with a Rate Protection Provider.
“Rate Protection Obligations”:  The liabilities, indebtedness and obligations of any Borrower, if any, to any Rate Protection Provider under a Rate Protection Agreement.
“Rate Protection Provider”:  Any counterparty of the Borrower under any Rate Protection Agreement.
“Real Property”:  Collectively, (a) the real property in respect of the Casablanca Resort & Casino in Mesquite, Nevada, (b) the real property in respect of the Virgin River Hotel and Casino in Mesquite, Nevada, (c) the real property in respect of the Oasis Hotel and Casino in Mesquite, Nevada, and (d) any other real property owned or leased by the Borrower or any Subsidiary, but excluding real property held by (i) RBG, LLC, located at 100 Pulsipher Lane, Units 1101 and 1105, Mesquite, Nevada, known as Clark County Assessor’s Parcel Numbers 001-18-711-001 and 001-18-711-173, and located northwest of Pulsipher Lane and Leavitt Lane, known as Clark County Assessor’s Parcel Number 001-18-701-007, (ii) Oasis Interval Ownership, LLC, located at 897 West Mesquite Boulevard, Mesquite, Nevada, known as Clark County Assessor’s Parcel Numbers 001-18-602-003 and 001-18-602-004, and (iii) VRCC, LLC, located on Pioneer Boulevard, known as Clark County Assessor’s Parcel Number 001-09-801-003.
“Reportable Event”:  A reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any waiver in accordance with Section 412(d) of the Code.  A Reportable Event shall also include an event under Section 4062(e) of ERISA and an event requiring notice to the PBGC under Section 4010 of ERISA, excluding any such event as to which the PBGC has waived the notice required under Section 4010 of ERISA.
“Resort Properties”:  Collectively, (a) the Casablanca Resort & Casino in Mesquite, Nevada, (b) the Virgin River Hotel and Casino in Mesquite, Nevada, (c) the Oasis Hotel and Casino in Mesquite, Nevada, and (d) any other casino, hotel, resort or entertainment facility owned or leased by the Borrower or any Subsidiary.
“Restricted Payment”:  (a) Any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any Subsidiary thereof or any option, warrant or other right to acquire any such Equity Interest in the Borrower or any Subsidiary thereof, (b) any amount paid on account of any Indebtedness, promissory notes, intercompany Indebtedness or other liabilities or obligations owed by the Borrower to any holder of Equity Interests in the Borrower other than any amounts due under this Agreement or any Loan 

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Document, or (c) any amount prepaid directly or indirectly on account of any Indebtedness other than (i) any prepayment on the First Lien Facility; (ii) any prepayment on the Obligations; or (ii) any regularly scheduled payments. 
 “Security Agreement”:  Collectively, one or more pledge and security agreements of the Borrower that grant a security interest to the Loan Agent to secure the Obligations, as amended, supplemented, extended, restated or otherwise modified from time to time, each in form and substance acceptable to the Lenders.
“Security Documents”:  Collectively, the Security Agreement, the Deed of Trust Documents and each other agreement, instrument and document executed by any Loan Party to secure the Obligations, as amended, supplemented, extended, restated, modified or replaced from time to time.
“Senior Cash Flow Leverage Ratio”:  As of any date of determination, the ratio of Total Funded Debt (excluding the Term Loan and any Subordinated Debt) to EBITDA for the four fiscal quarters ending on such date, in each case calculated for the Borrower and its Subsidiaries in accordance with GAAP.
“Subordinated Debt”:  Any Indebtedness of the Borrower that is subordinated in right of payment to the payment of the Obligations in a manner and to an extent, and is otherwise subject to terms and conditions that the Loan Agent, acting at the direction of a Lender Consent, has approved in writing on or before the later of (a) the Closing Date, and (b) the creation of such Indebtedness.
“Subordination Agreement”:  Each agreement between the Lenders and the holders of any Subordinated Debt pursuant to which such indebtedness is subordinated in right of payment to the payment of the Obligations in a manner and to an extent, and subject to terms and conditions, satisfactory to the Lenders.  
“Subsidiary”:  As to any Person, any corporation, limited liability company or other entity of which Equity Interests having ordinary voting power for the election of a majority of the board of directors or other Persons performing similar functions are owned by such Person either directly or through one or more Subsidiaries.  Except as the context otherwise requires, the term “Subsidiaries” in this Agreement refers to direct and indirect Subsidiaries of the Borrower.
 “Term Loan”:  As defined in Section 2.1(b).
“Term Loan Commitment”:  The agreement of each of the Lenders to make the Term Loan to the Borrower in the amounts set forth on Schedule L-1.
“Term Loan Commitment Amount”:  The total of the agreements of the Lenders to make the Term Loan to the Borrower in the amounts set forth in Schedule L-1, which equals $35,000,000.

“Term Loan Maturity Date”:  February 21, 2020.

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“Term Notes”:  Senior subordinated promissory notes of the Borrower in the form of Exhibit A, issued at the request of any Lender, evidencing the obligation of the Borrower to repay the Term Loan.
“Total Funded Debt”:  At the time of any determination, without duplication, (a) all Indebtedness for borrowed money, (b) Capitalized Lease Obligations, (c) notes payable and drafts accepted representing extensions of credit, (d) any obligations owed for all or any part of the deferred purchase price of property or services (excluding trade payables incurred in the ordinary course of business and insurance premiums paid over time), (e) all Indebtedness secured by any Lien on any property of the Borrower or Subsidiary even though the Borrower or Subsidiary has not assumed or become liable for the payment of such Indebtedness, provided that for purposes of this clause (e) the amount of such Indebtedness shall be limited to the greater of (i) the amount of such Indebtedness as to which there is recourse to the Borrower and (ii) the fair market value of the property subject to the Liens, and (f) Contingent Obligations.
“Total Liabilities”:  At the time of any determination, the amount, on a consolidated basis, of all items of Indebtedness of any Person referred to that would constitute “liabilities” for balance sheet purposes in accordance with GAAP.
“Total Revenues”:  With respect to any period of determination, the consolidated total revenues of the Borrower and its Subsidiaries for such period, as determined in accordance with GAAP.
“Unfunded Pension Liabilities”:  The excess of a Defined Benefit Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Defined Benefit Plan’s assets, determined in accordance with the assumptions used by the Defined Benefit Plan’s actuaries for funding the Defined Benefit Plan pursuant to Section 412 of the Code for the applicable plan year.
“Withdrawal Liabilities”:  As of any determination date, the aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA if the Borrower or any ERISA Affiliate made a complete or partial withdrawal from all Multiemployer Plans and any increase in contributions pursuant to Section 4243 of ERISA.
Section 1.2    Accounting Terms and Calculations.  Except as may be expressly provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made on a consolidated basis for the Borrower and the Subsidiaries and in accordance with GAAP.  To the extent any change in GAAP affects any computation or determination required to be made pursuant to this Agreement, such computation or determination shall be made as if such change in GAAP had not occurred unless the Borrower and the Lenders agree in writing on an adjustment to such computation or determination to account for such change in GAAP.
Section 1.3    Computation of Time Periods.  In this Agreement, in the computation of a period of time from a specified date to a later specified date, unless otherwise stated the word “from” means “from and including” and the word “to” or “until” each means “to but excluding.”

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Section 1.4    Other Definitional Terms.  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision.  References to Sections, Exhibits, Schedules, and the like are to this Agreement unless otherwise expressly provided.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The term “will” shall have the same mandatory meaning as the term “shall.”  Unless the context otherwise clearly requires, “or” has the inclusive meaning represented by the phrase “and/or.”  All covenants, terms, definitions or other provisions incorporated by reference to other agreements are so incorporated as if fully set forth herein, and such incorporation shall include all necessary definitions and related provisions from such other agreements but include only amendments thereto agreed to by the Lenders, and shall survive any termination of such other agreements until the Obligations are irrevocably paid in full and the Commitments are terminated.
Article II 
TERMS OF THE CREDIT FACILITIES
Part A ‐‐ Terms of Lending 

Section 2.1    Lending Commitment.  On the terms and subject to the conditions hereof, the Lenders agree to make a term loan in the amounts set forth on Schedule L-1 (collectively, the “Term Loan”) on the Closing Date.  
Section 2.2    Notes.  If requested by any Lender, the portion of the Term Loan of such Lender shall be evidenced by a Term Note or Term Notes. The Loan Agent shall enter in its ledgers and records the amount of the Term Loan, and the principal amount owing by the Borrower in respect of the Term Loan shall be the aggregate amount of the Term Loan less all payments of principal thereof made by the Borrower.
Section 2.3    Interest Rates and Default Interest.  Interest shall accrue and be payable on the Term Loan as follows:
(a)    Subject to paragraph (b) below, the Term Loan shall bear interest from the Closing Date to the first anniversary of the Closing Date at the rate of 7.0% per annum, and thereafter, at the rate of 8.0% per annum.    
(b)    Upon the occurrence of any Event of Default, the Term Loan shall, at the option of the Lenders, bear interest until paid in full at a rate per annum equal to the sum of the interest rate otherwise applicable thereto plus 3.0%.
Section 2.4    Repayment.   The Term Loan shall be repaid in (i) monthly installments of interest only, due and payable on the first day of each month, commencing on September 1, 2013, to and including the Term Loan Maturity Date, and (ii) an amount equal to all unpaid principal and interest on the Term Loan Maturity Date.  
Section 2.5    Prepayments.  The Borrower may prepay the Term Loan, in whole or in part, without premium or penalty (including, without limitation, breakage costs), at any time.

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Section 2.6    Application of Payments.  Subject to the provisions of the First Lien Subordination Agreement (and any other Subordination Agreement then in effect), all payments received on account of the Obligations shall be applied first to the payment of fees, expenses and indemnification obligations to the Loan Agent; second, to the payment of fees, expenses and indemnification obligations to the Lenders ratably in proportion to their relative percentages of the Term Loan Commitments, third, to the payment of accrued and unpaid interest on the Obligations to the Lenders ratably in proportion to their relative percentages of the Term Loan Commitments, and fourth, to the repayment of principal to the Lenders ratably in proportion to their relative percentages of the Term Loan Commitments. 
Part B ‐‐ General

Section 2.7    Reserved.
Section 2.8    Reserved.
Section 2.9    Computation.  Interest on the Term Loan shall be computed on the basis of actual days elapsed and a year of 360 days.
Section 2.10    Payments.  Payments and prepayments of principal of, and interest on, the Term Loan and all fees, expenses and other obligations under this Agreement payable to the Lenders and Loan Agent shall be made in accordance with instructions provided by the Loan Agent without setoff or counterclaim in Immediately Available Funds not later than 12:00 P.M. (Las Vegas, Nevada time) on the dates called for under this Agreement and the Term Notes (if any).  Funds received after such time shall be deemed to have been received on the next Business Day.  Whenever any payment to be made hereunder is stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time, in the case of a payment of principal, shall be included in the computation of any interest on such principal payment.  
Section 2.11    Use of Loan Proceeds.  The proceeds of the Term Loan shall be used to refinance existing Indebtedness of the Borrower on the Closing Date.
Section 2.12    Taxes.  
(a)        Any and all payments by the Borrower hereunder or under the Term Notes shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges of withholdings, and all liabilities with respect thereto, excluding, in the case of the Lenders, taxes imposed on its overall net income and franchise taxes imposed on it in lieu of net income taxes (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Term Notes being hereinafter referred to as “Taxes”).
(b)        The Borrower agree to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Term Notes or from the execution, delivery or 

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registration of, performing under, or otherwise with respect to, this Agreement or the Term Notes (hereinafter referred to as “Other Taxes”).
(c)        The Borrower shall indemnify the Lenders for the full amount of Taxes or Other Taxes imposed on or paid by the Lenders, and any penalties, interest and expenses with respect thereto.  Payments on this indemnification shall be made within 30 days after the date the Lenders make written demand therefor.
(d)        Within 30 days after the date of any payment of Taxes, the Borrower shall furnish to the applicable Lender, at its address referred to on the signature page hereof, a certified copy of a receipt evidencing payment thereof.  In the case of any payment hereunder by or on behalf of the Borrower through an account or branch outside the United States or by or on behalf of the Borrower by a payor that is not a United States person, if the Borrower determines that no Taxes are payable in respect thereof, the Borrower shall furnish or shall cause such payor to furnish, to the applicable Lender, at such address, an opinion of counsel acceptable to the applicable Lender stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Internal Revenue Code.
(e)    The Lenders represents to the Borrower that each is either (i) a corporation organized under the laws of the United States or any State thereof or (ii) is entitled to complete exemption from United States withholding tax imposed on or with respect to any payments, including fees, to be made pursuant to this Agreement (x) under an applicable provision of a tax convention to which the United States is a party or (y) because it is acting through a branch, agency or office in the United States and any payment to be received by it hereunder is effectively connected with a trade or business in the United States.  Upon the request of the Borrower, the Lenders shall submit to the Borrower a certificate on Internal Revenue Service Form W-9 or such substitute form as is reasonably satisfactory to the Borrower to the effect that it is such a United States person.
(f)        If the Borrower is required by law or regulation to make any deduction, withholding or backup withholding of any taxes, levies, imposts, duties, fees, liabilities or similar charges of the United States of America, any possession or territory of the United States of America (including the Commonwealth of Puerto Rico) or any area subject to the jurisdiction of the United States of America (“U.S. Taxes”) from any payments to the Lenders pursuant to any Loan Document in respect of the Obligations payable to the Lenders then or thereafter outstanding, the Borrower shall make such withholdings or deductions and pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with applicable law.
Section 2.13    Increased Costs; Capital Adequacy.  
If any Change in Law:

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(a)    subjects any Lender to any Taxes, or change the basis of taxation of payments to a Lender in respect of the Term Loan (excluding Taxes that are already covered by Section 2.11), or
(b)    imposes, modifies, or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any Lender, or
(c)     imposes any other condition the result of which is to increase the cost to any Lender of making, funding or maintaining the Term Loan, or reduces any amount receivable by any Lender in connection with the Term Loan, or requires the Lender to make any payment calculated by reference to the amount of the Term Loan or interest received by it, by an amount deemed material by any Lender in the exercise of its reasonable discretion,
and the result of any of the foregoing is to increase the cost to any Lender of making the Term Loan or to reduce the return received by any Lender in connection with the Term Loan, then the Borrower shall pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received.
(d)    If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Term Loan to a level below that which such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender’s holding company for any such reduction suffered.  For purposes of this Section, (a) “Change in Law” includes (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines (as defined below) or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) or in the interpretation, promulgation.  implementation or administration thereof after the date of this Agreement that affects the amount of capital required or expected to be maintained by any Lender or any corporation controlling such Lender, and (b) “Risk-Based Capital Guidelines” means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement.
(e)      A certificate of any Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsections (a) and (b) above, the basis for calculating such amount(s) and the method of allocating such amount(s) to the Borrower shall be delivered to the Borrower and shall be 

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conclusive absent manifest error.  The Borrower shall pay to such Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof.
(f)    Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.12 shall not constitute a waiver of such Lender’s right to demand such compensation; provided, however, that the Borrower shall not be required to compensate the Lender pursuant to this Section 2.12 for any increased costs or reductions incurred more than 180 days prior to the date that the Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of the Lender’s intention to claim compensation therefor; provided, further, that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
Section 2.14    Reserved.
Section 2.15    Reserved. 

Article III         
CONDITIONS PRECEDENT
Section 3.1    Conditions.  The making of the Term Loan shall be subject to the prior or simultaneous fulfillment of the following conditions:
(a)        Documents.  The Loan Agent shall have received the following: 
		
	(i)
	This Agreement, duly executed by the Borrower and each Lender.  

		
	(ii)
	If requested by any Lender, a Term Note or Term Notes duly executed the Borrower and dated the Closing Date.

		
	(iii)
	A Security Agreement duly executed by the Borrower, together with completed UCC, tax lien and judgment searches for each Loan Party satisfactory to the Lenders.

		
	(iv)
	A Guaranty duly executed by each Guarantor.

		
	(v)
	The Subordination Agreement, duly executed by the Borrower and Nevada State Bank as of the Closing Date.

		
	(vi)
	A certificate of the Secretary (or other appropriate officer) of each Loan Party dated as of the Closing Date and certifying as to the following:

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	(A)
	A true and accurate copy of the company resolutions of such Person authorizing the execution, delivery and performance of the Loan Documents to which it is a party;

		
	(B)
	The incumbency, names, titles and signatures of the officers of such Person authorized to execute the Loan Documents to which it is a party and, as to the Borrower, to request the proceeds of the Term Loan;

		
	(C)
	A true and accurate copy of the articles of organization or equivalent document of such Person with all amendments thereto, certified by the appropriate governmental official of the jurisdiction of its incorporation as of a date acceptable to the Lenders; and

		
	(D)
	A true and accurate copy of the bylaws (or the equivalent), and other Constituent Documents of such Person.

		
	(vii)
	A certificate of good standing for each Loan Party in the jurisdiction of its formation and in each other jurisdiction in which the nature of its operation made such qualification necessary to the business, certified by the appropriate governmental officials as of a date acceptable to the Lenders.

		
	(viii)
	A certificate of an officer of the Borrower dated as of the Closing Date and certifying (A) that true and accurate copies of each of the material documents evidencing the First Lien Facility have been provided to the Loan Agent, and each such document remains in full force and effect, without modification or amendment and that such documents embody the entire agreement and understanding between the parties thereto with respect to the matters therein and (B) that the Borrower has received proceeds of First Lien Facility in an amount no less than is necessary, together with the proceeds of the Term Loan, to retire all Indebtedness of the Borrower that is to be paid off on the Closing Date.

		
	(ix)
	Property and liability insurance certificates demonstrating that the Borrower maintains the insurance required by Section 5.3, together with lender’s loss payable or additional insured endorsements or policy language, each in form and substance acceptable to the Lenders.

		
	(x)
	The Deed of Trust Documents, duly executed by the owners of the Real Property, together with:

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	(A)
	a commitment in form and substance acceptable to the Lenders for an ALTA lender’s title policy in the amount of $35,000,000 together with endorsements reasonably requested by the Lenders and/or Loan Agent;

		
	(B)
	an ALTA survey of the Real Property made in accordance with the 2011 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys, and including Items 1, 2, 3, 4, 6(a), 6(b), 7(a), 7(b)(1), 7(b)(2), 7(c), 8, 9, 10, 11(b), 13, 16, 17, 18, 19, and 20(a) of Table A thereof in form and substance reasonably acceptable to the Lenders;

		
	(C)
	UCC financing statements and fixture filings, covering the collateral described in the Deed of Trust Documents, each in a form prescribed by the Lenders and acceptable to the Lenders;

		
	(D)
	a Phase I environmental survey reasonably satisfactory to the Lenders;

		
	(E)
	a flood check satisfactory to the Lenders and satisfying the requirements of 42 U.S.C. § 4104b and any rules and regulations promulgated pursuant thereto;

		
	(F)
	 a current rent roll for the Real Property; and

		
	(G)
	the Environmental Indemnity Agreement, duly executed by each Loan Party.

		
	(xi)
	The audited financial statements of the Borrower for the periods from August, 2011, through December 31, 2011, and the fiscal year ending December 31, 2012, certified without qualification by independent certified public accountants selected by the Borrower and acceptable to the Lenders, together with any management letters, management reports or other supplementary comments or reports to the Borrower or its board of managers furnished by such accountants.

		
	(xii)
	A certificate of even date herewith of the chief financial officer or treasurer of the Borrower certifying as to the matters set forth in Section 3.2(a) and (b).

		
	(xiii)
	Payoff letters duly executed by the holders of all Indebtedness of the Borrower that is to be paid off on the Closing Date, in form and substance reasonably acceptable to the Lenders.

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	(xiv)
	Such other documents and deliveries as may be reasonably requested by the Lenders or the Loan Agent.

(b)    Opinion.      Borrower shall have its counsel prepare a written opinion, addressed to the Loan Agent and dated the Closing Date, covering the matters reasonably prescribed by the Loan Agent and otherwise in form and substance reasonably acceptable to the Lenders.
(c)    First Lien Facility.  The First Lien Facility shall have closed contemporaneously with the Term Loan on the Closing Date.
(d)        Fees and Expenses.  The Lenders and Loan Agent shall have received all fees and other amounts due and payable by the Borrower on or prior to the Closing Date, including the reasonable fees and expenses of counsel to the Lenders and Loan Agent payable pursuant to Section 8.2.
Section 3.2    Conditions Precedent to Term Loan.  The obligation of the Lenders to make the Term Loan shall be subject to the fulfillment of the following conditions:
(c)        Representations and Warranties.  The representations and warranties in Article IV shall be true and correct in all material respects on and as of the Closing Date, with the same force an effect as if made on such date.
(d)        No Default.  No Default or Event of Default shall have occurred and be continuing on the Closing Date.
Article IV         
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the Term Loan, the Borrower represents and warrants to the Lenders:
Section 4.1    Organization, Standing, etc.  Each Loan Party (a) is duly created and validly existing and in good standing under the laws of its jurisdiction of organization and (b) has all requisite power and authority to carry on its business as now conducted and enter into and perform its obligations under the Loan Documents to which it is a party.  Each Loan Party (x) holds all certificates of authority, licenses and permits necessary to carry on its business as presently conducted (or contemplated to be conducted) in each jurisdiction in which it is carrying on such business, except where the failure to hold such certificates, licenses or permits could not be reasonably be expected to result in a Material Adverse Occurrence and (y) is duly qualified and in good standing, or has applied for qualification, as a foreign corporation (or other organization) in each jurisdiction in which the character of the properties owned, leased or operated by it or the business conducted (or contemplated to be conducted) by it makes such qualification necessary and the failure so to qualify would permanently preclude such Loan Party from enforcing its rights with respect to any material assets or could reasonably be expected to result in a Material Adverse Occurrence.

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Section 4.2    Authorization and Validity.  The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party have been duly authorized by all necessary company action by such Loan Party.  The Loan Documents to which each Loan Party is a party when executed will constitute, the legal, valid and binding obligations of such Loan Party, enforceable against such Loan Party in accordance with their respective terms, subject to limitations as to enforceability that might result from bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights generally and subject to limitations on the availability of equitable remedies.
Section 4.3    No Conflict; No Default.  The execution, delivery and performance of the Loan Documents will not (a) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to any Loan Party in any case in which such violation could reasonably be expected to result in a Material Adverse Occurrence, (b) violate or contravene any provision of the Constituent Documents of any Loan Party, (c) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which any Loan Party is a party or by which it or any of its properties may be bound following the Closing Date (including but not limited to the First Lien Facility), or (d) result in the creation of any Lien thereunder other than Liens under the Loan Documents.  No Loan Party is in default under or in violation of any such law, statute, rule or regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in which the consequences of such default or violation could reasonably be expected to result in a Material Adverse Occurrence.
Section 4.4    Government Consent.  No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority is required on the part of any Loan Party to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, the Loan Documents to which it is a party, except for any necessary filing or recordation of or with respect to any of the Security Documents, and the filing of a transaction report with the Gaming Authority in accordance with the Gaming Laws.
Section 4.5    Financial Statements and Condition.  The audited financial statements of the Borrower for the period from August, 2011, through December 31, 2011, and the fiscal year ending December 31, 2012 (collectively, the “Financials”), copies of each of which have been delivered to the Loan Agent, have been consistently prepared and accurately and fairly present the financial condition, cash flow and results of operation of the Borrower as at the respective dates thereof and for the periods therein referred to.  The Financials reflect all liabilities of the Borrower, whether absolute, accrued or contingent, as of the respective dates thereof of the type required to be reflected or disclosed in a balance sheet (or the notes thereto) prepared in accordance with GAAP.  As of the Closing Date, the books, records and accounts of the Borrower maintained with respect to its business were true and accurate in all material respects, reflected the material transactions and the material assets and material liabilities of the Borrower, and were used as the basis to prepare the Financials.  

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Section 4.6    Litigation.  Except as disclosed on Schedule 4.6, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting any Loan Party that could reasonably be expected to result in a Material Adverse Occurrence or that seeks to prevent, enjoin or delay the making of the Term Loan.  Other than any liability incident to any litigation, arbitration or proceeding that could not reasonably be expected to cause a Material Adverse Occurrence, no Loan Party has any material Contingent Obligations not provided for or disclosed in the financial statements referred to in the Financials. 
Section 4.7    Environmental, Health and Safety Laws.  There does not exist any violation by any Loan Party of any applicable federal, state or local law, rule or regulation or order of any government, governmental department, board, agency or other instrumentality relating to environmental, pollution, health or safety matters that has, will or threatens to impose any liability on any Loan Party or that has required or would require any expenditure by any Loan Party to cure, in any case that could constitute a Material Adverse Occurrence.  No Loan Party has received any notice to the effect that any part of its operations or properties is not in material compliance with any such law, rule, regulation or order or notice that it or its property is the subject of any governmental investigation evaluating whether any remedial action is needed to respond to any release of any toxic or hazardous waste or substance into the environment, which non‐compliance or remedial action could reasonably be expected to result in a Material Adverse Occurrence.  Except as set out on Schedule 4.7, no Loan Party has knowledge that any Loan Party or the property of any Loan Party will become subject to environmental laws or regulations during the term of this Agreement, compliance with which could reasonably be expected to require Capital Expenditures that could constitute a Material Adverse Occurrence. 
Section 4.8    ERISA.  Schedule 4.8 lists all Defined Benefit Plans and Multiemployer Plans that the Borrower sponsors, maintains or is making or is obligated to make contributions.  Except as could not reasonably be expected to result in a Material Adverse Occurrence, either individually or in the aggregate:  (a) each Plan complies, and is operated in compliance, with its terms and all applicable laws; (b) no proceeding, claim, lawsuit or investigation is, to the Borrower’s knowledge, pending concerning any Plan; (c) all required contributions have been made in accordance with the provisions of each Plan and, if applicable, each Multiemployer Plan; (d) no ERISA Event has occurred or is expected to occur with respect to any Plan or, if applicable, any Multiemployer Plan; and (e) the Borrower and each ERISA Affiliate currently comply and have complied with the notice and continuation coverage requirements of Section 4980B of the Code.  Except as disclosed on Schedule 4.8, there are, and have been, no (x) Unfunded Pension Liabilities with respect to any Plan that would reasonably be expected to become liabilities of any Loan Party or (y) Withdrawal Liabilities with respect to any Multiemployer Plan that could reasonably be expected to become liabilities of any Loan Party.  The Borrower has not entered into any agreement under Section 4204 of ERISA.
Section 4.9    Federal Reserve Regulations.  No Loan Party is engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the Board).  The value of all margin stock 

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owned by the any Loan Party does not constitute more than 25% of the value of the assets of such Loan Party.
Section 4.10    Title to Property; Leases; Liens; Subordination.  Each Loan Party has (a) good and marketable title to its real properties (including the Real Property) and (b) good and sufficient title to, or valid, subsisting and enforceable leasehold interest in, its other material properties, including the Resort Property and all real properties, other properties and assets, referred to as owned by such Loan Party in the most recent financial statement referred to in Section 5.1 (other than property disposed of since the date of such financial statements in the ordinary course of business).  None of such properties is subject to a Lien, except as allowed under Section 6.14.  No Loan Party has subordinated any of its rights under any obligation owing to it to the rights of any other Person other than the First Lien Lender and the Lenders.
Section 4.11    Taxes.  Each Loan Party has filed all federal and all material state and local tax returns required to be filed and has paid or made provision for the payment of all taxes due and payable pursuant to such returns and pursuant to any assessments made against it or any of its property and all other taxes, fees and other charges imposed on it or any of its property by any governmental authority (other than taxes, fees or charges the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with GAAP have been provided on the books of the Borrower).  No tax Liens have been filed and no material claims are being asserted with respect to any such taxes, fees or charges.  The charges, accruals and reserves on the books of the Borrower in respect of taxes and other governmental charges are adequate and the Borrower is not aware of any proposed material tax assessment against any Loan Party or any basis therefor. 
Section 4.12    Trademarks, Patents.  Each Loan Party possesses or has the right to use all of the patents, trademarks, trade names, service marks and copyrights, and applications therefor, and all technology, know‐how, processes, methods and designs used in or necessary for the conduct of its business, without known conflict with the rights of others.  
Section 4.13    Burdensome Restrictions.  No Loan Party is a party to or otherwise bound by any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter, corporate or partnership restriction that could reasonably be expected to result in a Material Adverse Occurrence.
Section 4.14    Force Majeure.  Since the date of the most recent financial statement referred to in Section 5.1, the business, properties and other assets of the Loan Parties have not been affected in any way as the result of any fire or other casualty, strike, lockout, or other labor trouble, embargo, sabotage, confiscation, condemnation, riot, civil disturbance, activity of armed forces or act of God, in any case that could reasonably be expected to result in a Material Adverse Occurrence.
Section 4.15    Investment Company Act.  No Loan Party is an “investment company” or a company “controlled” by an investment company within the meaning of the Investment Company Act of 1940, as amended.

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Section 4.16    Retirement Benefits.  Except as required under Section 4980B of the Code, Section 601 of ERISA or applicable state law, no Loan Party is obligated to provide post-retirement medical or insurance benefits with respect to employees or former employees.
Section 4.17    Full Disclosure.  Subject to the following sentence, neither the financial statements referred to in Section 5.1 nor any other certificate, written statement, exhibit or report furnished by or on behalf of any Loan Party in connection with or pursuant to this Agreement contains any untrue statement of a material fact or omits any material fact necessary to make the statements therein not misleading.  Certificates or statements furnished by or on behalf of any Loan Party to the Lenders or Loan Agent consisting of projections or forecasts of future results or events have been prepared in good faith and based on good faith estimates and assumptions of the management of such Loan Party, and no Loan Party has any reason to believe that such projections or forecasts are not reasonable.
Section 4.18    Subsidiaries.  Schedule 4.18 sets forth as of the date of this Agreement (a) a list of the authorized and outstanding Equity Interests in the Borrower and all warrants and options to acquire Equity Interests in the Borrower, the identity of the holders thereof, and the percentage of shares held by such holders, and (b) a list of all Subsidiaries and the number and percentage of the shares of each class of Equity Interests owned beneficially or of record by the Borrower or any Subsidiary therein, and the jurisdiction of incorporation of each Subsidiary. Except as described in the Constituent Documents as of the Closing Date, there are no agreements among the Borrower’s Equity Interest holders with respect to the voting and transfer of the Borrower’s Equity Interests. 
Section 4.19    Labor Matters.  There are no pending or threatened strikes, lockouts or slowdowns against any Loan Party that could reasonably be expected to constitute a Material Adverse Occurrence.  No Loan Party has been or is in violation in any material respect of the Fair Labor Standards Act or any other applicable federal, state, local or foreign law dealing with such matters that could reasonably be expected to constitute a Material Adverse Occurrence.  All material payments due from any Loan Party on account of wages and employee health and welfare insurance and other benefits (in each case, except for de minimis amounts) have been paid or accrued as a liability on the books of such Loan Party. The consummation of the transactions contemplated under the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any Subsidiary is bound.
Section 4.20    Solvency.  After the making of any Term Loan and after giving effect thereto, on a consolidated basis (a) the fair value of the assets of each Loan Party will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) no Loan Party intends to, or believes that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature; (d) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (e) no Loan Party will 

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have unreasonably small capital with which to conduct the business in which it is engaged as such business is proposed to be conducted following the Closing Date.
Section 4.21    Foreign Assets Control Regulations and Anti-Money Laundering.  No Loan Party (a) is a person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (b) engages in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise, to the knowledge of any Responsible Officer of the Borrower, associated with any such person in any manner violative of Section 2, or (c) is a person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order.
Section 4.22    USA Patriot Act.  Each Loan Party is in compliance, in all material respects, with the USA Patriot Act.  No part of the proceeds of the Term Loan will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
Section 4.23    Insurance.  Each Loan Party maintains insurance coverage as required by Section 5.3.
Section 4.24    Compliance with Laws.  Each Loan Party is in compliance in all material respects with the requirements of all applicable laws and all orders, writs, injunctions, and decrees applicable to it or to its properties and possesses all licenses, permits, franchises, exemptions, approvals, and other governmental authorizations necessary for the ownership of its property and the conduct and operation of its business, except in such instances in which the failure to comply therewith or the failure to be in possession thereof, either individually or in the aggregate, could not reasonably be expected to give rise to a Material Adverse Occurrence.
Section 4.25    Perfected Liens and Security Interests.  The Obligations are secured by valid, perfected Liens (subject to Liens permitted pursuant to Section 6.14) in favor of the Loan Agent, covering and encumbering all collateral granted by the Security Documents, to the extent perfection has occurred by the filing of a UCC financing statement or by continued possession or control or the filing or recording of the Security Documents (other than with respect to security interests in any collateral not required to be perfected pursuant to the terms of the Security Agreement). 
Section 4.26    Business Locations.  Schedule 4.26 sets forth as of the Closing Date the addresses of each business location of the Borrower and its Subsidiaries, and, if such business location is leased, the name and address of the landlord for such business location.  
Section 4.27    Broker’s or Finder’s Commissions.  No broker’s or finder’s or placement fee or commission will be payable to any broker or agent engaged by any Loan Party or any of 

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its officers, directors or agents with respect to the Term Loan, except for fees payable to the Loan Agent.
Section 4.28    Material Adverse Occurrence.  Since December 31, 2012, there has been no Material Adverse Occurrence.
Article V     
AFFIRMATIVE COVENANTS
Until any obligation of the Lenders to make the Term Loan has expired or been terminated and all of the Obligations have been irrevocably paid in full, absent written Lender Consent:
Section 5.1    Financial Statements and Reports.  The Borrower will furnish to the Loan Agent for distribution to the Lenders:
(a)        As soon as available and in any event within 120 days after the end of each fiscal year of the Borrower the audited consolidated financial statements of the Borrower and the Subsidiaries consisting of at least statements of income, cash flow and changes in shareholders’ equity, and a consolidated balance sheet as at the end of such year, setting forth in each case in comparative form corresponding figures from the previous annual audit, certified without qualification by independent certified public accountants selected by the Borrower and reasonably acceptable to the Lenders, together with any management letters, management reports or other supplementary comments or reports to the Borrower or its board of managers furnished by such accountants.
(b)    Within 45 days after the close of the each fiscal quarter, for itself and its Subsidiaries, consolidated unaudited balance sheets as at the close of each such period and unaudited consolidated statements of income and reconciliation of surplus statements (including sufficient detail for independent calculation of the financial covenants set forth herein) and an unaudited consolidated statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its chief financial officer as being fairly stated in all material respects. 
(c)        Contemporaneously with the furnishing of the statements and reports under Section 5.1(a) and (b), a Compliance Certificate in the form of Exhibit B signed by the chief financial officer, treasurer or controller of the Borrower demonstrating in reasonable detail compliance (or noncompliance, as the case may be) with Sections 6.16, 6.17 and 6.18 as of the end of the relevant reporting period, and Section 6.10 for the for the period ending the end of each fiscal year,  and stating that as at the end of such period there did not exist any Default or Event of Default or, if any Default or Event of Default existed, specifying the nature and period of existence thereof and what action the Borrower proposes to take with respect thereto.  
(d)    Promptly following submission, and in any event not later than the 25th day of each month, a copy of (i) the Monthly Gross Revenue Report (NGC-01) submitted to the 

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State Gaming Control Board and (ii) the Monthly Gross Revenue Statistical Report (NGC-31) for the prior month submitted by each applicable Subsidiary to the State Gaming Control Board, Tax and License Division.    
(e)    As soon as available, but in any event within 90 days after the beginning of each fiscal year of the Borrower, a copy of the detailed consolidated operating budget of the Borrower and its Subsidiaries for such fiscal year.
(f)        Immediately upon any officer of the Borrower becoming aware of any Default or Event of Default, a notice describing the nature thereof and what action the Borrower proposes to take with respect thereto.
(g)        Immediately upon any officer of the Borrower becoming aware of the occurrence, with respect to any Plan, of any Reportable Event or any Prohibited Transaction, a notice specifying the nature thereof and what action the Borrower proposes to take with respect thereto, and, when received, copies of any notice from PBGC of intention to terminate or have a trustee appointed for any Plan.
(h)        Immediately upon any officer of the Borrower becoming aware of any matter that has resulted or is reasonably likely to result in a Material Adverse Occurrence, a notice from the Borrower describing the nature thereof and what action the Borrower proposes to take with respect thereto.
(i)        Immediately upon any officer of the Borrower becoming aware of (i) the commencement of any action, suit, investigation, proceeding or arbitration before any court or arbitrator or any governmental department, board, agency or other instrumentality affecting the Borrower or any Subsidiary or any property of such Person, or to which the Borrower or any Subsidiary is a party (other than litigation where the insurance insures against the damages claimed and the insurer has assumed defense of the litigation without reservation) and in which an adverse determination or result could constitute a Material Adverse Occurrence; or (ii) any adverse development in any litigation, arbitration or governmental investigation or proceeding previously disclosed by the Borrower or any Subsidiary that, if determined adversely to the Borrower or any Subsidiary, would constitute a Material Adverse Occurrence, a notice from the Borrower describing the nature and status thereof and what action the Borrower proposes to take with respect thereto.
(j)        Promptly upon delivery or receipt thereof, all notices of default and acceleration and other material notices sent by or to the holder of the First Lien Facility and any Subordinated Debt outside the ordinary course of business.
(k)        From time to time, such other information regarding the business, operation and financial condition of the Borrower and the Subsidiaries as the Loan Agent or Lenders may reasonably request.

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Section 5.2    Existence.  The Borrower will maintain, and cause each Subsidiary to maintain, its company existence in good standing under the laws of its jurisdiction of organization and its qualification to transact business in each jurisdiction where failure so to qualify could reasonably be expected to result in a Material Adverse Occurrence; provided, however, that nothing herein shall prohibit the merger or liquidation of any Subsidiary allowed under Section 6.1.
Section 5.3    Insurance.  The Borrower has provided the Loan Agent with proof of existing insurance coverage, which the Lenders have approved as acceptable as to insurance companies and coverage amounts (“Existing Coverage”).  The Borrower shall maintain, and shall cause each Subsidiary to maintain the Existing Coverage, or replacement coverage with financially sound and reputable insurance companies and such insurance as is required by law and such other insurance in such amounts and against such hazards as may be reasonably required by the Lenders. The Borrower shall, and shall cause each Subsidiary to, name the Loan Agent, as agent for the Lenders, as an additional insured with respect to general liability insurance and as the loss payee and mortgagee with respect to property and hazard insurance at all times, subject to the rights of the First Lien Lender. 
Section 5.4    Payment of Taxes and Claims.  The Borrower shall file, and cause each Subsidiary to file, all federal and material state and local tax returns and reports that are required by law to be filed by it and will pay, and cause each Subsidiary to pay, before they become delinquent all federal and material state and local taxes, assessments and governmental charges and levies imposed upon it or its property and all claims or demands of any kind (including but not limited to those of suppliers, mechanics, carriers, warehouses, landlords and other like Persons) that, if unpaid, might result in the creation of a Lien upon its property; provided that the foregoing items need not be paid if they are being contested in good faith by appropriate proceedings, and as long as the Borrower’s or such Subsidiary’s title to its property is not materially adversely affected, its use of such property in the ordinary course of its business is not materially interfered with and adequate reserves with respect thereto have been set aside on the Borrower’s or such Subsidiary’s books in accordance with GAAP.
Section 5.5    Inspection.  To the extent permissible under the Gaming Laws, the Borrower shall permit any Person designated by the Loan Agent, upon reasonable prior notice to the Borrower (which notice shall not be required to be given during the continuation of an Event of Default), to visit and inspect any of the properties, books and financial records of the Borrower and the Subsidiaries, to examine and to make copies of the books of accounts and other financial records of the Borrower and the Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and the Subsidiaries with, and to be advised as to the same by, its officers at such reasonable times and intervals as the Loan Agent may designate.  The expenses of the Loan Agent for such visits, inspections and examinations shall be at the expense of the Lenders, provided, that any such visit, inspection, or examination shall be at the expense of the Borrower if such visit, inspection, or examination constitutes an annual collateral audit or is made while any Event of Default is continuing.

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Section 5.6    Maintenance of Properties.  The Borrower will maintain, and cause each Subsidiary to maintain, its properties used or useful in the conduct of its business in good condition, repair and working order, ordinary wear and tear excepted, and supplied with all necessary equipment, and make all necessary repairs, renewals, replacements, betterments and improvements thereto, all as may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times.
Section 5.7    Books and Records.  The Borrower will keep, and will cause each Subsidiary to keep, adequate and proper records and books of account in which full and correct entries will be made of its dealings, business and affairs.
Section 5.8    Compliance.  The Borrower will comply, and will cause each Subsidiary to comply, in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject.
Section 5.9    Environmental Matters; Reporting.  The Borrower will observe and comply with, and cause each Subsidiary to observe and comply with, all laws, rules, regulations and orders of any government or government agency relating to health, safety, pollution, hazardous materials or other environmental matters to the extent non‐compliance could result in a material liability or otherwise could reasonably be expected to result in a Material Adverse Occurrence.  The Borrower will give the Loan Agent prompt written notice of any violation as to any environmental matter by the Borrower or any Subsidiary and of the commencement of any judicial or administrative proceeding relating to health, safety or environmental matters (a) in which an adverse determination or result could constitute or result in a Material Adverse Occurrence or (b) that will or threatens to impose a material liability on the Borrower or such Subsidiary to any Person or that will require a material expenditure by the Borrower or such Subsidiary to cure any alleged problem or violation.
Section 5.10    Further Assurances.  
(g)    The Borrower shall, and shall cause each other Loan Party to, promptly correct any defect or error that may be discovered in any Loan Document or in the execution, acknowledgment or recordation thereof.  Promptly upon request by the Loan Agent, the Borrower also shall, and shall cause each Loan Party to, do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all deeds, conveyances, mortgages, deeds of trust, trust deeds, assignments, estoppel certificates, financing statements and continuations thereof, notices of assignment, transfers, certificates, assurances and other instruments as the Loan Agent reasonably requires from time to time:  (i) to carry out more effectively the purposes of the Loan Documents; (ii) to perfect and maintain the validity, effectiveness and priority of any security interests intended to be created by the Loan Documents including, without limitation, the delivery of a landlord waiver from the landlord of each location required by the Loan Agent; and (iii) to better assure, convey, grant, assign, transfer, preserve, protect and confirm unto the Loan Agent the rights granted now or hereafter intended to be granted to the Loan Agent under any Loan Document or under any other instrument executed in connection with any Loan Document or that any Loan Party may be or 

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become bound to convey, mortgage or assign to the Loan Agent to carry out the intention or facilitate the performance of the provisions of any Loan Document.  The Borrower shall furnish to the Loan Agent evidence satisfactory to the Lenders and the Loan Agent of every such recording, filing or registration.
(h)    In addition to and not in limitation of the foregoing paragraph (a), upon the formation of any Subsidiary after the Closing Date or the acquisition of any fee interests in real property after the Closing Date by the Borrower or any Subsidiary:  (i)(A) such Person (other than the Borrower, and a Subsidiary, if already a Loan Party) shall join the Guaranty and guaranty the Obligations, and (B) such Person shall grant to the Loan Agent a mortgage, deed of trust, or other similar agreement as required by the Lenders (and permit the Loan Agent to perfect such interest) in the real property of such Person, creating a first-priority mortgage or deed of trust (subject to Liens permitted under Section 6.14) and deliver such other related documents and instruments as the Lenders or Loan Agent reasonably requests; and (ii) the Borrower or the applicable Subsidiary shall, at the Borrower’s cost and expense, execute and deliver to the Loan Agent such documents and instruments reasonably deemed necessary by the Lenders to effect the matters specified in subclause (i).  
Section 5.11    Compliance with Terms of Material Contracts.  The Borrower shall, and shall cause each Subsidiary to, make all payments and otherwise perform all obligations in respect of all material contracts to which the Borrower or such Subsidiary is a party; provided, that such payment or performance will not be required to the extent such payment or performance is being contested in good faith by appropriate proceedings, and as long as such Person’s title to its property is not materially adversely affected, its use of such property in the ordinary course of its business is not materially interfered with and adequate reserves with respect thereto have been set aside on the Borrower’s books in accordance with GAAP or the failure to so perform could not reasonably be expected to constitute or result in a Material Adverse Occurrence.
Section 5.12    Intellectual Property.  The Borrower shall, and shall cause each Subsidiary to, maintain adequate licenses, patents, patent applications, copyrights, service marks, trademarks, trademark applications, tradestyles and trade names to continue its business as heretofore conducted by it or as hereafter conducted by it, except to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Occurrence. 
Section 5.13    Leaseholds.  The Borrower will use commercially reasonable efforts to prevent the termination of, and to maintain in full force and effect, each leasehold of the Borrower or any Subsidiary on any of the Real Property. 
Article VI         
NEGATIVE COVENANTS
Until the Term Loan and all of the other Obligations have been paid in full, absent written Lender Consent:

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Section 6.1    Merger.  The Borrower will not merge or consolidate or enter into any analogous reorganization or transaction with any Person or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution) or permit any Subsidiary to do any of the foregoing; provided, however, any Subsidiary may be merged with or liquidated into the Borrower or any wholly-owned domestic Subsidiary of the Borrower (if the Borrower or such wholly-owned domestic Subsidiary of the Borrower is the surviving entity).
Section 6.2    Disposition of Assets.  The Borrower will not, and will not permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of (whether in one transaction or a series of transactions) any property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except:
(a)    dispositions of inventory, or used, worn-out or surplus equipment, all in the ordinary course of business;
(b)    the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are applied with reasonable promptness to the purchase price of such replacement equipment; and
(c)    other dispositions of property in any fiscal year during the term of this Agreement whose net book value in the aggregate does not exceed 5.5% of the Borrower’s total consolidated assets as shown on the balance sheet for the most recent prior fiscal year.
Section 6.3    Plans.  The Borrower will not, nor will it allow any Subsidiary to, (a) enter into any new Plan or modify any existing Plan so as to increase its obligations thereunder in any manner that could reasonably be expected to result in a Material Adverse Occurrence, unless such modification is required by ERISA, the Code or other applicable law; (b) terminate any Plan under any circumstances that would cause the Lien provided for in Section 4068 of ERISA to attach to any assets of the Borrower or any Subsidiary or (c) enter into any agreement as a purchaser or as a seller of assets under Section 4204 of ERISA.
Section 6.4    Change in Nature of Business.  The Borrower will not, nor will it permit any Subsidiary to, make any material change in the nature of the business of the Borrower or any Subsidiary, as carried on at the Closing Date.  
Section 6.5    Subsidiaries.  The Borrower will not, nor will it permit any Subsidiary to, form or acquire any corporation, limited liability company, or other entity that would thereby become a Subsidiary, unless the Borrower or such Subsidiary complies with the provisions of Section 5.10.
Section 6.6    Subsidiary Restrictions.  The Borrower will not, and will not permit any Subsidiary to, place or allow any restriction, directly or indirectly, on the ability of such Person 

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to (a) pay dividends or any distributions on or with respect to such Person’s capital stock or (b) make loans or other cash payments to the Borrower.
Section 6.7    Reserved.
Section 6.8    Restricted Payments.  The Borrower will not make any Restricted Payments other than (a) payments on Subordinated Debt to the extent permitted by the applicable Subordination Agreement, (b) Restricted Payments from a Loan Party to another Loan Party, (c) payments to holders of Equity Interests of the Borrower for the payment of taxes in accordance with Section 5.2 of the Borrower’s limited liability company agreement, (d) if no Default or Event of Default exists or would exist after giving effect thereto, payments to holders of Equity Interests of the Borrower in a cumulative amount not to exceed $1,100,000 in any fiscal year in accordance with Sections 5.3 and 5.4 of the Borrower’s limited liability company agreement, and (e) Restricted Payments in the nature of reimbursements for costs and expenses to the Lenders and their counsel incurred in connection with the Term Loan to the extent permitted by the First Lien Subordination Agreement. 
Section 6.9    Transactions with Affiliates.  The Borrower will not, and will not permit any Subsidiary to, enter into any transaction with any of its Affiliates, except the Term Loan and the transactions contemplated or permitted by this Agreement, and except upon fair and reasonable terms no less favorable than the Borrower or such Subsidiary would obtain in a comparable arm’s-length transaction with a Person not an Affiliate.
Section 6.10    Accounting Changes, etc.  The Borrower will not, nor will it permit any Subsidiary to, (a) make any change in accounting treatment or reporting practices, except as permitted by GAAP, or change its fiscal year, (b) amend, modify or change any of its Constituent Documents in any manner that could reasonably be expected to be materially adverse in any respect to the rights or interests of the Lenders, or (c) amend, modify or change any of the loan documents evidencing any Subordinated Debt in any manner prohibited by the Subordination Agreement.
Section 6.11    Capital Expenditures.  The Borrower will not make Capital Expenditures in any fiscal year in an amount in excess of 4.40% of Total Revenues for the immediately preceding fiscal year (aggregated with Capital Expenditures of its Subsidiaries), and will make Capital Expenditures of not less than .90% of Total Revenues for the immediately preceding fiscal year. The foregoing calculations shall not include any sums funded with capital contributions from holders of Equity Interests in the Borrower.
Section 6.12    Subordinated Debt.  The Borrower will not , and will not permit any Subsidiary to, (a) make any scheduled payment of the principal of or interest on any Subordinated Debt that would be prohibited by the terms of the applicable Subordination Agreement; (b) directly or indirectly make any prepayment on or purchase, redeem or defease any Subordinated Debt or offer to do so prior to the due date thereof (whether such prepayment, purchase or redemption, or offer with respect thereto, is voluntary or mandatory); (c) amend or cancel the subordination provisions applicable to any Subordinated Debt; (d) take or omit any action if as a result of such action or omission the subordination of such Subordinated Debt, or 

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any part thereof, to the Obligations might be terminated, impaired or adversely affected; (e) omit to give the Loan Agent prompt notice of any notice received from any holder of Subordinated Debt, or any trustee therefor, or of any default under any agreement or instrument relating to any Subordinated Debt by reason whereof such Subordinated Debt might become or be declared to be due or payable; or (f) violate or breach any of its obligations under any subordination agreement relating to any Subordinated Debt.
Section 6.13    Investments.  The Borrower will not, and will not permit any Subsidiary to, acquire for value, make, have or hold any Investments, except:
(a)        Investments existing on the date of this Agreement and disclosed on Schedule 6.12;
(b)        Travel advances to management personnel and employees in the ordinary course of business;
(c)        Cash Equivalents;
(d)        Rate Protection Agreements;
(e)        Investments by the Borrower or any domestic Subsidiary in the form of acquisitions of all or substantially all of the business or a line of business (whether by the acquisition of Equity Interests, assets or any combination thereof) of any other Person if such acquisition has been approved in writing by the Lenders (the “Permitted Acquisitions”);
(f)          Contingent Obligations permitted by Section 6.14;
(g)        The establishment or creation of domestic Subsidiaries by the Borrower or a wholly-owned domestic Subsidiary of the Borrower after the Closing Date if the Borrower and Subsidiaries have complied with the provisions of Section 5.10 in respect thereof and no Default or Event of Default exists or otherwise would arise or result therefrom; 
(h)        Deposit accounts maintained in the ordinary course of business; 
(i)         The certificates of deposit and accounts held jointly by C & HRV, LLC, a Nevada limited liability company, and the Gaming Control Board, with Bank of Nevada and Bank of America, in amounts not to exceed the amounts required by the applicable Gaming Authorities to be held in such accounts from time to time, exclusive of interest earned thereon; and
(j)          Investments funded with capital contributions from holders of Equity Interests in the Borrower.
Section 6.14    Indebtedness.  The Borrower will not, nor will it permit any Subsidiary to, incur, create, issue, assume or suffer to exist any Indebtedness, except:

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(a)    the First Lien Facility and the Obligations;
(b)    current liabilities, other than for borrowed money, incurred in the ordinary course of business;
(c)    Indebtedness existing on the date of this Agreement and disclosed on Schedule 6.14, but not including any extension or refinancing thereof;  
(d)    Subordinated Debt so long as the applicable Subordination Agreement remains in effect with respect to such Subordinated Debt;
(e)    Contingent Obligations of the Borrower and its Subsidiaries in respect of Indebtedness of Loan Parties otherwise permitted hereunder;
(f)    Rate Protection Obligations; 
(g)    insurance premium financing; and
(h)    additional Indebtedness for borrowed money incurred after the Closing Date in an amount not to exceed $1,650,000 in the aggregate outstanding at any time, provided that (i) at the time such Indebtedness is incurred no Default or Event of Default has occurred and is continuing and (ii) copies of each document or instrument evidencing such Indebtedness are provided to the Loan Agent.
Section 6.15    Liens.  The Borrower will not, and will not permit it any Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter into, or make any commitment to enter into, any arrangement for the acquisition of any property through conditional sale, lease‐purchase or other title retention agreements, with respect to any property now owned or hereafter acquired by the Borrower or any Subsidiary, except:
(a)        Liens granted to the First Lien Lender under the First Lien Facility and to Loan Agent under the Security Documents to secure the Obligations;
(b)        Liens to secure Subordinated Debt permitted hereunder, to the extent permitted by the applicable Subordination Agreement;
(c)        Liens existing on the date of this Agreement and disclosed on Schedule 6.14;
(d)        Deposits or pledges to secure payment of workers’ compensation, unemployment insurance, old age pensions or other social security obligations, in the ordinary course of business of the Borrower or any Subsidiary;
(e)        Liens for taxes, fees, assessments and governmental charges not delinquent or to the extent that payment therefor is not at the time required to be made in accordance with Section 5.4;

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(f)        Liens of carriers, warehousemen, mechanics and materialmen, and other like Liens arising in the ordinary course of business, for sums not due or to the extent that payment therefor is not at the time required to be made in accordance with Section 5.4;
(g)        deposits or pledges to secure performance of bids, trade contracts, leases, statutory obligations and other obligations or a like nature, in each case in the ordinary course of business;
(h)        Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restriction against access by the Borrower or any Subsidiary in excess of those set forth by regulations promulgated by the Board, and (ii) such deposit account is not intended by the Borrower or any Subsidiary to provide collateral to the depository institution;
(i)        encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property and landlord’s Liens under leases on the premises rented that do not materially detract from the value of such property or impair the use thereof in the business of the Borrower or any Subsidiary; and
(j)        the interest of any lessor under any Capitalized Lease entered into after the Closing Date or purchase money Liens on property acquired after the Closing Date; provided, that, (i) the Indebtedness secured thereby is otherwise permitted by this Agreement and (ii) such Liens are limited to the property acquired and do not secure Indebtedness other than the related Capitalized Lease Obligations or the purchase price of such property; and
(k)    Liens securing Indebtedness permitted pursuant to Section 6.14(h) the holder of which is, or contemporaneously with the issuance of such Indebtedness becomes, a party to an intercreditor agreement in form and substance satisfactory to the Lenders.
Section 6.16    Reserved.
Section 6.17    Fixed Charge Coverage Ratio.  Commencing with the fiscal quarter ending December 31, 2013, the Borrower will not permit the Fixed Charge Coverage Ratio to be less than 1.00 to 1.00 as of the last day of any fiscal quarter for the 12 consecutive calendar months ending on such date.
Section 6.18    Senior Cash Flow Leverage Ratio.  Commencing with the fiscal quarter ending December 31, 2013, the Borrower will not permit the Senior Cash Flow Leverage Ratio to be more than 3.85 to 1.00 as of the last day of any fiscal quarter for the 12 consecutive fiscal months ending on such date.
Section 6.19    Liquidity.  Commencing with the fiscal year ending December 31, 2013, the Borrower will not permit its unrestricted cash or Cash Equivalents at the end of any fiscal 

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year to be less than (a) $7,200,000 for the fiscal year commencing January 1, 2013, or (b) $9,000,000 for any fiscal year commencing thereafter.    
Section 6.20    Loan Proceeds.  The Borrower will not, and will not permit any Subsidiary to, use any part of the proceeds of the Term Loan directly or indirectly, and whether immediately, incidentally or ultimately, (a) to purchase or carry margin stock (as defined in Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose or (b) for any purpose that entails a violation of, or that is inconsistent with, the provisions of Regulations U or X of the Board.
Section 6.21    Sale and Leaseback Transactions.  The Borrower will not, and will not permit any Subsidiary to, enter into any arrangement, directly or indirectly, whereby it sells or transfers any property, real or personal, and thereafter leases such property for the same or a substantially similar purpose or purposes as the property sold or transferred.
Section 6.22    Hedging Agreements.  The Borrower will not, and will not permit any Subsidiary to, enter into any hedging arrangements, other than any Rate Protection Agreements.
Section 6.23    Management Agreements.  The Borrower will not, and will not permit any Subsidiary to, (a) enter into any agreement for the management or operation of all or any material portion of the Resort Properties,  or (b) pay or otherwise incur management or other similar fees to any Person, with respect to any such management agreement, without prior written Lender Consent. 
Article VII     
EVENTS OF DEFAULT AND REMEDIES
Section 7.1    Events of Default.  The occurrence of any one or more of the following events shall constitute an Event of Default:
(d)    The Borrower fails to make when due, whether by acceleration or otherwise, any payment of principal of or interest on the Term Loan or any other Obligation required to be made to the Loan Agent or any Lender pursuant to this Agreement or any other Loan Document and, in the case of any such failure to make any payment of principal (other than upon the Term Loan Maturity Date) interest or fees, such failure continues unremedied for three Business Days. 
(e)    Any representation or warranty made by or on behalf of any Loan Party in this Agreement or any other Loan Document or by or on behalf of any Loan Party in any certificate, statement, report or document furnished to the Loan Agent or any Lender pursuant to this Agreement or any other Loan Document proves to have been false or misleading in any material respect on the date as of which the facts set forth are stated or certified.
(f)    The Borrower fails to comply with Section 2.11 or 5.2, or 5.3 (provided that any violation of Section 5.3 shall be subject to the grace periods described in Section 7.1

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(d) if such violation arises as a result of an inadvertent policy lapse or incorrect renewal and does not cause any losses or claims to be uncovered by such policy) or any Section of Article VI; provided that a violation of Section 6.16, 6.17 or 6.18 shall not constitute an Event of Default if, prior to the date the Borrower is required to deliver the financial statements pursuant to Section 5.1(a) or 5.1(b), as applicable, the Borrower has received capital contributions from the holders of its Equity Interests (which may be holders other than the holders that existed prior the date of such capital contribution so long as no Change of Control results from such contribution) in an amount necessary to cause the Borrower to be in compliance with Section 6.16, 6.17, and 6.18 after giving effect to such capital contribution (which capital contributions may be added to EBITDA on a trailing twelve month basis for purposes of calculations of covenant compliance); provided, further that (i) any such capital contributions shall be in a minimum amount of $500,000 and (ii) the Borrower may receive no more than two such capital contributions in any 12-month period.  
(g)    The Borrower fails to comply with any other agreement, covenant, condition, provision or term in this Agreement (other than those otherwise set forth in this Section 7.1) and such failure to comply continues for 30 calendar days after the earliest of (i) the date the Borrower gives notice of such failure to the Loan Agent, (ii) the date the Borrower should have given notice of such failure to the Loan Agent pursuant to Section 5.1, and (iii) the date the Loan Agent gives notice of such failure to the Borrower.  Notwithstanding the foregoing, if the failure to comply cannot reasonably be cured within such 30 calendar day period, provided Borrower has undertaken and is diligently pursuing a cure, Borrower shall have such additional period as is reasonably necessary to accomplish a cure, not to exceed an additional 30 calendar day period. 
(h)    Any Loan Party becomes insolvent or generally does not pay its debts as they mature or applies for, consents to, or acquiesces in the appointment of a custodian, trustee or receiver of any Loan Party or for a substantial part of the property thereof or, in the absence of such application, consent or acquiescence, a custodian, trustee or receiver is appointed for any Loan Party or for a substantial part of the property thereof and is not discharged within 60 days, or any Loan Party makes an assignment for the benefit of creditors.
(i)    Any bankruptcy, reorganization, debt arrangement or other proceedings under any bankruptcy or insolvency law is instituted by or against any Loan Party, and, if instituted against such Loan Party, has consented to or acquiesced in by such Loan Party or remains undismissed for 60 days, or an order for relief has been entered against such Loan Party.
(j)    Any dissolution or liquidation proceeding not permitted by Section 6.1 is instituted by or against any Loan Party, and, if instituted against such Loan Party, is consented to or acquiesced in by such Loan Party or remains for 60 days undismissed.
(k)    A judgment or judgments for the payment of money in excess of the sum of $275,000 in the aggregate are rendered against any Loan Party and either (i) the judgment 

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creditor executes on such judgment or (ii) such judgment remains unpaid or undischarged for more than 60 days from the date of entry thereof or such longer period during which execution of such judgment is stayed during an appeal from such judgment.
(l)    Other than Indebtedness under this Agreement, the maturity of any material Indebtedness of any Loan Party is accelerated (including Indebtedness under the First Lien Facility), or, other than Indebtedness under this Agreement or the First Lien Facility, any Loan Party fails to pay any such material Indebtedness when due (after the lapse of any applicable grace period) or, in the case of such Indebtedness payable on demand, when demanded (after the lapse of any applicable grace period), or any event occurs or condition exists and continues for more than any applicable grace period and causes, or permitting the holder of any such Indebtedness or any trustee or other Person acting on behalf of such holder to cause, such material Indebtedness to become due prior to its stated maturity or permits such holder to realize upon any collateral given as security therefor.  For purposes of this Section, Indebtedness shall be deemed “material” if it exceeds $550,000 as to any item of Indebtedness or in the aggregate for all items of Indebtedness with respect to which any of the events described in this Section 7.1(i) has occurred.
(m)    Any execution or attachment is issued whereby any substantial part of the property of any Loan Party is taken or attempted to be taken and such execution or attachment is not vacated or stayed within 60 days after the issuance thereof.
(n)    Any default or event of default (however denominated) occurs under any other Loan Document, and continues beyond any applicable grace period.
(o)    Any Guarantor repudiates or purports to revoke its guaranty, or the Guaranty for any reason ceases to be in full force and effect or is judicially declared null and void, except in connection with a merger or disposition permitted hereunder.
(p)    Any Security Document, at any time, ceases to be in full force and effect or is judicially declared null and void, or the validity or enforceability thereof is contested by a Loan Party, or the Loan Agent cease to have a valid and perfected security interest having the priority contemplated thereunder in all of the collateral described therein, other than by action or inaction of the Lenders or Loan Agent.
(q)    Any Change of Control occurs. 
(r)    Any Loan Party fails to pay any amount payable to a Rate Protection Provider (as defined in the First Lien Credit Agreement) in respect of any Rate Protection Agreement when such amount becomes due and payable (whether by scheduled payment, termination or likewise), and such failure continues after any applicable grace period.
(s)    Any nonmonetary judgment or order is rendered against any Loan Party that would reasonably be expected to result in a Material Adverse Occurrence and either (i) enforcement proceedings have been commenced by any person upon such judgment or 

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order, or (ii) there is any period of 60 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, is not in effect.
(t)    The Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its Withdrawal Liabilities under a Multiemployer Plan, (ii) the Borrower or any ERISA Affiliate fails to satisfy its contribution requirements under Section 412 of the Code, whether or not it has sought a waiver under Section 412(c) of the Code, (iii) an ERISA Event occurs, (iv) a Plan that is intended to be qualified under Section 401(a) of the Code loses its qualification, or (v) the Borrower or any ERISA Affiliate is assessed a tax under Section 4980B of the Code or incurs a liability under Section 601 et seq. of ERISA; and any such event, or the any combination of any such events, results in, or could reasonably be expected to result in, exposure to any Loan Party in an amount in excess of $275,000.
Section 7.2    Remedies.  If (a) any Event of Default described in Section 7.1(e), (f) or (g) occurs with respect to the Borrower or any Loan Party, the Obligations shall automatically become immediately due and payable; or (b) any other Event of Default is continuing, then the Lenders may declare the outstanding unpaid principal balance of the Term Loan, the accrued and unpaid interest thereon and all other Obligations to be forthwith due and payable, whereupon the Term Loan, all accrued and unpaid interest thereon and all Obligations shall immediately become due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement or in the Term Notes to the contrary notwithstanding.  Upon the occurrence of any of the events described in clause (a) or clause (b) of the preceding sentence, the Loan Agent and Lenders may exercise all rights and remedies under any of the Loan Documents, and enforce all rights and remedies under any applicable law.
Article VIII     
MISCELLANEOUS
Section 8.1    Modifications.  Notwithstanding any provisions to the contrary herein, any term of this Agreement may be amended with the written consent of the Borrower; provided, that no amendment, modification or waiver of any provision of this Agreement or any other Loan Document or consent to any departure therefrom by the Borrower or other party thereto shall in any event be effective unless written Lender Consent and the acknowledgment of the Loan Agent has been obtained, and then such Lender Consent shall be effective only in the specific instance and for the purpose for which given, provided that no such amendment, modification or consent shall (a) increase the amount of any Lender’s commitment, without the written consent of each such affected Lender; (b) postpone any date fixed by this Agreement or any other Loan Document for, or otherwise waive any obligation to make any payment of principal, interest, fees or other amounts due to the Lenders (or any Lender) or the Loan Agent, without the written consent of each Lender or the Loan Agent directly affected thereby; (c) reduce the principal of, or the rate of interest specified  herein, on any portion of the Term Loan, or any fees or other amounts payable hereunder or under any other Loan Document, without the written consent of 

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each Lender directly affected thereby; (d) change any provision of this Section 8.1 or the definition of “Lender Consent” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or (e) impose any greater restriction on the ability of any Lender to assign any of its rights or obligations hereunder without the written consent of such Lender. No amendment, waiver or consent shall, unless it is in writing signed by the Loan Agent in addition to the Lenders required herein, affect the rights or duties of the Loan Agent under this Agreement or any other Loan Document.  
Section 8.2    Expenses. Whether or not the transactions contemplated hereby are consummated, the Borrower shall reimburse the Loan Agent and the Lenders upon demand for all reasonable out-of-pocket expenses paid or incurred by the Loan Agent or the Lenders (including filing and recording costs and reasonable fees and expenses of counsel to the Loan Agent and/or the Lenders) in connection with the negotiation, preparation, approval, review, execution, delivery, administration, amendment, modification and interpretation of this Agreement and the other Loan Documents and any commitment letters relating thereto.  The Borrower shall also reimburse the Loan Agent and the Lenders upon demand for all reasonable out‐of‐pocket expenses (including reasonable expenses of legal counsel) paid or incurred by the Loan Agent and/or the Lenders in connection with the collection and enforcement of this Agreement and any other Loan Document.  The obligations of the Borrower under this Section shall survive any termination of this Agreement.
Section 8.3    Waivers, etc.  No failure on the part of the Loan Agent, Lenders or any holder of any Obligations to exercise and no delay in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right.  The remedies herein and in the other Loan Documents provided are cumulative and not exclusive of any remedies provided by law.
Section 8.4    Notices.  Except when telephonic notice is expressly authorized by this Agreement, any notice or other communication to any party in connection with this Agreement shall be in writing and shall be sent by manual delivery, facsimile transmission, overnight courier or United States mail (postage prepaid) addressed to such party at the address specified on the signature page hereof, or at such other address as such party specifies to the other party hereto in writing.  All periods of notice shall be measured from the date of delivery if manually delivered, from the date of sending if sent by facsimile transmission, from the first Business Day after the date of sending if sent by overnight courier, or from four days after the date of mailing if mailed; provided, however, that any notice to the Lenders under Article II shall be deemed to have been given only when received by the Loan Agent.
Section 8.5    Taxes.  The Borrower agree to pay, and save the Loan Agent and Lenders harmless from all liability for, any stamp or other taxes that may be payable with respect to the execution or delivery of this Agreement or the issuance of the Term Notes, if any, which obligation of the Borrower shall survive the termination of this Agreement.

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Section 8.6    Successors and Assigns; Participations; Purchasing Lenders.
(g)    This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, all future holders of the Term Notes, and their respective successors and assigns, except that no Borrower may assign or transfer any of its rights or obligations under this Agreement without written Lender Consent.
(h)    The Lenders may, in accordance with applicable law, at any time sell to one or more institutional lenders (“Participants”) participating interests in a minimum amount of $1,000,000 owing to the Lenders, any portion of the Term Loan held by the Lenders, or any other interest of the Lenders hereunder, provided that no such participating interest shall be sold to an Ineligible Assignee.  In the event of any such sale by the Lenders of participating interests to a Participant, (i) the Lender’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, (ii) the Lenders shall remain solely responsible for the performance thereof, (iii) the Lenders shall remain the holder of any Term Note for all purposes under this Agreement, (iv) the Borrower and the Lenders shall continue to deal solely and directly with the Loan Agent in connection with the Lenders’ rights and obligations under this Agreement, and (v) the agreement pursuant to which such Participant acquires its participating interest herein shall provide that the Lenders shall retain the sole right and responsibility to enforce the Obligations, including, without limitation the right to grant Lender Consent with respect to any amendment, modification, consent or waiver with respect to this Agreement or any other Loan Document.  
(i)    The Lenders may, from time to time, assign to institutional lenders (“Assignees”), provided that no such assignment shall be made to an Ineligible Assignee, all or part of its rights or obligations hereunder or under any Loan Document, in a minimum amount of $1,000,000, then held by that Lender, pursuant to written agreements executed by the Lender and such Assignee(s); provided that the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless an Event of Default is continuing at the time of such assignment; provided that the Borrower shall be deemed to have consented to any such assignment unless it objects thereto by written notice to the Loan Agent within 5 Business Days after having received notice thereof, where such written notice clearly states that a failure to object within 5 Business Days shall be deemed approval.  
(j)    NGA may, from time to time, assign its interest in the Term Loan to a transferee of its Equity Interests in Borrower (other than a transfer to an Ineligible Assignee), or in connection with any distribution of assets to NGA’s investors.
(k)    The Borrower shall not be liable for any costs incurred by the Lenders or the Loan Agent in effecting any participation under subparagraph (b) of this subsection or by the Lenders or the Loan Agent in effecting any assignment under subparagraph (c) or (d) of this subsection.

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(l)    The Lenders may disclose to any Assignee or Participant and to any prospective Assignee or Participant (other than any Ineligible Assignee) any and all financial information in the Lender’s possession concerning the Borrower or any of their Subsidiaries that has been delivered to the Lenders by or on behalf of any Loan Party pursuant to the Loan Documents or that has been delivered to the Lenders by or on behalf of any Loan Party in connection with the Lender’s credit evaluation of the Loan Parties prior to entering into this Agreement, provided that prior to disclosing such information, the Lenders shall first obtain the agreement of such prospective Assignee or Participant to comply with the provisions of Section 8.7.
(m)    Without the prior written consent of the Borrower, which may be granted or withheld in the Borrower’s sole discretion, Lenders shall not grant a participating interest or assign any interest in any portion of the Term Loan or other Obligation owing to the Lenders, any Term Note held by the Lenders, or any other interest of the Lenders hereunder assign all or any part of its rights or obligations hereunder or under any Loan Document to any Ineligible Assignee. Any such grant or assignment without the Borrower’s prior written consent shall be null, void and of no force or effect.
Section 8.7    Confidentiality of Information.  The Lenders and the Loan Agent shall use reasonable efforts to assure that information about the Borrower and its operations, affairs and financial condition not generally disclosed to the public or to trade and other creditors that is furnished to the Lenders or the Loan Agent pursuant to the provisions hereof is used only for the purposes of this Agreement and any other relationship between the Loan Agent, Lenders and the Borrower and shall not be divulged to any Person other than the Lenders, the Loan Agent, their Affiliates and their respective officers, directors, employees and agents, except:  (a) to their attorneys and accountants; (b) in connection with the enforcement of the rights of the Lenders or the Loan Agent hereunder and under the Loan Documents or otherwise in connection with applicable litigation; (c) in connection with assignments and participations and the solicitation of prospective assignees and participants referred to in the immediately preceding Section (other than Ineligible Assignees); (d) if such information is generally available to the public other than as a result of disclosure by the Lenders or the Loan Agent; (e) to any direct or indirect contractual counterparty in any hedging arrangement or such contractual counterparty’s professional advisor; (f) to any nationally recognized rating agency that requires information about the Lender’s investment portfolio in connection with ratings issued with respect to the Lenders; and (g) as may otherwise be required or requested by any regulatory authority having jurisdiction over the Lenders or the Loan Agent, or by any applicable law, rule, regulation or judicial process, the opinion of the Lenders’ or Loan Agent’s counsel concerning the making of such disclosure to be binding on the parties hereto.  Neither any Lender nor the Loan Agent shall incur any liability to the Borrower by reason of any disclosure permitted by this Section.  
Section 8.8    Governing Law and Construction.  THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.  Whenever possible, each provision of this Agreement and the other Loan Documents and any 

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other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be interpreted so as to be effective and valid under such applicable law, but if any provision of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto is held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto.
Section 8.9    Consent to Jurisdiction.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE ENFORCED IN ANY FEDERAL OR STATE COURT SITTING IN CLARK COUNTY, NEVADA, WHICH SHALL HAVE EXCLUSIVE JURISDICTION AS TO ANY DISPUTE ARISING FROM OR RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THE BORROWER, LOAN AGENT AND THE LENDERS CONSENT TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUM IS NOT CONVENIENT.
Section 8.10    Waiver of Jury Trial.  EACH OF THE BORROWER, LOAN AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 8.11    Survival of Agreement.  All representations, warranties, covenants and agreement made by the Borrower herein or in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be deemed to have been relied upon by the Lenders and the Loan Agent and shall survive the making of the Term Loan and the execution and delivery to the Loan Agent by the Borrower of the Term Notes, if any, regardless of any investigation made by or on behalf of the Lenders or the Loan Agent, and shall continue in full force and effect as long as any Obligation is outstanding and unpaid and so long as the Commitments have not been terminated; provided, however, that the obligations of the Borrower under Sections 8.2, 8.5, 8.12 and 8.21, and the Lenders’ obligations to the Loan Agent under Section 9.10 shall survive payment in full of the Obligations and the termination of the Commitments.
Section 8.12    Indemnification.  The Borrower hereby agrees to defend, protect, indemnify and hold harmless the Lenders, the Loan Agent, and their respective Affiliates and the directors, officers, employees, attorneys and agents and their respective Affiliates (each of the foregoing being an “Indemnitee” and all of the foregoing being collectively the “Indemnitees”) from and against any and all claims, actions, damages, liabilities, judgments, costs and expenses (including all reasonable fees and disbursements of counsel that may be incurred in the investigation or defense of any matter) imposed upon, incurred by or asserted against any Indemnitee, whether direct, indirect or consequential and whether based on any federal, state, 

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local or foreign laws or regulations (including securities laws, environmental laws, commercial laws and regulations), under common law or on equitable cause, or on contract or otherwise:  
(i)        by reason of, relating to or in connection with the execution, delivery, performance or enforcement of any Loan Document, any Commitments, or any transaction contemplated by any Loan Document; or
(j)         by reason of, relating to or in connection with any credit extended or used under the Loan Documents or any act done or omitted by any Person, or the exercise of any rights or remedies thereunder, including the acquisition of any collateral by the Lenders by way of foreclosure of the Lien thereon, deed or bill of sale in lieu of such foreclosure or otherwise; 
provided, however, that no Borrower shall be liable to any Indemnitee for any portion of such claims, damages, liabilities and expenses resulting from such Indemnitee’s gross negligence or willful misconduct.  If this indemnity is unenforceable as a matter of law as to a particular matter or consequence referred to herein, it shall be enforceable to the full extent permitted by law.
This indemnification applies, without limitation, to any act, omission, event or circumstance existing or occurring on or prior to the later of the Term Loan Maturity Date or the date of irrevocable payment in full of the Obligations, including specifically Obligations arising under clause (b) of this Section.  The indemnification provisions set forth above shall be in addition to any liability the Borrower may otherwise have.  
To the fullest extent permitted by applicable law, no Borrower shall assert, and the Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Term Loan or the use of the proceeds thereof.  
Without prejudice to the survival of any other obligation of the Borrower hereunder, the agreements of the Borrower in this Section shall survive the payment in full of the Obligations and the termination of the Commitments.
Section 8.13    Captions.  The captions or headings herein and any table of contents hereto are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Agreement.
Section 8.14    Entire Agreement.  This Agreement and the other Loan Documents embody the entire agreement and understanding between the Borrower and the Lenders with respect to the subject matter hereof and thereof.  This Agreement supersedes all prior agreements and understandings relating to the subject matter hereof.  Nothing in this Agreement or in any other Loan Document, expressed or implied, is intended to confer upon any Persons other than the parties hereto any rights, remedies, obligations or liabilities hereunder or thereunder.

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Section 8.15    Counterparts.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.
Section 8.16    Borrower Acknowledgements.  The Borrower hereby acknowledges that (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents, (b) as a result of this Agreement, neither the Lenders nor the Loan Agent have any fiduciary relationship to the Borrower, the relationship being solely that of debtor and creditor, (c) as a result of this Agreement, no joint venture exists between the Borrower and the Lenders or Loan Agent, and (d) the Lenders and the Loan Agent undertake no responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the business or operations of the Borrower and the Borrower shall rely entirely upon its own judgment with respect to its business, and any review, inspection or supervision of, or information supplied to, the Borrower by the Lenders or the Loan Agent is for the protection of the Lenders and Loan Agent and neither the Borrower nor any third party is entitled to rely thereon.
Section 8.17    Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to the Term Loan, together with all fees, charges and other amounts that are treated as interest under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lenders in accordance with applicable law, the rate of interest payable hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable but were not payable as a result of the operation of this Section shall be cumulated and the interest and charges payable to the Lenders in respect of the Term Loan shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, has been received by the Lenders.  “Federal Funds Effective Rate” means an interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations at approximately 10:00 a.m. (Las Vegas, Nevada) on such day on such transactions received by the Lenders from three federal funds brokers of recognized standing selected by the Lenders in its sole discretion.
Section 8.18    Independence of Covenants.  All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid an Event of Default or Default if such action is taken or condition exists.
Section 8.19    Payments Set Aside.  To the extent that any payment by or on behalf of the Borrower is made to the Lenders or Loan Agent, and such payment or the proceeds of such setoff 

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or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Lenders or the Loan Agent in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any bankruptcy or insolvency law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.  The obligations of the Borrower and the Lenders under this Section shall survive the irrevocable payment in full of the Obligations and the termination of the Commitments.
Section 8.20    Electronic Signatures, Etc.  The words “execution,” “signed,” “signature,” and words of like import in Loan Document or in any amendment or other modification thereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
Section 8.21    USA PATRIOT Act.  The Lenders hereby notify the Borrower that pursuant to the requirements of the USA PATRIOT Act (the “Act”), the Lenders may be required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lenders to identify the Borrower in accordance with the Act.  The Borrower shall, promptly following a request by the Lenders or Loan Agent, provide all documentation and other information that the Lenders requests to comply with any obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.
Article IX    
LOAN AGENT

Section 9.1    Appointment and Authority.  Each Lender hereby irrevocably appoints Loan Agent and its successors to act on its behalf as the Loan Agent hereunder and under the other Loan Documents, and authorizes the Loan Agent to take such actions on its behalf and to exercise such powers as are delegated to the Loan Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Loan Agent and the Lenders and neither Borrower nor any other Loan Party shall have rights as third party beneficiary of any of such provisions.  The Loan Agent shall also act as the collateral agent under the Loan Documents and each Lender hereby irrevocably appoints and authorizes the Loan Agent to act as the agent of the Lenders for purposes of acquiring holding and enforcing any and all liens on collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Loan Agent as collateral agent, and any co-agents, sub-agents and attorneys-in-fact appointed by the Loan Agent pursuant to Section 9.5 for purposes of holding or enforcing any Lien on the Collateral or any portion thereof granted under the Loan Documents, or for exercising any rights and remedies thereunder at the direction of the 

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Loan Agent, shall be entitled to the benefits of all provisions of this Article IX as though such co-agents, sub-agents, and attorneys-in-fact were the collateral agent under the Loan Documents, as if set forth in full herein with respect thereto.

Section 9.2    Rights as Lender. The Person serving as the Loan Agent hereunder shall if also a Lender have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Loan Agent and the term Lender shall unless otherwise expressly indicated or unless the context otherwise requires include the Person serving as the Loan Agent hereunder in its individual capacity.   
Section 9.3    Exculpatory Provisions.  The Loan Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing the Loan Agent shall not be subject to any fiduciary or other implied duties regardless of whether a default or Event of Default has occurred and is continuing; shall not have any duty to take any discretionary action or exercise any discretionary powers except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Loan Agent is required to exercise as directed in writing by the those holding in the aggregate more than a 75% interest in the Term Loan, provided that the Loan Agent shall not be required to take any action that in its opinion or the opinion of its counsel may expose the Loan Agent to liability or that is contrary to any Loan Document or applicable law and shall not except as expressly set forth herein and in the other Loan Documents have any duty to disclose and shall not be liable for the failure to disclose any information relating to any Borrower or any of their Affiliates that is communicated to or obtained by the Person serving as the Loan Agent or any of its Affiliates in any capacity other than its capacity as Loan Agent.  The Loan Agent shall not be liable for any action taken or not taken by it with the consent or at the request of those holding in the aggregate more than a 75% interest in the Term Loan or as the Loan Agent shall believe shall be necessary under the circumstances as provided in Sections 10.01 and 8.02 or in the absence of its own gross negligence or willful misconduct. The Loan Agent shall be deemed not to have knowledge of any default or Event of Default unless and until notice describing such default or Event of Default is given to the Loan Agent by Borrowers or the Lenders in accordance with Section 8.4.  The Loan Agent shall not be responsible for or have any duty to ascertain or inquire into any statement warranty or representation made in or in connection with this Agreement or any other Loan Document, the contents of any certificate report or other document delivered hereunder or thereunder or in connection herewith or therewith, the performance or observance of any of the covenants agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, the validity enforceability effectiveness or genuineness of this Agreement any other Loan Document or any other agreement instrument or document or the creation perfection or priority of any Lien purported to be created by the Loan Documents the value or the sufficiency of any Collateral or the satisfaction of any condition other than to confirm receipt of items expressly required to be delivered to the Loan Agent.  Until the Loan Agent receives instruction or clarification from those holding in the aggregate more than a 50% interest in the Term Loan, the Loan Agent may refrain from taking any action if the Loan Agent believes in good faith that it needs instruction or clarification from the Lenders.  

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Section 9.4    Reliance by Loan Agent.   The Loan Agent shall be entitled to rely upon and shall not incur any liability for relying upon any notice request certificate consent statement instrument document or other writing including any electronic message Internet or intranet website posting or other distribution believed by it to be genuine and to have been signed sent or otherwise authenticated by the proper Person. The Loan Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person and shall not incur any liability for relying thereon. The Loan Agent may consult with legal counsel, independent accountants and other experts selected by it and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel accountants or experts.  
Section 9.5    Delegation of Duties.  The Loan Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Loan Agent.  The Loan Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Affiliates of the Loan Agent and any such sub-agent.  
Section 9.6    Resignation of Loan Agent.  The Loan Agent may at any time give notice of its resignation to the Lenders and the Loan Parties.  Upon receipt of any such notice of resignation those holding in the aggregate more than a 50% interest in the Term Loan shall have the right to appoint a successor.  If no such successor shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Loan Agent gives notice of its resignation then the retiring Loan Agent may on behalf of the Lenders appoint a successor Loan Agent, provided that if the Loan Agent shall notify the Borrower and the Lenders that no Person has accepted such appointment then such resignation shall nonetheless become effective in accordance with such notice and the retiring Loan Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents except that in the case of any collateral security held by the Loan Agent on behalf of the Lenders under any of the Loan Documents the retiring Loan Agent shall continue to hold such collateral security until such time as successor Loan Agent is appointed and all payments communications and determinations provided to be made by to or through the Loan Agent shall instead be made by or to each Lender directly until such time as those holding in the aggregate more than a 50% interest in the Term Loan appoint a successor Loan Agent as provided for above in this Section.   Upon the acceptance of appointment as Loan Agent hereunder, such successor shall succeed to and become vested with all of the rights powers privileges and duties of the retiring or retired Loan Agent and the retiring Loan Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents if not already discharged therefrom as provided above in this Section. After the retiring Loan Agent’s resignation hereunder and under the other Loan Documents the provisions of this Article shall continue in effect for the benefit of such retiring Loan Agent its sub-agents and their respective Affiliates in respect of any actions taken or omitted to be taken by any of them while the retiring Loan Agent was acting as Loan Agent.
Section 9.7    Non-Reliance on Loan Agent and Lenders.  Each Lender acknowledges that it has independently and without reliance upon the Loan Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate 

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made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will independently and without reliance upon the Loan Agent or any other Lender or any of their Affiliates and based on such documents and information as it shall from time to time deem appropriate continue to make its own decisions in taking or not taking action under or based upon this Agreement any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
Section 9.8    Loan Agent May File Proofs of Claim.  In case of the pendency of any proceeding under any bankruptcy, reorganization, or debt arrangement under any bankruptcy or insolvency law, or any other judicial proceeding relative to any Loan Party, the Loan Agent, irrespective of whether the principal of the Term Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Loan Agent shall have made any demand on any Borrower shall be entitled and empowered by intervention in such proceeding or otherwise to file and prove claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loan and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Loan Agent including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Loan Agent and their respective agents and counsel and all other amounts due the Lenders and the Loan Agent under Section 8.2 allowed in such judicial proceeding and to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Loan Agent, and if the Loan Agent shall consent to the making of such payments directly to the Lenders to pay to the Loan Agent any amount due for the expenses, disbursements and advances of the Loan Agent and its agents and counsel and any other amounts due the Loan Agent under Section 8.2.  Nothing contained herein shall be deemed to authorize the Loan Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender to authorize the Loan Agent to vote in respect of the claim of any Lender or in any such proceeding. 
Section 9.9    Collateral and Guaranty Matters.  The Lenders irrevocably authorize the Loan Agent, at its option and in its discretion, to release any Lien on any property granted to or held by the Loan Agent under any Loan Document (a) upon payment in full of all Obligations other than contingent indemnification obligations for which no claim has been asserted, (b) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (c) if approved, authorized or ratified in writing by Lender Consent, to release any Subsidiary from its Guaranty if such Person ceases to be Subsidiary as result of transaction permitted hereunder.   Upon request by the Loan Agent at any time, the Lenders will confirm in writing the Loan Agent’s authority to release its interest in particular types or items of property or to release any Subsidiary from its Guaranty pursuant to this Section 9.9.  In each case as specified in this Section 9.9, the Loan Agent will, at Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of any item of collateral from the assignment and security interest granted 

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under the Loan Documents, or to release such Subsidiary from its obligations under its Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.9.
Section 9.10    Section 9.10    Payment, Reimbusement and Indemnification.  To the extent no paid or reimbursed by any Loan Party, each Lender agrees to pay or reimburse (at Loan Agent’s option), and indemnify Loan Agent, its Affiliates and the directors, officers, employees, attorneys and agents of Loan Agent and its Affiliates (each of the foregoing being a “Loan Agent Indemnitee” and all of the foregoing being collectively the “Loan Agent Indemnitees”) ratably in accordance with their relative percentages of the Term Loan in effect on the date on which payment, reimbursement or indemnification is sought hereunder (or if payment, reimbursement or indemnification is sought after the date on which the Term Loan has been paid in full, ratably in accordance with such relative percentages as the Lenders held immediately prior to the date on which the Term Loan was paid in full), for, and to save each Loan Agent Indemnitee harmless from and against any and all claims, actions, damages, liabilities, judgments, costs and expenses (including all reasonable fees and disbursements of counsel that may be incurred in the investigation or defense of any matter) imposed upon, incurred by or asserted against any Loan Agent Indemnitee, whether direct, indirect or consequential and whether based on any federal, state, local or foreign laws or regulations (including securities laws, environmental laws, commercial laws and regulations), under common law or on equitable cause, or on contract or otherwise by reason of, relating to or in connection with the execution, delivery, performance or enforcement of any Loan Document or any transaction contemplated by any Loan Document; or by reason of, relating to or in connection with any credit extended or used under the Loan Documents or any act done or omitted by Loan Agent in connection with any of the foregoing, provided that no Lender shall be liable to any Loan Agent Indemnitee for any portion of such claims, damages, liabilities and expenses resulting from such Loan Agent Indemnitee’s gross negligence or willful misconduct.  If this indemnity is unenforceable as a matter of law as to a particular matter or consequence referred to herein, it shall be enforceable to the full extent permitted by law.  The provisions of this Section 9.10 shall survive the payment in full of the Term Loan and the satisfaction of all Obligations thereunder. 
 

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

BORROWER:

MESQUITE GAMING, LLC

By: /s/ Anthony Toti                                                  
       ANTHONY TOTI, Chief Executive Officer 

Address for the Borrower:

950 West Mesquite Blvd.
Mesquite, NV 89027
Fax:  (702) 346-4030

With a copy to:

K. Michael Leavitt
Law Offices of K. Michael Leavitt
8345 West Sunset Road, Suite 250
Las Vegas, Nevada 89113 
Fax: (702) 382-2892

S-1
Second Lien Credit Agreement
LV 420049247v8

	
			
	 
	 

	Address for Loan Agent:
	LOAN AGENT:

	50 S. Sixth Street, Suite 1290
Minneapolis, MN  55402
	WILMINGTON TRUST, NATIONAL ASSOCIATION, as administrative agent and collateral agent for the Lender

	 
	 

	 
	By:
	/s/ Renee Kuhl

	 
	 
	RENEE KUHL, Vice President

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Second Lien Credit Agreement
LV 420049247v8

	
			
	 
	LENDERS:

	Address for MJG LLC, 
JFG LLC and MT:
	MICHAEL J. GAUGHAN FAMILY, LLC, 
as a Lender

	 
	 

	c/o South Point Hotel and Casino
	 

	9777 S. Las Vegas Boulevard   
	By:
	/s/ Michael J. Gaughan

	Las Vegas, NV 89183
	 
	MICHAEL J. GAUGHAN, Class A Member

	 
	 

	With a copy to:
	JOHN F. GAUGHAN FAMILY LLC, 
as a Lender

	Conway, Stuart & Woodbury
	 

	Attention:  R. Greg Stuart, CPA
	 

	4021 Meadows Lane
	By:
	/s/ Michael J. Gaughan

	Las Vegas, NV 89107
	 
	MICHAEL J. GAUGHAN, Class A Member

	 
	 

	 
	MICHAEL J. GAUGHAN, 
Trustee of the Marital Trust as created under the Gaughan 1993 Trust dated December 28, 1993, as a Lender

	 
	 

	 
	 

	 
	By:
	/s/ Michael J. Gaughan

	 
	 
	MICHAEL J. GAUGHAN, Trustee

	 
	 

	 
	 

	Address for Franklin Toti:

5023 Spanish Heights
	FRANKLIN TOTI, 
Trustee of the Frank Toti Trust dated May 6, 2008, 
as a Lender 

	Las Vegas, NV  89113
	 

	 
	 

	 
	By:
	/s/ Franklin Toti

	 
	 
	FRANKLIN TOTI, Trustee

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Second Lien Credit Agreement
LV 420049247v8

    
NGA Blocker, LLC,
as a Lender

Address for NGA:
By: /s/ Ryan Langdon                                      
21 Waterway Avenue, #150                 RYAN LANGDON, Manager       
The Woodlands, Texas 77380                    

By: /s/ Tim Janszen                                      
     TIM JANSZEN, Manager

 
       

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Second Lien Credit Agreement
LV 420049247v8

EXHIBIT A TO 
SECOND LIEN CREDIT AGREEMENT
FORM OF SENIOR SUBORDINATED TERM NOTE
$_________________    August [__], 2013
Las Vegas, Nevada
FOR VALUE RECEIVED, Mesquite Gaming, LLC, a Nevada limited liability company, hereby promises to pay to the order of ____________________________ (the “Lender”) at ____________________________________________, in lawful money of the United States of America in Immediately Available Funds (as such term and each other capitalized term used herein are defined in the Second Lien Credit Agreement hereinafter referred to) the principal amount of ___________________________________($____________), and to pay interest (computed on the basis of actual days elapsed and a year of 360 days) in like funds on the unpaid principal amount hereof from time to time outstanding at the rates and times set forth in the Second Lien Credit Agreement.
The principal hereof is payable as set forth in the Second Lien Credit Agreement.
This note is one of the Term Notes referred to in the Second Lien Credit Agreement dated as of August [  ], 2013, as from time to time amended, restated or otherwise modified, the “Second Lien Credit Agreement”) between the undersigned and the Lender.  This note is secured, it is subject to certain mandatory prepayments and its maturity is subject to acceleration, in each case upon the terms provided in said Second Lien Credit Agreement.  
In the event of default hereunder, the undersigned agrees to pay all reasonable costs and expenses of collection, including reasonable attorneys’ fees.  The undersigned waives demand, presentment, notice of nonpayment, protest, notice of protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
MESQUITE GAMING, LLC

By:                             
Name:                             
Title:                             

A-1
LV 420049247v8

EXHIBIT B TO 
CREDIT AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
To:  Nevada State Bank:
THE UNDERSIGNED HEREBY CERTIFIES THAT:    
(1)  I am the chief financial officer of Mesquite Gaming, LLC (the “Borrower”);
(2)  I have reviewed the terms of the Credit Agreement dated as of August [  ], 2013, between the Borrower and Nevada State Bank, as the Lender (as amended, the “Credit Agreement”), and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower during the accounting period covered by the Attachment hereto;
(3)  The examination described in paragraph (2) did not disclose, and I have no knowledge, whether arising out of such examinations or otherwise, of the existence of any condition or event that constitutes a Default or an Event of Default (as such terms are defined in the Credit Agreement) as of the end of the accounting period covered by the Attachment hereto, except as described below (or on a separate attachment to this Certificate).  The exceptions listing, in detail, the nature of the condition or event, the period during which it has existed and the action the Borrower have taken, is taking or proposes to take with respect to each such condition or event are as follows:
 
     
    
The foregoing certification, together with the computations in the Attachment hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this ___ day of _______________, _______ pursuant to Section 5.1(c) of the Credit Agreement.

MESQUITE GAMING, LLC

By:                             
Name:                             
Title:                             

B-1
LV 420049247v8

ATTACHMENT TO COMPLIANCE CERTIFICATE 
AS OF ______________, ____WHICH PERTAINS 
TO THE PERIOD FROM ________________, ______ 
TO ________________, _______

		
	1.
	Capital Expenditures (Section 6.11, calculated on an annual basis)

		
	(a)
	Total Revenues for Prior Year (201_):                $________

		
	(b)
	Maximum Capital Expenditures not financed by capital

contributions (4.4% of (a)):                        $________

		
	(c)  
	Minimum Capital Expenditures not financed by capital

contributions (.90% of (a)):                        $________

		
	(d)
	Total Capital Expenditures for Current Year (201_):            $________

(e)        Capital Expenditures financed by capital 
		
	             contributions
	$________

(f)         Capital Expenditures not financed by capital
		
	             contributions 
	((d) minus (c)):                $________

		
	2.
	Fixed Charge Coverage Ratio (Section 6.17)

Fixed Charge Coverage Ratio

		
	(i) EBITDA
	$______________ (A)

(plus cure contribution, if applicable)        $_______________(A1)

		
	(ii) Restricted Payments  
	$______________ (B)

		
	(iii) Capital Expenditures paid in cash
	$______________ (C)

		
	(iv) income taxes paid in cash
	$______________ (D)

		
	(v) Interest Expense paid in cash
	$______________ (E)

		
	(vi) scheduled principal payments with  
respect to Total Liabilities
	$______________ (F)

		
	Ratio of (A) (plus A1, if applicable) minus (B) minus (C) minus 
(D) to (E) plus (F)
	______ to 1.0

B-2
LV 420049247v8

		
	3.
	Senior Cash Flow Leverage Ratio (Section 6.18)

(i) Total Funded Debt            
other than Subordinated Debt            $______________ (G)

		
	(ii) EBITDA 
	$______________ (H)

(plus cure contribution, if applicable)        $______________ (H1)

		
	Ratio of (G) to (H) (plus H1, if applicable)
	______ to 1.0

4.    Liquidity (Section 6.19)

		
	(i) Cash and Cash Equivalents
	$______________ (I)

(plus cure contribution, if applicable)        $______________ (I1)

		
	(I) (plus I1, if applicable)
	$________________

B-3
 
LV 420049247v8

Schedule L-1

TERM LOAN COMMITMENTS

Michael J. Gaughan Family, LLC                        $  4,000,000

John F. Gaughan Family LLC                        $  4,000,000

Michael J. Gaughan, Trustee of the Marital Trust
as created under the Gaughan 1993 Trust dated December 28, 1993        $  2,500,000

Franklin Toti, Trustee of the Frank Toti Trust dated May 6, 2008        $10,500,000

NGA Blocker, LLC                                $14,000,000

 $35,000,000

 
LV 420049247v8

SCHEDULE 4.6

LITIGATION

None.

LV 420049247v8

SCHEDULE 4.7

ENVIRONMENTAL MATTERS

		
	1)
	Assessment findings set forth in that certain Phase I Environmental Site Assessment of 950 West Mesquite Boulevard, Mesquite, Nevada dated August 6, 2013 prepared by Converse Consultants and identified as Converse Project No. 13-43204-01.

		
	2)
	Assessment findings set forth in that certain Phase I Environmental Site Assessment of 711 Peppermill Palms Boulevard, Littlefield, Arizona dated August 6, 2013 prepared by Converse Consultants and identified as Converse Project No. 13-43204-01.

 
LV 420049247v8

SCHEDULE 4.8

ERISA

Mesquite Gaming, LLC 401(k) Plan – Number 001
Mesquite Gaming, LLC Employee Medical, Dental and Vision Plans

 
LV 420049247v8

SCHEDULE 4.18

SUBSIDIARIES

	
		
	Entity and Jurisdiction
	Owner-Percentage

	VRCC, LLC, 
a Nevada limited liability company

	Mesquite Gaming, LLC-100%

	C & HRV, LLC, 
a Nevada limited liability company

	Mesquite Gaming, LLC-100%

	5.47 RBI, LLC, 
a Nevada limited liability company

	VRCC, LLC – 100%

	RBG, LLC, 
a Nevada limited liability company

	VRCC, LLC -94.53%
5.47 RBI, LLC 5.47%

	CasaBlanca Resorts, LLC, 
a Nevada limited liability company

	RBG, LLC – 100%

	Oasis Interval Ownership, LLC, 
a Nevada limited liability company

	CasaBlanca Resorts, LLC – 100%

	Oasis Interval Management, LLC, 
a Nevada limited liability company

	CasaBlanca Resorts, LLC – 100%

	Oasis Recreational Properties, Inc., 
a Nevada corporation

	CasaBlanca Resorts, LLC – 100%

 
LV 420049247v8

SCHEDULE 4.26
LOCATIONS 

	
		
	Borrower/Subsidiary
	Location

	Mesquite Gaming, LLC
	950 West Mesquite Boulevard
Mesquite, NV 89027

	VRCC, LLC
	950 West Mesquite Boulevard
Mesquite, NV 89027

	C & HRV, LLC
	100 Pioneer Boulevard
Mesquite, NV 89027

	5.47 RBI, LLC
	950 West Mesquite Boulevard
Mesquite, NV 89027

	RBG, LLC
	950 West Mesquite Boulevard
Mesquite, NV 89027

	CasaBlanca Resorts, LLC
	897 West Mesquite Boulevard
Mesquite, NV 89027
850 West Mesquite Boulevard
Mesquite, NV 89027
61 Riverside Road
Mesquite, NV 89027

	Oasis Interval Ownership, LLC
	950 West Mesquite Boulevard
Mesquite, NV 89027

	Oasis Interval Management, LLC
	950 West Mesquite Boulevard
Mesquite, NV 89027

	Oasis Recreational Properties, Inc.
	530 West Peppermill Palms Boulevard
Littlefield, AZ 86432

 
LV 420049247v8

SCHEDULE 6.12
 
INVESTMENTS

None.

LV 420049247v8

SCHEDULE 6.13

INDEBTEDNESS

	
			
	Debtor
	Creditor
	Est. Balance

	C&HRV, LLC (B&BB, Inc.)
	Bally Technologies
(Capital Leases – Gaming Devices)
	$26,739.00

	C&HRV, LLC (B&BB, Inc.)
	International Game Technologies, Inc.
(Capital Leases – Gaming Devices)
	$17,761.00

	RBG, LLC
	Bally Technologies
(Capital Leases – Gaming Devices)
	$17,826.00

	RBG, LLC
	International Game Technologies, Inc.
(Capital Leases – Gaming Devices)
	$5,920.00

 
LV 420049247v8

SCHEDULE 6.14
LIENS

	
								
	File Date
	Debtor
	Secured Party
	Type
	Secured Party's Address
	Document No
	Actions
	Description of Property

	9/15/2011
	Mesquite Gaming LLC
	WMS Gaming, Inc
	Organization
	800 S Northpoint Blvd.
Waukegan, IL 60085
	2011024527-9
	Initial Financing Statement
	Slot Machines

	12/14/2011
	Mesquite Gaming LLC; RGB, LLC; C & HRV, LLC; Virgin River Hotel & Casino; CasaBlanca Resort & Casino
	U.S. Foodservice, Inc.
	Organization
	1685 W. Cheyenne Avenue 
North Las Vegas, NV 89032
	2011033359-3
	Initial Financing Statement
	Food and Equipment Trade Payables

	5/22/2012
	Mesquite Gaming LLC
	People's United Bank/
NFS Leasing, Inc.
	Organization
	People's United Bank
One Post Office Square 
Suite 3710  
Boston MA 02109

NFS Leasing, Inc.
900 Cummings Center 
Suite 309-V  
Beverly MA 01915
	2012013850-3
	Initial Financing Statement
	Dell Computers (operating lease)

	1/30/2013
	Mesquite Gaming LLC
	Konami Gaming, LLC
	Organization
	585 Trade Center Drive 
Las Vegas, NV 89119
	2013002742-3
	Initial Financing Statement
	Slot Machines

	8/8/2013
	Mesquite Gaming LLC
	Xerox Financial Services
	Organization
	45 Glover Ave  
Norwalk CT 06856
	2013020302-3
	Initial Financing Statement
	Hotel, Slots, Cage, Office desktop printers (operating lease)

	1/19/2009
	RBG, LLC
	US Bancorp
	Organization
	1310 Madrid Street 
Marshall MN 56258
	2009001564-5
	Initial Financing Statement
	Printer Copier (operating lease)

	12/28/2009
	RBG, LLC
	US Bancorp
	Organization
	1310 Madrid Street 
Marshall MN 56258
	2009031163-1
	Initial Financing Statement
	Printer Copier (operating lease)

	1/28/2010
	RBG, LLC
	US Bancorp
	Organization
	1310 Madrid Street 
Marshall MN 56258
	2010002511-8
	Initial Financing Statement
	Printer Copier (operating lease)

	2/1/2011
	RBG, LLC
	IGT
	Organization
	9295 Prototype Drive 
Reno, NV 89521
	2011002521-1
	Initial Financing Statement
	Slot Machines

LV 420049247v8

	
								
	File Date
	Debtor
	Secured Party
	Type
	Secured Party's Address
	Document No
	Actions
	Description of Property

	4/19/2012
	RBG, LLC
	Konami Gaming, LLC
	Organization
	585 Trade Center Drive 
Las Vegas, NV 89119
	2012010817-0
	Initial Financing Statement
	Slot Machines

	6/14/2012
	RBG, LLC
	Konami Gaming, LLC
	Organization
	585 Trade Center Drive 
Las Vegas, NV 89119
	2012016365-7
	Initial Financing Statement
	Slot Machines

	10/16/2012
	RBG, LLC
	Aristocrat Technologies, Inc
	Organization
	7230 Amigo Street Las Vegas NV 89119
	2012027491-7
	Initial Financing Statement
	Slot Machines

	12/18/2012
	RBG, LLC
	IGT
	Organization
	9295 Prototype Drive  
Reno, NV 89521
	2012032877-2
	Initial Financing Statement
	Slot Machines

	3/29/2013
	C&HRV LLC; and RG, LLC
	Onset Financial, Inc.
	Organization
	10813 S River Front Parkway 
Suite 450 
South Jordan, UT 84095
	2013007908-0
	Initial Financing Statement
	Surveillance Equipment (operating lease)

	8/26/2011
	C&HRV LLC
	Dell Financial Services L.L.C.
	Organization
	M.S. PS2DF
23 One Dell Way
Round Rock, TX 78682
	2011022705-5
	Initial Financing Statement
	Computer equipment

	10/18/2011
	C&HRV LLC
	Konami Gaming, Inc.
	Organization
	585 Trade Center Drive
Las Vegas, NV 89119
	2011027728-8
	Initial Financing Statement
	Slot Machines

	4/12/2012
	C & HRV dba Virgin River Hotel and Casino
	Ainsworth Game Technology Ltd
	Organization
	6975 S. Decatur Blvd., Suite 140
Las Vegas, NV 89118
	2012010047-7
	Initial Financing Statement
	Slot Machines

	4/13/2012
	C & HRV, LLC
	WMS Gaming, Inc.
	Organization
	800 S Northpoint Blvd.
Waukegan, IL 60085
	2012010069-3
	Initial Financing Statement
	Slot Machines

	12/10/2012
	C & HRV, LLC
	Aristocrat Technologies, Inc.
	Organization
	7230 Amigo Street Las Vegas NV 89119
	2012031852-9
	Initial Financing Statement
	Slot Machines

	12/13/2012
	C & HRV, LLC
	Aristocrat Technologies, Inc.
	Organization
	7230 Amigo Street Las Vegas NV 89119
	2012032229-9
	Initial Financing Statement
	Slot Machines

	12/18/2012
	C & HRV, LLC
	IGT
	Organization
	9295 Prototype Drive  
Reno, NV 89521
	2012032887-3
	Initial Financing Statement
	Slot Machines

LV 420049247v8

LV 420049247v8

LV 420049247v8ex10-1.htm

Exhibit 10.1

 

SPHERIX INCORPORATED

 

DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT

 

This Director and Officer Indemnification Agreement, dated as of October 14, 2013 (this “Agreement”), is made by and between Spherix Incorporated, a Delaware corporation (the “Company”), and Michael Pollack (the “Indemnitee”).

 

RECITALS:

 

A.           Section 141 of the Delaware General Corporation Law provides that the business and affairs of a corporation shall be managed by or under the direction of its board of directors.

 

B.           By virtue of the managerial prerogatives vested in the directors and officers of a Delaware corporation, directors and officers act as fiduciaries of the corporation and its stockholders.

 

C.           Thus, it is critically important to the Company and its stockholders that the Company be able to attract and retain the most capable persons reasonably available to serve as directors and officers of the Company.

 

D.           In recognition of the need for corporations to be able to induce capable and responsible persons to accept positions in corporate management, Delaware law authorizes (and in some instances requires) corporations to indemnify their directors and officers, and further authorizes corporations to purchase and maintain insurance for the benefit of their directors and officers.

 

E.           The Delaware courts have recognized that indemnification by a corporation serves the dual policies of (1) allowing corporate officials to resist unjustified lawsuits, secure in the knowledge that, if vindicated, the corporation will bear the expense of litigation, and (2) encouraging capable women and men to serve as corporate directors and officers, secure in the knowledge that the corporation will absorb the costs of defending their honesty and integrity.

 

F.           The number of lawsuits challenging the judgment and actions of directors and officers of Delaware corporations, the costs of defending those lawsuits and the threat to personal assets have all materially increased over the past several years, chilling the willingness of capable women and men to undertake the responsibilities imposed on corporate directors and officers.

 

G.           Recent federal legislation and rules adopted by the Securities and Exchange Commission and the national securities exchanges have exposed such directors and officers to new and substantially broadened civil liabilities.

 

H.           Under Delaware law, a director’s or officer’s right to be reimbursed for the costs of defense of criminal actions, whether such claims are asserted under state or federal law, does not depend upon the merits of the claims asserted against the director or officer and is separate and distinct from any right to indemnification the director may be able to establish.

  

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I.           Indemnitee is, or will be, a director and/or officer of the Company and his or her willingness to serve in such capacity is predicated, in substantial part, upon the Company’s willingness to indemnify him or her in accordance with the principles reflected above, to the fullest extent permitted by the laws of the State of Delaware, and upon the other undertakings set forth in this Agreement.

 

J.           Therefore, in recognition of the need to provide Indemnitee with substantial protection against personal liability, in order to procure Indemnitee’s continued service as a director and/or officer of the Company and to enhance Indemnitee’s ability to serve the Company in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company’s certificate of incorporation or bylaws (collectively, the “Constituent Documents”), any change in the composition of the Company’s Board of Directors (the “Board”) or any change-in-control or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification and advancement of Expenses to Indemnitee on the terms, and subject to the conditions, set forth in this Agreement.

 

K.           In light of the considerations referred to in the preceding recitals, it is the Company’s intention and desire that the provisions of this Agreement be construed liberally, subject to their express terms, to maximize the protections to be provided to Indemnitee hereunder.

 

AGREEMENT:

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Certain Definitions.  In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:

 

“Change in Control” shall have occurred at such time, if any, as Incumbent Directors cease for any reason to constitute a majority of Directors.  For purposes of this Section 1(a), “Incumbent Directors” means the individuals who, as of the date hereof, are Directors of the Company and any individual becoming a Director subsequent to the date hereof whose election, nomination for election by the Company’s stockholders, or appointment, was approved by a vote of at least a majority of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Securities Exchange Act of 1934, as amended) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

 

“Claim” means (i) any threatened, asserted, pending or completed claim, demand, action, suit or proceeding, whether civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; and (ii) any inquiry or investigation, whether made, instituted or conducted by the Company or any other Person, including, without limitation, any federal, state or other governmental entity, that Indemnitee reasonably determines might lead to the institution of any such claim, demand, action, suit or proceeding.  For the avoidance of doubt, the Company intends indemnity to be provided hereunder in respect of acts or failure to act prior to, on or after the date hereof.

 

“Controlled Affiliate” means any corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, that is directly or indirectly controlled by the Company.  For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity or enterprise, whether through the ownership of voting securities, through other voting rights, by contract or otherwise; provided that direct or indirect beneficial ownership of capital stock or other interests in an entity or enterprise entitling the holder to cast 15% or more of the total number of votes generally entitled to be cast in the election of directors (or persons performing comparable functions) of such entity or enterprise shall be deemed to constitute control for purposes of this definition.

 

  

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“Disinterested Director” means a director of the Company who is not and was not a party to the Claim in respect of which indemnification is sought by Indemnitee.

 

“Expenses” means attorneys’ and experts’ fees and expenses and all other costs and expenses paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in (including on appeal), any Claim.

 

“Indemnifiable Claim” means any Claim based upon, arising out of or resulting from (i) any actual, alleged or suspected act or failure to act by Indemnitee in his or her capacity as a director, officer, employee or agent of the Company or as a director, officer, employee, member, manager, trustee or agent of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, as to which Indemnitee is or was serving at the request of the Company, (ii) any actual, alleged or suspected act or failure to act by Indemnitee in respect of any business, transaction, communication, filing, disclosure or other activity of the Company or any other entity or enterprise referred to in clause (i) of this sentence, or (iii) Indemnitee’s status as a current or former director, officer, employee or agent of the Company or as a current or former director, officer, employee, member, manager, trustee or agent of the Company or any other entity or enterprise referred to in clause (i) of this sentence or any actual, alleged or suspected act or failure to act by Indemnitee in connection with any obligation or restriction imposed upon Indemnitee by reason of such status.  In addition to any service at the actual request of the Company, for purposes of this Agreement, Indemnitee shall be deemed to be serving or to have served at the request of the Company as a director, officer, employee, member, manager, trustee or agent of another entity or enterprise if Indemnitee is or was serving as a director, officer, employee, member, manager, agent, trustee or other fiduciary of such entity or enterprise and (i) such entity or enterprise is or at the time of such service was a Controlled Affiliate, (ii) such entity or enterprise is or at the time of such service was an employee benefit plan (or related trust) sponsored or maintained by the Company or a Controlled Affiliate, or (iii) the Company or a Controlled Affiliate (by action of the Board, any committee thereof or the Company’s Chief Executive Officer (“CEO”) (other than as the CEO him or herself)) caused or authorized Indemnitee to be nominated, elected, appointed, designated, employed, engaged or selected to serve in such capacity.

 

“Indemnifiable Losses” means any and all Losses relating to, arising out of or resulting from any Indemnifiable Claim; provided, however, that Indemnifiable Losses shall not include Losses incurred by Indemnitee in respect of any Indemnifiable Claim (or any matter or issue therein) as to which Indemnitee shall have been adjudged liable to the Company, unless and only to the extent that the Delaware Court of Chancery or the court in which such Indemnifiable Claim was brought shall have determined upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Expenses as the court shall deem proper.

 

“Independent Counsel” means a nationally recognized law firm, or a member of a nationally recognized law firm, that is experienced in matters of Delaware corporate law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company (or any subsidiary) or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements) or (ii) any other named (or, as to a threatened matter, reasonably likely to be named) party to the Indemnifiable Claim giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

“Losses” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other) and amounts paid or payable in settlement, including, without limitation, all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing.

 

“Person” means any individual, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended.

 

  

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“Standard of Conduct” means the standard for conduct by Indemnitee that is a condition precedent to indemnification of Indemnitee hereunder against Indemnifiable Losses relating to, arising out of or resulting from an Indemnifiable Claim.  The Standard of Conduct is (i) good faith and a reasonable belief by Indemnitee that his action was in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, that Indemnitee had no reasonable cause to believe that his conduct was unlawful, or (ii) any other applicable standard of conduct that may hereafter be substituted under Section 145(a) or (b) of the Delaware General Corporation Law or any successor to such provision(s).

 

2. Indemnification Obligation.  Subject only to Section 7 and to the proviso in this Section, the Company shall indemnify, defend and hold harmless Indemnitee, to the fullest extent permitted or required by the laws of the State of Delaware in effect on the date hereof or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against any and all Indemnifiable Claims and Indemnifiable Losses; provided, however, that, except as provided in Section 5, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with (i) any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has joined in or consented to the initiation of such Claim, or (ii) the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended.  The Company acknowledges that the foregoing obligation may be broader than that now provided by applicable law and the Company’s Constituent Documents and intends that it be interpreted consistently with this Section and the recitals to this Agreement.

 

3. Advancement of Expenses.  Indemnitee shall have the right to advancement by the Company prior to the final disposition of any Indemnifiable Claim of any and all actual and reasonable Expenses relating to, arising out of or resulting from any Indemnifiable Claim paid or incurred by Indemnitee.  Without limiting the generality or effect of any other provision hereof, Indemnitee’s right to such advancement is not subject to the satisfaction of any Standard of Conduct.  Without limiting the generality or effect of the foregoing, within five business days after any request by Indemnitee that is accompanied by supporting documentation for specific reasonable Expenses to be reimbursed or advanced, the Company shall, in accordance with such request (but without duplication), (a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses; provided that Indemnitee shall repay, without interest, any amounts actually advanced to Indemnitee that, at the final disposition of the Indemnifiable Claim to which the advance related, were in excess of amounts paid or payable by Indemnitee in respect of Expenses relating to, arising out of or resulting from such Indemnifiable Claim.  In connection with any such payment, advancement or reimbursement, at the request of the Company, Indemnitee shall execute and deliver to the Company an undertaking, which need not be secured and shall be accepted without reference to Indemnitee’s ability to repay the Expenses, by or on behalf of the Indemnitee, to repay any amounts paid, advanced or reimbursed by the Company in respect of Expenses relating to, arising out of or resulting from any Indemnifiable Claim in respect of which it shall have been determined, following the final disposition of such Indemnifiable Claim and in accordance with Section 7, that Indemnitee is not entitled to indemnification hereunder.

 

4. Indemnification for Additional Expenses.  Without limiting the generality or effect of the foregoing, the Company shall indemnify and hold harmless Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business days of such request accompanied by supporting documentation for specific Expenses to be reimbursed or advanced, any and all actual and reasonable Expenses paid or incurred by Indemnitee in connection with any Claim made, instituted or conducted by Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any other agreement or provision of the Constituent Documents now or hereafter in effect relating to Indemnifiable Claims, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company; provided, however, if it is ultimately determined that the Indemnitee is not entitled to such indemnification, reimbursement, advance or insurance recovery, as the case may be, then the Indemnitee shall be obligated to repay any such Expenses to the Company; provided further, that, regardless in each case of whether Indemnitee ultimately is determined to be entitled to such indemnification, reimbursement, advance or insurance recovery, as the case may be, Indemnitee shall return, without interest, any such advance of Expenses (or portion thereof) which remains unspent at the final disposition of the Claim to which the advance related.

 

  

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5. Partial Indemnity.  If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Indemnifiable Loss but not for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

 

6. Procedure for Notification.  To obtain indemnification under this Agreement in respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee shall submit to the Company a written request therefore, including a brief description (based upon information then available to Indemnitee) of such Indemnifiable Claim or Indemnifiable Loss.  If, at the time of the receipt of such request, the Company has directors’ and officers’ liability insurance in effect under which coverage for such Indemnifiable Claim or Indemnifiable Loss is potentially available, the Company shall give prompt written notice of such Indemnifiable Claim or Indemnifiable Loss to the applicable insurers in accordance with the procedures set forth in the applicable policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all Indemnifiable Claims and Indemnifiable Losses in accordance with the terms of such policies.  The Company shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, substantially concurrently with the delivery thereof by the Company.  The failure by Indemnitee to timely notify the Company of any Indemnifiable Claim or Indemnifiable Loss shall not relieve the Company from any liability hereunder unless, and only to the extent that, the Company did not otherwise learn of such Indemnifiable Claim or Indemnifiable Loss and to the extent that such failure results in forfeiture by the Company of substantial defenses, rights or insurance coverage.

 

7.  Determination of Right to Indemnification.

 

To the extent that Indemnitee shall have been successful on the merits or otherwise in defense of any Indemnifiable Claim or any portion thereof or in defense of any issue or matter therein, including, without limitation, dismissal without prejudice, Indemnitee shall be indemnified against all Indemnifiable Losses relating to, arising out of or resulting from such Indemnifiable Claim in accordance with Section 2 and no Standard of Conduct Determination (as defined in Section 7(b)) shall be required.

 

To the extent that the provisions of Section 7(a) are inapplicable to an Indemnifiable Claim that shall have been finally disposed of, any determination of whether Indemnitee has satisfied the applicable Standard of Conduct (a “Standard of Conduct Determination”) shall be made as follows:  (i) if a Change in Control shall not have occurred, or if a Change in Control shall have occurred but Indemnitee shall have requested that the Standard of Conduct Determination be made pursuant to this clause (i), (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) if such Disinterested Directors so direct, by a majority vote of a committee of Disinterested Directors designated by a majority vote of all Disinterested Directors, or (C) if there are no such Disinterested Directors, or if a majority of the Disinterested Directors so direct, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee; and (ii) if a Change in Control shall have occurred and Indemnitee shall not have requested that the Standard of Conduct Determination be made pursuant to clause (i) above, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to Indemnitee.

 

If (i) Indemnitee shall be entitled to indemnification hereunder against any Indemnifiable Losses pursuant to Section 7(a), (ii) no determination of whether Indemnitee has satisfied any applicable standard of conduct under Delaware law is a legally required condition precedent to indemnification of Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee has been determined or deemed pursuant to Section 7(b) to have satisfied the applicable Standard of Conduct, then the Company shall pay to Indemnitee, within five business days after the later of (x) the Notification Date in respect of the Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are related, out of which such Indemnifiable Losses arose or from which such Indemnifiable Losses resulted, and (y) the earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) above shall have been satisfied, an amount equal to the amount of such Indemnifiable Losses.  Nothing herein is intended to mean or imply that the Company is intending to use Section 145(f) of the Delaware General Corporation Law to dispense with a requirement that Indemnitee meet the applicable Standard of Conduct where it is otherwise required by such statute.

 

  

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If a Standard of Conduct Determination is required to be, but has not been, made by Independent Counsel pursuant to Section 7(b)(i), the Independent Counsel shall be selected by the Board or a committee of the Board, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected.  If a Standard of Conduct Determination is required to be, or to have been, made by Independent Counsel pursuant to Section 7(b)(ii), the Independent Counsel shall be selected by Indemnitee, and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected.  In either case, Indemnitee or the Company, as applicable, may, within five business days after receiving written notice of selection from the other, deliver to the other a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the definition of “Independent Counsel” in Section 1(h), and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the Person so selected shall act as Independent Counsel.  If such written objection is properly and timely made and substantiated, (i) the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit and (ii) the non-objecting party may, at its option, select an alternative Independent Counsel and give written notice to the other party advising such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two immediately preceding sentences and clause (i) of this sentence shall apply to such subsequent selection and notice.  If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative selections.  If no Independent Counsel that is permitted under the foregoing provisions of this Section 7(d) to make the Standard of Conduct Determination shall have been selected within 30 calendar days after the Company gives its initial notice pursuant to the first sentence of this Section 7(d) or Indemnitee gives its initial notice pursuant to the second sentence of this Section 7(d), as the case may be, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person or firm selected by the Court or by such other person as the Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel.  In all events, the Company shall pay all of the actual and reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 7(b).

 

8. Cooperation.  Indemnitee shall cooperate with reasonable requests of the Company in connection with any Indemnifiable Claim and any individual or firm making such Standard of Conduct Determination, including providing to such Person documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to defend the Indemnifiable Claim or make any Standard of Conduct Determination without incurring any unreimbursed cost in connection therewith.  The Company shall indemnify and hold harmless Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business days of such request accompanied by supporting documentation for specific costs and expenses to be reimbursed or advanced, any and all costs and expenses (including attorneys’ and experts’ fees and expenses) actually and reasonably incurred by Indemnitee in so cooperating with the Person defending the Indemnifiable Claim or making such Standard of Conduct Determination.

 

9. Presumption of Entitlement.  Notwithstanding any other provision hereof, in making any Standard of Conduct Determination, the Person making such determination shall presume that Indemnitee has satisfied the applicable Standard of Conduct.

 

10. No Other Presumption.  For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meet any applicable Standard of Conduct or that indemnification hereunder is otherwise not permitted.

 

  

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11. Non-Exclusivity.  The rights of Indemnitee hereunder will be in addition to any other rights Indemnitee may have under the Constituent Documents, or the substantive laws of the Company’s jurisdiction of incorporation, any other contract or otherwise (collectively, “Other Indemnity Provisions”); provided, however, that (a) to the extent that Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, Indemnitee will without further action be deemed to have such greater right hereunder, and (b) to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the date hereof, Indemnitee will be deemed to have such greater right hereunder.  The Company may not, without the consent of Indemnitee, adopt any amendment to any of the Constituent Documents the effect of which would be to deny, diminish or encumber Indemnitee’s right to indemnification under this Agreement.

 

12.  Liability Insurance and Funding.  For the duration of Indemnitee’s service as a director and/or officer of the Company and for a reasonable period of time thereafter, which such period shall be determined by the Company in its sole discretion, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be maintained in effect policies of directors’ and officers’ liability insurance providing coverage for directors and/or officers of the Company, and, if applicable, that is substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance.  Upon reasonable request, the Company shall provide Indemnitee or his or her counsel with a copy of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials.  In all policies of directors’ and officers’ liability insurance obtained by the Company, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits, subject to the same limitations, as are accorded to the Company’s directors and officers most favorably insured by such policy.  Notwithstanding the foregoing, (i) the Company may, but shall not be required to, create a trust fund, grant a security interest or use other means, including, without limitation, a letter of credit, to ensure the payment of such amounts as may be necessary to satisfy its obligations to indemnify and advance expenses pursuant to this Agreement and (ii) in renewing or seeking to renew any insurance hereunder, the Company will not be required to expend more than 2.0 times the premium amount of the immediately preceding policy period (equitably adjusted if necessary to reflect differences in policy periods).

 

13. Subrogation.  In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the related rights of recovery of Indemnitee against other Persons (other than Indemnitee’s successors), including any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f).  Indemnitee shall execute all papers reasonably required to evidence such rights (all of Indemnitee’s reasonable Expenses, including attorneys’ fees and charges, related thereto to be reimbursed by or, at the option of Indemnitee, advanced by the Company).

 

14. No Duplication of Payments.  The Company shall not be liable under this Agreement to make any payment to Indemnitee in respect of any Indemnifiable Losses to the extent Indemnitee has otherwise already actually received payment (net of Expenses incurred in connection therewith) under any insurance policy, the Constituent Documents and Other Indemnity Provisions or otherwise (including from any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f)) in respect of such Indemnifiable Losses otherwise indemnifiable hereunder.

 

  

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15.  Defense of Claims.  Subject to the provisions of applicable policies of directors’ and officers’ liability insurance, if any, the Company shall be entitled to participate in the defense of any Indemnifiable Claim or to assume or lead the defense thereof with counsel reasonably satisfactory to the Indemnitee; provided that if Indemnitee determines, after consultation with counsel selected by Indemnitee, that (a) the use of counsel chosen by the Company to represent Indemnitee would present such counsel with an actual or potential conflict, (b) the named parties in any such Indemnifiable Claim (including any impleaded parties) include both the Company and Indemnitee and Indemnitee shall conclude that there may be one or more legal defenses available to him or her that are different from or in addition to those available to the Company, (c) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, or (d) Indemnitee has interests in the claim or underlying subject matter that are different from or in addition to those of other Persons against whom the Claim has been made or might reasonably be expected to be made, then Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Indemnifiable Claim for all indemnitees in Indemnitee’s circumstances) at the Company’s expense.  The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any threatened or pending Indemnifiable Claim effected without the Company’s prior written consent.  The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any threatened or pending Indemnifiable Claim which the Indemnitee is or could have been a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of the Indemnitee from all liability on any claims that are the subject matter of such Indemnifiable Claim.  Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement; provided that Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of Indemnitee.

 

16. Mutual Acknowledgment. Both the Company and the Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise.  Indemnitee understands and acknowledges that the Company may be required in the future to undertake to the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee and, in that event, the Indemnitee’s rights and the Company’s obligations hereunder shall be subject to that determination.

 

17. Successors and Binding Agreement.

 

This Agreement shall be binding upon and inure to the benefit of the Company and any successor to the Company, including, without limitation, any Person acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the “Company” for purposes of this Agreement), but shall not otherwise be assignable or delegatable by the Company.

 

This Agreement shall inure to the benefit of and be enforceable by the Indemnitee’s personal or legal representatives, executors, administrators, heirs, distributees, legatees and other successors.

 

This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 17(a) and 17(b).  Without limiting the generality or effect of the foregoing, Indemnitee’s right to receive payments hereunder shall not be assignable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by the Indemnitee’s will or by the laws of descent and distribution, and, in the event of any attempted assignment or transfer contrary to this Section 17(c), the Company shall have no liability to pay any amount so attempted to be assigned or transferred.

 

  

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18. Notices.  For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder must be in writing and shall be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or one business day after having been sent for next-day delivery by a nationally recognized overnight courier service, addressed to the Company (to the attention of the Secretary of the Company) and to Indemnitee at the applicable address shown on the signature page hereto, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt.

 

19. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware, without giving effect to the principles of conflict of laws of such State.  The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the Chancery Court of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement, waive all procedural objections to suit in that jurisdiction, including, without limitation, objections as to venue or inconvenience, agree that service in any such action may be made by notice given in accordance with Section 18 and also agree that any action instituted under this Agreement shall be brought only in the Chancery Court of the State of Delaware.

 

20.  Validity.  If any provision of this Agreement or the application of any provision hereof to any Person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other Person or circumstance shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent, and only to the extent, necessary to make it enforceable, valid or legal.  In the event that any court or other adjudicative body shall decline to reform any provision of this Agreement held to be invalid, unenforceable or otherwise illegal as contemplated by the immediately preceding sentence, the parties thereto shall take all such action as may be necessary or appropriate to replace the provision so held to be invalid, unenforceable or otherwise illegal with one or more alternative provisions that effectuate the purpose and intent of the original provisions of this Agreement as fully as possible without being invalid, unenforceable or otherwise illegal.

 

21. Miscellaneous.  No provision of this Agreement may be waived, modified or discharged unless such waiver, modification or discharge is agreed to in writing signed by Indemnitee and the Company.  No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement.

 

22. Certain Interpretive Matters.  Unless the context of this Agreement otherwise requires, (1) “it” or “its” or words of any gender include each other gender, (2) words using the singular or plural number also include the plural or singular number, respectively, (3) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement, (4) the terms “Article,” “Section,” “Annex” or “Exhibit” refer to the specified Article, Section, Annex or Exhibit of or to this Agreement, (5) the terms “include,” “includes” and “including” will be deemed to be followed by the words “without limitation” (whether or not so expressed), and (6) the word “or” is disjunctive but not exclusive.  Whenever this Agreement refers to a number of days, such number will refer to calendar days unless business days are specified and whenever action must be taken (including the giving of notice or the delivery of documents) under this Agreement during a certain period of time or by a particular date that ends or occurs on a non-business day, then such period or date will be extended until the immediately following business day.  As used herein, “business day” means any day other than Saturday, Sunday or a United States federal holiday.

 

23. Entire Agreement.  This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter of this Agreement.  Any prior agreements or understandings between the parties hereto with respect to indemnification are hereby terminated and of no further force or effect.  This Agreement is not the exclusive means of securing indemnification rights of Indemnitee and is in addition to any rights Indemnitee may have under any Constituent Documents.

 

  

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24.  Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together shall constitute one and the same agreement.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

  

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IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly authorized representative to execute this Agreement as of the date first above written.

 

SPHERIX INCORPORATED

 

By:        /s/ Anthony Hayes

Name:   Anthony Hayes

Title:     Chief Executive Officer

 

 

INDEMNITEE:

By:        /s/ Michael Pollack

Name:   Michael Pollack

Address:

 

 

 

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