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Exhibit 10.39    
  

 
 

AMENDMENT NO. 7 TO
  CREDIT AGREEMENT    
  

        This AMENDMENT NO. 7 TO CREDIT AGREEMENT (this "Amendment") is dated as of August 15, 2002 and entered into
by and among OUTSOURCING SERVICES GROUP, INC., a Delaware corporation ("OSG"), as Guarantor, its wholly-owned Subsidiaries,  AEROSOL SERVICES COMPANY, INC.,
 a California corporation, PIEDMONT LABORATORIES, INC., a
Georgia corporation, KOLMAR LABORATORIES, INC., a Delaware corporation, ACUPAC
PACKAGING, INC., a New Jersey corporation, and PRECISION PACKAGING AND SERVICES, INC., an Ohio corporation (the
"Borrowers"), the banks and other financial institutions signatory hereto that are parties as Lenders to the Credit Agreement referred to below (the "Lenders"), BT COMMERCIAL
CORPORATION, as agent (in such capacity, the "Agent") for the Lenders and the Issuing Bank (as defined in the Credit Agreement referred to below) and  HELLER FINANCIAL, INC.,
acting as co-agent (in such capacity, the "Co-Agent"). 

Recitals  

        Whereas, the Borrowers, OSG, the Lenders, the Co-Agent and the Agent have entered into that certain
Credit Agreement dated as of January 8, 1998 (as amended, supplemented or otherwise modified to date, the "Credit Agreement"; capitalized terms used in this Amendment without definition shall
have the meanings given such terms in the Credit Agreement); and 

        Whereas, the Borrowers have requested that the Lenders agree to extend the Expiration Date under the Credit Agreement; and 

        Whereas, the Lenders are willing to agree to grant such extension, subject to the conditions and on the terms set forth herein; 

        Now Therefore, in consideration of the premises and the mutual agreements set forth herein, the Borrowers, OSG, the Lenders, the
Co-Agent and the Agent agree as follows: 

        1.    AMENDMENTS TO CREDIT AGREEMENT.    Subject to the conditions and on the terms set forth in this Amendment and in
reliance on the representations and warranties of the Borrowers and OSG set forth in this Amendment, the Credit Agreement is hereby amended to (a) delete the definition of Expiration Date and
replace it with the following: 

        "Expiration
Date" shall mean July 7, 2003. 

        and
(b) establish a reserve against the Borrowing Base, commencing on September 30, 2002 and increasing on the last day of each month thereafter, in an amount for each such
month equal to 1/6th of the semi-annual interest payment on the Subordinated Debt; provided that, upon meeting the conditions
to Revolving Loans in Section 5.02 of the Credit Agreement, Borrowers may borrow the amount of interest due on such Subordinated Debt (and the reserve shall be reduced to such extent) to make
payments to OSG to pay such interest if payment is then permitted under Section 8.11 of the Credit Agreement. 

        2.    FEES.    The Borrowers, jointly and severally, agree to pay to the Agent, for the ratable benefit of the
Lenders, the following fees, each of which is fully earned on the date on which this Amendment becomes effective in accordance with its terms, and non-refundable when paid: 

        (a)  on
the effective date of this Amendment, a work fee equal to $60,000; and 

        (b)  on
September 30, 2002, a fee equal to one-quarter of one percent (0.25%) of the Commitments outstanding on the date hereof, less the amount of the
work fee paid under clause (a). 

        Such
fees shall be part of the Obligations and secured by the Collateral 

 

        3.    REPRESENTATIONS AND WARRANTIES OF THE BORROWERS AND OSG.    In order to induce the Lenders, the
Co-Agent and the Agent to enter into this Amendment, the Borrowers and OSG represent and warrant to each Lender, the Co-Agent and the Agent that the following statements are
true, correct and complete: 

        3.1    Power and Authority.    Each of the Credit Parties has all corporate power and authority to enter into this
Amendment and, as applicable, the Consent of Guarantors attached hereto (the "Consent"), and to carry out the transactions contemplated by, and to perform its obligations under or in respect of, this
Amendment and the Credit Agreement as amended hereby. 

        3.2    Corporate Action.    The execution and delivery of this Amendment and the Consent and the performance of the
obligations of each Credit Party under or in respect of this Amendment and the Credit Agreement as amended hereby have been duly authorized by all necessary corporate action on the part of each of the
Credit Parties. 

        3.3    No Conflict or Violation or Required Consent or Approval.    The execution and delivery of this Amendment and
the Consent and the performance of the obligations of each Credit Party under or in respect of this Amendment and the Credit Agreement as amended hereby do not and will not conflict with or violate
(a) any provision of the articles or certificate of incorporation or bylaws or other governing documents of any Credit Party, (b) any Requirement of Law, (c) any order, judgment
or decree of any court or other governmental agency binding on any Credit Party or any of its Subsidiaries, or (d) any indenture, agreement or instrument to which any Credit Party or any of its
Subsidiaries is a party or by which any Credit Party or any of its Subsidiaries, or any property of any of them, is bound, and do not and will not require any consent or approval of any Person. 

        3.4    Execution, Delivery and Enforceability.    This Amendment and the Consent and the Credit Agreement as amended
hereby and each other Credit Document have been duly executed and delivered by each Credit Party thereto and are the legal, valid and binding obligations of such Credit Party, enforceable in
accordance with their terms, except as enforceability may be affected by applicable bankruptcy, insolvency, and similar proceedings affecting the rights of creditors generally. 

        3.5    No Default or Event of Default.    No event has occurred and is continuing or will result from the execution
and delivery of this Amendment that would constitute a Default or an Event of Default. 

        3.6    No Material Adverse Effect.    No event has occurred that has resulted, or could reasonably be expected to
result, in a Material Adverse Effect. 

        3.7    Senior Debt.    All Obligations of the Borrowers, whether now outstanding or hereafter created or incurred,
constitute "Guarantor Senior Debt" under the terms of the Subordinated Debt Documents, and all Obligations of OSG, whether now outstanding or hereafter created or incurred, constitute "Senior Debt"
under the terms of the Subordinated Debt Documents. 

        3.8    Representations and Warranties.    Each of the representations and warranties contained in the Credit Documents
is and will be true and correct in all material respects on and as of the date hereof and as of the effective date of this Amendment, except to the extent that such representations and warranties
specifically relate to an earlier date, in which case they were true, correct and complete in all material respects as of such earlier date. 

        4.    CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT.    This Amendment shall be effective only if and when signed by,
and when counterparts hereof shall have been delivered to the 

2

 

Agent (by hand delivery, mail or telecopy) by, the Borrowers, OSG and all Lenders and only if and when each of the following conditions is satisfied: 

        4.1    Consent of Guarantors.    Each of the Guarantors shall have executed and delivered to the Agent the Consent. 

        4.2    No Default or Event of Default; Accuracy of Representations and Warranties.    No Default or Event of Default
shall exist and each of the representations and warranties made by the Credit Parties herein and in or pursuant to the Credit Documents shall be true and correct in all material respects as if made on
and as of the date on which this Amendment becomes effective (except that any such representation or warranty that is expressly stated as being made only as of a specified earlier date shall be true
and correct as of such earlier date), and the Borrowers shall have delivered to the Agent a certificate confirming such matters. 

        4.3    Refinancing Commitments.    The Borrowers shall have delivered to the Agent firm commitments of one or more
lenders to refinance the Obligations in full, which commitments shall not expire prior to September 30, 2002, or such other evidence of refinancing as is acceptable to the Agent
[and the Lenders]. 

        4.4    Work Fee.    The Borrowers shall have paid to the Agent, for the ratable benefit of the Lenders, the work fee
set forth in Section 2(a) above. 

        4.5    Expense Reimbursements.    The Borrowers shall have paid all expense reimbursements due to the Agent pursuant
to Section 11.10 of the Credit Agreement. 

        5.    EFFECT OF THIS AMENDMENT.    From and after the date on which this Amendment becomes effective, all references
in the Credit Documents to the Credit Agreement shall mean the Credit Agreement as amended hereby. Except as expressly amended hereby or waived herein, the Credit Agreement and the other Credit
Documents, including the Liens granted thereunder, shall remain in full force and effect, and are hereby ratified and confirmed. 

        6.    APPLICABLE LAW.    THE VALIDITY, INTERPRETATIONS AND ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT
OF OR IN CONNECTION WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS OTHER THAN
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS OF THE STATE OF NEW YORK. 

        7.    COMPLETE AGREEMENT.    This Amendment sets forth the complete agreement of the parties in respect of any
amendment to any of the provisions of any Credit Document or any waiver thereof. 

        8.    CATCHLINES & COUNTERPARTS.    The catchlines and captions herein are intended solely for convenience of
reference and shall not be used to interpret or construe the provisions hereof. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts
(including by telecopy), all of which taken together shall constitute but one and the same instrument. 

[remainder
of page intentionally left blank] 

3

   
        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by a duly authorized officer as of the date first
above written. 

	 	 	OUTSOURCING SERVICES GROUP, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	AEROSOL SERVICES COMPANY, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	PIEDMONT LABORATORIES, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	KOLMAR LABORATORIES, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO

[signatures
continue] 

S-1

 

	 	 	ACUPAC PACKAGING, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	PRECISION PACKAGING AND SERVICES, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 

S-2

 

	 	 	BT COMMERCIAL CORPORATION,

as Agent
	

 	
 	

 	

 	

 
	 	 	By:	/s/  MICHAEL MALCANGI      

	 	 	 	Name:	Michael Malcangi
	 	 	 	Title:	Vice President
	

 	
 	

 	

 	

 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known as Bankers Trust Company), as a Lender
	

 	
 	

 	

 	

 
	 	 	By:	/s/  MICHAEL MALCANGI      

	 	 	 	Name:	Michael Malcangi
	 	 	 	Title:	Vice President
	

 	
 	

 	

 	

 

S-3

 

	 	 	HELLER FINANCIAL, INC.,

as Co-Agent and as a Lender
	

 	
 	

 	

 	

 
	 	 	By:	 	 
	 	 	 	

	 	 	 	Name:	 
	 	 	 	 	

	 	 	 	Title:	 
	 	 	 	 	

	

 	
 	

 	

 	

 

S-4

 

	 	 	PNC BANK, NATIONAL ASSOCIATION

as a Lender
	

 	
 	

 	

 	

 
	 	 	By:	/s/  GREGORY J. HALL      

	 	 	 	Name:	Gregory J. Hall
	 	 	 	Title:	Vice President
	

 	
 	

 	

 	

 

S-5

 

	 	 	CALIFORNIA BANK & TRUST,

as a Lender
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PAUL W. JOHNSON, JR.      

	 	 	 	Name:	Paul W. Johnson, Jr.
	 	 	 	Title:	Vice President
	

 	
 	

 	

 	

 

S-6

 

	 	 	FLEET CAPITAL CORPORATION,

as a Lender
	

 	
 	

 	

 	

 
	 	 	By:	/s/  MATTHEW R. VAN STEENHUYSE      

	 	 	 	Name:	Matthew R. Van Steenhuyse
	 	 	 	Title:	Senior Vice President
	

 	
 	

 	

 	

 

S-7

 
 

CONSENT OF GUARANTORS    
  

        Each of the undersigned is a Guarantor of the Obligations of the Borrowers under the Credit Agreement and hereby (a) consents to the foregoing Amendment,
(b) acknowledges that notwithstanding the execution and delivery of the foregoing Amendment, the obligations of each of the undersigned Guarantors are not impaired or affected and the
Guaranties continue in full force and effect, and (c) ratifies its Guaranty. 

        IN
WITNESS WHEREOF, each of the undersigned has executed and delivered this Consent of Guarantors as of the 15th day of August, 2002. 

	 	 	OUTSOURCING SERVICES GROUP, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	AEROSOL SERVICES COMPANY, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	PIEDMONT LABORATORIES, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	KOLMAR LABORATORIES, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 

	 	 	ACUPAC PACKAGING, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	PRECISION PACKAGING AND SERVICES, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	KOLMAR CANADA, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 
	 	 	OSG IVERS-LEE, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  PERRY MORGAN      

	 	 	 	Name:	Perry Morgan
	 	 	 	Title:	VP & CFO
	

 	
 	

 	

 	

 

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Exhibit 10.39

AMENDMENT NO. 7 TO CREDIT AGREEMENT

CONSENT OF GUARANTORS<Page>

                                                                EXHIBIT NO. 10.1

                        ASSUMPTION AND CONSENT AGREEMENT

          THIS ASSUMPTION AND CONSENT AGREEMENT ("Assumption Agreement") is made
as of the 1st day of April, 2002, by and among BRANCH BANKING AND TRUST COMPANY
(herein referred to as the "Assuming Lender"), MTR GAMING GROUP, INC., a
Delaware corporation, MOUNTAINEER PARK, INC., a West Virginia corporation,
SPEAKEASY GAMING OF LAS VEGAS, INC., a Nevada corporation, SPEAKEASY GAMING OF
RENO, INC., a Nevada corporation and PRESQUE ISLE DOWNS, INC., a Pennsylvania
corporation (collectively the "Borrowers") and WELLS FARGO BANK, National
Association, in its capacity as Agent Bank as described hereinbelow.

                                 R E C I T A L S:

          A.   Reference is made to that certain Amended and Restated Credit
Agreement, dated as of August 15, 2000, as amended by First Amendment to Amended
and Restated Credit Agreement dated as of July 30, 2001 and as further amended
by Second Amendment to Amended and Restated Credit Agreement dated as of October
16, 2001 (as may be further amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), by and among Borrowers, the Banks therein
named and Wells Fargo Bank, National Association, as administrative and
collateral agent for the Banks (herein, in such capacity, called the "Agent
Bank").

          B.   In this Assumption Agreement, all capitalized words and terms not
otherwise defined herein shall have the respective meanings to be construed
herein as provided in Section 1.01 of the Credit Agreement and any reference to
a provision of the Credit Agreement shall be deemed to incorporate such
provision as a part hereof in the same manner and with the same effect as if the
same were fully set forth herein.

          C.   The Second Increase Effective Date occurred as of October 30,
2001, on which date the Aggregate Commitment was increased from Sixty-Seven
Million Five Hundred Thousand Dollars ($67,500,000.00) to Seventy-Five Million
Dollars ($75,000,000.00).

          D.   Pursuant to Section 2.01(d) of the Credit Agreement, Borrowers
desire to further increase the Aggregate Commitment from Seventy-Five Million
Dollars ($75,000,000.00) to Eighty-Five Million Dollars ($85,000,000.00), an
increase of Ten Million Dollars ($10,000,000.00) (the "Commitment Increase").

          E.   Assuming Lender is willing to commit to advance the full amount
of the Commitment Increase, so that as of the Effective Date, as hereinafter
defined, Assuming Lender shall hold the respective Pro Rata Share of the
Aggregate

<Page>

Commitment as increased by the Commitment Increase and the respective
Syndication Interest in the Revolving Credit Facility set forth below (the
"Assumed Interest"):

<Table>
<Caption>
                                                                                         PROPORTIONATE
                                                          PRO RATA SHARE OF          SYNDICATION INTERESTS
                              AMOUNT OF COMMITMENT       AGGREGATE COMMITMENT         AFTER COMMITMENT
 NAME OF ASSUMING LENDER            INCREASE           AFTER COMMITMENT INCREASE           INCREASE
-------------------------- -------------------------- --------------------------- -------------------------
<S>                               <C>                         <C>                           <C>
Branch Banking and Trust          $ 10,000,000.00             $ 10,000,000.00               11.7647059%
Company
========================== ========================== =========================== =========================
</Table>

          F.   This Assumption Agreement is made, executed and delivered
pursuant to Section 2.01(d) of the Credit Agreement and shall also constitute
the assumption by and delegation to Assuming Lender of the Syndication Interest
particularly described hereinbelow.

          NOW, THEREFORE, in consideration of the foregoing and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do agree as follows:

          1.   From and after the Effective Date, Assuming Lender shall and does
hereby assume and agree to perform all of the promises and covenants of a Lender
as to the Assumed Interest arising or performable from and after the Effective
Date and does further agree to assume and be bound by each and every term,
condition, provision and covenant contained in the Credit Agreement and each of
the Loan Documents, effective as of the Effective Date, to the same extent and
manner as if such Assuming Lender had originally been named in the Credit
Agreement as a Lender holding the Assumed Interest therein and Assuming Lender
shall be deemed to be a Lender party to the Credit Agreement for all purposes
thereof.

          2.   The "Effective Date" as used herein shall mean April 4, 2002,
provided that each of the following conditions precedent have been satisfied on
or before the Effective Date: (a) Assuming Lender, Borrowers and Agent Bank have
executed sufficient duplicate originals of this Assumption Agreement for each of
the Assuming Lender, Borrowers and Agent Bank and each of such originals have
been delivered to Agent Bank, (b) Borrowers have executed and delivered to Agent
Bank, on behalf of the Lenders, a restatement of the Revolving Credit Note
payable to the order of Agent Bank on behalf of the Lenders, in the principal
amount of Eighty-Five Million Dollars ($85,000,000.00), (c) the Borrowers have
executed and delivered to Agent Bank such amendments, supplements, restatements
and modifications to the Security Documentation as Agent Bank reasonably
requests and in a form and content acceptable to Agent Bank, for the purpose of
securing repayment of the Commitment

                                        2
<Page>

Increase and the restated Revolving Credit Note, (d) Title Company has committed
to issue, at Borrowers' expense, its modified 110.10 (or other appropriate
endorsement) endorsement to the Title Insurance Policies increasing coverage
thereunder by an additional Ten Million Dollars ($10,000,000.00), (e) each
Lender realizing a decrease in its respective Syndication Interest has received
from Agent Bank such amount as is necessary to adjust such Lender's Pro Rata
Share of the Funded Outstandings as of the Effective Date equal to such Lender's
Syndication Interest as set forth on the Schedule of Lenders' Proportions in
Revolving Credit Facility as of April 4, 2002, attached hereto, (f) Assuming
Lender has delivered to Agent Bank an amount representing its Pro Rata Share of
the Funded Outstandings as of the Effective Date for distribution to the
remaining Lenders in such amounts as are necessary to adjust each such Lenders'
Pro Rata Share of the Funded Outstandings as of the Effective Date to a
percentage equal to the Syndication Interests set forth on the Schedule of
Lenders' Proportions in Revolving Credit Facility as of April 4, 2002, attached
hereto, (g) Agent Bank has received from Borrowers for the account of the
Assuming Lender a non-refundable fee in the amount of Fifty Thousand Dollars
($50,000.00), and (h) Agent Bank has received from Borrowers for the account of
the applicable Lenders, any Breakage Charges due under Section 2.07(c) of the
Credit Agreement. Interest accrued but remaining unpaid on the portion of the
outstanding principal balance under the Revolving Credit Facility shall be
prorated to the Effective Date and disbursed by Agent Bank to Lenders upon
receipt of the next payment of accrued interest under the Revolving Credit Note.

          3.   On the Effective Date, the respective aggregate Syndication
Interests of the Lenders in the Revolving Credit Facility shall be as set forth
on the Schedule of Lenders' Proportions in Revolving Credit Facility as of April
4, 2002, a copy of which is marked "Schedule 2.01(a)" affixed hereto and by this
reference incorporated herein and made a part hereof, which shall restate the
Schedule of Lenders' Proportions in Revolving Credit Facility attached as
Schedule 2.01(a) to the Credit Agreement, and all previous amendments and
restatements thereof, for the purpose of showing the Commitment Increase, the
adjustment of the respective Syndication Interests held by each of the Lenders
and evidencing each Assuming Lender's applicable Syndication Interest in the
Revolving Credit Facility on and after the Effective Date.

          4.   Agent Bank, on behalf of itself and each of the Lenders, makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made by Borrowers in or in connection
with the Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, the Loan Documents or
any other instrument or document furnished pursuant thereto. Agent Bank, on
behalf of itself and each of the Lenders, makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of the Borrowers or the performance or
observance by the Borrowers of any

                                        3
<Page>

of their respective obligations under the Credit Agreement, the Loan Documents
or any other instrument or document furnished in connection therewith.

          5.   Assuming Lender represents and warrants on behalf of itself that:

               a.   (i) it is duly organized and existing and it has full power
and authority to take, and has taken, all action necessary to execute and
deliver this Assumption Agreement and any other documents required to be
executed or delivered by it in connection with this Assumption Agreement, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assumption Agreement; and apart from any agreements or undertakings or filings
required by the Credit Agreement, no further action by, or notice to, or filing
with, any person is required of it for such execution, delivery or performance;
(iii) this Assumption Agreement has been fully executed and delivered by it and
constitutes its legal, valid and binding obligations, enforceable against it in
accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles;
and (iv) it is eligible under the Credit Agreement to be a Lender in accordance
with the terms hereof.

               b.   (i) under applicable law and treaties no tax will be
required to be withheld by Borrowers or any Bank with respect to any payments to
be made to such Assuming Lender under the Credit Agreement, (ii) it agrees to
furnish (if it is organized under the laws of any jurisdiction other than the
United States or any State thereof) to the Agent Bank and the Borrowers prior to
the time that the Agent Bank or Borrowers are required to make any payment of
principal, interest or fees hereunder, duplicate executed original of either
U.S. Internal Revenue Service Form W-8BEN or U.S. Internal Revenue Service Form
W-8ECI (wherein the Assuming Lender claims entitlement to the benefits of a tax
treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms
W-8BEN or W-8ECI upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by the Assuming Lender, and
(iii) it agrees to comply with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.

          6.   Borrowers represent and warrant as of the Effective Date that:

               a.   the representations and warranties contained in Article IV
of the Credit Agreement and contained in each of the other Loan Documents (other
than representations and warranties which expressly speak only as of a different
date, which shall be true and correct in all material respects as of such date)
are true and correct on and as of the Effective Date in all material respects as
though such representations and

                                        4
<Page>

warranties had been made on and as of the Effective Date, except to the extent
that such representations and warranties are not true and correct as a result of
a change which is permitted by the Credit Agreement or by any other Loan
Document or which has been otherwise consented to by Agent Bank;

               b.   Since the date of the most recent financial statements
referred to in Section 5.08(a)(ii) of the Credit Agreement, no Material Adverse
Change has occurred and no event or circumstance which could reasonably be
expected to result in a Material Adverse Change has occurred; and

               c.   no event has occurred and is continuing which constitutes a
Default or Event of Default under the terms of the Credit Agreement.

          7.   Assuming Lender (a) acknowledges that it has received a copy of
the Credit Agreement and the Loan Documents, together with copies of the most
recent financial statements referred to in Section 5.08 of the Credit Agreement,
and such other documents and information as it has deemed appropriate to make
its own credit and legal analysis and decision to enter into this Assumption
Agreement; (b) agrees that it will, independently and without reliance upon the
Agent Bank or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Credit Agreement; and (c)
appoints and authorizes the Agent Bank to take such action as agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to the Agent Bank by the terms thereof, together with such powers as are
reasonably incidental thereto.

          8.   Assuming Lender hereby advises Borrowers and Agent Bank of the
following administrative details:

               a.   Credit/Business Matters:

                    Rob Bowlby
                    Vice President - Corporate Banking
                    496 High Street
                    Morgantown, WV  26505
                    Telephone: (304) 285-5638
                    Facsimile: (304) 285-5635

                                        5
<Page>

               b.   Operations/Administration:

                    Sue Denham
                    496 High Street
                    Morgantown, WV  26505
                    Telephone: (304) 285-5666
                    Facsimile: (304) 285-5635

               c.   Payment Instructions:

                    Branch Banking and Trust Company
                    496 High Street
                    Morgantown, WV  26505
                    ABA #051503394
                    CR: 9570137147
                    Attn:  Sue Denham
                    Ref: MTR Gaming

          9.   This Assumption Agreement may be signed in any number of
counterparts, and signatures to all counterparts thereto, when assembled
together, shall constitute signatures to this entire agreement with the same
effect as if all signatures were on the same document.

          10.  This Assumption Agreement shall be governed by and construed in
accordance with the internal laws of the State of Nevada without regard to
principles of conflicts of law. Borrowers further agree that the full and
exclusive forum for the determination of any action relating to this Assumption
Agreement, the Loan Documents, or any other document or instrument delivered in
favor of Banks pursuant to the terms hereof shall be either an appropriate Court
of the State of Nevada or the United States District Court or United States
Bankruptcy Court for the District of Nevada.

          11.  Any amendment or waiver of any provision of this Assumption
Agreement shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assumption Agreement shall be without prejudice to any rights
with respect to any other or further breach thereof.

                                        6
<Page>

          IN WITNESS WHEREOF, the parties hereto have executed the foregoing
Assumption Agreement as of the day and year first above written.

                                        MTR GAMING GROUP, INC., a
                                        Delaware corporation,
                                        MOUNTAINEER PARK, INC., a West
                                        Virginia corporation, SPEAKEASY
                                        GAMING OF LAS VEGAS, INC., a
                                        Nevada corporation, SPEAKEASY
                                        GAMING OF RENO, INC., a Nevada
                                        corporation and PRESQUE ISLE
                                        DOWNS, INC., a Pennsylvania
                                        corporation

                                        Name: /s/ Edson R. Arneault
                                              ---------------------
                                              Edson R. Arneault,
                                              President and
                                              Authorized Officer

                                        AGENT BANK:

                                        WELLS FARGO BANK,
                                        National Association

                                        By: /s/ Virginia S. Christenson
                                            ---------------------------
                                        Name:   Virginia S. Christenson

                                        Title: Vice President

                                        7
<Page>

                                        ASSUMING LENDER:

                                        BRANCH BANKING AND TRUST
                                        COMPANY

                                        By: /s/ Robert J. Bowlby
                                            --------------------
                                        Name:  Robert J. Bowlby

                                        Title: Vice President, Corporate
                                        Banking

                                        8

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